<PAGE>

================================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                            ----------------------

                                  FORM 10-Q/A

               Quarterly Report Pursuant to Section 13 or 15(d)
                    of the Securities Exchange Act of 1934

      For Quarter Ended:  June 30, 2001    Commission File No. 333-43619

                        UNITED DEFENSE INDUSTRIES, INC.
            (Exact name of registrant as specified in its charter)

                            ----------------------

          Delaware                                          52-2059782
   (State or other jurisdiction of                          (I.R.S. Employer
  incorporation or organization)                          Identification No.)

                         CO-REGISTRANTS AND GUARANTORS

      IRON HORSE INVESTORS, L.L.C.                    DELAWARE 52-2059783
      UDLP HOLDINGS CORP.                             DELAWARE 52-2059780
      UNITED DEFENSE, L.P.                            DELAWARE 54-1693796

                            ----------------------

                       1525 Wilson Boulevard, Suite 700
                        Arlington, Virginia, 22209-2411
                                 (703)312-6100
        (Address and telephone number of principal executive offices of
                      Registrant and each Co-Registrant)


                            ----------------------


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. Common Stock
outstanding as of July 31, 2001.


                                                No. of shares    Par Value
                                                -------------    ---------
     United Defense Industries, Inc..........     18,106,467       $0.01
     Iron Horse Investors, L.L.C.............       -NONE-
     UDLP Holdings Corp......................        1,000         $0.01
     United Defense, L.P.....................       -NONE-

================================================================================
<PAGE>

                         IRON HORSE INVESTORS, L.L.C.
                        UNITED DEFENSE INDUSTRIES, INC.

Amendment
---------

   This amended report on Form 10-Q provides restated financial information as
described in Note 2 to the consolidated financial statements.



                                     INDEX
                                     -----

<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                          PAGE
------------------------------                                          ----
<S>                                                                     <C>
Item 1 - Unaudited Consolidated Financial Statements -
           Iron Horse Investors, L.L.C.

         Unaudited Consolidated Balance Sheets as of December 31,
           2000 and June 30, 2001                                          1

         Unaudited Consolidated Statements of Operations for the
           Three Months and Six Months Ended June 30, 2000 and 2001        2

         Unaudited Consolidated Statement of Members' Capital
           for the Six Months Ended June 30, 2001                          3

         Unaudited Consolidated Statements of Cash Flows
           for the Six Months Ended June 30, 2000 and 2001                 4

         Notes to Unaudited Consolidated Financial Statements            5-6

         Unaudited Consolidated Financial Statements -
           United Defense Industries, Inc.

         Unaudited Consolidated Balance Sheets as of
           December 31, 2000 and June 30, 2001                             7

         Unaudited Consolidated Statements of Operations for the
           Three Months and Six Months Ended June 30, 2000 and 2001        8

         Unaudited Consolidated Statement of Stockholders' Equity
           for the Six Months Ended June 30, 2001                          9

         Unaudited Consolidated Statements of Cash Flows
           for the  Six Months Ended June 30, 2000 and 2001               10

         Notes to Unaudited Consolidated Financial Statements          11-15

Item 2 - Management's Discussion and Analysis of the Results
           of Operations and Financial Condition                       16-22

Item 3 - Quantitative and Qualitative Disclosures about
           Market Risk                                                    23
</TABLE>
<PAGE>

                         IRON HORSE INVESTORS, L.L.C.
                        UNITED DEFENSE INDUSTRIES, INC.

                                     INDEX
                                     -----

<TABLE>
<CAPTION>
PART II - OTHER INFORMATION                                              PAGE
---------------------------                                              ----
<S>                                                                      <C>
Item 1 - Legal Proceedings                                                 24

Item 6 - Exhibits and Reports on Form 8-K                                  24

SIGNATURE                                                                  25
---------
</TABLE>

<PAGE>

                         Iron Horse Investors, L.L.C.
                          Consolidated Balance Sheets

                                (In thousands)

<TABLE>
<CAPTION>

Assets                                                             December 31, 2000    June 30, 2001
                                                                -------------------------------------
<S>                                                             <C>                     <C>
Current assets:
     Cash and marketable securities                                 $       113,357      $     62,739
     Trade receivables                                                      109,705            83,993
     Inventories                                                            259,238           281,405
     Other current assets                                                    13,083            17,956
                                                                -------------------------------------
  Total current assets                                                      495,383           446,093

Property, plant and equipment, net                                           80,775            77,229

Intangible assets, net                                                      162,340           142,087
Prepaid pension and postretirement benefit cost                             123,100           125,096
Restricted cash                                                              23,528            20,916
Other assets                                                                 11,930             5,396
                                                                -------------------------------------
Total assets                                                        $       897,056      $    816,817
                                                                =====================================

Liabilities and Capital
Current liabilities:
     Current portion of long-term debt                              $        23,086      $          -
     Accounts payable, trade and other                                       86,117            77,252
     Advanced payments                                                      342,394           352,933
     Accrued and other liabilities                                          104,168            91,728
                                                                -------------------------------------
     Total current liabilities                                              555,765           521,913

Long-term liabilities:
    Accrued pension and postretirement benefit cost                          28,515            26,332
    Long-term debt net of current portion                                   246,491           182,820
    Other liabilities                                                        23,148            25,680
                                                                -------------------------------------
Total liabilities                                                           853,919           756,745

Minority interest                                                             4,604             6,159

Commitments and contingencies

Members' capital                                                             38,533            53,913
                                                                -------------------------------------

Total liabilities and members' capital                              $       897,056      $    816,817
                                                                =====================================
</TABLE>


See accompanying notes. Amounts are as restated (Note 2).

                                       1
<PAGE>

                         Iron Horse Investors, L.L.C.
                Unaudited Consolidated Statements of Operations

                                (In thousands)

<TABLE>
<CAPTION>
                                                   Three months       Three months       Six months        Six months
                                                       ended              ended             ended             ended
                                                   June 30, 2000      June 30, 2001     June 30, 2000     June 30, 2001
                                               ------------------------------------   ---------------------------------
<S>                                            <C>                   <C>              <C>               <C>
Revenue:
     Sales                                              $297,249           $346,728          $564,143          $638,808

Costs and expenses:
     Cost of sales                                       242,108            282,195           457,164           513,388
     Selling, general and
      administrative expenses                             46,152             36,323            87,899            78,551
     Research and development                              5,751              5,241             9,414             9,608
                                               ------------------------------------   ---------------------------------
          Total expenses                                 294,011            323,759           554,477           601,547

Income from operations                                     3,238             22,969             9,666            37,261

Other income (expense):
     Earnings related to investments
        in foreign affiliates                                152               (672)               97               (18)
     Interest income                                         653              1,076             1,734             2,747
     Interest expense                                     (7,195)            (6,286)          (15,305)          (12,480)
                                               ------------------------------------   ---------------------------------
Total other expense                                       (6,390)            (5,882)          (13,474)           (9,751)
                                               ------------------------------------   ---------------------------------
(Loss) income before income taxes and
     minority interest                                    (3,152)            17,087            (3,808)           27,510

Provision for income taxes                                 1,228              1,377             1,803             6,670
                                               ------------------------------------   ---------------------------------
(Loss) income before minority interest                    (4,380)            15,710            (5,611)           20,840

Minority interest                                            126               (696)              157              (905)
                                               ------------------------------------   ---------------------------------
Net (loss) income before extraordinary item               (4,254)            15,014            (5,454)           19,935
Extraordinary item - net gain from early
     extinguishment of bond debt                             680                  -               680                 -
                                               ------------------------------------   ---------------------------------
Net (loss) income                                       $ (3,574)          $ 15,014          $ (4,774)         $ 19,935
                                               ====================================   =================================
</TABLE>

See accompanying notes. Amounts are as restated (Note 2).


                                       2
<PAGE>

                         Iron Horse Investors, L.L.C.
                       Unaudited Consolidated Statement
                              of Members' Capital

                                (In thousands)

<TABLE>
<CAPTION>

                                                                              Amount
                                                                        ------------------
<S>                                                                     <C>
Balance, December 31, 2000                                                    $ 38,533

Net foreign currency translation adjustment                                     (2,492)
Cumulative effect of change in
     accounting principle- foreign currency hedges                                (951)
Change in fair value of foreign currency hedges                                 (1,112)
Net income for the six months ended June 30, 2001                               19,935
                                                                        ------------------
Total comprehensive income                                                      15,380
                                                                        ------------------
Balance, June 30, 2001                                                        $ 53,913
                                                                        ==================
</TABLE>

See accompanying notes. Amounts are as restated (Note 2).

                                       3

<PAGE>

                         Iron Horse Investors, L.L.C.
                     Consolidated Statements of Cash Flows

                                (In thousands)

<TABLE>
<CAPTION>
                                                                      Six months             Six months
                                                                        ended                  ended
                                                                    June 30, 2000          June 30, 2001
                                                               ------------------------------------------
<S>                                                             <C>                   <C>
Operating activities
Net (loss) income                                                      $ (4,774)              $ 19,935
Adjustments to reconcile net (loss) income to cash
  provided by operating activities:
   Depreciation                                                          12,591                 10,309
   Amortization                                                          35,989                 30,170
   Minority interest                                                       (157)                   905
   Net gain from early retirement of bond debt                             (680)                     -
Changes in assets and liabilities:
   Trade receivables                                                    (17,172)                25,712
   Inventories                                                            9,882                (22,167)
   Other assets                                                           2,104                 (2,261)
   Prepaid pension and postretirement benefit cost                       (3,466)                (1,996)
   Accounts payable, trade and other                                    (10,364)                (8,865)
   Advanced payments                                                    (13,772)                10,539
   Accrued and other liabilities                                         (1,665)               (16,790)
   Accrued pension and postretirement benefit cost                         (522)                (2,183)
                                                               ------------------------------------------
Cash provided by operating activities                                     7,994                 43,308
                                                               ------------------------------------------

Investing activities
   Capital spending                                                      (7,170)                (8,188)
   Disposal of property, plant and equipment                                247                    249
   Purchase of Barnes & Reinecke, net of $1.2 million
      cash acquired                                                      (1,634)                     -
                                                               ------------------------------------------
Cash used in investing activities                                        (8,557)                (7,939)
                                                               ------------------------------------------
Financing activities
   Payments on long-term debt                                           (47,528)               (86,757)
   Proceeds from sale of common stock by subsidiary                           5                    650
   Repurchase of common stock by subsidiary                                (205)                     -
                                                               ------------------------------------------
Cash used in financing activities                                       (47,728)               (86,107)
                                                               ------------------------------------------
Effect of exchange rate changes on cash                                       -                    120
                                                               ------------------------------------------

Decrease in cash and marketable securities                              (48,291)               (50,618)
Cash and marketable securities, beginning of year                        94,325                113,357
                                                               ------------------------------------------
Cash and marketable securities, end of period                          $ 46,034               $ 62,739
                                                               ==========================================
</TABLE>

See accompanying notes. Amounts are as restated (Note 2).

                                       4

<PAGE>

                         Iron Horse Investors, L.L.C.

             Notes to Unaudited Consolidated Financial Statements

                                 June 30, 2001


1.   Basis of Presentation

The financial information presented as of any other date than December 31 has
been prepared from the books and records without audit.  Financial information
as of December 31 has been derived from the audited financial statements of Iron
Horse Investors, L.L.C. (the "Company"), but does not include all the
disclosures required by generally accepted accounting principles.  In the
opinion of management, the accompanying unaudited financial statements contain
all adjustments, consisting of only normal recurring adjustments necessary to
present fairly the Company's financial position as of June 30, 2001, and the
results of its operations and cash flows for the periods ended June 30, 2001 and
2000.  The results of operations are not necessarily indicative of the results
that may be expected for the year ending December 31, 2001.  These unaudited
consolidated financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K/A for the year ended December 31, 2000.

2.   Reclassifications and Restatement

     The Company's previously reported financial statements for 1998 through
2001 have been restated to account for the Company's investment in a Turkish
joint venture under the equity method.

     The impact on operating results was as follows (in thousands):

<TABLE>
<CAPTION>
                                                            Three Months Ended              Six Months Ended
                                                                  June 30,                       June 30,
------------------------------------------------------------------------------------------------------------------
(Decrease)  increase                                       2000            2001            2000           2001
------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>             <C>             <C>
Earnings related to investments in                        $(712)        $(1,337)        $(1,613)        $(6,377)
 foreign affiliates
------------------------------------------------------------------------------------------------------------------
 Net (loss) income                                         (615)         (1,060)         (1,086)         (4,620)
------------------------------------------------------------------------------------------------------------------
</TABLE>

     This change also resulted in certain reclassifications on the balance sheet
and income statement. The Company had previously separately reported intangible
assets related to the investment and an accrual related to a potential offset
obligation, which are now included in the investment account within other assets
on the balance sheet. On the income statement, certain amortization costs
included in selling, general and administrative expenses related to the
investment were reclassified to earnings related to investments in foreign
affiliates.

                                       5
<PAGE>

3.   Changes in Accounting Principle

     Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities," as amended.  The statement
requires that an entity recognize all derivatives as either assets or
liabilities.

     The Company's subsidiary, Bofors, had forward exchange contracts with a
notional contract value of $14.4 million at December 31, 2000. These contracts
which were designated as cash flow hedges were entered into to hedge firm
commitments related to purchases or sales denominated in foreign currencies. The
fair value of the contracts was a liability of $0.95 million at December 31,
2000. The transition adjustment to implement this new standard on January 1,
2001, which is presented as a cumulative effect of change in accounting
principle, and the subsequent change in market value of $1.1 million for the
six months ended June 30, 2001 were charged to accumulated other
comprehensive loss within members' capital.

     In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations", and No. 142, "Goodwill and Other Intangible Assets",
(the "Statements") effective for fiscal years beginning after December 15, 2001.
Under the new rules, goodwill will no longer be amortized but will be subject to
annual impairment tests in accordance with the Statements.  Other intangible
assets will continue to be amortized over their useful lives.

     The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
non-amortization provisions of the Statements is expected to result in an
increase in net income of approximately $4 million per year. During 2002, the
Company will perform the first of the required impairment tests of goodwill as
of January 1, 2002 and has not yet determined what the effect of these tests
will be on the earnings and financial position of the Company.

4.   Investments in Affiliated Companies

     The Company's investment in 51% owned foreign joint ventures in Turkey
and Saudi Arabia are accounted for by using the equity method because the
Company does not control the joint ventures although it has the ability to
exercise significant influence over their operating and financial policies.
Equity in earnings from these investments was $0.1 million and $(0.02) million
for the six months ended June 30, 2000 and 2001.

     The following table summarizes financial information for these joint
ventures (in thousands):

<TABLE>
<CAPTION>
                                                              Three Months Ended                Six Months Ended
                                                                  June 30,                        June 30, 2001
--------------------------------------------------------------------------------------------------------------------
                                                           2000           2001                2000           2001
--------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>              <C>                <C>            <C>
Sales                                                    $14,621        $12,229              $43,500        $49,284
--------------------------------------------------------------------------------------------------------------------
Cost of Sales                                             10,525          8,849               34,030         30,577
--------------------------------------------------------------------------------------------------------------------
Net income                                                   301         (1,267)                 199            (24)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>

                        United Defense Industries, Inc.
                     Unaudited Consolidated Balance Sheets

                                (In thousands)


<TABLE>
<CAPTION>

Assets                                                              December 31, 2000              June 30, 2001
                                                          --------------------------------------------------------
<S>                                                         <C>                             <C>
Current assets:
     Cash and marketable securities                                           $ 113,357                  $  62,739
     Trade receivables                                                          109,705                     83,993
     Inventories                                                                259,238                    281,405
     Other current assets                                                        13,083                     17,956
                                                          --------------------------------------------------------
  Total current assets                                                          495,383                    446,093

Property, plant and equipment, net                                               80,775                     77,229

Intangible assets, net                                                          162,340                    142,087
Prepaid pension and postretirement benefit cost                                 123,100                    125,096
Restricted cash                                                                  23,528                     20,916
Other assets                                                                     10,694                      4,160
                                                          --------------------------------------------------------
Total assets                                                                  $ 895,820                  $ 815,581
                                                          ========================================================

Liabilities and Equity
Current liabilities:
     Current portion of long-term debt                                        $  23,086                  $       -
     Accounts payable, trade and other                                           86,117                     77,252
     Advanced payments                                                          342,394                    352,933
     Accrued and other liabilities                                              104,168                     91,728
                                                          --------------------------------------------------------
     Total current liabilities                                                  555,765                    521,913

Long-term liabilities:
    Accrued pension and postretirement benefit cost                              28,515                     26,332
    Long-term debt net of current portion                                       246,491                    182,820
    Other liabilities                                                            23,148                     25,680
                                                          --------------------------------------------------------
Total liabilities                                                               853,919                    756,745

Commitments and contingencies

Stockholders' Equity :
    Common Stock $.01 par value, 20,000,000 shares authorized;
     18,036,667 and 18,101,667 issued and outstanding
     at December 31, 2000 and June 30, 2001                                         180                        181
     Additional paid-in-capital                                                 180,031                    180,680
     Stockholders' loans                                                         (1,236)                    (1,236)
     Retained deficit                                                          (137,074)                  (116,234)
     Accumulated other comprehensive loss                                             -                     (4,555)
                                                          --------------------------------------------------------
     Total stockholders' equity                                                  41,901                     58,836
                                                          --------------------------------------------------------

Total liabilities and stockholders' equity                                    $ 895,820                  $ 815,581
                                                          ========================================================
</TABLE>

See accompanying notes. Amounts are as restated (Note 2).

                                       7
<PAGE>

                        United Defense Industries, Inc.
                Unaudited Consolidated Statements of Operations

                                (In thousands)

<TABLE>
<CAPTION>
                                            Three months      Three months       Six months        Six months
                                                ended             ended             ended             ended
                                            June 30, 2000     June 30, 2001     June 30, 2000     June 30, 2001
                                        -----------------------------------  ----------------------------------
<S>                                      <C>                 <C>               <C>               <C>
Revenue:
     Sales                                       $297,249          $346,728          $564,143          $638,808

Costs and expenses:
     Cost of sales                                242,108           282,195           457,164           513,388
     Selling, general and
      administrative expenses                      46,152            36,323            87,899            78,551
     Research and development                       5,751             5,241             9,414             9,608
                                        -----------------  ----------------  ----------------------------------
          Total expenses                          294,011           323,759           554,477           601,547
Income from operations                              3,238            22,969             9,666            37,261

Other income (expense):
     Earnings related to investments
        in foreign affiliates                         152              (672)               97               (18)
     Interest income                                  653             1,076             1,734             2,747
     Interest expense                              (7,195)           (6,286)          (15,305)          (12,480)
                                        -----------------  ----------------  ----------------------------------
Total other expense                                (6,390)           (5,882)          (13,474)           (9,751)
(Loss)income before income taxes                   (3,152)           17,087            (3,808)           27,510

Provision for income taxes                          1,228             1,377             1,803             6,670
                                        -----------------  ----------------  ----------------------------------
Income(loss) before extraordinary item             (4,380)           15,710            (5,611)           20,840


Extraordinary item - net gain from early
     extinguishment of bond debt                      680                 -               680                 -
                                        -----------------  ----------------  ----------------------------------
Net (loss)income                                 $ (3,700)         $ 15,710          $ (4,931)         $ 20,840
                                        =================  ================  ==================================
</TABLE>

See accompanying notes. Amounts are as restated (Note 2).

                                       8
<PAGE>

                        United Defense Industries, Inc.
                       Unaudited Consolidated Statement
                            of Stockholders' Equity

                                (In thousands)

<TABLE>
<CAPTION>
                                                                                   Accumulated
                                                   Additional                         other
                                      Common         Paid-In        Retained      Comprehensive      Stockholders'
                                       Stock         Capital         Deficit          Loss               Loans          Total
                                 ----------------------------------------------------------------------------------------------
<S>                                <C>           <C>             <C>            <C>                <C>             <C>
Balance, December 31, 2000         $     180          $180,031        ($137,074)        $   --      $    (1,236)        $41,901
Issuance of common stock                   1               649              --              --              --              650
Net foreign currency translation
    adjustment                           --                --               --           (2,492)            --           (2,492)
Cumulative effect of change in
     accounting principle-foreign
     currency hedges                     --                --               --             (951)            --             (951)
Change in fair value of foreign
     currency hedges                     --                --               --           (1,112)            --           (1,112)
Net income for the six months
     ended June 30, 2001                 --                --            20,840             --              --           20,840
                                                                                                                    -----------
Total comprehensive income                                                                                               16,285
                                 ----------------------------------------------------------------------------------------------
Balance, June 30, 2001             $     181          $180,680        $(116,234)        $(4,555)     $   (1,236)    $    58,836
                                 ==============================================================================================
</TABLE>

See accompanying notes. Amounts are as restated (Note 2).

                                       9
<PAGE>

                        United Defense Industries, Inc.
                 Unaudited Consolidated Statement of Cash Flow

                                (In thousands)

<TABLE>
<CAPTION>
                                                                                             Six months            Six months
                                                                                               ended                 ended
                                                                                           June 30, 2000         June 30, 2001
                                                                                        -------------------------------------------
<S>                                                                                      <C>                <C>
Operating activities
Net (loss) income                                                                            $    (4,931)                 $  20,840
Adjustments to reconcile net (loss) income to cash
   provided by operating activities:
   Depreciation                                                                                   12,591                     10,309
   Amortization                                                                                   35,989                     30,170
   Net gain from early retirement of bond debt                                                      (680)                         -
Changes in assets and liabilities:
   Trade receivables                                                                             (17,172)                    25,712
   Inventories                                                                                     9,882                    (22,167)
   Other assets                                                                                    2,104                     (2,261)
   Prepaid pension and postretirement benefit cost                                                (3,466)                    (1,996)
   Accounts payable, trade and other                                                             (10,364)                    (8,865)
   Advanced payments                                                                             (13,772)                    10,539
   Accrued and other liabilities                                                                  (1,665)                   (16,790)
   Accrued pension and postretirement benefit cost                                                  (522)                    (2,183)
                                                                                        -------------------------------------------
Cash provided by operating activities                                                              7,994                     43,308
                                                                                        -------------------------------------------
Investing activities
   Capital spending                                                                               (7,170)                    (8,188)
   Disposal of property, plant and equipment                                                         247                        249
   Purchase of Barnes & Reinecke, net of $1.2 million
     cash acquired                                                                                (1,634)                         -
                                                                                        -------------------------------------------
Cash used in investing activities                                                                 (8,557)                    (7,939)
                                                                                        -------------------------------------------
Financing activities
   Payments on long-term debt                                                                    (47,528)                   (86,757)
   Proceeds from issuance of common stock                                                              5                        650
   Repurchase of common stock                                                                       (205)                         -
                                                                                        -------------------------------------------
Cash used in financing activities                                                                (47,728)                   (86,107)
                                                                                        -------------------------------------------
Effect of exchange rate changes on cash                                                                -                        120
                                                                                        -------------------------------------------

Decrease in cash and marketable securities                                                       (48,291)                   (50,618)
Cash and marketable securities, beginning of year                                                 94,325                    113,357
                                                                                        -------------------------------------------
Cash and marketable securities, end of period                                                $    46,034                  $  62,739
                                                                                        ===========================================
</TABLE>

See accompanying notes. Amounts are as restated (Note 2).

                                      10

<PAGE>

                        United Defense Industries, Inc.

             Notes to Unaudited Consolidated Financial Statements

                                 June 30, 2001


1.   Basis of Presentation

The financial information presented as of any other date than December 31 has
been prepared from the books and records without audit.  Financial information
as of December 31 has been derived from the audited financial statements of
United Defense Industries, Inc. (the "Company"), but does not include all the
disclosures required by generally accepted accounting principles.  In the
opinion of management, the accompanying unaudited financial statements contain
all adjustments, consisting of only normal recurring adjustments necessary to
present fairly the Company's financial position as of June 30, 2001, and the
results of its operations and cash flows for the periods ended June 30, 2001 and
2000.  The results of operations are not necessarily indicative of the results
that may be expected for the year ending December 31, 2001.  These unaudited
consolidated financial statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K/A for the year ended December 31, 2000.

2.   Classifications and Restatement

     The Company's previously reported financial statements for 1998 through
2001 have been restated to account for the Company's investment in a Turkish
joint venture under the equity method.

     The impact on operating results was as follows (in thousands):

<TABLE>
<CAPTION>
                                                           Three Months Ended             Six Months Ended
                                                                 June 30,                      June 30,
---------------------------------------------------------------------------------------------------------------
(Decrease)  increase                                       2000            2001         2000            2001
---------------------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>             <C>            <C>
Earnings related to investments in
 foreign affiliates                                       $(712)        $(1,337)        $(1,613)        $(6,377)
---------------------------------------------------------------------------------------------------------------
 Net (loss) income                                         (614)         (1,046)         (1,085)         (4,758)
---------------------------------------------------------------------------------------------------------------
</TABLE>

     This change also resulted in certain reclassifications on the balance sheet
and income statement. The Company had previously separately reported intangible
assets related to the investment and an accrual related to a potential offset
obligation, which are now included in the investment account within other assets
on the balance sheet. On the income statement, certain amortization costs
included in selling, general and administrative expenses related to the
investment were reclassified to earnings related to investments in foreign
affiliates.

3.   Financial Information for Subsidiary Guarantors and non-Guarantors

     The outstanding loans under the senior credit facility and senior
subordinated notes are general obligations of the Company and are jointly and
severally guaranteed by the wholly owned subsidiary guarantors of the Company.
Bofors Defence AB ("Bofors') is the only non-guarantor subsidiary of the
Company.

     The following information presents an unaudited consolidating Balance
Sheet, Statement of Operations and Statement of Cash Flows for the Six Months
2001.

                                      11

<PAGE>

                        United Defense Industries, Inc.
                     Unaudited Consolidating Balance Sheet
                              As of June 30, 2001
                                 (In millions)

<TABLE>
<CAPTION>
                                                                                       Non-
                                                                       Subsidiary   Guarantor
                                                             Parent    Guarantors   Subsidiary   Eliminations   Consolidated
                                                           -----------------------------------------------------------------
<S>                                                        <C>        <C>          <C>          <C>            <C>
Assets
Current assets:
     Cash and maketable securities                           $     -      $  19.4       $ 43.3        $     -        $  62.7
     Trade receivables                                             -         72.0         12.0              -           84.0
     Inventories                                                   -        270.0         11.4              -          281.4
     Other current assets                                          -          5.6         12.4              -           18.0
                                                           -----------------------------------------------------------------
  Total current assets                                             -        367.0         79.1              -          446.1

Property, plant and equipment, net                                 -         74.6          2.6              -           77.2

Intangible assets, net                                             -        138.9          3.2              -          142.1
Prepaid pension and postretirement benefit cost                    -        125.1            -              -          125.1
Restricted cash                                                    -            -         20.9              -           20.9
Due from subsidiary                                             19.9            -            -          (19.9)             -
Investments in and advances to  subsidiaries                   235.2            -            -         (235.2)             -
Other assets                                                       -          3.8          0.4              -            4.2
                                                           -----------------------------------------------------------------
Total assets                                                 $ 255.1      $ 709.4       $106.2        $(255.1)       $ 815.6
                                                           =================================================================

Liabilities and Equity
Current liabilities:

     Accounts payable, trade and other                             -         63.6         13.7              -           77.3
     Advanced payments                                             -        317.7         35.2              -          352.9
     Accrued and other liabilities                                 -         80.9         10.8              -           91.7
                                                           -----------------------------------------------------------------
     Total current liabilities                                     -        462.2         59.7              -          521.9

Long-term liabilities:
    Due to parent                                                  -            -         19.9          (19.9)             -
    Accrued pension and postretirement benefit cost                -          5.8         20.5              -           26.3
    Long-term debt net of current portion                      182.8            -            -              -          182.8
    Other liabilities                                              -         20.1          5.6              -           25.7
                                                           -----------------------------------------------------------------
Total liabilities                                              182.8        488.1        105.7          (19.9)         756.7

Stckholders' Equity:
    Common Stock                                                 0.2            -            -              -            0.2
     Additional paid-in-capital                                180.7            -            -              -          180.7
     Stockholders' loans                                        (1.2)           -            -              -           (1.2)
     Retained earnings/(deficit)                              (107.4)       221.3          5.1         (235.2)        (116.2)
     Accumulated other comprehensive loss                                       -         (4.6)                         (4.6)
                                                           -----------------------------------------------------------------
     Total stockholders' equity                                 72.3        221.3          0.5         (235.2)          58.9
                                                           -----------------------------------------------------------------
Total liabilities and stockholders' equity                   $ 255.1      $ 709.4       $106.2        $(255.1)       $ 815.6
                                                           =================================================================
</TABLE>

                                      12

<PAGE>

                        United Defense Industries, Inc.
                Unaudited Consolidating Statement of Operations
                    For the Six months ended June 30, 2001

                                 (In millions)

<TABLE>
<CAPTION>
                                                                                       Non-
                                                                       Subsidiary   Guarantor
                                                             Parent    Guarantors   Subsidiary   Eliminations   Consolidated
                                                           -----------------------------------------------------------------
<S>                                                        <C>        <C>         <C>          <C>            <C>
Revenue:
     Sales                                                   $     -      $ 577.9       $ 60.9        $     -        $ 638.8

Costs and expenses:
     Cost of sales                                                 -        465.0         48.4              -          513.4
     Selling, general and
      administrative expenses                                      -         68.6         10.0              -           78.6
     Research and development                                      -          8.0          1.6              -            9.6
                                                           -----------------------------------------------------------------

          Total expenses                                           -        541.6         60.0              -          601.6

     Earnings related to investments
        in foreign affiliates and subsidiaries                  43.3            -            -          (43.3)             -
                                                           -----------------------------------------------------------------

Income (loss) from operations                                   43.3         36.3          0.9          (43.3)          37.2

Other income (expense):
     Interest income                                             0.8          0.9          1.8           (0.8)           2.7
     Interest expense                                          (12.5)           -         (0.8)           0.8          (12.5)
                                                           -----------------------------------------------------------------
Total other expense                                            (11.7)         0.9          1.0              -           (9.8)
                                                           -----------------------------------------------------------------

Income (loss) before income taxes                               31.6         37.2          1.9          (43.3)          27.4
Provision for income taxes                                       6.0            -          0.7              -            6.7
                                                           -----------------------------------------------------------------

Net income (loss)                                            $  25.6      $  37.2       $  1.2        $ (43.3)       $  20.7
                                                           =================================================================
</TABLE>

                                      13

<PAGE>

                        United Defense Industries, Inc.
           Unaudited Consolidating Condensed Statement of Cash Flows
                                 June 30, 2001

                                 (In millions)

<TABLE>
<CAPTION>
                                                                                    Non-
                                                                       Subsidiary   Guarantor
                                                             Parent    Guarantors   Subsidiary   Eliminations   Consolidated
                                                           -----------------------------------------------------------------
<S>                                                         <C>        <C>          <C>          <C>           <C>
Cash (used in) provided by operating activities              $ 129.4      $  67.7       $ (6.7)        (147.1)       $  43.3

Cash (used in) provided by investing activities                (43.3)        (8.0)         0.1           43.3           (7.9)

Cash (used in) provided by financing activities                (86.1)      (103.8)           -          103.8          (86.1)

Effect of exchange rate changes on cash                                                    0.1                           0.1
                                                           -----------------------------------------------------------------
Net change in cash and marketable securities                       -        (44.1)        (6.5)             -          (50.6)

Cash and marketable securities, beginning of period                -         63.6         49.8              -          113.4
                                                           -----------------------------------------------------------------
Cash and marketable securities, end of period                $     -      $  19.5       $ 43.3        $     -        $  62.8
                                                           =================================================================
</TABLE>

4.   Changes in Accounting Principle.

     Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities," as amended.  The statement
requires that an entity recognize all derivatives as either assets or
liabilities.

     The Company's subsidiary, Bofors, had forward exchange contracts with a
notional contract value of $14.4 million at December 31, 2000. These contracts
which were designated as cash flow hedges were entered into to hedge firm
commitments related to purchases or sales denominated in foreign currencies. The
fair value of the contracts was a liability of $0.95 million at December 31,
2000. The transition adjustment to implement this new standard on January 1,
2001, which is presented as a cumulative effect of change in accounting
principle, and the subsequent change in market value of $1.1 million for the
six months ended June 30, 2001 were charged to accumulated other
comprehensive loss within stockholders' equity.

     In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations", and No. 142, "Goodwill and Other Intangible Assets",
(the "Statements") effective for fiscal years beginning after December 15, 2001.
Under the new rules, goodwill will no longer be amortized but will be subject to
annual impairment tests in accordance with the Statements.  Other intangible
assets will continue to be amortized over their useful lives.

     The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002.  Application of the
non-amortization provisions of the Statements is expected to result in an
increase in net income of approximately $4 million per year.  During 2002, the
Company will perform the first of the required impairment tests of goodwill as
of January 1, 2002 and has not yet determined what the effect of these tests
will be on the earnings and financial position of the Company.


                                      14

<PAGE>

5.   Investments in Affiliated Companies

     The Company's investment in 51% owned foreign joint ventures in Turkey and
Saudi Arabia are accounted for by using the equity method because the Company
does not control the joint ventures although it has the ability to exercise
significant influence over their operating and financial policies. Equity in
earnings from these investments was $0.1 million and $0.02 million for the six
months ended June 30, 2000 and 2001.

     The following table summarizes financial information for these joint
ventures (in thousands):

<TABLE>
<CAPTION>
                                                         Three Months Ended                  Six Months Ended
                                                             June 30,                         June 30, 2001
-------------------------------------------------------------------------------------------------------------
                                                           2000           2001            2000           2001
-------------------------------------------------------------------------------------------------------------
<S>                                                   <C>           <C>            <C>            <C>
Sales                                                   $14,621        $12,229         $43,500        $49,284
-------------------------------------------------------------------------------------------------------------
Cost of Sales                                            10,525          8,849          34,030         30,577
-------------------------------------------------------------------------------------------------------------
Net income                                                  301         (1,267)            199            (24)
-------------------------------------------------------------------------------------------------------------
</TABLE>

                                      15

<PAGE>

                          IRON HORSE INVESTORS, L.L.C.
                        UNITED DEFENSE INDUSTRIES, INC.

                ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS
                          -------------------------------------

              OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
              ----------------------------------------------------

                                 June 30, 2001
                                 -------------


Forward-Looking Statements

     Management's Discussion and Analysis of the Results of Operations and
Financial Condition contains forward-looking statements that are based on
management's expectations, estimates, projections and assumptions. Words such as
"expects," "anticipates," "plans," "believes," "estimates," variations of these
words, and similar expressions are intended to identify forward-looking
statements which include but are not limited to projections of revenues,
earnings, performance, cash flows and contract awards. Forward-looking
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are not guarantees of
future performance and involve certain risks and uncertainties which are
difficult to predict. Therefore, actual future results and trends may differ
materially from those made in or suggested by any forward-looking statements due
to a variety of factors, including: the ability of United Defense Industries,
Inc. (the "Company") to design and implement key technological improvements
(such as, for example in the Crusader program) and to execute its internal
performance plans; performance issues with key suppliers and subcontractors;
developments with respect to contingencies such as legal proceedings and
environmental matters; labor negotiations; changing priorities or reductions in
the U.S. government defense budget; the performance of, and political and other
risks associated with, the Company's international operations and joint
ventures; and the termination of government contracts due to unilateral
government action. For additional information, see "Risk Factors" in the
Company's Registration Statement on Form S-4, SEC File Number 333-43619.


     The following discussion and analysis should be read in conjunction with
the financial statements and related notes and the other financial information,
included elsewhere in this report, and with the Company's Annual Report on Form
10-K/A for the year ended December 31, 2000.

                                      16

<PAGE>

Introduction

     In October 1997, the Company's direct parent, Iron Horse Investors, L.L.C.
("Iron Horse"), was funded from several partnerships controlled by The Carlyle
Group. The equity was invested in the Company. On October 6, 1997, the Company
acquired (the "Acquisition") directly or through its wholly owned subsidiary,
UDLP Holdings Corp., 100% of the partnership interests in United Defense L.P.
("UDLP").

     United Defense Industries, Inc. is the only asset of Iron Horse.
Accordingly, Management's Discussion and Analysis of the Results of Operations
and Financial Condition is the same for both Iron Horse and United Defense
Industries, Inc. The Company's subsidiary guarantors, UDLP Holdings Corp., UDLP
and Barnes & Reinecke, Inc. ("BRI"), are directly or indirectly wholly owned by
the Company and all such subsidiary guarantors have guaranteed the Company's 8
3/4% Senior Subordinated Notes on a full, unconditional, and joint and several
basis. Accordingly, separate financial statements of those subsidiaries are not
considered material or provided herein. Bofors, a Swedish company acquired by
the Company in September 2000, is a non-guarantor subsidiary. Note 2 to the
consolidated financial statements of United Defense Industries, Inc. sets forth
condensed consolidating Balance Sheets, Statement of Operations and Statement of
Cash Flows for guarantor and non-guarantor subsidiaries as of June 30, 2001 and
for the six months then ended.

Overview

     The Company is a supplier of tracked, armored combat vehicles and weapons
delivery systems to the U.S. Department of Defense ("DoD") and a number of
allied military forces worldwide. The Company's products include critical
elements of the U.S. military's tactical force structure. The Company had a firm
funded backlog of approximately $2.1 billion as of June 30, 2001, a substantial
majority of which is derived from sole-source, prime contracts. Approximately
75% of the Company's sales for the first six months of 2001 were to the U.S.
government, primarily to agencies of the DoD (excluding Foreign Military Sales),
or through subcontracts with other government contractors.

     Interim Armored Vehicles. As discussed in the Company's Report on Form 10-K
for the year ended December 31, 2000, the Company competed for participation in
the U.S. Army's Interim Armored Vehicle (IAV) Program. The Army awarded the IAV
program vehicles to another competitor, and the Company filed a protest with the
General Accounting Office (GAO) regarding the award. On April 9, 2001 the GAO
denied the Company's protest, and the Company subsequently determined not to
further contest the IAV award. Accordingly, the Company does not expect to
participate in the IAV program. Apart from the opportunity for revenues and
profits thereby lost, the Company believes that the primary business result of
the IAV loss is that unless Congress increases overall spending allocated to
Army, the anticipated funding requirements for the IAV program (approximately
$6.4 billion spanning DoD Fiscal Years 2001 through 2006) may

                                      17

<PAGE>

reduce the funds available for the Company's other U.S. Army programs, such as
the Crusader artillery system and the Bradley Fighting Vehicle.

     Administration Defense Review. The eventual outcome of the Bush
Administration's review of the Defense Department's principal missions,
priorities, and programs is unknown. Press reports indicate that some
participants in the review have recommended the cancellation or deferral of
various DoD weapons programs, including certain programs in which the Company
participates: the Crusader artillery system, the DD21 destroyer, and further
upgrades to the Bradley Fighting Vehicle fleet. By contrast, the
Administration's recent FY02 DoD budget submitted to Congress included
substantial proposed appropriations for all of the foregoing programs. The
Company is uncertain whether (i) the Administration's defense budgetary and
legislative proposals may be further revised to reduce funds for any of the
Company's programs, and (ii) any ensuing Congressional action would adopt,
reject, or otherwise vary the Administration's proposals. If the final outcome
of the foregoing process were to include any significant reduction, deferral, or
cancellation of one or more substantial programs in which the Company
participates, the Company's revenues and profits would be commensurately
reduced, to the extent not offset by favorable developments elsewhere in the
Company's business.

     The only material change to the Company's major programs from those
described in the Company's Form 10-K/A report, other than normal additional
funding as new contracts are negotiated and awarded, was the signing of a multi-
year contract to upgrade Bradley Fighting Vehicles for approximately $700
million over a three-year period.

     For a more detailed description of the Company's business and principal
operating programs, see the Form 10-K/A report for the year ended December 31,
2000.

Results of Operations

Three Months Ended June 30, 2001 ("Three Months 2001") Compared with Three
Months Ended June 30, 2000 ("Three Months 2000").

<TABLE>
<CAPTION>
                                                        Three Months        Three Months
               (dollars in millions)                   June 30, 2001       June 30, 2000         Change
     --------------------------------------------------------------------------------------------------
     <S>                                         <C>                 <C>                 <C>
     Revenue                                                $346.7              $297.2            $49.5
     --------------------------------------------------------------------------------------------------
     Gross Profit                                             64.5                55.1              9.4
     --------------------------------------------------------------------------------------------------
            %                                                 18.6%               18.5%             0.1%
     --------------------------------------------------------------------------------------------------
     Selling, general and administrative                      36.3                46.2             (9.9)
     --------------------------------------------------------------------------------------------------
     Research and development                                  5.2                 5.8             (0.6)
     --------------------------------------------------------------------------------------------------
     Earnings from affiliates                                 (0.7)                0.2             (0.9)
     --------------------------------------------------------------------------------------------------
     Interest expense                                          5.2                 6.5             (1.3)
     --------------------------------------------------------------------------------------------------
     Provision for income tax                                  1.4                 1.2              0.2
     --------------------------------------------------------------------------------------------------
     Net income(loss)                                       $ 15.7              $ (3.7)           $19.4
     --------------------------------------------------------------------------------------------------
</TABLE>

                                      18

<PAGE>

     Revenue. The increase in revenue of $49.5 million during the Three Months
2001 was due to the sales generated by Bofors, which was acquired in September
2000, increased Crusader volume and higher deliveries of amphibious vehicles to
Korea. These favorable variances were partially offset by lower international
sales due to completion of contracts with Spain for delivery of amphibious
vehicles and Greece for shipment of multiple launcher rocket systems, and lower
sales of co-production recovery vehicles in Egypt.

     Gross Profit. Driven by the improvement in revenue as discussed in the
previous paragraph, gross profit for the Three Months 2001 was better by $9.4
million.

     Selling, general and administrative expenses. Selling , general and
administrative expenses were $9.9 million less in the Three Months 2001 due to
lower amortization of intangible assets established in conjunction with the
Acquisition and reduced proposal costs in the Three Months 2001 (the Interim
Armored Vehicle program required substantial proposal costs in the Three Months
2000), partially offset by spending at Bofors.

     Interest expense.  Net interest expense was lower by $1.3 million in the
Three Months 2001 due to the decline in interest expense resulting from lower
debt levels and interest rates.  The senior debt was fully repaid as of June 30,
2001.

     Provision for income taxes.  The moderate increase in the provision for
income taxes for the Three Months 2001 of $0.2 million was a result of taxes
provided for Bofors partially offset by reduction due to the application of the
new "FSC Repeal Extraterritorial Income Exclusion Act of 2000" to foreign sales
in replacement of the former Foreign Sales Corporation tax regulation.

     Net (loss)income.  As a result of the foregoing, there was net income of
$15.7 million in the Three Months 2001 compared with a net loss of $3.7 million
in the Three Months 2000.

                                      19
<PAGE>

Six Months Ended June 30, 2001 ("Six Months 2001") Compared with Six Months
Ended June 30, 2000 ("Six Months 2000").

<TABLE>
<CAPTION>
                                                        Six Months          Six Months
               (dollars in millions)                  June 30, 2001       June 30, 2000         Change
     --------------------------------------------------------------------------------------------------
     <S>                                         <C>                 <C>                 <C>
     Revenue                                                $638.8              $564.1            $74.7
     --------------------------------------------------------------------------------------------------
     Gross Profit                                            125.4               107.0             18.4
     --------------------------------------------------------------------------------------------------
            %                                                 19.6%               19.0%             0.6%
     --------------------------------------------------------------------------------------------------
     Selling, general and administrative                      78.6                87.9             (9.3)
     --------------------------------------------------------------------------------------------------
     Research and development                                  9.6                 9.4              0.2
     --------------------------------------------------------------------------------------------------
     Earnings from affiliates                                  0.0                 0.1             (0.1)
     --------------------------------------------------------------------------------------------------
     Interest expense                                          9.7                13.6             (3.9)
     --------------------------------------------------------------------------------------------------
     Provision for income tax                                  6.7                 1.8              4.9
     --------------------------------------------------------------------------------------------------
     Net income(loss)                                       $ 20.8              $ (4.9)           $25.7
     --------------------------------------------------------------------------------------------------
</TABLE>

     Revenue. The revenue during the Six Months 2001 improved by $74.7 million
over the Six Months 2000 of which eighty percent was attributed to sales
generated by Bofors. The remainder was mostly due to higher billings for
Crusader, advance gun systems, self-propelled howitzers and amphibious assault
vehicles, offset mainly by lower shipments of Bradley vehicles and co-production
recovery vehicles in Egypt.

     Gross Profit.  The increase in gross profit by $18.4 million or 17.2% from
the Six Months 2000 was largely contributed by Bofors and the other increased
revenue described above.  The modest increase in gross profit rate in the Six
Months 2001 was the result of contract profit adjustments.

     Selling, general and administrative expenses. Selling , general and
administrative expenses were $9.3 million less in the Six Months 2001 due to
lower amortization of intangibles related to the acquisition and reduced
proposal costs, partially offset by spending at Bofors.

     Earnings from foreign affiliates. Earnings from foreign affiliates in
the Six Months 2001 were $0.1 million less from the Six Months 2000 due to
our share of the increase in our Turkey joint venture's operating loss. This
loss was offset by $4.0 million of income representing our share of income
recognized by our joint venture in Saudi Arabia due to a change in estimated
contract costs and fees in additon to other operating income recorded by
that joint venture.

     Interest expense.  Net interest expense was lower by $3.9 million in the
Six Months 2001 due to the decline in interest expense resulting from lower debt
levels and interest rates.  The senior debt was fully repaid as of June 30,
2001.

     Provision for income taxes. The provision for income taxes for the Six
Months 2001 was $4.9 million higher than the Six Months 2000 mainly due to
increased taxes for the state of Pennsylvania and provision for Bofors,
partially offset by the reduction in foreign sales taxes due to the application
the new "FSC Repeal Extraterritorial Income Exclusion Act of 2000" to foreign
sales.

                                      20

<PAGE>

     Net (loss)income.  As a result of the foregoing, there was net income of
$20.8 million in the Six Months 2001 compared with a net loss of $4.9 million in
the Six Months 2000.


Liquidity

<TABLE>
<CAPTION>
                                                        Six Months          Six Months
              (dollars in millions)                    June30, 2001       June 30, 2000       Change
   ---------------------------------------------------------------------------------------------------
   <S>                                                 <C>                 <C>                 <C>
   Cash provided by operating activities                   $ 43.3              $  8.0            $35.3
   ---------------------------------------------------------------------------------------------------
   Cash used in investing activities                         (7.9)               (8.6)            (0.7)
   ---------------------------------------------------------------------------------------------------
   Cash used in financing activities                        (86.1)              (47.7)            38.4
   ---------------------------------------------------------------------------------------------------
   Cash and marketable securities, end
   ---------------------------------------------------------------------------------------------------
        of period                                          $ 62.7              $ 46.0            $16.7
   ---------------------------------------------------------------------------------------------------
</TABLE>


     Operating activities provided net cash of $43.3 million and $8.0 million in
the Six Months 2001 and 2000, respectively.  The substantial increase of $35.3
million resulted primarily from growth in net earnings as discussed in the above
"Results of Operations".  Other contributing factors are highly improved
collections of receivables partly offset by the settling of accrued liabilities
to a greater extent than the prior year and a deterioration in the relationship
between inventory build up net of advanced payments.

     Investing activities were moderately higher in the Six Months 2000 mainly
due to the purchase of BRI.

     Cash used for financing activities was applied to fully pay down the senior
debt of $86.8 million in 2001 compared with a payment of $47.5 million in 2000.

     The Company is in the process of refinancing its debt. Existing debt
arrangements, consisting of the October 6, 1997 senior debt credit facility
(under which, as indicated above, no loan amount is currently outstanding) and
the 8 3/4% Senior Subordinated Notes Due 2007 (the "Notes"), $182.8 million of
which are currently outstanding, will be replaced. The new financing
arrangement, for which the Company expects to conclude a definitive agreement
within the next few days, will provide to the Company a revolving credit
facility of $200 million, and also a loan of $600 million at an interest rate
pegged to the London Inter-Bank Offered Rate ("Libor"). The Company initially
expects to use such loan proceeds to repurchase the Notes, and to pay a dividend
to holders of its common stock in the amount of approximately $300 million. On
July 27, 2001 the Company commenced a tender offer and consent solicitation for
the Notes. The total fees and expenses associated with the refinancing,
including an early tender premium offered by the Company, is estimated to be as
much as $45 million, and will reduce the Company's net income for the third
quarter and full year 2001 by approximately $17 million.

     Upon completion of the refinancing, the repurchase of the Notes, and the
dividend payment, the Company anticipates that approximately $100 million in
proceeds from the refinancing loan will remain available for future corporate
uses.  Also, upon completion

                                      21

<PAGE>

of such transactions, the Company's outstanding debt will have increased from
$182.8 million to approximately $600 million. The new financing agreement is
expected to require mandatory principal repayments by the Company of $5.7
million in 2001, $32.6 million in 2002, and comparable amounts in future years.
Such payments will reduce cash available for other corporate purposes.
Additionally, interest charges under the new financing are expected to amount to
approximately $15 million in 2001. As interest charges in future years will
depend upon periodic fluctuations in Libor, the Company cannot precisely predict
the anticipated interest expense for 2002 and future years, but the Company
expects that such changes will substantially exceed interest expenses incurred
in 2000 and 2001, and will materially reduce the Company's net income in such
future periods.

                                      22

<PAGE>

                         IRON HORSE INVESTORS, L.L.C.
                        UNITED DEFENSE INDUSTRIES, INC.

           ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                   ----------------------------------------------

                                  MARKET RISK
                                  -----------

                                 June 30, 2001


     Forward Exchange Contracts. Bofors uses forward exchange contracts to
reduce the effect of fluctuating currencies on short-term foreign currency-
denominated transactions.

     The following table summarizes by major currency the contractual amounts of
Bofors' forward exchange contracts and their termination market values.


                                   Contractual      Termination
          Contractual Currency       Amount         Market Value
          ---------------------    -----------      ------------

          British pound            USD  2.8         USD    3.2
          European euro            USD  1.4         USD    1.5
          US dollar                USD (8.3)        USD  (10.8)


     As a result of adopting SFAS No. 133, the net liability for the difference
between the contractual amount and the termination market value is recorded as a
current liability in the balance sheet.

                                      23

<PAGE>

                                    PART II
                                    -------

                               OTHER INFORMATION
                               -----------------

                                 June 30, 2001

ITEM 1.   Legal Proceedings
          -----------------

          The Company is subject to claims and lawsuits arising in the ordinary
course of business. Management believes that the outcome of any such proceedings
to which the Company is a party will not have a material adverse effect on the
Company.

ITEM 6.   Exhibits and Reports on Form 8-K
          --------------------------------

(a)       Exhibits

          None.

(b)       Reports on Form 8-K

          None.

                                      24

<PAGE>

                                   SIGNATURE
                                   ---------


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                          By: /s/ Francis Raborn
                                              -------------------
                                                 Francis Raborn
                                                 Principal Financial and
                                                 Accounting Officer
                                                 and Authorized Signatory



Dated:  December 12, 2001

                                      25