Exhibit 99.1
News Release |
| Corporate Communications |
| Phone: 952-351-3087 |
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| MN01-1030 |
| Fax: 952-351-3009 |
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| 5050 Lincoln Drive |
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| Edina, MN 55436 |
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For Immediate Release
Media Contact: |
| Investor Contact: |
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Bryce Hallowell |
| Steve Wold |
Phone: 952-351-3087 |
| Phone: 952-351-3056 |
E-mail: bryce.hallowell@atk.com |
| E-mail: steve_wold@atk.com |
ATK FY04 EARNINGS FROM CONTINUING
OPERATIONS INCREASE 35 PERCENT TO $4.14 PER SHARE
FY04 SALES RISE 9 PERCENT TO $2.37 BILLION,
DRIVEN PRIMARILY BY ORGANIC GROWTH
FY04 ORDERS RISE TO RECORD $2.7 BILLION; FY04 CASH
PERFORMANCE EXCEEDS EXPECTATIONS
ATK NARROWS FY05 EPS GUIDANCE RANGE
Summary – ATK reported another year of outstanding performance in FY04, with EPS from continuing operations rising 35 percent over the prior year to $4.14 – up 44 cents over guidance of $3.70, incorporating a lower tax rate than previously forecast. Sales rose 9 percent to $2.37 billion, while orders increased to a record $2.7 billion – both exceeding previous guidance. Cash provided by operating activities less capital expenditures was $121 million, topping previous expectations of $115 million. ATK continues to grow as a leading supplier of advanced weapon and space systems, capturing targeted precision weapon opportunities and strengthening its advanced technology base through key enabling acquisitions. Based on improved business visibility, the company is narrowing its guidance range for FY05 EPS to between $3.85 and $3.95. – End Summary.
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Minneapolis, May 6, 2004 – ATK (NYSE: ATK), a leading supplier of advanced weapon and space systems, today reported earnings per share from continuing operations for fiscal year 2004 of $4.14, an increase of 35 percent over the previous year.
Sales for FY04, which ended March 31, rose 9 percent to $2.37 billion from $2.17 billion a year ago, driven primarily by organic program growth, which accounted for nearly two thirds of the increase. New revenues from acquisitions, including ATK Missile Systems and Composite Optics, Inc., also contributed to the sales growth.
Earnings per share from continuing operations in the fourth quarter rose 46 percent to $1.31. Earnings for the period include 43 cents per share from tax benefits and were partially offset by charges totaling 13 cents per share for previously announced restructuring activities. Earnings per share from continuing operations in the same period a year ago were 90 cents. Sales in the fourth quarter of FY04 were $677 million, up 9 percent from $619 million last year.
Other key FY04 highlights:
• The EBIT margin (earnings from continuing operations before interest and income taxes as a percent of sales) was 11.7 percent versus 12.7 percent a year ago. Excluding the effect of increased pension expense, which was $11.4 million in FY04 versus pension income of $16.9 million the prior year, the EBIT margin was 12.2 percent, compared to 11.9 percent a year ago. (See reconciliation table at the end of this news release.). Additionally, the current year included non-recurring charges in the fourth quarter of approximately $8 million for restructuring and related facility closure costs, which were announced previously.
• Cash provided by operating activities less capital expenditures was $121 million, exceeding previous guidance of approximately $115 million, as improvements in working capital partially offset greater use of cash for pension contributions, which were more than $25 million higher (net of tax benefit) in FY04. Cash provided by operating activities less capital expenditures a year ago was $142 million, which included the non-recurring receipt of $17 million for a swap restructuring.
• Orders in FY04 rose to a record level for the second year in a row, reaching $2.7 billion – up 37 percent over $1.9 billion in FY03. Increased orders for small-caliber ammunition, missile defense propulsion systems, and a new contract to develop the Advanced Anti-Radiation Guided Missile (AARGM) were the principle factors in the new business growth.
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• Contracted backlog, which represents the estimated value of contracts for which ATK is authorized to incur costs but for which revenue has not yet been recognized, was $3.8 billion at the end of FY04. Total backlog, which includes contracted backlog plus the value of unexercised options, was $5.1 billion at the end of the year.
• During the fourth quarter, the ATK board of directors authorized the repurchase of up to two million shares of the company’s common stock. To date, the company has repurchased 1.6 million shares at a cost of $93 million for an average price of approximately $57.50 per share. The share repurchase authorization extends through March 31, 2005.
• Precision Systems Group sales rose 13 percent to $628 million from $556 million, with approximately half of the increase coming from growth in precision fuze, missile defense, and tank ammunition programs. New revenues from the acquisitions of ATK Missiles Systems and ATK GASL accounted for the balance of the increase.
• Revenues from new work on the Minuteman III strategic missile program contributed to higher Aerospace Group sales, which rose 4 percent to $985 million from $943 million a year ago. Other factors in the growth included higher sales of composite structure products and new revenues from Composite Optics, Inc., which offset lower volume from propulsion programs.
• Ammunition and Related Products Group sales were $786 million, up 11 percent over $706 million a year ago. Higher sales of military small-caliber ammunition was the primary factor in the growth, with increased volume from commercial ammunition also contributing to the increase.
FY05 Guidance
As a result of improved visibility into the new fiscal year, ATK is narrowing its guidance range for FY05 EPS from continuing operations to between $3.85 and $3.95. The previous range was between $3.80 and $3.95. The company expects FY05 sales to be between $2.65 billion and $2.70 billion, which is consistent with previous guidance. The projection for cash provided by operating activities less capital expenditures remains in excess of $100 million.
ATK is a $2.4 billion advanced weapon and space systems company employing 13,200 people in 21 states. News and information can be found on the Internet at www.atk.com.
Certain information discussed in this press release regarding guidance for fiscal year 2005 constitutes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Although ATK believes that the expectations reflected in such forward-looking statements are
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based on reasonable assumptions, it can give no assurance that its expectations will be achieved. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among these factors are: unforeseen delays in NASA’s Space Shuttle program, changes in governmental spending, risks inherent in the development and manufacture of advanced technology, budgetary policies, product sourcing strategies, economic conditions, equity and corporate bond market returns, the company’s competitive environment, the timing of awards and contracts, the outcome of contingencies, including litigation and environmental remediation, program performance, program terminations, and financial performance projections. ATK undertakes no obligation to update any forward-looking statements. For further information on factors that could impact ATK, and statements contained herein, reference should be made to ATK’s filings with the Securities and Exchange Commission, including quarterly reports on Form 10-Q, current reports on Form 8-K and annual reports on Form 10-K.
Reconciliation of Non-GAAP Financial Measure
The EBIT margin excluding the effect of pension expense is a non-GAAP financial measure that ATK defines as income from continuing operations before interest and income taxes excluding the impact of pension expense (income) as a percent of sales. ATK is presenting this measure so that a reader may compare EBIT margin excluding pension expense (income), which has changed significantly from the prior fiscal year. ATK’s definition may differ from that used by other companies.
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| Fiscal Year |
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| 2004 |
| 2003 |
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Income from continuing operations before interest and income taxes |
| $ | 277,063 |
| $ | 275,543 |
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Pension expense (income) |
| 11,434 |
| (16,882 | ) | ||
Income from continuing operations before interest and income taxes excluding the effect of pension expense (income) |
| 288,497 |
| 258,661 |
| ||
Sales |
| 2,366,193 |
| 2,172,135 |
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Income from continuing operations before interest and income taxes excluding the effect of pension expense (income) as a percent of sales |
| 12.2 | % | 11.9 | % | ||
Webcast Information: ATK will webcast its investor conference call on FY04 fourth-quarter and year-end results at 10:00 a.m. Eastern Time today. The live audio webcast will be available on the Investor Relations page of ATK’s web site at www.atk.com. Information about downloading free Windows Media Player software, which is required to access the webcast, is available on the website. For those who cannot participate in the live webcast, a telephone recording of the conference call will be available for one month after the call. The telephone number is 719-457-0820, and the confirmation code is 323422.
Note to Editors: ATK will issue the text of chief executive officer Dan Murphy’s conference call remarks on PR Newswire following the completion of the call.
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED INCOME STATEMENTS
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| QUARTERS ENDED |
| YEARS ENDED |
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(In thousands except per share data) |
| March 31, |
| March 31, |
| March 31, |
| March 31, |
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Sales |
| $ | 676,687 |
| $ | 619,342 |
| $ | 2,366,193 |
| $ | 2,172,135 |
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Cost of sales |
| 549,426 |
| 487,890 |
| 1,872,253 |
| 1,692,742 |
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Gross profit |
| 127,261 |
| 131,452 |
| 493,940 |
| 479,393 |
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Operating expenses: |
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Research and development |
| 6,747 |
| 10,148 |
| 28,936 |
| 26,849 |
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Selling |
| 20,839 |
| 19,529 |
| 67,204 |
| 64,200 |
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General and administrative |
| 30,755 |
| 28,396 |
| 120,737 |
| 112,801 |
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Total operating expenses |
| 58,341 |
| 58,073 |
| 216,877 |
| 203,850 |
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Income from continuing operations before interest and |
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income taxes |
| 68,920 |
| 73,379 |
| 277,063 |
| 275,543 |
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Interest expense |
| (15,847 | ) | (15,776 | ) | (60,327 | ) | (79,495 | ) | ||||
Interest income |
| 580 |
| 372 |
| 1,060 |
| 1,429 |
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Income from continuing operations before income taxes |
| 53,653 |
| 57,975 |
| 217,796 |
| 197,477 |
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Income tax provision |
| 2,709 |
| 22,752 |
| 55,041 |
| 77,020 |
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Income from continuing operations before minority interest expense |
| 50,944 |
| 35,223 |
| 162,755 |
| 120,457 |
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Minority interest expense, net of income taxes |
| 47 |
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| 450 |
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Income from continuing operations |
| 50,897 |
| 35,223 |
| 162,305 |
| 120,457 |
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Cumulative effect of change in accounting principle, net of income taxes |
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| 3,830 |
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Net income |
| $ | 50,897 |
| $ | 35,223 |
| $ | 162,305 |
| $ | 124,287 |
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Basic earnings per common share: |
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Income from continuing operations |
| $ | 1.34 |
| $ | 0.92 |
| $ | 4.22 |
| $ | 3.15 |
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Cumulative effect of change in accounting principle |
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| 0.10 |
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Net income |
| 1.34 |
| $ | 0.92 |
| $ | 4.22 |
| $ | 3.25 |
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Diluted earnings per common share: |
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Income from continuing operations |
| $ | 1.31 |
| $ | 0.90 |
| $ | 4.14 |
| $ | 3.06 |
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Cumulative effect of change in accounting principle |
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| 0.10 |
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Net income |
| $ | 1.31 |
| $ | 0.90 |
| $ | 4.14 |
| $ | 3.16 |
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Average number of common shares |
| 38,022 |
| 38,445 |
| 38,447 |
| 38,283 |
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Average number of common and dilutive shares |
| 38,792 |
| 39,222 |
| 39,176 |
| 39,344 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) |
| March 31, 2004 |
| March 31, 2003 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 56,891 |
| $ | 14,383 |
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Net receivables |
| 528,848 |
| 451,156 |
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Net inventory |
| 134,676 |
| 155,438 |
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Deferred income tax asset |
| 53,105 |
| 69,460 |
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Other current assets |
| 32,165 |
| 25,658 |
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Total current assets |
| 805,685 |
| 716,095 |
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Net property, plant, and equipment |
| 465,786 |
| 463,736 |
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Goodwill |
| 1,063,711 |
| 839,893 |
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Prepaid and intangible pension assets |
| 331,860 |
| 281,941 |
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Deferred income tax asset |
| 38,940 |
| 62,537 |
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Deferred charges and other non-current assets |
| 127,347 |
| 118,841 |
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Total assets |
| $ | 2,833,329 |
| $ | 2,483,043 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Current portion of long-term debt |
| $ | 4,000 |
| $ | 4,331 |
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Accounts payable |
| 142,941 |
| 115,704 |
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Contract advances and allowances |
| 46,221 |
| 48,386 |
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Accrued compensation |
| 117,333 |
| 110,693 |
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Accrued income taxes |
| 10,278 |
| 23,107 |
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Other accrued liabilities |
| 107,618 |
| 129,611 |
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Total current liabilities |
| 428,391 |
| 431,832 |
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Long-term debt |
| 1,076,000 |
| 820,856 |
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Post-retirement and post-employment benefits liability |
| 218,755 |
| 234,037 |
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Additional minimum pension liability |
| 397,232 |
| 379,856 |
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Other long-term liabilities |
| 148,751 |
| 138,538 |
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Total liabilities |
| 2,269,129 |
| 2,005,119 |
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Commitments and contingencies |
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Common stock - $.01 par value |
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Authorized - 90,000,000 shares |
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Issued and outstanding 37,439,972 shares at March 31, 2004 and 38,486,630 at March 31, 2003 |
| 416 |
| 416 |
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Additional paid-in-capital |
| 468,044 |
| 470,158 |
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Retained earnings |
| 621,099 |
| 458,794 |
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Unearned compensation |
| (1,015 | ) | (2,650 | ) | ||
Accumulated other comprehensive income |
| (263,687 | ) | (246,878 | ) | ||
Common stock in treasury, at cost, 4,117,126 shares held at March 31, 2004 and 3,070,468 at March 31, 2003 |
| (260,657 | ) | (201,916 | ) | ||
Total stockholders’ equity |
| 564,200 |
| 477,924 |
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Total liabilities and stockholders’ equity |
| $ | 2,833,329 |
| $ | 2,483,043 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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| YEARS ENDED |
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(In thousands) |
| March 31, 2004 |
| March 31, 2003 |
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Operating activities |
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Net income |
| $ | 162,305 |
| $ | 124,287 |
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Adjustments to net income to arrive at cash provided by operating activities: |
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Depreciation |
| 63,923 |
| 61,066 |
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Amortization of intangible assets and unearned compensation |
| 5,995 |
| 6,068 |
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Deferred income tax |
| 46,512 |
| 29,596 |
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Loss on disposal of property |
| 1,229 |
| 1,840 |
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Minority interest expense, net of income taxes |
| 450 |
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Cumulative effect of change in accounting principle, net of income taxes |
|
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| (3,830 | ) | ||
Changes in assets and liabilities: |
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Net receivables |
| (44,314 | ) | (39,354 | ) | ||
Net inventory |
| 20,783 |
| (16,863 | ) | ||
Accounts payable |
| 20,140 |
| 24,356 |
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Contract advances and allowances |
| (3,794 | ) | 2,527 |
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Accrued compensation |
| 14,148 |
| 8,776 |
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Accrued income taxes |
| (8,747 | ) | 28,912 |
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Accrued environmental |
| (2,152 | ) | (625 | ) | ||
Pension and post-retirement benefits |
| (74,496 | ) | (49,997 | ) | ||
Other assets and liabilities |
| (22,181 | ) | 19,818 |
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Cash provided by operating activities |
| 179,801 |
| 196,577 |
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Investing activities |
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Capital expenditures |
| (58,754 | ) | (54,171 | ) | ||
Acquisition of businesses |
| (258,312 | ) | (127,325 | ) | ||
Proceeds from sale of a subsidiary |
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| 20,383 |
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Proceeds from sale of property, plant, and equipment |
| 1,650 |
| 4,374 |
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Cash used for investing activities |
| (315,416 | ) | (156,739 | ) | ||
Financing activities |
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Payments made on bank debt |
| (27,601 | ) | (100,035 | ) | ||
Payments made to extinguish debt |
| (397,586 | ) | (472,220 | ) | ||
Proceeds from issuance of long-term debt |
| 680,000 |
| 525,000 |
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Payments made for debt issue costs |
| (10,814 | ) | (2,160 | ) | ||
Net purchase of treasury shares |
| (77,792 | ) | (2,804 | ) | ||
Proceeds from employee stock compensation plans |
| 11,916 |
| 18,251 |
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Cash provided by (used for) financing activities |
| 178,123 |
| (33,968 | ) | ||
Increase in cash and cash equivalents |
| 42,508 |
| 5,870 |
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Cash and cash equivalents - beginning of period |
| 14,383 |
| 8,513 |
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Cash and cash equivalents - end of period |
| $ | 56,891 |
| $ | 14,383 |
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