Exhibit 99.1
News Release |
| Corporate Communications |
| Phone: 952-351-3087 |
|
| MN01-1030 |
| Fax: 952-351-3009 |
|
| 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 SECOND-QUARTER EARNINGS RISE 37 PERCENT TO $1.07 PER SHARE
SALES INCREASE 15 PERCENT TO $772 MILLION ON STRONG DEMAND FOR AMMUNITION, ROCKET MOTORS, PRECISION MUNITIONS
ORDERS UP 20 PERCENT OVER PRIOR YEAR PERIOD
STRONG OPERATING CASH FLOW HITS $109 MILLION
ATK RAISES CASH FLOW GUIDANCE FOR FY06
CURRENT YEAR SHARE REPURCHASES TOTAL APPROXIMATELY 950,000 SHARES
Minneapolis, November 2, 2005 – Alliant Techsystems (NYSE: ATK), reported a 37 percent increase in earnings per share for the second-quarter of fiscal year 2006. Earnings per share were $1.07 versus 78 cents a year ago.
Sales for the second-quarter, which ended October 2, rose 15 percent to $772 million from $673 million a year ago. Organic sales grew 11 percent. Operating cash for the second quarter was $109 million versus $54 million a year ago. Current year cash flow benefited from higher profits and improved working capital management.
Other second-quarter performance highlights:
• The company’s EBIT margin (earnings before interest and income taxes as a percent of sales) rose to 10.1 percent versus 9.1 percent a year ago, reflecting improved operating results across numerous business lines.
• Orders increased 20 percent to $656 million versus $548 million a year ago.
Earnings per share for the first six months of the fiscal year increased 36 percent to $2.06 from $1.51 a year ago. Sales rose 16 percent to $1.53 billion versus $1.32 billion in the previous year. Year-to-date operating cash is $116 million versus $28 million a year ago.
Since the beginning of the fiscal year, ATK has repurchased approximately 950,000 shares of its stock. ATK is authorized to repurchase an additional 350,000 shares.
Operations Review
ATK Thiokol sales rose 15 percent to $243 million versus $211 million last year. The increase reflects additional revenue from the Minuteman III propulsion replacement program, as well as increased demand for various flares and decoys used in support of ongoing operations in Iraq and Afghanistan.
Ammunition Group sales increased 12 percent to $252 million from $225 million in the previous year. The growth reflects demand for small and medium-caliber ammunition. To meet additional demand for small-caliber ammunition, ATK and the U.S. Army have implemented a modernization effort of the Lake City Army Ammunition Plant designed to increase its capacity to 1.5 billion rounds annually. The company remains on track to complete the capacity expansion by March 2006.
Precision Systems Group sales rose 4 percent to $124 million from $119 million a year ago. Advanced weapons such as the precision guided mortar munition (PGMM) and advanced anti-radiation guided missile (AARGM) contributed to the growth trend. Both programs remain on schedule and on cost.
Sales in the Advanced Propulsion and Space Systems Group rose 35 percent to $116 million from $86 million a year ago. The growth reflects new revenues from the acquisition of the PSI Group and increased sales in missile defense programs.
Recent business highlights:
• NASA’s September announcement to baseline ATK’s reusable solid rocket motors as the foundation for next-generation space exploration initiatives
• The consolidation of all fuze operations into ATK’s manufacturing center of excellence in West Virginia
• The signing of a strategic alliance with Nitrochemie to develop the North American market for advanced energetics
• $15 million contract to conduct additional air-breathing hypersonic research for NASA
• A contract to supply the British Royal Navy Type 23 Frigates with Bushmaster Mk44 gun systems
• Successful initial qualification of an Orbus 1A rocket motor for missile defense
• The 100th successful launch of a Delta II rocket using ATK GEM motors
• ATK’s Scathe View infrared and electro-optical sensor technology was used extensively by Air National Guard units to conduct search and rescue mission in the aftermath of Hurricane Katrina – it received very positive reviews from the air crews
FY06 Guidance
ATK continues to expect FY06 earnings per share in the range of $4.48 to $4.58 on sales of approximately $3.1 billion. Cash flow from operations is expected to increase to approximately $240 million, up from previous guidance of $230 million. The company expects capital expenditures to remain steady at approximately $70 million.
ATK is a $3.1 billion advanced weapon and space systems company employing approximately 14,500 people in 23 states. News and information can be found on the Internet at www.atk.com.
Certain information discussed in this press release 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 those factors are: changes in governmental spending, budgetary policies and product sourcing strategies; the company’s competitive environment; the terms and timing of awards and contracts; and economic conditions. 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 ATK’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005.
Webcast Information: ATK will webcast its investor conference call on FY06 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 1096146.
# # #
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED INCOME STATEMENTS
|
| QUARTERS ENDED |
| SIX MONTHS ENDED |
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(In thousands except per share data) |
| October 2, |
| October 3, |
| October 2, |
| October 3, |
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Sales |
| $ | 772,092 |
| $ | 673,050 |
| $ | 1,529,084 |
| $ | 1,317,445 |
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Cost of sales |
| 621,647 |
| 552,159 |
| 1,245,236 |
| 1,082,933 |
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Gross profit |
| 150,445 |
| 120,891 |
| 283,848 |
| 234,512 |
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Operating expenses: |
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Research and development |
| 14,196 |
| 7,698 |
| 24,077 |
| 13,229 |
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Selling |
| 19,309 |
| 16,085 |
| 37,285 |
| 35,262 |
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General and administrative |
| 38,676 |
| 35,662 |
| 74,041 |
| 66,236 |
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Total operating expenses |
| 72,181 |
| 59,445 |
| 135,403 |
| 114,727 |
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Income before interest, income taxes, and minority interest |
| 78,264 |
| 61,446 |
| 148,445 |
| 119,785 |
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Interest expense |
| (17,044 | ) | (15,549 | ) | (34,514 | ) | (30,532 | ) | ||||
Interest income |
| 241 |
| 388 |
| 368 |
| 483 |
| ||||
Income before income taxes and minority interest |
| 61,461 |
| 46,285 |
| 114,299 |
| 89,736 |
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Income tax provision |
| 21,207 |
| 16,369 |
| 36,716 |
| 32,120 |
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Income before minority interest |
| 40,254 |
| 29,916 |
| 77,583 |
| 57,616 |
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Minority interest, net of income taxes |
| 102 |
| 18 |
| 211 |
| 144 |
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Net income |
| $ | 40,152 |
| $ | 29,898 |
| $ | 77,372 |
| $ | 57,472 |
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Earnings per share: |
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Basic |
| $ | 1.08 |
| $ | 0.80 |
| $ | 2.09 |
| $ | 1.53 |
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Diluted |
| 1.07 |
| 0.78 |
| 2.06 |
| 1.51 |
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Average number of common shares |
| 37,027 |
| 37,590 |
| 37,026 |
| 37,507 |
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Average number of common and dilutive shares |
| 37,646 |
| 38,094 |
| 37,625 |
| 38,076 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) |
| October 2, 2005 |
| March 31, 2005 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 37,820 |
| $ | 12,772 |
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Net receivables |
| 608,318 |
| 626,711 |
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Net inventories |
| 142,644 |
| 125,190 |
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Deferred income tax asset |
| 29,066 |
| 30,754 |
| ||
Other current assets |
| 35,711 |
| 37,987 |
| ||
Total current assets |
| 853,559 |
| 833,414 |
| ||
Net property, plant, and equipment |
| 441,477 |
| 456,310 |
| ||
Goodwill |
| 1,167,649 |
| 1,154,406 |
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Prepaid and intangible pension assets |
| 364,284 |
| 362,158 |
| ||
Deferred charges and other non-current assets |
| 189,501 |
| 209,522 |
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Total assets |
| $ | 3,016,470 |
| $ | 3,015,810 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Cash overdrafts |
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| $ | 6,092 |
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Current portion of long-term debt |
| $ | 27,000 |
| 2,692 |
| |
Accounts payable |
| 86,994 |
| 147,286 |
| ||
Contract advances and allowances |
| 44,961 |
| 31,717 |
| ||
Accrued compensation |
| 106,574 |
| 107,509 |
| ||
Accrued income taxes |
| 36,075 |
| — |
| ||
Other accrued liabilities |
| 140,707 |
| 136,444 |
| ||
Total current liabilities |
| 442,311 |
| 431,740 |
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Long-term debt |
| 1,099,727 |
| 1,131,353 |
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Deferred income tax liability |
| 9,442 |
| 8,279 |
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Postretirement and postemployment benefits liability |
| 202,415 |
| 209,893 |
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Accrued pension liability |
| 409,042 |
| 409,042 |
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Other long-term liabilities |
| 137,999 |
| 139,144 |
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Total liabilities |
| 2,300,936 |
| 2,329,451 |
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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 36,646,605 shares at October 2, 2005 and 37,248,241 at March 31, 2005 |
| 416 |
| 416 |
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Additional paid-in-capital |
| 444,130 |
| 449,883 |
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Retained earnings |
| 852,011 |
| 774,639 |
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Unearned compensation |
| (2,136 | ) | (1,674 | ) | ||
Accumulated other comprehensive loss |
| (253,148 | ) | (259,590 | ) | ||
Common stock in treasury, at cost, 4,910,493 shares held at |
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October 2, 2005 and 4,308,857 at March 31, 2005 |
| (325,739 | ) | (277,315 | ) | ||
Total stockholders’ equity |
| 715,534 |
| 686,359 |
| ||
Total liabilities and stockholders’ equity |
| $ | 3,016,470 |
| $ | 3,015,810 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| SIX MONTHS ENDED |
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(In thousands) |
| October 2, 2005 |
| October 3, 2004 |
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Operating activities |
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Net income |
| $ | 77,372 |
| $ | 57,472 |
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Adjustments to net income to arrive at cash provided by operating activities: |
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Depreciation |
| 34,137 |
| 32,949 |
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Amortization of intangible assets and unearned compensation |
| 6,962 |
| 4,667 |
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Deferred income tax |
| 6,762 |
| (1,604 | ) | ||
Loss on disposal of property |
| 266 |
| 2,102 |
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Minority interest, net of income taxes |
| 211 |
| 144 |
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Changes in assets and liabilities: |
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Net receivables |
| 16,814 |
| (65,570 | ) | ||
Net inventories |
| (20,227 | ) | 13,411 |
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Accounts payable |
| (60,292 | ) | (40,332 | ) | ||
Contract advances and allowances |
| 13,244 |
| (12,275 | ) | ||
Accrued compensation |
| 900 |
| (34,018 | ) | ||
Accrued income taxes |
| 36,318 |
| 42,327 |
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Accrued environmental |
| (1,174 | ) | 138 |
| ||
Pension and postretirement benefits |
| (9,604 | ) | 10,858 |
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Other assets and liabilities |
| 14,662 |
| 17,582 |
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Cash provided by operating activities |
| 116,351 |
| 27,851 |
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Investing activities |
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Capital expenditures |
| (20,430 | ) | (24,603 | ) | ||
Acquisition of business |
| — |
| (164,198 | ) | ||
Proceeds from the disposition of property, plant, and equipment |
| 1,371 |
| 289 |
| ||
Cash used for investing activities |
| (19,059 | ) | (188,512 | ) | ||
Financing activities |
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Change in cash overdrafts |
| (6,092 | ) | — |
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Payments made on bank debt |
| (280,053 | ) | (2,000 | ) | ||
Proceeds from issuance of long-term debt |
| 270,000 |
| 200,000 |
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Payments made for debt issue costs |
| (699 | ) | (5,567 | ) | ||
Net purchase of treasury shares |
| (69,908 | ) | (25,988 | ) | ||
Proceeds from employee stock compensation plans |
| 14,508 |
| 18,333 |
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Cash (used for) provided by financing activities |
| (72,244 | ) | 184,778 |
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Increase in cash and cash equivalents |
| 25,048 |
| 24,117 |
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Cash and cash equivalents - beginning of period |
| 12,772 |
| 24,306 |
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Cash and cash equivalents - end of period |
| $ | 37,820 |
| $ | 48,423 |
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Net Sales and Income before Interest, Income Taxes, and Minority Interest by Segment
(Dollars in Millions)
Net Sales:
|
| Quarters Ended |
| Six Months Ended |
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| Oct 2, 2005 |
| Oct 3, 2004 |
| $ Change |
| % |
| Oct 2, 2005 |
| Oct 3, 2004 |
| $ Change |
| % |
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ATK Thiokol |
| $ | 242.8 |
| $ | 211.0 |
| $ | 31.8 |
| 15.1 | % | $ | 473.5 |
| $ | 419.0 |
| $ | 54.5 |
| 13.0 | % |
Ammunition |
| 252.0 |
| 224.5 |
| 27.5 |
| 12.2 | % | 499.0 |
| 424.1 |
| 74.9 |
| 17.7 | % | ||||||
Precision Systems |
| 123.7 |
| 118.6 |
| 5.1 |
| 4.3 | % | 251.3 |
| 230.6 |
| 20.7 |
| 9.0 | % | ||||||
Advanced Propulsion and Space Systems |
| 116.0 |
| 85.7 |
| 30.3 |
| 35.4 | % | 226.7 |
| 163.6 |
| 63.1 |
| 38.6 | % | ||||||
Other |
| 37.6 |
| 33.3 |
| 4.3 |
| 12.9 | % | 78.6 |
| 80.1 |
| (1.5 | ) | (1.9 | )% | ||||||
Total sales |
| $ | 772.1 |
| $ | 673.1 |
| $ | 99.0 |
| 14.7 | % | $ | 1,529.1 |
| $ | 1,317.4 |
| $ | 211.7 |
| 16.1 | % |
Income before Interest, Income Taxes, and Minority Interest:
|
| Quarters Ended |
| Six Months Ended |
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| Oct 2, |
| As a % |
| Oct 3, |
| As a % |
| Oct 2, |
| As a % |
| Oct 3, |
| As a % |
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ATK Thiokol |
| $ | 34.5 |
| 14.0 | % | $ | 27.4 |
| 12.9 | % | $ | 66.6 |
| 13.9 | % | $ | 60.3 |
| 14.3 | % |
Ammunition |
| 23.9 |
| 9.4 | % | 21.6 |
| 9.5 | % | 44.4 |
| 8.8 | % | 34.4 |
| 8.0 | % | ||||
Precision Systems |
| 10.1 |
| 7.6 | % | 11.0 |
| 8.9 | % | 19.5 |
| 7.3 | % | 22.4 |
| 9.3 | % | ||||
Advanced Propulsion |
| 13.1 |
| 9.8 | % | 8.2 |
| 8.6 | % | 25.0 |
| 9.7 | % | 9.7 |
| 5.3 | % | ||||
Corporate and other |
| (3.3 | ) |
|
| (6.8 | ) |
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| (7.1 | ) |
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| (7.0 | ) |
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Total |
| $ | 78.3 |
| 10.1 | % | $ | 61.4 |
| 9.1 | % | $ | 148.4 |
| 9.7 | % | $ | 119.8 |
| 9.1 | % |