Exhibit 99.1
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News Release | Corporate Communications | Phone: 952-351-3087 |
For Immediate Release |
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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 REPORTS FY05 EARNINGS PER SHARE OF $4.03
SALES EXCEED GUIDANCE, INCREASING 18 PERCENT
TO $2.8 BILLION; ORGANIC SALES RISE 9 PERCENT
ORDERS CLIMB TO $2.9 BILLION ON
STRONG BOOKINGS IN ALL BUSINESSES
FREE CASH FLOW TOPS GUIDANCE
ATK CONFIRMS FY06 EPS, SALES, AND CASH GUIDANCE
Summary – ATK reported outstanding performance in FY05, with earnings per share, sales, and free cash flow exceeding guidance. Earnings per share were $4.03, which included not previously forecasted state tax benefits of 15 cents and legal settlement costs of 12 cents in the fourth quarter. Sales rose 18 percent to $2.8 billion, with organic sales accounting for half of the growth. Orders reached a record level for the third year in a row, rising to $2.9 billion, while free cash flow exceeded expectations at $133 million. ATK is confirming guidance for FY06 earnings per share, sales, and cash. – End Summary.
-more-
Minneapolis, May 5, 2005 – Alliant Techsystems (NYSE: ATK) today reported earnings per share for fiscal year 2005 of $4.03, exceeding the company’s guidance range of $3.95 to $4.00. Earnings for the year included not previously forecasted state tax benefits of 15 cents per share and legal settlement costs of 12 cents per share in the fourth quarter.
Last year’s earnings per share were $4.14, which included a lower tax rate and gains from a benefit plan curtailment and a contract rate settlement. The variance also reflects higher pension and restructuring expenses in the current year.
Earnings per share in the fourth quarter of FY05 were $1.26 versus $1.31 in the same period a year ago. The current quarter included the previously mentioned tax benefits and legal settlement costs. Last year’s fourth quarter benefited from a lower tax rate.
Sales for fiscal year 2005, which ended March 31, increased 18 percent to $2.80 billion from $2.37 billion a year ago. Organic sales rose 9 percent on revenue growth in a number of programs across the company, including Minuteman III strategic missile, small-caliber ammunition, precision weapons, space structures, missile warning systems, and military flares and decoys. New revenues from the acquisitions of ATK GASL and ATK Mission Research in FY04 and the PSI Group in FY05 also contributed to the overall increase.
Other FY05 performance highlights:
• Orders reached a record level for the third year in a row, rising to $2.9 billion on strong bookings across all business groups. Small-caliber ammunition, Minuteman III strategic missile, the Precision Guided Mortar Munition, and technology programs under ATK Mission Research accounted for a major portion of the growth. International orders also contributed to the increase, rising 35 percent to a record $279 million on strong demand for core munitions, gun systems, and missile warning systems.
• 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 $3.7 billion at the end of the year. Total backlog, which includes contracted backlog plus the value of unexercised options, was $5.0 billion.
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• Free cash flow (cash provided by operating activities less capital expenditures) in FY05 exceeded expectations, totaling $133 million versus $122 million a year ago. During the fourth quarter, the company generated free cash flow of $76 million, driven by a $40 million reduction in working capital employed, offset partially by an accelerated $25 million pension plan contribution. (See free cash flow reconciliation table at the end of this news release).
• During FY05, ATK repurchased just over one million shares of its common stock for $75 million and made debt prepayments of approximately $130 million – actions that will generate long-term value to shareholders and increase the company’s strategic flexibility. To date in FY06, the company has made additional share repurchases totaling $25 million.
• The EBIT margin (earnings before interest and income taxes as a percent of sales) was 10.2 percent versus 11.7 percent a year ago, primarily reflecting higher pension expense, restructuring charges, and legal settlement costs in FY05, as well as the absence of FY04 benefits from a curtailment gain and contract rate settlements. Excluding these items, the EBIT margin rate for FY05 was 11.9 percent, compared with 11.9 percent last year. (See EBIT margin reconciliation table at the end of this news release.)
Operations Review
ATK Thiokol FY05 sales rose to $845 million from $799 million a year ago, representing an organic growth rate of 6 percent, driven by higher volume from the Minuteman III strategic missile program and increased sales of military flares and decoys.
The ATK Advanced Propulsion and Space Systems Group reported FY05 sales of $393 million versus $271 million last year, with organic sales rising 19 percent on higher revenues from missile defense and space structures programs. The group’s sales also include $68 million in new revenues from the acquisitions of ATK GASL and the PSI Group.
Sales from the ATK Precision Systems Group in FY05 rose to $518 million from $483 million a year ago for an organic sales increase of 7 percent. The growth reflects higher volume from precision weapons and sensors and missile warning systems.
Sales from the ATK Ammunition Group in FY05 were $889 million versus $806 million last year, representing a 10-percent organic growth rate. Higher sales of military small-caliber ammunition and law enforcement ammunition were the primary factors in the increase.
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(ATK Gun Systems, formerly a business within the ATK Precision Systems Group, was transferred to the ATK Ammunition Group. All segment data is presented as if the transfer had occurred April 1, 2003. ATK Gun Systems had revenue of approximately $45 million in FY05 and approximately $40 million in FY04.)
Recent business highlights include:
• A $23 million contract for work on dual-mode seeker technologies, including a semi-active laser, for the Mid-Range Munition, a precision-guided 120mm projectile designed to defeat enemy targets at line-of-sight and beyond line-of-sight ranges.
• Contracts worth approximately $23 million to equip additional fixed-wing and rotary-wing aircraft with the AN/AAR-47 missile warning system.
• Orders worth $54 million to continue production of training ammunition used by the U.S. Army’s M1A1/A2 Abrams main battle tank and to continue to provide logistics support for the ammunition.
• A $40 million contract for Bushmaster III dual-feed chain gunsÒ to be mounted on the Netherlands CV90 Infantry Fighting Vehicle.
• A $20 million contract to continue production of rocket motors for the Tube-launched, Optically-tracked, Wire-guided (TOW) anti-tank missile.
• Production of 1.2 billion rounds of small-caliber ammunition in FY05 – up from 350 million rounds in FY01 – at the Lake City Army Ammunition Plant in Independence, Mo., which is operated by ATK.
• A successful test of a full-scale Reusable Solid Rocket Motor in support of return to flight for NASA’s Space Shuttle.
• A successful launch of a Japanese H-IIA vehicle and a Titan IVB vehicle supported by ATK rocket motors and composite technologies.
Financial Guidance
ATK is confirming its guidance range for FY06 earnings per share of between $4.35 and $4.50. The forecast includes an increase in pension expense of approximately $17 million or 30 cents per share and costs for moving fuze manufacturing operations of approximately $5 million or 11 cents per share.
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Guidance for FY06 sales remains in excess of $3.0 billion, driven entirely by organic growth of between 7 percent and 8 percent. The company continues to expect free cash flow to be in excess of $150 million – approximately equal to net income. (See free cash flow reconciliation table at the end of this news release.)
ATK is a $3.0 billion advanced weapon and space systems company employing approximately 14,000 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 FY06, including but not limited to anticipated costs for manufacturing operations relocation and FY06 pension expense, constitute 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, changes to accounting standards, changes in cost estimates related to relocation of facilities, 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 Measures
Free Cash Flow
Free cash flow is defined as cash provided by operating activities less capital expenditures. ATK management believes free cash flow provides investors with an important perspective on the cash available for debt repayment, share repurchase, and acquisitions after making the capital investments required to support ongoing business operations. ATK management uses free cash flow internally to assess both business performance and overall liquidity.
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| Quarter Ended |
| Years Ended |
| Projected |
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| March 31, 2005 |
| March 31, 2005 |
| March 31, 2004 |
| March 31, 2006 |
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Cash provided by operating activities |
| $ | 102,478 |
| $ | 196,055 |
| $ | 180,885 |
| $ | > 220,000 |
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Capital expenditures |
| (26,067 | ) | (62,600 | ) | (58,754 | ) | < (70,000 | ) | ||||
Free cash flow |
| $ | 76,411 |
| $ | 133,455 |
| $ | 122,131 |
| $ | > 150,000 |
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EBIT Margin
The EBIT margin excluding the effect of restructuring charges, a curtailment gain, a rate settlement, legal settlement costs, and pension expense is a non-GAAP financial measure that ATK defines as income before interest and income taxes excluding the effect of restructuring charges, a curtailment gain, a rate settlement, legal settlement costs, and pension expense as a percent of sales. ATK management is presenting this measure so that a reader may compare EBIT margin excluding these items. ATK’s definition may differ from that used by other companies.
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| Years Ended |
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| March 31, 2005 |
| March 31, 2004 |
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Income before interest and income taxes |
| $ | 284,992 |
| $ | 277,063 |
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Restructuring charges |
| 11,900 |
| 8,000 |
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Curtailment gain |
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| (8,300 | ) | ||
Rate settlement |
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| (7,000 | ) | ||
Legal settlement costs |
| 7,000 |
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Pension expense |
| 30,883 |
| 11,434 |
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Income before interest and income taxes excluding the effect of restructuring charges, a curtailment gain, a rate settlement, legal settlement costs, and pension expense |
| 334,775 |
| 281,197 |
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Sales |
| 2,801,956 |
| 2,366,193 |
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Income before interest and income taxes excluding the effect of restructuring charges, a curtailment gain, a rate settlement, legal settlement costs, and pension expense as a percent of sales |
| 11.9 | % | 11.9 | % | ||
Webcast Information: ATK will webcast its investor conference call on FY05 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 1447735.
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED INCOME STATEMENTS
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| QUARTERS ENDED |
| YEARS ENDED |
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| March 31, |
| March 31, |
| March 31, |
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(In thousands except per share data) |
| 2005 |
| 2004 |
| 2005 |
| 2004 |
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Sales |
| $ | 800,018 |
| $ | 676,687 |
| $ | 2,801,956 |
| $ | 2,366,193 |
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Cost of sales |
| 640,042 |
| 550,560 |
| 2,270,754 |
| 1,875,656 |
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Gross profit |
| 159,976 |
| 126,127 |
| 531,202 |
| 490,537 |
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Operating expenses: |
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Research and development |
| 14,244 |
| 6,747 |
| 37,929 |
| 28,936 |
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Selling |
| 20,514 |
| 20,839 |
| 71,112 |
| 67,204 |
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General and administrative |
| 41,914 |
| 29,621 |
| 137,169 |
| 117,334 |
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Total operating expenses |
| 76,672 |
| 57,207 |
| 246,210 |
| 213,474 |
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Income before interest, income taxes, and minority interest |
| 83,304 |
| 68,920 |
| 284,992 |
| 277,063 |
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Interest expense |
| (17,358 | ) | (15,847 | ) | (65,382 | ) | (60,327 | ) | ||||
Interest income |
| 285 |
| 580 |
| 930 |
| 1,060 |
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Income before income taxes and minority interest |
| 66,231 |
| 53,653 |
| 220,540 |
| 217,796 |
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Income tax provision |
| 17,808 |
| 2,709 |
| 66,549 |
| 55,041 |
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Income before minority interest |
| 48,423 |
| 50,944 |
| 153,991 |
| 162,755 |
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Minority interest, net of income taxes |
| 203 |
| 47 |
| 451 |
| 450 |
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Net income |
| $ | 48,220 |
| $ | 50,897 |
| $ | 153,540 |
| $ | 162,305 |
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Earnings per share: |
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Basic |
| $ | 1.28 |
| $ | 1.34 |
| $ | 4.09 |
| $ | 4.22 |
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Diluted |
| 1.26 |
| 1.31 |
| 4.03 |
| 4.14 |
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Average number of common shares |
| 37,577 |
| 38,022 |
| 37,576 |
| 38,447 |
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Average number of common and dilutive shares |
| 38,186 |
| 38,792 |
| 38,145 |
| 39,176 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) |
| March 31, 2005 |
| March 31, 2004 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 12,772 |
| $ | 24,306 |
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Net receivables |
| 640,120 |
| 528,848 |
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Net inventory |
| 113,774 |
| 134,676 |
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Deferred income tax asset |
| 30,754 |
| 53,105 |
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Other current assets |
| 37,987 |
| 32,165 |
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Total current assets |
| 835,407 |
| 773,100 |
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Net property, plant, and equipment |
| 456,018 |
| 465,786 |
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Goodwill |
| 1,154,406 |
| 1,063,711 |
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Prepaid and intangible pension assets |
| 362,158 |
| 331,860 |
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Deferred income tax asset |
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| 38,940 |
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Deferred charges and other non-current assets |
| 211,241 |
| 127,347 |
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Total assets |
| $ | 3,019,230 |
| $ | 2,800,744 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Cash overdrafts |
| $ | 6,092 |
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Current portion of long-term debt |
| 2,692 |
| $ | 4,000 |
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Accounts payable |
| 147,076 |
| 110,356 |
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Contract advances and allowances |
| 31,717 |
| 46,221 |
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Accrued compensation |
| 107,509 |
| 117,333 |
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Accrued income taxes |
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| 10,278 |
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Other accrued liabilities |
| 138,355 |
| 107,618 |
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Total current liabilities |
| 433,441 |
| 395,806 |
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Long-term debt |
| 1,131,353 |
| 1,080,294 |
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Deferred income tax liability |
| 8,279 |
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Post-retirement and post-employment benefits liability |
| 209,893 |
| 218,755 |
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Minimum pension liability |
| 409,042 |
| 401,314 |
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Other long-term liabilities |
| 140,863 |
| 140,375 |
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Total liabilities |
| 2,332,871 |
| 2,236,544 |
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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 37,248,241 shares at |
| 416 |
| 416 |
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Additional paid-in-capital |
| 449,883 |
| 468,044 |
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Retained earnings |
| 774,639 |
| 621,099 |
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Unearned compensation |
| (1,674 | ) | (1,015 | ) | ||
Accumulated other comprehensive income |
| (259,590 | ) | (263,687 | ) | ||
Common stock in treasury, at cost, 4,308,857 shares held at |
| (277,315 | ) | (260,657 | ) | ||
Total stockholders’ equity |
| 686,359 |
| 564,200 |
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Total liabilities and stockholders’ equity |
| $ | 3,019,230 |
| $ | 2,800,744 |
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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, 2005 |
| March 31, 2004 |
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Operating activities |
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Net income |
| $ | 153,540 |
| $ | 162,305 |
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Adjustments to net income to arrive at cash provided by operating activities: |
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Depreciation |
| 71,138 |
| 63,923 |
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Amortization of intangible assets and unearned compensation |
| 13,187 |
| 5,995 |
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Deferred income tax |
| 48,932 |
| 46,512 |
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Loss on disposal of property |
| 3,928 |
| 1,229 |
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Minority interest, net of income taxes |
| 451 |
| 450 |
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Changes in assets and liabilities: |
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Net receivables |
| (93,567 | ) | (44,314 | ) | ||
Net inventory |
| 26,302 |
| 20,783 |
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Accounts payable |
| 33,364 |
| 21,224 |
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Contract advances and allowances |
| (15,961 | ) | (3,794 | ) | ||
Accrued compensation |
| (12,930 | ) | 14,148 |
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Accrued income taxes |
| 1,435 |
| (8,747 | ) | ||
Accrued environmental |
| (952 | ) | (2,152 | ) | ||
Pension and post-retirement benefits |
| (40,048 | ) | (74,496 | ) | ||
Other assets and liabilities |
| 7,236 |
| (22,181 | ) | ||
Cash provided by operating activities |
| 196,055 |
| 180,885 |
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Investing activities |
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Capital expenditures |
| (62,600 | ) | (58,754 | ) | ||
Acquisition of businesses |
| (164,198 | ) | (258,312 | ) | ||
Proceeds from sale of property, plant, and equipment |
| 948 |
| 1,650 |
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Cash used for investing activities |
| (225,850 | ) | (315,416 | ) | ||
Financing activities |
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Change in cash overdrafts |
| 6,092 |
| (19,286 | ) | ||
Payments made on bank debt |
| (133,447 | ) | (27,601 | ) | ||
Payments made to extinguish debt |
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| (397,586 | ) | ||
Proceeds from issuance of long-term debt |
| 200,000 |
| 680,000 |
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Payments made for debt issue costs |
| (6,336 | ) | (10,814 | ) | ||
Net purchase of treasury shares |
| (76,106 | ) | (77,792 | ) | ||
Proceeds from employee stock compensation plans |
| 28,058 |
| 11,916 |
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Cash provided by financing activities |
| 18,261 |
| 158,837 |
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(Decrease) increase in cash and cash equivalents |
| (11,534 | ) | 24,306 |
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Cash and cash equivalents - beginning of period |
| 24,306 |
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Cash and cash equivalents - end of period |
| $ | 12,772 |
| $ | 24,306 |
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