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Exhibit 99.5
PRO FORMA COMBINED FINANCIAL INFORMATION
The following pro forma combined financial information has been prepared to reflect the Thiokol acquisition and the related financing. The pro forma combined income statement has been prepared as if each of these transactions occurred on April 1, 2000, while the pro forma combined balance sheet has been prepared as if each of these transactions occurred on March 31, 2001.
Our fiscal year ends on March 31 of each year while Thiokol's fiscal year ends on December 31 of each year. Accordingly, as permitted by Regulation S-X under the Securities Act of 1933, as amended, for purposes of the pro forma combined income statement, we have combined our historical results for the year ended March 31, 2001 with Thiokol's historical results for the year ended December 31, 2000. For purposes of the pro forma combined balance sheet, we have combined our historical financial position as of March 31, 2001 with Thiokol's historical financial position as of December 31, 2000.
The Thiokol acquisition will be accounted for under the purchase method of accounting. Under this method of accounting, the identifiable assets and liabilities of the Thiokol business will be adjusted to their estimated fair values. In connection with the acquisition of Cordant by Alcoa in May 2000, the Thiokol assets were adjusted to their estimated fair values. The historical combined financial information for Thiokol under the caption "Successor" reflects this adjustment and the allocation of the purchase price. We will review these fair values and, as a result, the adjustments made by Alcoa may be further adjusted.
Prior to the May 25, 2000 acquisition by Alcoa, Thiokol was a division of Cordant. The historical combined income statement for Thiokol for the periods from January 1, 1998 to May 25, 2000 is presented based on Cordant's accounting policies and is included under the caption "Predecessor." The historical combined income statement for Thiokol for the period from May 26, 2000 to December 31, 2000 is presented based on Alcoa's accounting policies and is included under the caption "Successor."
The pro forma combined financial information has been prepared based on the foregoing and on other assumptions described in the related notes.
The pro forma combined financial information should be read together with Alliant Techsystem Inc.'s historical consolidated financial statements, which have been previously filed with the Securities and Exchange Commission, and those of Thiokol, including the related notes, which are included in this Current Report on Form 8-K on page F-1. The following pro forma combined financial information does not purport to be indicative of the financial position or results of operations that would have been reported had the transactions been effected on the dates indicated, or which may be reported in the future.
Thiokol results for the year ended December 31, 2000 include a full allocation of Cordant corporate office expenses for the period from January 1 to May 25, 2000 and an allocation of Alcoa Industrial Components Group expenses for the period from May 26 to December 31, 2000 under Alcoa ownership.
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PRO FORMA COMBINED INCOME STATEMENT
Year Ended March 31, 2001
(dollars in thousands, except per share information)
| Historical | | | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Alliant | Thiokol | | | |||||||||||||
| Year Ended March 31, 2001 | Predecessor for the Period from January 1 to May 25, 2000 | Successor for the Period from May 26 to December 31, 2000 | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||
Sales | $ | 1,141,949 | $ | 233,258 | $ | 379,694 | — | $ | 1,754,901 | ||||||||
Cost of sales | 905,574 | 189,612 | 308,911 | $ | 2,236 | (a) | 1,406,333 | ||||||||||
Research and development | 11,575 | 3,072 | 4,561 | — | 19,208 | ||||||||||||
Selling | 24,372 | 2,224 | 3,113 | — | 29,709 | ||||||||||||
General and administrative | 64,334 | 3,392 | 11,476 | — | 79,202 | ||||||||||||
Income from operations | 136,094 | 34,958 | 51,633 | (2,236 | ) | 220,449 | |||||||||||
Interest expense | (33,738 | ) | — | — | (63,081 | )(b) | (96,819 | ) | |||||||||
Interest income | 1,038 | — | — | — | 1,038 | ||||||||||||
Income from operations before income taxes | 103,394 | 34,958 | 51,633 | (65,317 | ) | 124,668 | |||||||||||
Income tax provision | 35,473 | 13,626 | 20,479 | (27,711 | )(c) | 41,867 | |||||||||||
Income before extraordinary loss | 67,921 | 21,332 | 31,154 | (37,606 | ) | 82,801 | |||||||||||
Extraordinary loss on early extinguishment of debt, net of income taxes | — | — | — | (9,484 | )(d) | (9,484 | ) | ||||||||||
Net income (loss) | $ | 67,921 | $ | 21,332 | $ | 31,154 | $ | (47,090 | ) | $ | 73,317 | ||||||
Basic earnings per share: | |||||||||||||||||
Continuing operations | $ | 4.92 | $ | 5.99 | |||||||||||||
Extraordinary Loss | — | (.69 | ) | ||||||||||||||
Net income | $ | 4.92 | $ | 5.30 | |||||||||||||
Diluted earnings per share: | |||||||||||||||||
Continuing operations | $ | 4.80 | $ | 5.85 | |||||||||||||
Extraordinary loss | — | (.67 | ) | ||||||||||||||
Net income | $ | 4.80 | $ | 5.18 | |||||||||||||
Weighted shares outstanding: | |||||||||||||||||
Basic | 13,815 | 13,815 | |||||||||||||||
Diluted | 14,155 | 14,155 |
See Notes to Pro Forma Combined Financial Statements.
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PRO FORMA COMBINED BALANCE SHEET
As of March 31, 2001
(dollars in thousands)
| Historical | | | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Alliant as of March 31, 2001 | Thiokol as of December 31, 2000 | Pro Forma Adjustments | Pro Forma Combined | ||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 27,163 | $ | 12 | $ | (3,279 | )(e) | $ | 23,896 | |||||||
Receivables | 214,724 | 118,666 | 18,218 | (a) | 351,608 | |||||||||||
Net inventory | 54,136 | 37,931 | (25,931 | )(a) | 66,136 | |||||||||||
Deferred income tax asset | 16,478 | 27,776 | — | 44,254 | ||||||||||||
Other current assets | 20,322 | 111 | — | 20,433 | ||||||||||||
Total current assets | 332,823 | 184,496 | (10,992 | ) | 506,327 | |||||||||||
Net property, plant and equipment | 303,188 | 314,636 | — | 617,824 | ||||||||||||
Goodwill and other intangible assets | 117,737 | 263,254 | 89,446 | (a) | 470,437 | |||||||||||
Prepaid and intangible pension assets | 106,048 | 163,213 | 269,261 | |||||||||||||
Deferred charges and other non-current assets | 19,708 | 29,026 | 27,656 | (f) | 76,390 | |||||||||||
Total assets | $ | 879,504 | $ | 954,625 | $ | 106,110 | $ | 1,940,239 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
Current portion of long-term debt | $ | 69,200 | $ | — | $ | (52,032 | )(g) | $ | 17,168 | |||||||
Line of credit borrowings | — | — | 3,000 | (g) | 3,000 | |||||||||||
Accounts payable | 71,758 | 27,633 | — | 99,391 | ||||||||||||
Contract advances and allowances | 34,494 | 16,095 | — | 50,589 | ||||||||||||
Accrued compensation | 38,487 | 23,761 | — | 62,248 | ||||||||||||
Accrued income taxes | 11,873 | — | — | 11,873 | ||||||||||||
Other accrued liabilities | 66,151 | 22,512 | 677 | (a) | 89,340 | |||||||||||
Total current liabilities | 291,963 | 90,001 | (48,355 | ) | 333,609 | |||||||||||
Long-term debt | 207,909 | — | 779,216 | (g) | 987,125 | |||||||||||
Deferred income taxes | — | 84,615 | — | 84,615 | ||||||||||||
Post-retirement and post-employment benefits liability | 108,203 | 113,710 | — | 221,913 | ||||||||||||
Other long-term liabilities | 73,097 | 51,032 | — | 124,129 | ||||||||||||
Total liabilities | 681,172 | 339,358 | 730,861 | 1,751,391 | ||||||||||||
Contingencies | ||||||||||||||||
Common Stock—$.01 par value | ||||||||||||||||
Authorized—20,000,000 shares | ||||||||||||||||
Issued and outstanding—14,070,569 shares | 185 | — | — | 185 | ||||||||||||
Additional paid-in-capital | 231,598 | — | — | 231,598 | ||||||||||||
Retained earnings | 265,180 | — | (9,484 | )(d) | 255,696 | |||||||||||
Parent company equity | — | 615,267 | (615,267 | )(a) | — | |||||||||||
Unearned compensation | (3,854 | ) | — | — | (3,854 | ) | ||||||||||
Other comprehensive income | (6,140 | ) | — | — | (6,140 | ) | ||||||||||
Common stock in treasury, at cost—4,426,202 shares | (288,637 | ) | — | — | (288,637 | ) | ||||||||||
Total stockholders' equity | 198,332 | 615,267 | (624,751 | ) | 188,848 | |||||||||||
Total liabilities and stockholders' equity | $ | 879,504 | $ | 954,625 | $ | 106,110 | $ | 1,940,239 | ||||||||
See Notes to Pro Forma Combined Financial Statements.
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Notes to Pro Forma Condensed Combined Financial Statements
(dollars in thousands)
- (a)
- The adjustments reflect the incremental goodwill created as a result of the Thiokol acquisition by Alliant. This is based on our initial allocation of the purchase price and is subject to change pending subsequent valuations. This incremental goodwill will be amortized over 40 years.
Purchase price | $ | 685,000 | ||
Net assets acquired | (615,267 | ) | ||
Other adjustments (net) | 19,713 | |||
Incremental goodwill | $ | 89,446 | ||
Annual amortization expense | $ | 2,236 | ||
The other adjustments shown above include transaction expenses, an adjustment to conform Thiokol's revenue recognition policy to ours for certain long-term production contracts and employee-related accruals in connection with severance, retirement and other obligations. An adjustment was also made to accrued liabilities for the employee-related accruals.
- (b)
- Total interest expense was adjusted to reflect additional interest expense on our new senior credit facilities and the senior subordinated notes and the amortization of deferred financing costs related to our new financing. The actual calculation is shown in the following table. Total interest expense does not reflect interest expense related to the $125 million senior subordinated credit facility we entered into in connection with the Thiokol transaction as we refinanced this facility with net proceeds from the sale of the senior subordinated notes on May 14, 2001.
| Amount | Interest Rate | Interest Expense | ||||||
---|---|---|---|---|---|---|---|---|---|
Assumed revolver balance year-end (1) | $ | 3,000 | 7.25 | % | $ | 218 | |||
Tranche A term loans (1) | 104,293 | 8.15 | % | 8,500 | |||||
Tranche B term loans | 500,000 | 8.82 | % | 44,100 | |||||
Senior subordinated notes | 400,000 | 8.50 | % | 34,000 | |||||
Subtotal new debt | 1,007,293 | 8.62 | % | 86,818 | |||||
Amortization of deferred financing fees ($32,998 assumed to be amortized using the effective interest rate method over the scheduled term of the debt) | 4,828 | ||||||||
Average historical revolver balance for fiscal 2001 | 71,349 | 7.25 | % | 5,173 | |||||
Total | $ | 1,078,642 | 8.98 | % | $ | 96,819 | |||
- (1)
- Balance gives pro forma effect to the application of the net proceeds of the senior subordinated notes.
- (c)
- The total income tax provision was adjusted for the effects of the pro forma adjustments. The revised effective tax rates vary from statutory rates principally due to tax effects associated with our business strategies, resolution of tax matters and the impact of state taxes.
- (d)
- The pro forma combined income statement for the year ended March 31, 2001 assumes that the Thiokol acquisition and related financing occurred on April 1, 2000. We have assumed an early extinguishment of our existing debt and the $125 million senior subordinated credit facility and a portion of the Tranche A term loans, resulting in an extraordinary loss of $15,807, net of a $6,323
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tax benefit, due to the write-off of deferred financing fees and expenses associated with the extinguished debt.
- (e)
- Net adjustment of cash was determined as follows:
Proceeds from issuance of new debt | $ | 1,007,293 | ||
Repayment of existing debt | (277,109 | ) | ||
Cost of Thiokol acquisition | (685,000 | ) | ||
Estimated transaction expenses | (48,463 | ) | ||
Net application of cash | (1,010,572 | ) | ||
Net decrease in cash | $ | (3,279 | ) | |
- (f)
- The adjustments reflect the $5,342 write-off of deferred charges associated with the refinancing of the existing debt, and recording of $32,998 of new deferred charges paid in conjunction with the financing of the Thiokol acquisition and the issuance of the senior subordinated notes. These deferred charges will be amortized as interest expense assumed to be amortized using the effective interest rate method over the scheduled term of the debt.
- (g)
- The adjustments reflect the retirement of existing indebtedness and the $125 million senior subordinated credit facilities, and new borrowings related to the Thiokol acquisition, including the senior subordinated notes. The adjustments are summarized as follows:
Retirement of existing debt | $ | (277,109 | ) | ||
Revolving credit facility(1) | 3,000 | ||||
Tranche A term loans(1) | 104,293 | ||||
Tranche B term loans | 500,000 | ||||
Senior subordinated notes | 400,000 | ||||
Total increase in debt | $ | 730,184 | |||
- (1)
- Balance gives pro forma effect to the application of the net proceeds of the senior subordinated notes.
- (h)
- Nonrecurring charges, net of related tax effects, resulting directly from the acquisition are expected to be $5,000 and will be recorded over the 12 months following the date of the Thiokol acquisition.
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PRO FORMA COMBINED FINANCIAL INFORMATION
Notes to Pro Forma Condensed Combined Income Statement