Exhibit 99.1
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News Release | Corporate Communications MN01-1030 5050 Lincoln Drive Edina, MN 55436 | Phone: 952-351-3087 Fax: 952-351-3009 |
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 TOPS SECOND-QUARTER GUIDANCE
WITH EARNINGS OF 78 CENTS PER SHARE
SALES RISE 19 PERCENT TO $673 MILLION,
DRIVEN PRIMARILY BY ORGANIC GROWTH
ORDERS INCREASE 16 PERCENT TO
$548 MILLION ON STRONG BOOKINGS
SECOND-QUARTER FREE CASH FLOW TOTALS $49 MILLION
ATK NOW EXPECTS FY05 FREE CASH FLOW TO EXCEED
$120 MILLION; FY05 SALES AND EPS GUIDANCE CONFIRMED;
THIRD-QUARTER EPS ESTABLISHED AT $1.15
Summary — ATK reported second-quarter EPS of 78 cents — higher than previous guidance of 70 cents. The increased results reflect changes in the spending profile of a previously announced restructuring, as well as improved operating results. Sales rose 19 percent to $673 million, driven primarily by organic growth. Orders increased 16 percent to $548 million. Second-quarter free cash flow (cash from operating activities less capital expenditures) totaled $49 million versus $28 million a year ago. As a result of greater visibility into the second half, ATK now expects FY05 free cash flow to exceed $120 million. The company also confirmed guidance for FY05 EPS of between $3.90 and $4.00; established third-quarter FY05 EPS of $1.15; and confirmed FY05 sales of more than $2.75 billion. — End Summary.
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ATK — page 2
Minneapolis, Oct. 28, 2004 — ATK (NYSE: ATK), a leading supplier of advanced weapon and space systems, today reported earnings per share for the second quarter of fiscal year 2005 of 78 cents versus 93 cents in the same period a year ago. Current-quarter earnings were higher than previous guidance of 70 cents per share due to changes in the spending profile of a previously announced restructuring, as well as improved operating results.
Excluding non-recurring items, second-quarter earnings per share increased 22 percent over last year. Non-recurring items in the current quarter were pension expense related to a retirement plan payout (included in general and administrative operating expenses) and restructuring expense. The prior quarter included previously disclosed non-recurring income from tax settlements and contract cost recovery settlements. (See reconciliation table at the end of this news release.)
Sales for the second quarter rose 19 percent to $673 million from $567 million a year ago, driven by organic growth of 11 percent. Orders increased 16 percent to $548 million from $474 million last year on strong bookings. Free cash flow was $49 million versus $28 million a year ago.
Earnings per share for the first half of fiscal year 2005 were $1.51, compared with $1.77 in the same period a year ago. Excluding non-recurring items, first-half earnings per share increased 17 percent over last year. Non-recurring items in the current year were pension expense related to a retirement plan payout and restructuring expense. The prior year included previously disclosed non-recurring income from tax settlements, contract cost recovery settlements, and a curtailment gain resulting from restructuring employee benefit plans. (See reconciliation table at the end of this news release.)
Sales for the six-month period rose 17 percent to $1.32 billion from $1.13 billion a year ago, with organic sales rising 9 percent. Free cash flow was $18 million versus $51 million last year.
FY05 Guidance
As a result of greater visibility into the second half of the year, ATK now expects FY05 free cash flow to be in excess of $120 million. Previous free cash flow guidance was in excess of $100 million. The company is establishing guidance for third-quarter earnings per share at $1.15, and continues to expect FY05 earnings per share to be between $3.90 and $4.00. Guidance for FY05 sales remains at more than $2.75 billion.
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ATK — page 3
ATK is a $2.4 billion advanced weapon and space systems company employing 13,600 people in 23 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 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 availability of capital market financing, 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
Diluted earnings per share (EPS) excluding the effect of restructuring charges, rate settlement, pension-related settlement charge, curtailment gain, and non-recurring tax item is a non-GAAP financial measure that ATK defines as diluted EPS excluding the impact of restructuring charges, a pension-related settlement charge, a curtailment gain, and a non-recurring tax item. ATK is presenting this measure so that a reader may compare diluted EPS excluding restructuring charges, a pension-related settlement charge, a curtailment gain, and a non-recurring tax item. ATK’s definition may differ from that used by other companies.
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| Quarters Ended |
| Six Months Ended |
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| Oct. 3, 2004 |
| Sept. 28, 2003 |
| Oct. 3, 2004 |
| Sept. 28, 2003 |
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Diluted earnings per share (EPS) |
| $ | 0.78 |
| $ | 0.93 |
| $ | 1.51 |
| $ | 1.77 |
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Restructuring charges, net of taxes |
| 0.01 |
| — |
| 0.09 |
| — |
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Rate settlement, net of taxes |
| — |
| (0.12 | ) | — |
| (0.12 | ) | ||||
Pension-related settlement charge, net of taxes |
| 0.11 |
| — |
| 0.11 |
| — |
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Curtailment gain, net of taxes |
| — |
| — |
| — |
| (0.12 | ) | ||||
Non-recurring tax item |
| — |
| (0.07 | ) | — |
| (0.07 | ) | ||||
Diluted EPS excluding the effect of restructuring charges, rate settlement, pension-related settlement charge, curtailment gain, and non-recurring tax item |
| $ | 0.90 |
| $ | 0.74 |
| $ | 1.71 |
| $ | 1.46 |
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ATK — page 4
Webcast Information: ATK will webcast its investor conference call on FY05 second-quarter results and the financial outlook 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 831685.
Note to Editors: ATK will issue the text of president and 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
(In thousands except per share data) |
| QUARTERS ENDED |
| SIX MONTHS ENDED |
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| October 3, |
| September 28, |
| October 3, |
| September 28, |
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| 2004 |
| 2003 |
| 2004 |
| 2003 |
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Sales |
| $ | 673,050 |
| $ | 566,551 |
| $ | 1,317,445 |
| $ | 1,125,689 |
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Cost of sales |
| 547,703 |
| 446,947 |
| 1,079,260 |
| 884,990 |
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Gross profit |
| 125,347 |
| 119,604 |
| 238,185 |
| 240,699 |
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Operating expenses: |
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| 7,513 |
| 8,294 |
| 13,482 |
| 16,375 |
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Selling |
| 16,302 |
| 16,328 |
| 34,144 |
| 30,736 |
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General and administrative |
| 40,086 |
| 25,302 |
| 70,774 |
| 55,896 |
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Total operating expenses |
| 63,901 |
| 49,924 |
| 118,400 |
| 103,007 |
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Income before interest, income taxes, and minority interest |
| 61,446 |
| 69,680 |
| 119,785 |
| 137,692 |
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Interest expense |
| (15,549 | ) | (15,133 | ) | (30,532 | ) | (30,178 | ) | |||||
Interest income |
| 388 |
| 168 |
| 483 |
| 368 |
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Income before income taxes and minority interest |
| 46,285 |
| 54,715 |
| 89,736 |
| 107,882 |
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Income tax provision |
| 16,369 |
| 17,873 |
| 32,120 |
| 38,076 |
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Income before minority interest |
| 29,916 |
| 36,842 |
| 57,616 |
| 69,806 |
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Minority interest, net of income taxes |
| 18 |
| 195 |
| 144 |
| 255 |
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Net income |
| $ | 29,898 |
| $ | 36,647 |
| $ | 57,472 |
| $ | 69,551 |
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Earnings per share: |
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Basic |
| $ | 0.80 |
| $ | 0.95 |
| $ | 1.53 |
| $ | 1.80 |
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Diluted |
| 0.78 |
| 0.93 |
| 1.51 |
| 1.77 |
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Average number of common shares |
| 37,590 |
| 38,583 |
| 37,507 |
| 38,572 |
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Average number of common and dilutive shares |
| 38,094 |
| 39,293 |
| 38,076 |
| 39,290 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) |
| October 3, 2004 |
| March 31, 2004 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 95,879 |
| $ | 56,891 |
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Net receivables |
| 612,458 |
| 528,848 |
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Net inventory |
| 126,715 |
| 134,676 |
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Deferred income tax asset |
| 58,444 |
| 53,105 |
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Other current assets |
| 27,755 |
| 32,165 |
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Total current assets |
| 921,251 |
| 805,685 |
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Net property, plant, and equipment |
| 459,309 |
| 465,786 |
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Goodwill |
| 1,173,551 |
| 1,063,711 |
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Prepaid and intangible pension assets |
| 317,683 |
| 331,860 |
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Deferred income tax asset |
| 17,476 |
| 38,940 |
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Deferred charges and other non-current assets |
| 182,330 |
| 127,347 |
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Total assets |
| $ | 3,071,600 |
| $ | 2,833,329 |
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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 |
| $ | 4,000 |
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Accounts payable |
| 120,836 |
| 142,941 |
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Contract advances and allowances |
| 35,403 |
| 46,221 |
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Accrued compensation |
| 86,484 |
| 117,333 |
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Accrued income taxes |
| 50,447 |
| 10,278 |
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Other accrued liabilities |
| 137,289 |
| 107,618 |
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Total current liabilities |
| 434,459 |
| 428,391 |
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Long-term debt |
| 1,274,000 |
| 1,076,000 |
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Post-retirement and post-employment benefits liability |
| 215,436 |
| 218,755 |
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Additional minimum pension liability |
| 401,314 |
| 401,314 |
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Other long-term liabilities |
| 129,646 |
| 144,669 |
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Total liabilities |
| 2,454,855 |
| 2,269,129 |
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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 37,672,127 shares at October 3, 2004 and 37,439,972 at March 31, 2004 |
| 416 |
| 416 |
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Additional paid-in-capital |
| 446,248 |
| 468,044 |
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Retained earnings |
| 678,571 |
| 621,099 |
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Unearned compensation |
| (1,623 | ) | (1,015 | ) | ||
Accumulated other comprehensive income |
| (261,153 | ) | (263,687 | ) | ||
Common stock in treasury, at cost, 3,884,971 shares held at October 3, 2004 and 4,117,126 at March 31, 2004 |
| (245,714 | ) | (260,657 | ) | ||
Total stockholders’ equity |
| 616,745 |
| 564,200 |
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Total liabilities and stockholders’ equity |
| $ | 3,071,600 |
| $ | 2,833,329 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) |
| SIX MONTHS ENDED |
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| October 3, 2004 |
| September 28, 2003 |
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Operating activities |
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Net income |
| $ | 57,472 |
| $ | 69,551 |
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Adjustments to net income to arrive at cash provided by operating activities: |
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Depreciation |
| 32,949 |
| 30,811 |
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Amortization of intangible assets and unearned compensation |
| 4,667 |
| 2,675 |
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Deferred income tax |
| (1,604 | ) | — |
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Loss (gain) on disposal of property |
| 2,102 |
| (497 | ) | ||
Minority interest, net of income taxes |
| 144 |
| 255 |
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Changes in assets and liabilities: |
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Net receivables |
| (65,570 | ) | 5,181 |
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Net inventory |
| 13,411 |
| 6,269 |
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Accounts payable |
| (25,461 | ) | (17,424 | ) | ||
Contract advances and allowances |
| (12,275 | ) | (10,055 | ) | ||
Accrued compensation |
| (34,018 | ) | (18,700 | ) | ||
Accrued income taxes |
| 42,327 |
| 35,333 |
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Accrued environmental |
| 138 |
| (643 | ) | ||
Pension and post-retirement benefits |
| 10,858 |
| (40,535 | ) | ||
Other assets and liabilities |
| 17,582 |
| 7,422 |
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Cash provided by operating activities |
| 42,722 |
| 69,643 |
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Investing activities |
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Capital expenditures |
| (24,603 | ) | (19,103 | ) | ||
Acquisition of businesses |
| (164,198 | ) | — |
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Proceeds from sale of property, plant, and equipment |
| 289 |
| 1,627 |
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Cash used for investing activities |
| (188,512 | ) | (17,476 | ) | ||
Financing activities |
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Payments made on bank debt |
| (2,000 | ) | (25,571 | ) | ||
Proceeds from issuance of long-term debt |
| 200,000 |
| — |
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Payments made for debt issue costs |
| (5,567 | ) | — |
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Net purchase of treasury shares |
| (25,988 | ) | (2,426 | ) | ||
Proceeds from employee stock compensation plans |
| 18,333 |
| 7,561 |
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Cash provided by (used for) financing activities |
| 184,778 |
| (20,436 | ) | ||
Increase in cash and cash equivalents |
| 38,988 |
| 31,731 |
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Cash and cash equivalents - beginning of period |
| 56,891 |
| 14,383 |
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Cash and cash equivalents - end of period |
| $ | 95,879 |
| $ | 46,114 |
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