Exhibit 99.1
News Release |
| Corporate Communications |
| Phone: 952-351-3087 |
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 Reports Strong FY08 Fourth Quarter and Year-End Earnings
Raises FY09 EPS Guidance to $7.15 - $7.35
Fourth Quarter Earnings Per Share up 17 Percent to $1.83; Full Year Earnings Per Share up 21 Percent to $6.43
Fourth Quarter Net Income up 19 Percent to $64 Million; Full Year Net Income up 23 percent to $226 Million
Fourth Quarter Sales up 12 Percent to More Than $1.1 Billion; Full Year Sales up 17 Percent to $4.2 Billion
FY08 Orders Reach Record $6.5 Billion; Free Cash Exceeds $280 Million
Minneapolis, May 8, 2008 – Alliant Techsystems (NYSE: ATK) reported today that earnings per share (EPS) in the fourth quarter of fiscal year 2008, which ended on March 31, rose 17 percent over the prior-year quarter to $1.83. Sales for the quarter surpassed $1.1 billion, a 12 percent increase over the prior-year quarter. Net income for the quarter rose 19 percent to $64 million.
For the full-year, EPS increased 21 percent to $6.43 and sales were up 17 percent to $4.2 billion. The company reported full-year net income of $226 million, a 23 percent increase compared to the prior year, and year-end free cash flow of $282 million (see reconciliation table for details). The company recorded record orders for the year of $6.5 billion. Full-year margins increased to 10.5 percent, up from 9.5 percent in the prior year.
“2008 was another strong year for our company and our shareholders,” said Dan Murphy, Chairman and CEO. “Our success in FY08 and the strength of our orders profile position us for continued double-digit earnings growth in FY09 and beyond.”
SUMMARY OF REPORTED RESULTS
The following table presents the company’s results for fiscal year 2008 and the fourth quarter ending March 31, 2008 (in thousands).
External Sales:
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| Quarters Ended |
| Years Ended |
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| March 31, |
| March 31, 2007 |
| $ Change |
| % |
| March 31, |
| March 31, 2007 |
| $ Change |
| % |
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ATK Armament Systems |
| $ | 405,204 |
| $ | 376,092 |
| $ | 29,112 |
| 7.7 | % | $ | 1,476,716 |
| $ | 1,276,228 |
| $ | 200,488 |
| 15.7 | % |
ATK Launch Systems |
| 286,387 |
| 277,557 |
| 8,830 |
| 3.2 | % | 1,217,461 |
| 1,078,194 |
| 139,267 |
| 12.9 | % | ||||||
ATK Mission Systems |
| 437,552 |
| 354,752 |
| 82,800 |
| 23.3 | % | 1,477,548 |
| 1,210,650 |
| 266,898 |
| 22.0 | % | ||||||
Total external sales |
| $ | 1,129,143 |
| $ | 1,008,401 |
| $ | 120,742 |
| 12.0 | % | $ | 4,171,725 |
| $ | 3,565,072 |
| $ | 606,653 |
| 17.0 | % |
Income before Interest, Income Taxes, and Minority Interest (Operating Profit):
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| Quarters Ended |
| Years Ended |
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| March 31, 2008 |
| March 31, 2007 |
| $ Change |
| % |
| March 31, 2008 |
| March 31, 2007 |
| $ Change |
| % |
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ATK Armament Systems |
| $ | 41,283 |
| $ | 34,064 |
| $ | 7,219 |
| 21.2 | % | $ | 139,603 |
| $ | 112,614 |
| $ | 26,989 |
| 24.0 | % |
ATK Launch Systems |
| 40,388 |
| 39,656 |
| 732 |
| 1.8 | % | 171,857 |
| 147,340 |
| 24,517 |
| 16.6 | % | ||||||
ATK Mission Systems |
| 44,995 |
| 31,021 |
| 13,974 |
| 45.0 | % | 150,166 |
| 114,566 |
| 35,600 |
| 31.1 | % | ||||||
Corporate |
| (6,706 | ) | (18,736 | ) | 12,030 |
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| (24,531 | ) | (34,792 | ) | 10,261 |
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Total |
| $ | 119,960 |
| $ | 86,005 |
| $ | 33,955 |
| 39.5 | % | $ | 437,095 |
| $ | 339,728 |
| $ | 97,367 |
| 28.7 | % |
SEGMENT RESULTS
In FY08, ATK operated three principal business groups: Armament Systems (formerly known as Ammunition Systems); Launch Systems; and Mission Systems.
ATK ARMAMENT SYSTEMS
On April 1, the Ammunition Systems group name changed to the Armament Systems group. This change reflects the breadth of the group’s business, which includes ammunition, medium-caliber gun systems, energetics, and accessories. Sales in the group increased eight percent to $405 million compared to $376 million in the prior-year quarter. The increase reflects continued strength in civil ammunition.
Earnings before interest, taxes, and minority interest (operating profit) rose 21 percent to $41 million from $34 million in the prior-year quarter, reflecting higher sales volume in civil ammunition, lower pension expenses, and the absence of prior-year costs associated with an energetics program. These were partially offset by higher raw material costs.
For the full year, sales in the Armament Systems group increased 16 percent to $1.5 billion compared to $1.3 billion in the prior year. Operating profit for the year increased 24 percent to $140 million, from $113 million in FY07.
ATK LAUNCH SYSTEMS
Sales in the Launch Systems group rose three percent to $286 million compared to $278 million in the prior-year quarter. The increase reflects higher sales in NASA programs, partially offset by anticipated lower sales in strategic propulsion programs. Operating profit was $40 million, up approximately $1 million from the prior-year quarter due to higher sales volume and lower pension expenses.
For the full year, sales in the Launch Systems group rose 13 percent to $1.2 billion, up from $1.1 billion in the prior year. Full-year operating profit rose 17 percent to $172 million compared to $147 million in the prior year.
ATK MISSION SYSTEMS
Sales in the Mission Systems group rose 23 percent to $438 million from $355 million in the prior-year quarter. Organic sales rose 10 percent, driven primarily by Ares I, advanced weapons, and composite structure sales. Sales from the acquisition of Swales Aerospace added $48 million to revenue, including revenue from a NASA service contract which is nearly complete. Operating profit increased sharply to $45 million, a 45 percent rise from the $31 million recorded in the prior-year quarter. The increase reflects higher organic sales, additional sales from Swales Aerospace and the absence of a one-time discretionary expense related to the pursuit of an advanced weapons program, and lower pension expenses.
For the full year, sales in the Mission Systems group rose 22 percent to $1.5 billion, compared to $1.2 billion in the prior year. Organic sales increased 11 percent while sales from the acquisition of Swales Aerospace contributed $134 million. Full-year operating profit rose 31 percent to $150 million from $115 million in the prior year.
CORPORATE AND OTHER
In the fourth quarter, corporate and other expenses totaled $7 million compared to $19 million in the prior-year period. The decrease was primarily the result of prior-year expenses related to the termination of an internal information system.
For the full year, corporate and other expenses totaled $25 million, compared to $35 million in the previous year. The decrease resulted from the same factors that drove the quarterly expenses.
OUTLOOK
The FY08 fourth-quarter and year-end results announced today do not include potential charges related to the previously announced intention to acquire the Information Systems and Geospatial businesses of McDonald, Dettwiler and Associates. If the transaction does not close, ATK could incur a charge for transaction-related expenses that could be applied to the fourth quarter. Additionally, the company’s FY09 guidance does not include any revenue, EBIT or free cash flow from the potential MDA acquisition.
ATK is raising its FY09 EPS guidance to a range of $7.15 - $7.35, up from its previous guidance of $7.10 - $7.30. The company continues to expect sales of approximately $4.5 billion, in line with long-term organic growth rates of 8-10 percent. Based primarily on increased operating efficiencies, with additional benefit from reduced pension expenses, the company projects FY09 operating margins to approach 11 percent.
In FY09, the company expects its average share count to be slightly more than 36 million. The effective tax rate for the year is expected to be approximately 37 percent. The tax rate assumes that the Federal R&D tax credit will be extended retroactively. Pension expenses are expected to be approximately $40 million. Capital expenditures in FY09 are anticipated to be approximately $115 million. ATK expects to generate free cash flow of approximately $260 million (see reconciliation table for details).
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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| Year Ended |
| Projected |
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Cash provided by operating activities |
| $ | 382,751 |
| $ | ~375,000 |
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Capital expenditures |
| (100,709 | ) | ~(115,000 | ) | ||
Free cash flow |
| $ | 282,042 |
| $ | ~260,000 |
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ATK is a premier aerospace and defense company with more than 17,000 employees in 21 states and over $4.5 billion in revenue. 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.
# # #
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED INCOME STATEMENTS
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| QUARTERS ENDED |
| YEARS ENDED |
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| March 31, |
| March 31, |
| March 31, |
| March 31, |
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(In thousands except per share data) |
| 2008 |
| 2007 |
| 2008 |
| 2007 |
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Sales |
| $ | 1,129,143 |
| $ | 1,008,401 |
| $ | 4,171,725 |
| $ | 3,565,072 |
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Cost of sales |
| 886,051 |
| 810,993 |
| 3,325,410 |
| 2,878,711 |
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Gross profit |
| 243,092 |
| 197,408 |
| 846,315 |
| 686,361 |
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Operating expenses: |
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Research and development |
| 23,965 |
| 22,521 |
| 68,333 |
| 61,533 |
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Selling |
| 38,638 |
| 30,296 |
| 131,068 |
| 99,687 |
| ||||
General and administrative |
| 60,529 |
| 58,586 |
| 209,819 |
| 185,413 |
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Total operating expenses |
| 123,132 |
| 111,403 |
| 409,220 |
| 346,633 |
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Income before interest, income taxes, and minority interest |
| 119,960 |
| 86,005 |
| 437,095 |
| 339,728 |
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Interest expense |
| (17,567 | ) | (21,903 | ) | (81,578 | ) | (76,144 | ) | ||||
Interest income |
| 425 |
| 469 |
| 1,431 |
| 1,212 |
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Income before income taxes and minority interest |
| 102,818 |
| 64,571 |
| 356,948 |
| 264,796 |
| ||||
Income tax provision |
| 38,506 |
| 10,346 |
| 130,306 |
| 80,217 |
| ||||
Income before minority interest |
| 64,312 |
| 54,225 |
| 226,642 |
| 184,579 |
| ||||
Minority interest, net of income taxes |
| (45 | ) | 127 |
| 376 |
| 451 |
| ||||
Net income |
| $ | 64,357 |
| $ | 54,098 |
| $ | 226,266 |
| $ | 184,128 |
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Earnings per common share: |
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Basic |
| $ | 1.97 |
| $ | 1.64 |
| $ | 6.87 |
| $ | 5.43 |
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Diluted |
| 1.83 |
| 1.57 |
| 6.43 |
| 5.32 |
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Average number of common shares |
| 32,682 |
| 33,040 |
| 32,924 |
| 33,885 |
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Average number of common and dilutive shares |
| 35,112 |
| 34,553 |
| 35,208 |
| 34,591 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) |
| March 31, 2008 |
| March 31, 2007 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 119,773 |
| $ | 16,093 |
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Net receivables |
| 797,988 |
| 733,304 |
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Net inventories |
| 205,825 |
| 170,602 |
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Deferred income tax assets |
| 88,282 |
| 75,333 |
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Other current assets |
| 35,568 |
| 33,686 |
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Total current assets |
| 1,247,436 |
| 1,029,018 |
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Net property, plant, and equipment |
| 492,336 |
| 454,748 |
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Goodwill |
| 1,236,196 |
| 1,163,186 |
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Prepaid and intangible pension assets |
| 25,280 |
| 27,998 |
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Deferred charges and other non-current assets |
| 201,034 |
| 199,732 |
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Total assets |
| $ | 3,202,282 |
| $ | 2,874,682 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
| $ | 215,755 |
| $ | 153,572 |
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Contract advances and allowances |
| 81,624 |
| 80,904 |
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Accrued compensation |
| 147,287 |
| 123,696 |
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Accrued income taxes |
| 44,329 |
| 11,791 |
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Other accrued liabilities |
| 144,060 |
| 133,309 |
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Total current liabilities |
| 633,055 |
| 503,272 |
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Long-term debt |
| 1,455,000 |
| 1,455,000 |
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Deferred income tax liabilities |
| 38,316 |
| 22,278 |
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Postretirement and postemployment benefits liabilities |
| 138,378 |
| 163,709 |
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Accrued pension liability |
| 84,267 |
| 89,383 |
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Other long-term liabilities |
| 108,238 |
| 83,159 |
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Total liabilities |
| 2,457,254 |
| 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 32,795,800 shares at |
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March 31, 2008 and 33,075,268 at March 31, 2007 |
| 328 |
| 331 |
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Additional paid-in-capital |
| 467,857 |
| 477,554 |
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Retained earnings |
| 1,319,844 |
| 1,112,649 |
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Accumulated other comprehensive loss |
| (376,636 | ) | (424,075 | ) | ||
Common stock in treasury, at cost, 8,759,261 shares held at |
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March 31, 2008 and 8,479,793 at March 31, 2007 |
| (666,365 | ) | (608,578 | ) | ||
Total stockholders’ equity |
| 745,028 |
| 557,881 |
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Total liabilities and stockholders’ equity |
| $ | 3,202,282 |
| $ | 2,874,682 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| YEARS ENDED |
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(In thousands) |
| March 31, 2008 |
| March 31, 2007 |
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Operating activities |
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Net income |
| $ | 226,266 |
| $ | 184,128 |
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Adjustments to net income to arrive at cash |
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provided by operating activities: |
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Depreciation |
| 71,511 |
| 69,380 |
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Amortization of intangible assets |
| 5,975 |
| 6,772 |
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Amortization of deferred financing costs |
| 3,851 |
| 3,999 |
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Write-off of debt issuance costs associated with convertible notes |
| 5,600 |
| — |
| ||
Deferred income taxes |
| (15,742 | ) | 81,725 |
| ||
Loss on disposal of property |
| 2,505 |
| 9,295 |
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Minority interest, net of income taxes |
| 376 |
| 451 |
| ||
Share-based plans expense |
| 23,415 |
| 38,076 |
| ||
Excess tax benefits from share-based plans |
| (9,459 | ) | (3,539 | ) | ||
Changes in assets and liabilities: |
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Net receivables |
| (27,028 | ) | 5,605 |
| ||
Net inventories |
| (33,608 | ) | (30,726 | ) | ||
Accounts payable |
| 49,066 |
| (12,514 | ) | ||
Contract advances and allowances |
| 720 |
| 31,237 |
| ||
Accrued compensation |
| (1,143 | ) | 5,470 |
| ||
Accrued income taxes |
| 54,786 |
| (5,312 | ) | ||
Pension and other postretirement benefits |
| 32,179 |
| (348,303 | ) | ||
Other assets and liabilities |
| (6,519 | ) | 8,724 |
| ||
Cash provided by operating activities |
| 382,751 |
| 44,468 |
| ||
Investing activities |
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Capital expenditures |
| (100,709 | ) | (81,086 | ) | ||
Acquisition of business |
| (103,685 | ) | — |
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Proceeds from the disposition of property, plant, and equipment |
| 362 |
| 603 |
| ||
Cash used for investing activities |
| (204,032 | ) | (80,483 | ) | ||
Financing activities |
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Change in cash overdrafts |
| — |
| (63,036 | ) | ||
Payments made on bank debt |
| — |
| (20,250 | ) | ||
Payments made to extinguish debt |
| — |
| (225,346 | ) | ||
Proceeds from issuance of long-term debt |
| — |
| 575,000 |
| ||
Purchase of call options |
| — |
| (50,850 | ) | ||
Sale of warrants |
| — |
| 23,220 |
| ||
Payments made for debt issue costs |
| (740 | ) | (10,564 | ) | ||
Net purchase of treasury shares |
| (100,068 | ) | (208,027 | ) | ||
Proceeds from employee stock compensation plans |
| 16,310 |
| 19,332 |
| ||
Excess tax benefits from share-based plans |
| 9,459 |
| 3,539 |
| ||
Cash (used for) provided by financing activities |
| (75,039 | ) | 43,018 |
| ||
Increase in cash and cash equivalents |
| 103,680 |
| 7,003 |
| ||
Cash and cash equivalents - beginning of period |
| 16,093 |
| 9,090 |
| ||
Cash and cash equivalents - end of period |
| $ | 119,773 |
| $ | 16,093 |
|