Exhibit 99.1
News Release | Corporate Communications | Phone: 952-351-3087 |
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 RAISES FY08 EPS GUIDANCE TO $5.95 - $6.15 PER SHARE – SALES AND
ORDERS GUIDANCE ALSO INCREASED
FOURTH-QUARTER FY07 EPS RISES TO $1.57, QUARTERLY SALES UP 10 PERCENT
AND ORDERS INCREASE 29 PERCENT
FULL-YEAR FY07 EPS INCREASES TO $5.32, FULL-YEAR SALES INCREASE 11
PERCENT AND ORDERS INCREASE 18 PERCENT
FULL-YEAR FY07 NET INCOME UP 20 PERCENT TO $184 MILLION
Minneapolis, May 4, 2007 – Alliant Techsystems (NYSE: ATK) reported today that earnings per share (EPS) in the fourth quarter of fiscal year 2007, which ended on March 31, rose to $1.57 from $0.79 in the prior-year quarter. Excluding discrete items, EPS in the quarter increased by 17 percent to $1.54 from $1.32 in the prior-year quarter (see reconciliation chart for details). Sales for the quarter increased 10 percent to more than $1.0 billion, compared to $918 million in the prior-year quarter while orders increased 29 percent to $1.5 billion, compared to $1.2 billion in the prior-year period. The company’s fourth-quarter net income rose to $54 million, from $29 million in the prior-year period.
For the full-year, EPS rose to $5.32 from $4.11 in the prior year. Excluding discrete items, EPS for the year increased by 15 percent to $5.29 from $4.60 a year ago (see reconciliation chart for details). Sales for the full year increased 11 percent to $3.56 billion compared to $3.22 billion in the prior year while orders increased 18 percent to $3.93 billion, compared to $3.32 billion in the prior year. The company’s full-year net income rose to $184 million, from $154 million in the prior year.
“Fiscal year 2007 was a strong year for ATK and our shareholders. We achieved our growth targets; strengthened our orders backlog; and secured a decades-long future with NASA on the Ares I crew exploration vehicle,” said Dan Murphy, Chairman and CEO. “With increased visibility into 2008, we are raising our EPS, sales and orders guidance and will continue delivering on our commitment of double-digit earnings growth.”
Net earnings in the quarter included a $0.26 per share discrete tax benefit, primarily from a favorable tax settlement of prior-year audits, and an $0.18 non-cash charge related to the termination of an internal information systems project. The company determined the planned information system was insufficient to support its current business model.
The quarter also included a $0.05 per share charge related to refinancing the company’s senior debt. The transaction expands ATK’s senior debt borrowing capacity to $775 million, including $500 million of revolving capacity. The transaction also extends the maturity of the senior debt three years to March 2012, and is expected to slightly reduce the company’s borrowing costs under its senior facilities. The prior-year quarter also included debt extinguishment charges of $0.56 per share.
Cash flow from operations of $44.5 million exceeded the company’s previous expectations of approximately $35 million. The current year cash flow results include the impact of pre-funding the company’s pension as previously disclosed. The company pre-funded $300 million to its defined benefit pension plan, bringing it to near fully-funded status.
SUMMARY OF REPORTED RESULTS
The following table presents the company’s results for the fourth quarter and full year, which ended on March 31, 2007.
2
Net Sales and Income before Interest, Income Taxes, and Minority Interest
(Dollars in Millions)
External Sales:
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| Quarters Ended |
| Years Ended |
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| March 31, |
| March 31, |
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| % |
| March 31, |
| March 31, |
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|
| % |
| ||||||
|
| 2007 |
| 2006 |
| $ Change |
| Change |
| 2007 |
| 2006 |
| $ Change |
| Change |
| ||||||
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Mission Systems Group |
| $ | 355.5 |
| $ | 344.2 |
| $ | 11.3 |
| 3.3 | % | $ | 1,210.5 |
| $ | 1,157.0 |
| $ | 53.5 |
| 4.6 | % |
Ammunition Systems Group |
| 376.1 |
| 340.6 |
| 35.5 |
| 10.4 | % | 1,276.2 |
| 1,105.4 |
| 170.8 |
| 15.5 | % | ||||||
Launch Systems Group |
| 277.6 |
| 232.9 |
| 44.7 |
| 19.2 | % | 1,078.2 |
| 954.4 |
| 123.8 |
| 13.0 | % | ||||||
Total external sales |
| $ | 1,009.2 |
| $ | 917.7 |
| $ | 91.5 |
| 10.0 | % | $ | 3,564.9 |
| $ | 3,216.8 |
| $ | 348.1 |
| 10.8 | % |
Income before Interest, Income Taxes, and Minority Interest (Operating Profit):
| Quarters Ended |
| Years Ended |
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|
| March 31, |
| March 31, |
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|
| March 31, |
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| 2007 |
| 2006 |
| Change |
| 2007 |
| March 31, 2006 |
| Change |
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Mission Systems Group |
| $ | 31.0 |
| $ | 26.9 |
| $ | 4.1 |
| $ | 114.6 |
| $ | 97.4 |
| $ | 17.2 |
|
Ammunition Systems Group |
| 34.1 |
| 33.5 |
| 0.6 |
| 112.6 |
| 109.3 |
| 3.3 |
| ||||||
Launch Systems Group |
| 39.6 |
| 32.2 |
| 7.4 |
| 147.3 |
| 133.6 |
| 13.7 |
| ||||||
Corporate |
| (18.7 | ) | (2.1 | ) | (16.6 | ) | (34.8 | ) | (13.2 | ) | (21.6 | ) | ||||||
Total |
| $ | 86.0 |
| $ | 90.5 |
| $ | (4.5 | ) | $ | 339.7 |
| $ | 327.1 |
| $ | 12.6 |
|
SEGMENT RESULTS
ATK operates three principal business groups: Mission Systems Group; Ammunition Systems Group; and Launch Systems Group.
MISSION SYSTEMS GROUP
For the quarter, sales from the Mission Systems Group increased three percent to $356 million, from $344 million in the prior-year quarter. Higher sales in commercial aircraft composites; aircraft missile warning sensors; aircraft intelligence, surveillance and reconnaissance (ISR) programs; and land barrier systems contributed to the increase. These were partially offset by lower fuze sales in the company’s artillery and tank ammunition business. For the year, the Group’s sales increased five percent to $1.21 billion, from $1.16 billion in FY06.
Fourth-quarter earnings before interest and taxes (operating profit) were $31 million, compared to $27 million in the previous-year quarter. The increase primarily reflects improved profit in the Group’s technical services business, offset by higher costs for new business pursuits. Operating profit for the year was $115 million, compared to $97 million in the prior year. The increase reflects improved profit on missile defense programs, tank ammunition and aircraft ISR programs.
3
AMMUNITION SYSTEMS GROUP
Sales in the Ammunition Systems Group increased 10 percent to $376 million from $341 million in the prior-year quarter. The increase reflects higher volumes in medium-caliber gun systems and ammunition, civil ammunition and military small-caliber ammunition. For the year, sales increased by more than 15 percent to $1.28 billion, from $1.11 billion in FY06. The year-over-year increase reflects growth in medium-caliber gun systems and ammunition, civil ammunition and military small-caliber ammunition.
Fourth-quarter operating profit for the Ammunition Systems Group was $34 million, compared to $33 million in the prior-year quarter. Higher volumes of civil and military ammunition contributed to the increase, which was partially offset by increased sales in the Group’s lower-margin medium-caliber ammunition business. For the full year, operating profit was $113 million versus $109 million in the prior year. The growth of the businesses was partially offset by higher than planned TNT start-up costs.
LAUNCH SYSTEMS
Sales from the Launch Systems Group increased 19 percent to $278 million versus $233 million in the prior-year quarter. Sales growth in the quarter was driven by the increased pace of activities related to the Ares I, and commercial launch programs. The increase was partially offset by expected reductions in work scope on the Space Shuttle. For the year, sales increased 13 percent to $1.08 billion, from $954 million in the prior year. The increase reflects new sales on the Ares I program as well as strategic propulsion programs, partially offset by the expected reduction in Space Shuttle work scope.
Fourth-quarter operating profit for the Launch Systems Group rose to $40 million, compared to $32 million in the prior-year quarter. The increase was driven by additional revenue from Ares I and commercial launch programs, offset by lower Space Shuttle program volume. For the year, operating profit increased to $147 million from $134 million in the prior year. The increase is primarily due to revenue from Ares I and strategic propulsion programs.
4
CORPORATE AND OTHER
In the fourth quarter, corporate and other expenses totaled $19 million compared to $2 million in the prior-year period. For the full year, the expenses were $35 million, compared to $13 million in the prior year. The increases for the quarter and the year are primarily the result of expenses related to the previously discussed decision to terminate an internal information systems project, as well the expensing of stock options due to the adoption of SFAS 123R.
OUTLOOK
Based on the strength of sales and strong program execution across all three business Groups, ATK is raising its FY08 EPS, sales, and orders guidance. ATK now expects FY08 EPS in a range of $5.95-$6.15, up from its previous guidance of $5.80-$6.00. The company is raising its sales expectations to a range of $3.75 - $3.85 billion, up from the previous range of $3.7 - $3.8 billion. ATK expects FY08 orders to exceed $5.2 billion, up from its previous expectation of $5.0 billion. Free cash flow is expected to be approximately $260 million (see reconciliation table for details). The company expects average share count of approximately 35 million and an effective tax rate in the mid-30’s.
The company’s earnings guidance for FY08 does not include projections related to its recently announced intention to acquire Swales Aerospace. The company anticipates that the acquisition, which is expected to be slightly accretive this year, will close in the first quarter of FY08.
ATK is an advanced weapon and space systems company employing approximately 15,500 people in 21 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 these factors are: delays in NASA’s human-rated launch programs; changes in governmental spending, budgetary policies and product sourcing strategies; the company’s competitive environment; risks inherent in the development and manufacture of advanced technology; increases in commodity costs, energy prices, and production costs; the terms and timing of awards and contracts; program performance; program terminations; changes in cost estimates related to relocation of facilities; the outcome of contingencies, including litigation and
5
environmental remediation; actual pension asset returns and assumptions regarding future returns, discount rates and service costs; the availability of capital market financing; changes to accounting standards; changes in tax rules or pronouncements; economic conditions; and the company’s capital deployment strategy, including debt repayment, share repurchases, pension funding, mergers and acquisitions and any integration thereof. ATK undertakes no obligation to update any forward-looking statements. For further information on factors that could impact ATK, and statements contained herein, please refer to ATK’s most recent Annual Report on Form 10-K and any subsequent quarterly reports on Form 10-Q and current reports on Form 8-K filed with the U.S. Securities and Exchange Commission.
# # #
6
Reconciliation of Non-GAAP Financial Measures
Earnings per Share excluding impact of non-recurring items
Earnings per share excluding the impact of non-recurring items is defined as earnings per share less the impact of an internal information systems project, debt refinancing and extinguishment costs, management-change costs, restructuring costs, a favorable tax settlement for prior year audits, and resolution of tax matters. ATK management believes earnings per share excluding the impact of non-recurring items provides investors with an important perspective on the operating results of the Company. ATK management uses this measurement internally to assess business performance.
|
| Quarter Ended |
| Quarter Ended |
| % |
| Year Ended |
| Year Ended |
| % |
| ||||
|
| March 31, 2007 |
| March 31, 2006 |
| change |
| March 31, 2007 |
| March 31, 2006 |
| change |
| ||||
Earnings per share |
| $ | 1.57 |
| $ | 0.79 |
|
|
| $ | 5.32 |
| $ | 4.11 |
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|
|
Internal information systems project |
| 0.18 |
|
|
|
|
| 0.18 |
|
|
|
|
| ||||
Debt refinancing/extinguishment costs |
| 0.05 |
| 0.56 |
|
|
| 0.05 |
| 0.56 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Resolution of tax matters |
| (0.26 | ) | (0.06 | ) |
|
| (0.26 | ) | (0.18 | ) |
|
| ||||
Management-change and restructuring charges |
|
|
| 0.03 |
|
|
|
|
| 0.11 |
|
|
| ||||
Earnings per share excluding the impact of non-recurring items |
| $ | 1.54 |
| $ | 1.32 |
| 17 | % | $ | 5.29 |
| $ | 4.60 |
| 15 | % |
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.
| Projected |
| ||
|
| Year Ending |
| |
|
| March 31, 2008 |
| |
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| (in thousands) |
| |
Cash provided by operating activities |
| $ | 345,000 |
|
Capital expenditures |
| 85,000 |
| |
Free cash flow |
| $ | 260,000 |
|
7
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED INCOME STATEMENTS
|
| QUARTERS ENDED |
| YEARS ENDED |
| ||||||||
|
| March 31, |
| March 31, |
| March 31, |
| March 31, |
| ||||
(In thousands except per share data) |
| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Sales |
| $ | 1,009,166 |
| $ | 917,694 |
| $ | 3,564,940 |
| $ | 3,216,807 |
|
Cost of sales |
| 815,960 |
| 746,536 |
| 2,893,023 |
| 2,606,087 |
| ||||
Gross profit |
| 193,206 |
| 171,158 |
| 671,917 |
| 610,720 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Research and development |
| 22,521 |
| 16,405 |
| 61,533 |
| 51,506 |
| ||||
Selling |
| 29,401 |
| 25,226 |
| 96,738 |
| 82,038 |
| ||||
General and administrative |
| 55,279 |
| 38,985 |
| 173,918 |
| 150,027 |
| ||||
Total operating expenses |
| 107,201 |
| 80,616 |
| 332,189 |
| 283,571 |
| ||||
Income before interest, income taxes, and minority interest |
| 86,005 |
| 90,542 |
| 339,728 |
| 327,149 |
| ||||
Interest expense |
| (21,903 | ) | (49,134 | ) | (76,144 | ) | (100,837 | ) | ||||
Interest income |
| 469 |
| 304 |
| 1,212 |
| 1,245 |
| ||||
Income before income taxes and minority interest |
| 64,571 |
| 41,712 |
| 264,796 |
| 227,557 |
| ||||
Income tax provision |
| 10,346 |
| 12,232 |
| 80,217 |
| 73,271 |
| ||||
Income before minority interest |
| 54,225 |
| 29,480 |
| 184,579 |
| 154,286 |
| ||||
Minority interest, net of income taxes |
| 127 |
| 69 |
| 451 |
| 404 |
| ||||
Net income |
| $ | 54,098 |
| $ | 29,411 |
| $ | 184,128 |
| $ | 153,882 |
|
|
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|
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|
|
|
|
|
| ||||
Earnings per common share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 1.64 |
| $ | 0.81 |
| $ | 5.43 |
| $ | 4.19 |
|
Diluted |
| 1.57 |
| 0.79 |
| 5.32 |
| 4.11 |
| ||||
|
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|
|
|
|
|
|
|
| ||||
Average number of common shares |
| 33,040 |
| 36,165 |
| 33,885 |
| 36,730 |
| ||||
Average number of common and dilutive shares |
| 34,553 |
| 37,085 |
| 34,591 |
| 37,402 |
|
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) |
| March 31, 2007 |
| March 31, 2006 |
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 16,093 |
| $ | 9,090 |
|
Net receivables |
| 733,304 |
| 738,909 |
| ||
Net inventories |
| 170,602 |
| 139,876 |
| ||
Deferred income tax assets |
| 75,333 |
| 77,848 |
| ||
Other current assets |
| 33,686 |
| 53,728 |
| ||
Total current assets |
| 1,029,018 |
| 1,019,451 |
| ||
Net property, plant, and equipment |
| 454,748 |
| 453,958 |
| ||
Goodwill |
| 1,163,186 |
| 1,163,186 |
| ||
Prepaid and intangible pension assets |
| 27,998 |
| 69,216 |
| ||
Deferred charges and other non-current assets |
| 199,732 |
| 196,169 |
| ||
Total assets |
| $ | 2,874,682 |
| $ | 2,901,980 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Cash overdrafts |
|
|
| $ | 63,036 |
| |
Current portion of long-term debt |
|
|
| 29,596 |
| ||
Accounts payable |
| $ | 153,572 |
| 165,955 |
| |
Contract advances and allowances |
| 80,904 |
| 49,667 |
| ||
Accrued compensation |
| 123,696 |
| 114,537 |
| ||
Accrued income taxes |
| 11,791 |
| 23,710 |
| ||
Other accrued liabilities |
| 133,309 |
| 224,443 |
| ||
Total current liabilities |
| 503,272 |
| 670,944 |
| ||
Long-term debt |
| 1,455,000 |
| 1,096,000 |
| ||
Deferred income tax liabilities |
| 22,278 |
| 2,909 |
| ||
Postretirement and postemployment benefits liability |
| 163,709 |
| 175,314 |
| ||
Accrued pension liability |
| 89,383 |
| 239,313 |
| ||
Other long-term liabilities |
| 83,159 |
| 89,142 |
| ||
Total liabilities |
| 2,316,801 |
| 2,273,622 |
| ||
Contingencies |
|
|
|
|
| ||
Common stock - $.01 par value |
|
|
|
|
| ||
Authorized - 90,000,000 shares |
|
|
|
|
| ||
Issued and outstanding 33,075,268 shares at March 31, 2007 and 35,207,335 at March 31, 2006 |
| 331 |
| 352 |
| ||
Additional paid-in-capital |
| 477,554 |
| 472,861 |
| ||
Retained earnings |
| 1,112,649 |
| 928,521 |
| ||
Unearned compensation |
| — |
| (2,760 | ) | ||
Accumulated other comprehensive loss |
| (424,075 | ) | (333,136 | ) | ||
Common stock in treasury, at cost, 8,479,793 shares held at March 31, 2007 and 6,347,726 at March 31, 2006 |
| (608,578 | ) | (437,480 | ) | ||
Total stockholders’ equity |
| 557,881 |
| 628,358 |
| ||
Total liabilities and stockholders’ equity |
| $ | 2,874,682 |
| $ | 2,901,980 |
|
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| YEARS ENDED |
| ||||
(In thousands) |
| March 31, 2007 |
| March 31, 2006 |
| ||
Operating activities |
|
|
|
|
| ||
Net income |
| $ | 184,128 |
| $ | 153,882 |
|
Adjustments to net income to arrive at cash provided by operating activities: |
|
|
|
|
| ||
Depreciation |
| 69,380 |
| 69,589 |
| ||
Amortization of intangible assets |
| 6,772 |
| 8,745 |
| ||
Amortization of deferred financing costs |
| 3,999 |
| 3,764 |
| ||
Loss on extinguishment of debt |
| — |
| 18,849 |
| ||
Deferred income taxes |
| 81,725 |
| 9,523 |
| ||
Loss on disposal of property |
| 9,295 |
| 374 |
| ||
Minority interest, net of income taxes |
| 451 |
| 404 |
| ||
Share-based plans expense |
| 38,076 |
| 21,256 |
| ||
Excess tax benefits from share-based plans |
| (3,539 | ) | — |
| ||
Changes in assets and liabilities: |
|
|
|
|
| ||
Net receivables |
| 5,605 |
| (113,776 | ) | ||
Net inventories |
| (30,726 | ) | (17,459 | ) | ||
Accounts payable |
| (12,514 | ) | 15,938 |
| ||
Contract advances and allowances |
| 31,237 |
| 17,950 |
| ||
Accrued compensation |
| 5,470 |
| 15,466 |
| ||
Accrued income taxes |
| (5,312 | ) | 29,491 |
| ||
Pension and other postretirement benefits |
| (348,303 | ) | 9,109 |
| ||
Other assets and liabilities |
| 8,724 |
| (26,458 | ) | ||
Cash provided by operating activities |
| 44,468 |
| 216,647 |
| ||
Investing activities |
|
|
|
|
| ||
Capital expenditures |
| (81,086 | ) | (65,352 | ) | ||
Proceeds from the disposition of property, plant, and equipment |
| 603 |
| 1,781 |
| ||
Cash used for investing activities |
| (80,483 | ) | (63,571 | ) | ||
Financing activities |
|
|
|
|
| ||
Change in cash overdrafts |
| (63,036 | ) | 56,944 |
| ||
Payments made on bank debt |
| (20,250 | ) | (27,000 | ) | ||
Payments made to extinguish debt |
| (225,346 | ) | (663,957 | ) | ||
Proceeds from issuance of long-term debt |
| 575,000 |
| 670,000 |
| ||
Premium to extinguish debt |
| — |
| (18,849 | ) | ||
Purchase of call options |
| (50,850 | ) | — |
| ||
Sale of warrants |
| 23,220 |
| — |
| ||
Payments made for debt issue costs |
| (10,564 | ) | (7,993 | ) | ||
Net purchase of treasury shares |
| (208,027 | ) | (189,860 | ) | ||
Proceeds from employee stock compensation plans |
| 19,332 |
| 23,957 |
| ||
Excess tax benefits from share-based plans |
| 3,539 |
| — |
| ||
Cash provided by (used for) financing activities |
| 43,018 |
| (156,758 | ) | ||
Increase (decrease) in cash and cash equivalents |
| 7,003 |
| (3,682 | ) | ||
Cash and cash equivalents - beginning of period |
| 9,090 |
| 12,772 |
| ||
Cash and cash equivalents - end of period |
| $ | 16,093 |
| $ | 9,090 |
|