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: |
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 3rd Quarter 2008 Earnings Per Share of $1.65
Sales Rise 17 Percent to $1.1 Billion — Organic Sales Up 13 percent
Third Quarter Net Income Rises 14 Percent to $58 million
ATK Increases FY08 Full-Year EPS Guidance to Range of $6.25 - $6.35
ATK Establishes FY09 EPS Range of $7.10 - $7.30 — a 12-17 percent Increase Over Anticipated FY08 Results
FY09 Sales Expected to Reach Approximately $4.5 Billion
Minneapolis, January 31, 2008 — Alliant Techsystems (NYSE: ATK) reported today that earnings per share (EPS) in the third quarter of fiscal year 2008 (FY08), which ended on December 30, 2007, were $1.65. EPS was up 16 percent compared to the prior-year quarter, excluding an 11-cent benefit recorded in the prior-year quarter due to the extension of the Federal research and development tax credit (see reconciliation table).
Sales in the quarter rose 17 percent to $1.1 billion. Organic sales in the quarter were up 13 percent. The company reported net income of $58 million, a 14 percent increase over the prior-year period, and continued margin improvements to 10.5 percent versus 10.2 percent in the prior year. Orders in the quarter were $670 million, bringing year-to-date orders to $4.3 billion compared to $2.4 billion at this time a year ago. The company continues to expect FY08 orders of approximately $6.0 billion.
“Our shareholders enjoyed another exceptional quarter and the company is well positioned to deliver the results they have come to expect — double digit EPS growth and strong organic sales growth,” said Dan Murphy, Chairman and CEO. “Looking ahead to FY09, our strategy of affordable innovation for our customers will continue to deliver on these expectations.”
Earnings per share for the first nine months of FY08 rose 23 percent to $4.60 versus $3.74 in the prior year. Sales for the first nine months rose 19 percent to slightly more than $3.0 billion compared to $2.56 billion in the prior year. Net income was $162 million, a 25 percent increase over the prior-year period, and operating margins were 10.4 percent versus 9.9 in the prior year. Year-to-date free cash flow generated was $133 million compared to $106 million used in the prior year (see reconciliation table). The improvement in free cash flow reflects the company’s prior-year decision to prefund its pension plan, and increased profitability in the current year.
SUMMARY OF REPORTED RESULTS
The following table presents the company’s results for the year to date and third quarter ending December 30, 2007 (in thousands).
External Sales:
| Quarters Ended |
| Nine Months Ended |
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| December 30, 2007 |
| December 31, 2006 |
| $ Change |
| % Change |
| December 30, 2007 |
| December 31, 2006 |
| $ Change |
| % Change |
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ATK Ammunition Systems | $ | 381,313 |
| $ | 330,549 |
| $ | 50,764 |
| 15.4 | % | $ | 1,071,512 |
| $ | 900,136 |
| $ | 171,376 |
| 19.0 | % |
ATK Launch Systems | 307,758 |
| 273,779 |
| 33,979 |
| 12.4 | % | 931,074 |
| 800,637 |
| 130,437 |
| 16.3 | % | ||||||
ATK Mission Systems | 365,794 |
| 299,475 |
| 66,319 |
| 22.1 | % | 1,039,996 |
| 855,898 |
| 184,098 |
| 21.5 | % | ||||||
Total external sales | $ | 1,054,865 |
| $ | 903,803 |
| $ | 151,062 |
| 16.7 | % | $ | 3,042,582 |
| $ | 2,556,671 |
| $ | 458,911 |
| 19.0 | % |
Income before Interest, Income Taxes, and Minority Interest (Operating Profit):
| Quarters Ended |
| Nine Months Ended |
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| December 30, 2007 |
| December 31, 2006 |
| $ Change |
| % Change |
| December 30, 2007 |
| December 31, 2006 |
| $ Change |
| % Change |
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ATK Ammunition Systems | $ | 37,261 |
| $ | 32,536 |
| $ | 4,725 |
| 14.5 | % | $ | 98,320 |
| $ | 78,550 |
| $ | 19,770 |
| 25.2 | % |
ATK Launch Systems | 43,317 |
| 34,611 |
| 8,706 |
| 25.2 | % | 131,469 |
| 107,684 |
| 23,785 |
| 22.1 | % | ||||||
ATK Mission Systems | 36,666 |
| 30,054 |
| 6,612 |
| 22.0 | % | 105,171 |
| 83,545 |
| 21,626 |
| 25.9 | % | ||||||
Corporate | (6,688 | ) | (4,775 | ) | (1,913 | ) |
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| (17,825 | ) | (16,056 | ) | (1,769 | ) |
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Total | $ | 110,556 |
| $ | 92,426 |
| $ | 18,130 |
| 19.6 | % | $ | 317,135 |
| $ | 253,723 |
| $ | 63,412 |
| 25.0 | % |
SEGMENT RESULTS
ATK operates three principal business groups: Ammunition Systems; Launch Systems; and Mission Systems.
ATK AMMUNITION SYSTEMS
Sales in the Ammunition Systems group increased by 15 percent to $381 million compared to $331 million in the prior-year quarter. The increase reflects strong sales growth in the company’s civil ammunition and medium-caliber systems businesses.
Earnings before interest, taxes, and minority interest (operating profit) rose 15 percent to $37 million from $33 million in the prior-year quarter, reflecting higher sales and lower pension expenses. For the full-year, ATK continues to expect margins in the Ammunition Systems group in the mid-nine percent range.
ATK LAUNCH SYSTEMS
Sales in the Launch Systems group rose 12 percent to $308 million compared to $274 million in the prior-year quarter. The increase reflects higher sales in the first-stage and launch abort systems of the Ares I program. These were partially offset by anticipated lower sales in strategic missile programs.
Operating profit in the Launch Systems group rose by 25 percent to $43 million from $35 million in the prior-year quarter. The increase reflects higher sales on the Ares I program, the previously-forecasted, favorable resolution of certain prior-year overhead rate matters, and lower pension expenses. ATK continues to expect margins for the full year in the Launch Systems group to approach 14 percent.
ATK MISSION SYSTEMS
Sales in the Mission Systems group rose 22 percent to $366 million from $299 million in the prior-year quarter. Organic sales rose 10 percent, driven by the strength of sales in defense electronics, the Ares I Attitude Control Motor, and satellite subsystems. Sales from the acquisition of Swales Aerospace added $38 million to revenue.
Operating profit increased 22 percent to $37 million from $30 million in the prior-year quarter. The increase reflects higher sales (both organic and from the Swales acquisition), improved margins in defense electronics, and lower pension expenses. ATK continues to expect full-year margins in the Mission Systems group of approximately 10 percent.
CORPORATE AND OTHER
In the third quarter, corporate and other expenses totaled $6.7 million compared to $4.8 million in the prior-year period.
OUTLOOK
Based on continued strength in all three business groups and increasing visibility into the company’s full-year performance, ATK is raising its full-year FY08 EPS guidance to a range of $6.25 - $6.35. The company’s previous guidance was a range of $6.20 - $6.30. The company continues to expect full-year sales in excess of $4.1 billion.
For the year, the company continues to expect an average share count of approximately 35.5 million shares. 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 includes capital expenditures approaching $100 million (see reconciliation table for details).
ATK is establishing FY09 guidance for EPS, sales and free cash flow. The company expects FY09 EPS in the range of $7.10 - $7.30, a 12-17 percent increase over anticipated FY08 performance and in line with the company’s commitment to double-digit EPS growth. The company also expects to generate sales of approximately $4.5 billion, in line with organic growth expectations of 8 -10 percent. ATK expects to generate free cash flow of approximately $260 million (see reconciliation table for details).
The FY08 and FY09 guidance the company is issuing today does not include any revenue, EBIT or free cash flow from the company’s previously announced acquisition of MDA’s space businesses. The company expects the transaction to close in the first quarter of FY09, be neutral to EPS during the year, and accretive thereafter.
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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| Nine Months |
| Nine Months |
| Projected |
| Projected |
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Cash (used for) provided by operating activities |
| $ | (52,701 | ) | $ | 197,315 |
| $ | 360,000 |
| $ | 370,000 |
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Capital expenditures |
| (52,990 | ) | (63,959 | ) | (100,000 | ) | (110,000 | ) | ||||
Free cash flow |
| $ | (105,691 | ) | $ | 133,356 |
| $ | 260,000 |
| $ | 260,000 |
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Adjusted Non-GAAP Net Income
Adjusted non-GAAP net income is defined as net income adjusted for the income tax benefit for prior periods as a result of R&D tax credit extension. ATK management believes adjusted non-GAAP net income provides investors with an important perspective on the results of ATK’s earnings.
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| Quarter Ended |
| Quarter Ended |
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GAAP net income |
| $ | 51,230 |
| $ | 1.53 |
| $ | 58,330 |
| $ | 1.65 |
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Income tax benefit for prior periods as a result of the R&D tax credit extension |
| (3,856 | ) | (0.11 | ) | — |
| — |
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Adjusted Non-GAAP net income |
| $ | 47,374 |
| $ | 1.42 |
| $ | 58,330 |
| $ | 1.65 |
| 16 | % |
ATK is an advanced weapon and space systems company with annual revenues in excess of $4.1 billion that employs approximately 17,000 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: assumptions relating to the closing of the recently announced acquisition of MDA’s Information Systems and Geospatial Services businesses including the timing of the transaction, financing, and transaction costs; 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 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
(In thousands except per share data) |
| QUARTERS ENDED |
| NINE MONTHS ENDED |
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| December 30, |
| December 31, |
| December 30, |
| December 31, |
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| 2007 |
| 2006 |
| 2007 |
| 2006 |
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Sales |
| $ | 1,054,865 |
| $ | 903,803 |
| $ | 3,042,582 |
| $ | 2,556,671 |
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Cost of sales |
| 842,201 |
| 732,674 |
| 2,439,359 |
| 2,067,718 |
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Gross profit |
| 212,664 |
| 171,129 |
| 603,223 |
| 488,953 |
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Operating expenses: |
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Research and development |
| 14,360 |
| 13,461 |
| 44,368 |
| 39,012 |
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Selling |
| 31,639 |
| 20,609 |
| 92,430 |
| 69,391 |
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General and administrative |
| 56,109 |
| 44,633 |
| 149,290 |
| 126,827 |
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Total operating expenses |
| 102,108 |
| 78,703 |
| 286,088 |
| 235,230 |
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Income before interest, income taxes, and minority interest |
| 110,556 |
| 92,426 |
| 317,135 |
| 253,723 |
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Interest expense |
| (18,659 | ) | (19,555 | ) | (64,011 | ) | (54,241 | ) | ||||
Interest income |
| 306 |
| 199 |
| 1,006 |
| 743 |
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Income before income taxes and minority interest |
| 92,203 |
| 73,070 |
| 254,130 |
| 200,225 |
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Income tax provision |
| 33,716 |
| 21,734 |
| 91,800 |
| 69,871 |
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Income before minority interest |
| 58,487 |
| 51,336 |
| 162,330 |
| 130,354 |
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Minority interest, net of income taxes |
| 157 |
| 106 |
| 421 |
| 324 |
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Net income |
| $ | 58,330 |
| $ | 51,230 |
| $ | 161,909 |
| $ | 130,030 |
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Earnings per common share: |
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Basic |
| $ | 1.79 |
| $ | 1.55 |
| $ | 4.91 |
| $ | 3.81 |
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Diluted |
| 1.65 |
| 1.53 |
| 4.60 |
| 3.74 |
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Average number of common shares |
| 32,626 |
| 32,953 |
| 32,980 |
| 34,169 |
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Average number of common and dilutive shares |
| 35,434 |
| 33,556 |
| 35,205 |
| 34,749 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) |
| December 30, 2007 |
| March 31, 2007 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 26,663 |
| $ | 16,093 |
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Net receivables |
| 838,872 |
| 733,304 |
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Net inventories |
| 226,515 |
| 170,602 |
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Deferred income tax assets |
| 61,842 |
| 75,333 |
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Other current assets |
| 31,558 |
| 33,686 |
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Total current assets |
| 1,185,450 |
| 1,029,018 |
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Net property, plant, and equipment |
| 468,332 |
| 454,748 |
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Goodwill |
| 1,236,350 |
| 1,163,186 |
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Prepaid and intangible pension assets |
| 58,230 |
| 27,998 |
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Deferred charges and other non-current assets |
| 191,985 |
| 199,732 |
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Total assets |
| $ | 3,140,347 |
| $ | 2,874,682 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Cash overdrafts |
| $ | 32,220 |
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Current portion of long-term debt |
| 480,000 |
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Accounts payable |
| 165,078 |
| $ | 153,572 |
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Contract advances and allowances |
| 79,597 |
| 80,904 |
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Accrued compensation |
| 116,326 |
| 123,696 |
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Accrued income taxes |
| 27,146 |
| 11,791 |
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Other accrued liabilities |
| 168,204 |
| 133,309 |
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Total current liabilities |
| 1,068,571 |
| 503,272 |
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Long-term debt |
| 999,000 |
| 1,455,000 |
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Deferred income tax liabilities |
| 51,072 |
| 22,278 |
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Postretirement and postemployment benefits liabilities |
| 155,465 |
| 163,709 |
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Accrued pension liability |
| 65,816 |
| 89,383 |
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Other long-term liabilities |
| 102,104 |
| 83,159 |
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Total liabilities |
| 2,442,028 |
| 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 32,734,373 shares at |
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December 30, 2007 and 33,075,268 at March 31, 2007 |
| 327 |
| 331 |
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Additional paid-in-capital |
| 459,463 |
| 477,554 |
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Retained earnings |
| 1,255,485 |
| 1,112,649 |
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Accumulated other comprehensive loss |
| (359,556 | ) | (424,075 | ) | ||
Common stock in treasury, at cost, 8,820,688 shares held at |
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December 30, 2007 and 8,479,793 at March 31, 2007 |
| (657,400 | ) | (608,578 | ) | ||
Total stockholders’ equity |
| 698,319 |
| 557,881 |
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Total liabilities and stockholders’ equity |
| $ | 3,140,347 |
| $ | 2,874,682 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASHFLOWS
(In thousands) |
| NINE MONTHS ENDED |
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| December 30, 2007 |
| December 31, 2006 |
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Operating activities |
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Net income |
| $ | 161,909 |
| $ | 130,030 |
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Adjustments to net income to arrive at cash |
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Depreciation |
| 52,988 |
| 51,347 |
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Amortization of intangible assets |
| 4,420 |
| 5,537 |
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Amortization of deferred financing costs |
| 3,145 |
| 2,814 |
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Write-off of debt issuance costs associated with convertible notes |
| 5,600 |
| — |
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Deferred income taxes |
| 4,858 |
| 53,184 |
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Loss on disposal of property |
| 2,433 |
| 124 |
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Minority interest, net of income taxes |
| 421 |
| 324 |
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Share-based plans expense |
| 17,751 |
| 27,268 |
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Excess tax benefits from share-based plans |
| (8,836 | ) | (2,114 | ) | ||
Changes in assets and liabilities: |
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Net receivables |
| (67,411 | ) | (63,346 | ) | ||
Net inventories |
| (53,755 | ) | (37,928 | ) | ||
Accounts payable |
| 4,537 |
| (13,906 | ) | ||
Contract advances and allowances |
| (1,307 | ) | 26,715 |
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Accrued compensation |
| (33,055 | ) | (14,219 | ) | ||
Accrued income taxes |
| 50,378 |
| 13,336 |
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Pension and other postretirement benefits |
| 26,218 |
| (272,657 | ) | ||
Other assets and liabilities |
| 27,021 |
| 40,790 |
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Cash provided by (used for) operating activities |
| 197,315 |
| (52,701 | ) | ||
Investing activities |
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Capital expenditures |
| (63,959 | ) | (52,990 | ) | ||
Acquisition of business |
| (101,195 | ) | — |
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Proceeds from the disposition of property, plant, and equipment |
| 292 |
| 572 |
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Cash used for investing activities |
| (164,862 | ) | (52,418 | ) | ||
Financing activities |
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Change in cash overdrafts |
| 32,220 |
| (61,496 | ) | ||
Net borrowings on line of credit |
| 24,000 |
| 125,000 |
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Payments made on bank debt |
| — |
| (20,250 | ) | ||
Payments made to extinguish debt |
| — |
| (2,596 | ) | ||
Proceeds from issuance of long-term debt |
| — |
| 300,000 |
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Purchase of call options |
| — |
| (50,850 | ) | ||
Sale of warrants |
| — |
| 23,220 |
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Payments made for debt issue costs |
| (102 | ) | (7,478 | ) | ||
Net purchase of treasury shares |
| (100,068 | ) | (208,027 | ) | ||
Proceeds from employee stock compensation plans |
| 13,231 |
| 15,067 |
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Excess tax benefits from share-based plans |
| 8,836 |
| 2,114 |
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Cash (used for) provided by financing activities |
| (21,883 | ) | 114,704 |
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Increase in cash and cash equivalents |
| 10,570 |
| 9,585 |
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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 |
| $ | 26,663 |
| $ | 18,675 |
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