Exhibit 99.1
News Release | Corporate Communications | Phone: 952-351-3087 | |
| 7480 Flying Cloud Drive | Fax: 952-351-3009 | |
| Minneapolis, MN 55344 |
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For immediate release |
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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 FY09 First Quarter Earnings — up 9 Percent to $1.64 Per Share
First Quarter Sales up 17 Percent to More Than $1.1 Billion
First Quarter Net Income Rises 10 Percent to $58 Million
ATK Raises Full-Year Sales Outlook to Approximately $4.55 Billion, Narrows Full-Year EPS to Upper End of Range at $7.25 - $7.35
Minneapolis, August 7, 2008 — Alliant Techsystems (NYSE: ATK) reported today that earnings per share (EPS) in the first quarter of fiscal year 2009, which ended on June 29, rose 9 percent from the prior-year quarter to $1.64. The quarter included charges of approximately $15 million ($9 million net of tax, or 27 cents per share) related to program performance in the company’s spacecraft structures business that are intended to correct the issues and restore it to profitability. Based on continued strength in its overall businesses, the company is raising full-year sales guidance to approximately $4.55 billion, up from previous guidance of approximately $4.5 billion, and narrowing its EPS estimate to the upper end of the range at $7.25 - $7.35.
Sales for the quarter surpassed $1.1 billion, a 17 percent increase over the prior-year quarter, while organic sales increased 12 percent. Net income for the quarter rose 10 percent to $58 million.
“I am pleased with the overall performance of our company,” said Dan Murphy, Chairman and CEO. “We are moving now to further integrate and strengthen our space operations. ATK’s full-year and long-term outlook is very strong.”
SUMMARY OF REPORTED RESULTS
The following table presents the company’s results for the first quarter of fiscal year 2009, which ended on June 29, 2008 (in thousands).
External Sales:
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| Quarters Ended |
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| June 29, |
| July 1, |
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| 2008 |
| 2007 |
| $ Change |
| Change |
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ATK Armament Systems |
| $ | 441,574 |
| $ | 335,502 |
| $ | 106,072 |
| 32 | % |
ATK Mission Systems |
| 276,503 |
| 256,465 |
| 20,038 |
| 8 | % | |||
ATK Space Systems |
| 406,788 |
| 366,405 |
| 40,383 |
| 11 | % | |||
Total external sales |
| $ | 1,124,865 |
| $ | 958,372 |
| $ | 166,493 |
| 17 | % |
Income before Interest, Income Taxes, and Minority Interest (Operating Profit):
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| Quarters Ended |
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| June 29, |
| July 1, |
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| 2008 |
| 2007 |
| $ Change |
| Change |
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ATK Armament Systems |
| $ | 44,160 |
| $ | 28,877 |
| $ | 15,283 |
| 53 | % |
ATK Mission Systems |
| 32,834 |
| 27,452 |
| 5,382 |
| 20 | % | |||
ATK Space Systems |
| 36,242 |
| 50,897 |
| (14,655 | ) | (29 | )% | |||
Corporate |
| (4,904 | ) | (5,722 | ) | 818 |
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Total |
| $ | 108,332 |
| $ | 101,504 |
| $ | 6,828 |
| 7 | % |
SEGMENT RESULTS
ATK operates three principal business groups: Armament Systems, Mission Systems, and Space Systems (the combination of the company’s former Launch Systems group and the space assets of the Mission Systems group). The company reorganized to this structure during the first quarter of FY09. The financial results reported below reflect the reorganization for both FY08 and FY09.
ATK ARMAMENT SYSTEMS
Sales in the Armament Systems group rose 32 percent to $442 million compared to $336 million in the prior-year quarter. Part of the strong start was due to the timing of $26 million in medium-caliber ammunition sales that were recorded in the first quarter rather than later in the fiscal year. Absent the timing, the increase still reflects continued strength in commercial products and military ammunition sales.
Earnings before interest, taxes, and minority interest (operating profit) rose 53 percent to $44 million from $29 million in the prior-year quarter, reflecting higher sales volume and improved profitability in commercial products and energetics, partially offset by higher raw material costs.
ATK MISSION SYSTEMS
Sales in the Mission Systems group rose eight percent to $277 million from $256 million in the prior-year quarter. The increase reflects additional work on NASA space exploration programs, growth in the group’s tactical rocket motor business and strong demand for defense electronics.
Operating profit increased 20 percent to $33 million, compared to $27 million in the prior-year quarter. The increase reflects better performance in military aircraft structures, additional volume in NASA programs and tactical rocket motors, partially offset by increased selling costs related to new business pursuits.
ATK SPACE SYSTEMS
Sales in the Space Systems group grew by 11 percent to $407 million, compared to $366 million in the prior-year quarter. The increase included a full quarter of sales from the acquisition of Swales Aerospace and continued strength in NASA and strategic programs. These were partially offset by lower volumes in spacecraft structures programs and the group’s flare and decoy business.
Operating profit was $36 million compared to $51 million in the prior-year quarter reflecting the impact of spacecraft structures performance, and increased research and development expenses.
CORPORATE AND OTHER
In the first quarter, corporate and other expenses totaled $4.9 million compared to $5.7 million in the prior-year period.
OUTLOOK
Based on better visibility into full-year performance and the continued strength of its overall businesses, ATK is raising its sales guidance to approximately $4.55 billion, up from previous expectations of approximately $4.5 billion. The company is narrowing its EPS estimate to the upper end of the range at $7.25 - $7.35. The company now expects FY09 operating margins of approximately 10.5 percent, and an effective tax rate of approximately 37 percent. Pension expenses are expected to be approximately $40 million. Capital expenditures in FY09 are now expected to approach $120 million, up from previous expectations of approximately $115 million. ATK
continues to expect to generate free cash flow of approximately $260 million that will provide the financial flexibility to execute its capital deployment strategy (see reconciliation table for details).
ATK is a premier aerospace and defense company with more than 17,000 employees in 21 states and approximately $4.6 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: delays in NASA’s human-rated launch programs; challenges faced in restoring profitability to the company’s spacecraft structures business, 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.
# # #
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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| Projected |
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| Year Ending |
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| March 31, |
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| 2009 |
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Cash provided by operating activities |
| $ | ~380,000 |
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Capital expenditures |
| ~(120,000) |
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Free cash flow |
| $ | ~260,000 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands except per share data) |
| QUARTERS ENDED |
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| June 29 |
| July 1, |
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| 2008 |
| 2007 |
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Sales |
| $ | 1,124,865 |
| $ | 958,372 |
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Cost of sales |
| 905,593 |
| 766,182 |
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Gross profit |
| 219,272 |
| 192,190 |
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Operating expenses: |
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Research and development |
| 21,721 |
| 12,683 |
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Selling |
| 38,687 |
| 29,930 |
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General and administrative |
| 50,532 |
| 48,073 |
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Total operating expenses |
| 110,940 |
| 90,686 |
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Income before interest, income taxes, and minority interest |
| 108,332 |
| 101,504 |
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Interest expense |
| (16,709 | ) | (19,297 | ) | ||
Interest income |
| 367 |
| 284 |
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Income before income taxes and minority interest |
| 91,990 |
| 82,491 |
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Income tax provision |
| 34,033 |
| 29,913 |
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Income before minority interest |
| 57,957 |
| 52,578 |
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Minority interest, net of income taxes |
| 90 |
| 174 |
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Net income |
| $ | 57,867 |
| $ | 52,404 |
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Earnings per common share: |
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Basic |
| $ | 1.76 |
| $ | 1.58 |
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Diluted |
| 1.64 |
| 1.50 |
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Average number of common shares |
| 32,826 |
| 33,255 |
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Average number of common and dilutive shares |
| 35,184 |
| 34,852 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) |
| June 29, 2008 |
| March 31, 2008 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 20,148 |
| $ | 119,773 |
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Net receivables |
| 946,072 |
| 798,468 |
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Net inventories |
| 190,160 |
| 205,825 |
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Deferred income tax assets |
| 88,222 |
| 88,282 |
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Other current assets |
| 33,724 |
| 35,568 |
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Total current assets |
| 1,278,326 |
| 1,247,916 |
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Net property, plant, and equipment |
| 496,013 |
| 492,336 |
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Goodwill |
| 1,236,196 |
| 1,236,196 |
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Prepaid and intangible pension assets |
| 26,398 |
| 25,280 |
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Deferred charges and other non-current assets |
| 198,992 |
| 194,466 |
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Total assets |
| $ | 3,235,925 |
| $ | 3,196,194 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Cash overdrafts |
| $ | 10,598 |
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Current portion of long-term debt |
| 483,438 |
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Accounts payable |
| 193,590 |
| $ | 215,755 |
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Contract advances and allowances |
| 73,341 |
| 81,624 |
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Accrued compensation |
| 97,624 |
| 147,287 |
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Accrued income taxes |
| 50,909 |
| 41,681 |
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Other accrued liabilities |
| 173,654 |
| 144,540 |
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Total current liabilities |
| 1,083,154 |
| 630,887 |
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Long-term debt |
| 971,562 |
| 1,455,000 |
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Deferred income tax liabilities |
| 40,113 |
| 38,316 |
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Postretirement and postemployment benefits liabilities |
| 137,889 |
| 138,378 |
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Accrued pension liability |
| 88,082 |
| 84,267 |
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Other long-term liabilities |
| 107,553 |
| 108,238 |
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Total liabilities |
| 2,428,353 |
| 2,455,086 |
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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 32,947,063 shares atJune 29, 2008 and 32,795,800 at March 31, 2008 |
| 329 |
| 328 |
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Additional paid-in-capital |
| 463,933 |
| 467,857 |
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Retained earnings |
| 1,373,791 |
| 1,315,924 |
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Accumulated other comprehensive loss |
| (373,896 | ) | (376,636 | ) | ||
Common stock in treasury, at cost, 8,607,998 shares held at June 29, 2008 and 8,759,261 at March 31, 2008 |
| (656,585 | ) | (666,365 | ) | ||
Total stockholders’ equity |
| 807,572 |
| 741,108 |
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Total liabilities and stockholders’ equity |
| $ | 3,235,925 |
| $ | 3,196,194 |
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ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) |
| QUARTERS ENDED |
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| June 29, 2008 |
| July 1, 2007 |
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Operating activities |
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Net income |
| $ | 57,867 |
| $ | 52,404 |
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Adjustments to net income to arrive at cash used for operating activities: |
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Depreciation |
| 18,781 |
| 17,693 |
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Amortization of intangible assets |
| 1,405 |
| 1,300 |
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Amortization of deferred financing costs |
| 728 |
| 1,258 |
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Deferred income taxes |
| 59 |
| (761 | ) | ||
Loss on disposal of property |
| 58 |
| 130 |
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Minority interest, net of income taxes |
| 90 |
| 174 |
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Share-based plans expense |
| 4,898 |
| 6,260 |
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Excess tax benefits from share-based plans |
| (2,392 | ) | (7,057 | ) | ||
Changes in assets and liabilities: |
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Net receivables |
| (147,604 | ) | (77,152 | ) | ||
Net inventories |
| 18,055 |
| (11,255 | ) | ||
Accounts payable |
| (12,482 | ) | 8,733 |
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Contract advances and allowances |
| (8,283 | ) | (8,563 | ) | ||
Accrued compensation |
| (54,614 | ) | (49,690 | ) | ||
Accrued income taxes |
| 13,886 |
| 26,367 |
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Pension and other postretirement benefits |
| 7,565 |
| 8,403 |
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Other assets and liabilities |
| 24,470 |
| 14,614 |
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Cash used for operating activities |
| (77,513 | ) | (17,142 | ) | ||
Investing activities |
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Capital expenditures |
| (31,579 | ) | (17,071 | ) | ||
Acquisition of business |
| (7,511 | ) | (101,195 | ) | ||
Proceeds from the disposition of property, plant, and equipment |
| 106 |
| 195 |
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Cash used for investing activities |
| (38,984 | ) | (118,071 | ) | ||
Financing activities |
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Change in cash overdrafts |
| 10,598 |
| 22,196 |
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Net borrowings on line of credit |
| — |
| 100,000 |
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Payments made for debt issue costs |
| (5 | ) | (94 | ) | ||
Proceeds from employee stock compensation plans |
| 3,887 |
| 9,320 |
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Excess tax benefits from share-based plans |
| 2,392 |
| 7,057 |
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Cash provided by financing activities |
| 16,872 |
| 138,479 |
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(Decrease) increase in cash and cash equivalents |
| (99,625 | ) | 3,266 |
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Cash and cash equivalents - beginning of period |
| 119,773 |
| 16,093 |
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Cash and cash equivalents - end of period |
| $ | 20,148 |
| $ | 19,359 |
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