Exhibit 99.1
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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 REPORTS STRONG FIRST QUARTER 2008 EARNINGS – UP 38 PERCENT TO |
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ATK INCREASES FY08 SALES GUIDANCE TO $4.0 - $4.1 BILLION, EPS TO $6.15 - |
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FIRST QUARTER SALES RISE 16 PERCENT TO $958 MILLION, ORDERS UP 65 |
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MARGINS RISE TO 10.6 PERCENT – REMAIN ON TRACK FOR FULL YEAR |
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FIRST QUARTER NET INCOME RISES 35 PERCENT TO $52 MILLION |
Minneapolis, August 2, 2007 – Alliant Techsystems (NYSE: ATK) reported today that earnings per share (EPS) in the first quarter of fiscal year 2008, which ended on July 1, rose 38 percent to $1.50 versus $1.09 in the prior-year quarter. Sales rose 16 percent to $958 million compared to $824 million in the prior-year quarter. Organic sales in the quarter increased 15 percent from the prior-year quarter. Orders increased 65 percent to $1.0 billion from $612 million in the previous year’s quarter. The strong orders growth was driven by increases in NASA, advanced weapons, medium-caliber ammunition, and missile defense programs.
The company reported improved margins of 10.6 percent versus 9.6 percent in the prior-year quarter and net income of $52 million, a 35 percent increase from $39 million in the prior-year quarter. The margin improvement was primarily due to reduced pension expenses and increased operating efficiencies, including supply chain management initiatives.
“ATK shareholders enjoyed a very strong start to fiscal year 2008 and we look forward to building on this momentum throughout the year,” said Dan Murphy, Chairman and CEO. “We remain focused on delivering the bottom-line results our shareholders expect through sales growth, margin improvements, and capital deployment initiatives.”
SUMMARY OF REPORTED RESULTS
The following table presents the company’s results for the first quarter, which ended on July 1, 2007.
Net Sales and Income before Interest, Income Taxes, and Minority Interest
(Dollars in Millions)
External Sales:
| Quarters Ended |
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| July 1, 2007 |
| July 2, 2006 |
| $ Change |
| % Change |
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Ammunition Systems Group |
| $ | 335.5 |
| $ | 286.9 |
| $ | 48.6 |
| 16.9 | % |
Launch Systems Group |
| 305.1 |
| 264.6 |
| 40.5 |
| 15.3 | % | |||
Mission Systems Group |
| 317.8 |
| 272.6 |
| 45.2 |
| 16.6 | % | |||
Total External Sales |
| $ | 958.4 |
| $ | 824.1 |
| $ | 134.3 |
| 16.3 | % |
Income before Interest, Income Taxes, and Minority Interest (Operating Profit):
Quarters Ended
Income before Interest, Income Taxes, and Minority Interest (Operating Profit):
| Quarters Ended |
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| July 1, 2007 |
| July 2, 2006 |
| Change |
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Ammunition Systems Group |
| $ | 28.9 |
| $ | 19.8 |
| $ | 9.1 |
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Launch Systems Group |
| 44.8 |
| 37.7 |
| 7.1 |
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Mission Systems Group |
| 33.5 |
| 27.1 |
| 6.4 |
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Corporate |
| (5.7 | ) | (5.2 | ) | (0.5 | ) | |||
Total |
| $ | 101.5 |
| $ | 79.4 |
| $ | 22.1 |
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Note: The net expense of Corporate primarily reflects expenses incurred for administrative functions that are performed centrally at the corporate headquarters (as well as stock option expenses and elimination of intercompany profits.)
SEGMENT RESULTS
ATK operates three principal business groups: Ammunition Systems Group; Launch Systems Group; and Mission Systems Group.
AMMUNITION SYSTEMS GROUP
Sales in the Ammunition Systems Group increased by 17 percent to $336 million compared to $287 million in the prior-year quarter. The increase reflects strong sales growth in the company’s civil ammunition business, as well as increased sales in military small and medium-caliber ammunition, partially offset by lower sales in energetics.
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Earnings before interest and taxes (operating profit) rose 46 percent to $29 million from $20 million in the prior-year quarter. The increase reflects higher sales volume, lower pension expenses, and increased operating efficiencies. These were partially offset by the Group’s sales mix. For the full-year, ATK continues to expect margins in the Ammunition Systems Group to be in the mid-nine percent range.
LAUNCH SYSTEMS GROUP
Sales in the Launch Systems Group rose by 15 percent to $305 million compared to $265 million in the prior year quarter. Higher sales from NASA’s Ares I program contributed to the increase, partially offset by the expected decrease of sales on the Minuteman III program.
Operating profit rose by 19 percent to $45 million from $38 million in the prior-year quarter. The increase reflects additional Ares I work, lower pension expenses, and the timing of program closeouts and incentives. ATK continues to expect margins for the full year in the Launch Systems Group of approximately 14 percent.
MISSION SYSTEMS GROUP
Sales in the Mission Systems Group rose 17 percent to $318 million from $273 million in the prior-year quarter. The increase was driven in part by higher volume in missile defense programs, increased demand for space systems content and additional aircraft intelligence, surveillance and reconnaissance work. The Group also benefited from $10 million in new sales resulting from the recently closed acquisition of Swales Aerospace.
Operating profit increased 24 percent to $34 million from $27 million in the prior-year quarter. The increase reflects higher sales volume, lower pension expenses, and operating efficiencies. These were partially offset by increased investment in strategic program pursuits. ATK continues to expect full-year margins in the Mission Systems Group of approximately 10 percent.
CORPORATE AND OTHER
In the first quarter, corporate and other expenses totaled $5.7 million compared to $5.2 million in the prior-year period.
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OUTLOOK
Based on the strength of sales across all three business Groups, ATK is raising full-year FY08 sales guidance from $3.85 - $3.95 billion, to a range of $4.0 - $4.1 billion. The company is raising EPS guidance to $6.15 - - $6.25 from the previous range of $5.95 - $6.15. Orders for the year are now expected to reach $6.0 billion, up from previous guidance of more than $5.2 billion.
For the year, the company expects an average share count of approximately 35 million. The effective tax rate for the year is expected to be approximately 36 percent while pension expenses are expected to be approximately $50 million. ATK continues to expect full-year free-cash flow of approximately $260 million which now includes an additional $10 million of operating cash, offset by a $10 million increase in capital expenditures. Capital expenditures are now expected to be approximately $95 million (see reconciliation table for details).
Reconciliation of Non-GAAP Financial Measure
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 |
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| (in thousands) |
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Cash provided by operating activities |
| $ | 355,000 |
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Capital expenditures |
| 95,000 |
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Free cash flow |
| $ | 260,000 |
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ATK is a $4.0 billion advanced weapon and space systems company employing approximately 16,500 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
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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 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.
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED INCOME STATEMENTS
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| QUARTERS ENDED |
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(In thousands except per share data) |
| July 1, |
| July 2, |
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Sales |
| $ | 958,372 |
| $ | 824,079 |
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Cost of sales |
| 766,182 |
| 665,824 |
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Gross profit |
| 192,190 |
| 158,255 |
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Operating expenses: |
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Research and development |
| 12,683 |
| 11,657 |
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Selling |
| 29,930 |
| 27,083 |
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General and administrative |
| 48,073 |
| 40,137 |
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Total operating expenses |
| 90,686 |
| 78,877 |
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Income before interest, income taxes, and minority interest |
| 101,504 |
| 79,378 |
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Interest expense |
| (19,297 | ) | (16,835 | ) | ||
Interest income |
| 284 |
| 203 |
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Income before income taxes and minority interest |
| 82,491 |
| 62,746 |
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Income tax provision |
| 29,913 |
| 23,800 |
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Income before minority interest |
| 52,578 |
| 38,946 |
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Minority interest, net of income taxes |
| 174 |
| 73 |
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Net income |
| $ | 52,404 |
| $ | 38,873 |
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Earnings per common share: |
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Basic |
| $ | 1.58 |
| $ | 1.10 |
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Diluted |
| 1.50 |
| 1.09 |
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Average number of common shares |
| 33,255 |
| 35,327 |
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Average number of common and dilutive shares |
| 34,852 |
| 35,771 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) |
| July 1, 2007 |
| March 31, 2007 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 19,359 |
| $ | 16,093 |
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Net receivables |
| 848,942 |
| 733,304 |
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Net inventories |
| 183,269 |
| 170,602 |
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Deferred income tax assets |
| 69,810 |
| 75,333 |
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Other current assets |
| 34,860 |
| 33,686 |
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Total current assets |
| 1,156,240 |
| 1,029,018 |
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Net property, plant, and equipment |
| 458,705 |
| 454,748 |
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Goodwill |
| 1,236,211 |
| 1,163,186 |
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Prepaid and intangible pension assets |
| 58,027 |
| 27,998 |
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Deferred charges and other non-current assets |
| 198,389 |
| 199,732 |
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Total assets |
| $ | 3,107,572 |
| $ | 2,874,682 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Cash overdrafts |
| $ | 22,196 |
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Accounts payable |
| 164,731 |
| $ | 153,572 |
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Contract advances and allowances |
| 72,341 |
| 80,904 |
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Accrued compensation |
| 97,502 |
| 123,696 |
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Accrued income taxes |
| 6,554 |
| 11,791 |
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Other accrued liabilities |
| 161,176 |
| 133,309 |
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Total current liabilities |
| 524,500 |
| 503,272 |
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Long-term debt |
| 1,555,000 |
| 1,455,000 |
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Deferred income tax liabilities |
| 49,049 |
| 22,278 |
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Postretirement and postemployment benefits liabilities |
| 156,505 |
| 163,709 |
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Accrued pension liability |
| 62,518 |
| 89,383 |
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Other long-term liabilities |
| 101,512 |
| 83,159 |
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Total liabilities |
| 2,449,084 |
| 2,316,801 |
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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 33,591,122 shares at July 1, 2007 and 33,075,268 at March 31, 2007 |
| 337 |
| 331 |
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Additional paid-in-capital |
| 446,452 |
| 477,554 |
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Retained earnings |
| 1,145,979 |
| 1,112,649 |
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Accumulated other comprehensive loss |
| (370,868 | ) | (424,075 | ) | ||
Common stock in treasury, at cost, 7,963,939 shares held at July 1, 2007 and 8,479,793 at March 31, 2007 |
| (563,412 | ) | (608,578 | ) | ||
Total stockholders’ equity |
| 658,488 |
| 557,881 |
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Total liabilities and stockholders’ equity |
| $ | 3,107,572 |
| $ | 2,874,682 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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| QUARTERS ENDED |
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(In thousands) |
| July 1, 2007 |
| July 2, 2006 |
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Operating activities |
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Net income |
| $ | 52,404 |
| $ | 38,873 |
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Adjustments to net income to arrive at cash used for operating activities: |
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Depreciation |
| 17,693 |
| 17,231 |
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Amortization of intangible assets |
| 1,300 |
| 2,043 |
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Amortization of deferred financing costs |
| 1,258 |
| 810 |
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Deferred income taxes |
| (761 | ) | 271 |
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Loss (gain) on disposal of property |
| 130 |
| (72 | ) | ||
Minority interest, net of income taxes |
| 174 |
| 73 |
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Share-based plans expense |
| 6,260 |
| 9,137 |
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Excess tax benefits from share-based plans |
| (7,057 | ) | (1,385 | ) | ||
Changes in assets and liabilities: |
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Net receivables |
| (77,152 | ) | (50,832 | ) | ||
Net inventories |
| (11,255 | ) | (20,104 | ) | ||
Accounts payable |
| 8,733 |
| (12,538 | ) | ||
Contract advances and allowances |
| (8,563 | ) | (4,806 | ) | ||
Accrued compensation |
| (49,690 | ) | (27,923 | ) | ||
Accrued income taxes |
| 26,367 |
| 19,288 |
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Pension and other postretirement benefits |
| 8,403 |
| 12,506 |
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Other assets and liabilities |
| 14,614 |
| 15,889 |
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Cash used for operating activities |
| (17,142 | ) | (1,539 | ) | ||
Investing activities |
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Capital expenditures |
| (17,071 | ) | (18,760 | ) | ||
Acquisition of business |
| (101,195 | ) | — |
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Proceeds from the disposition of property, plant, and equipment |
| 195 |
| 370 |
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Cash used for investing activities |
| (118,071 | ) | (18,390 | ) | ||
Financing activities |
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Change in cash overdrafts |
| 22,196 |
| (50,117 | ) | ||
Net borrowings on line of credit |
| 100,000 |
| 75,000 |
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Payments made on bank debt |
| — |
| (6,750 | ) | ||
Payments made to extinguish debt |
| — |
| (2,596 | ) | ||
Payments made for debt issue costs |
| (94 | ) | (185 | ) | ||
Net purchase of treasury shares |
| — |
| (6,147 | ) | ||
Proceeds from employee stock compensation plans |
| 9,320 |
| 11,792 |
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Excess tax benefits from share-based plans |
| 7,057 |
| 1,385 |
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Cash provided by financing activities |
| 138,479 |
| 22,382 |
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Increase in cash and cash equivalents |
| 3,266 |
| 2,453 |
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Cash and cash equivalents - beginning of period |
| 16,093 |
| 9,090 |
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Cash and cash equivalents - end of period |
| $ | 19,359 |
| $ | 11,543 |
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