Exhibit 99.1
News Release |
| Corporate Communications 7480 Flying Cloud Drive Minneapolis, MN 55344 |
| Phone: 952-351-3087 Fax: 952-351-3009 |
Media Contact: |
| Investor Contact: |
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Bryce Hallowell |
| Jeff Huebschen |
Phone: 952-351-3087 |
| Phone: 952-351-2929 |
E-mail: bryce.hallowell@atk.com |
| E-mail: jeff.huebschen@atk.com |
ATK Raises Full-Year EPS Guidance
ATK Reports Strong FY10 Third Quarter Financial Results
Third Quarter Fully Diluted EPS Climb 26 Percent to $2.33 as
Sales Rise Three Percent to $1.1 Billion
Third Quarter Net Income up 28 Percent to $78 Million
Third Quarter Margins Reach 11.9 Percent
Minneapolis, February 4, 2010 — Alliant Techsystems (NYSE: ATK) today reported that fully diluted earnings per share (EPS) in the third quarter of fiscal year 2010 (FY10), which ended on January 3, 2010, rose 26 percent to $2.33, compared to $1.85(1) in the prior-year quarter. The results were driven by improved operating margins and the benefit of a lower than expected tax rate primarily due to the favorable true-up of prior-year taxes. Based on its performance, better visibility into the remainder of the year, and the lower tax rate, the company is raising its full-year EPS guidance to a range of $8.80 - $8.90.
Sales for the quarter rose 3 percent to $1.1 billion, driven by continued strength in the company’s Armament Systems and Mission Systems groups, partially offset by expected lower sales in the company’s Space Systems group. Net income in the third quarter was up 28 percent to $78 million. Third quarter margins reached 11.9 percent. Orders in the quarter were $752 million, in line with expectations, and keeping the company on track for a full-year book-to-bill ratio in excess of one.
(1)At the beginning of the company’s fiscal year on April 1, 2009, ATK retrospectively adopted FSP APB14-1 “Accounting for Convertible Debt Instruments that may be settled in cash upon conversion” (FSP 14-1) and was required to restate certain financial information for all prior periods. The adoption resulted in an increase to non-cash interest expense of $6.033 million ($3.614 million net of tax, or $0.11 diluted EPS) for the quarter ended December 28, 2008. All fiscal 2009 financial amounts included in this press release have been restated to reflect the adoption of FSP 14-1.
“I couldn’t be more pleased with our earnings. Our aggressive focus on margin improvement continues to yield significant results, including another quarter of double-digit earnings growth,” said John Shroyer, Senior Vice President and Chief Financial Officer. “Third quarter sales and orders were right on track with our expectations and we are on pace to generate strong free cash flow through the end of our fiscal year. We are raising full-year EPS guidance and will enter fiscal year 2011 with a solid backlog of orders, substantial cash on the balance sheet, and continued strong operating performance.”
SUMMARY OF REPORTED RESULTS
The following table presents the company’s results for the third quarter of fiscal year 2010, which ended on January 3, 2010 (in thousands).
Sales:
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| Quarters Ended |
| Nine Months Ended |
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| January 3, |
| December 28, |
| $ |
| % |
| January 3, |
| December |
| $ |
| % |
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ATK Armament Systems |
| $ | 509,112 |
| $ | 438,167 |
| $ | 70,945 |
| 16.2 | % | $ | 1,615,496 |
| $ | 1,302,603 |
| $ | 312,893 |
| 24.0 | % |
ATK Mission Systems |
| 306,560 |
| 285,336 |
| 21,224 |
| 7.4 | % | 903,503 |
| 842,381 |
| 61,122 |
| 7.3 | % | ||||||
ATK Space Systems |
| 325,857 |
| 385,947 |
| (60,090 | ) | (15.6 | )% | 1,039,628 |
| 1,181,282 |
| (141,564 | ) | (12.0 | )% | ||||||
Total sales |
| $ | 1,141,529 |
| $ | 1,109,450 |
| $ | 32,079 |
| 2.9 | % | $ | 3,558,627 |
| $ | 3,326,266 |
| $ | 232,361 |
| 7.0 | % |
Income before Interest, Income Taxes, and Noncontrolling Interest (Operating Profit):
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| Quarters Ended |
| Nine Months Ended |
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| January 3, |
| December 28, |
| $ |
| % |
| January 3, |
| December 28, |
| $ |
| % |
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ATK Armament Systems |
| $ | 63,413 |
| $ | 43,695 |
| $ | 19,718 |
| 45.1 | % | $ | 192,346 |
| $ | 130,824 |
| $ | 61,522 |
| 47.0 | % |
ATK Mission Systems |
| 33,979 |
| 35,802 |
| (1,823 | ) | (5.1 | )% | 100,192 |
| 104,421 |
| (4,229 | ) | (4.0 | )% | ||||||
ATK Space Systems |
| 44,781 |
| 44,303 |
| 478 |
| 1.1 | % | 124,626 |
| 128,527 |
| (3,901 | ) | (3.0 | )% | ||||||
Corporate |
| (5,773 | ) | (4,516 | ) | (1,257 | ) | (27.8 | )% | (14,518 | ) | (15,511 | ) | 993 |
| 6.4 | % | ||||||
Total operating profit |
| $ | 136,400 |
| $ | 119,284 |
| $ | 17,116 |
| 14.3 | % | $ | 402,646 |
| $ | 348,261 |
| $ | 54,385 |
| 15.6 | % |
SEGMENT RESULTS
ATK operates three principal business groups: Armament Systems; Mission Systems; and Space Systems.
ATK ARMAMENT SYSTEMS
Sales in the third quarter of FY10 increased 16 percent to $509 million, compared to $438 million in the prior-year quarter. The increase reflects strong sales of non-standard ammunition, modernization efforts at Lake City and Radford, and $18 million of additional sales from the acquisition of Eagle Industries. Organic sales increased 12 percent.
Earnings before interest, taxes, and noncontrolling interest (operating profit) in the third quarter rose 45 percent to $63 million, compared to $44 million in the prior-year quarter. The increase was driven by additional sales volume and improved profitability across Armament Systems. Demand for ATK’s commercial ammunition brands and products remained strong. The higher operating profit was partially offset by the costs associated with the construction of an energetics facility for the Australian Ministry of Defense that was previously in the Space Systems group; and higher pension expense.
ATK MISSION SYSTEMS
Third quarter sales rose seven percent to $307 million compared to $285 million in the prior-year quarter. The increase reflects higher sales volume in military and commercial aircraft structures, defense electronics, tactical rocket motors, and missile programs, partially offset by lower sales of tank ammunition, missile defense, and special mission aircraft.
Operating profit of $34 million was in line with expectations and down five percent from $36 million in the prior-year quarter. The quarter benefited from higher sales volume and profit improvements in defense electronics but was offset by a lower incentive fee on the SM-3 program than in the prior-year quarter, and higher pension expense.
ATK SPACE SYSTEMS
Third quarter sales in the Space Systems group of $326 million were in line with the company’s expectations, and down 16 percent from $386 million in the prior-year quarter. Strengthening sales profiles for Ares I and spacecraft structures were negated by lower sales on the Space Shuttle and Minuteman III programs, and the termination of the Kinetic Energy Interceptor.
Operating profit for the group was $45 million, up slightly from the prior-year quarter. Higher sales volume on Ares I, the timing of an incentive fee on the Space Shuttle program, and profit improvements in the space structures business were offset by lower total sales volume and higher pension expense.
CORPORATE AND OTHER
In the third quarter, corporate and other expenses totaled $5.8 million compared to $4.5 million recorded in the prior-year quarter. The share count was 33.5 million, compared to 33.1 million in the prior-year quarter.
OUTLOOK
Based on the continued strong operating performance of the company, better visibility into the remainder of the year, and a lower expected tax rate, ATK is raising its full-year EPS guidance. ATK now expects full-year FY10 fully diluted EPS in a range of $8.80 - $8.90, up from previous guidance of $8.60 - $8.75. The company continues to expect full-year sales to be in a range of $4.825 -$4.875 billion, and free cash flow of approximately $150 million (see reconciliation table for details). The company continues to expect an average share count of approximately 33.5 million. An expected effective tax rate for the year in the mid-36 percent range is slightly lower than previous expectations of approximately 37 percent, due primarily to the favorable true-up of prior-year taxes. The company continues to expect full-year pension expenses of approximately $70 million, and it now believes that capital expenditures will be approximately $140 million.
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 Year |
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Cash provided by operating activities |
| $ | ~ 290,000 |
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Capital expenditures |
| ~(140,000 | ) | |
Free cash flow |
| $ | ~ 150,000 | * |
ATK is a premier aerospace and defense company with more than 18,000 employees in 22 states, Puerto Rico and internationally, and revenues in excess of $4.8 billion. 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 related to the Ares I and Ares V programs for NASA;
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; capital market volatility and corresponding assumptions related to the company’s shares outstanding; 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
(unaudited)
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| QUARTERS ENDED |
| NINE MONTHS ENDED |
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(In thousands except per share data) |
| January 3, 2010 |
| December 28, 2008 (1) |
| January 3, 2010 |
| December 28, 2008 (1) |
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Sales |
| $ | 1,141,529 |
| $ | 1,109,450 |
| $ | 3,558,627 |
| $ | 3,326,266 |
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Cost of sales |
| 891,148 |
| 879,866 |
| 2,802,699 |
| 2,637,179 |
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Gross profit |
| 250,381 |
| 229,584 |
| 755,928 |
| 689,087 |
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Operating expenses: |
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Research and development |
| 16,057 |
| 16,105 |
| 47,321 |
| 63,245 |
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Selling |
| 35,134 |
| 39,584 |
| 125,430 |
| 117,392 |
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General and administrative |
| 62,790 |
| 54,611 |
| 180,531 |
| 160,189 |
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Income before interest, income taxes, and noncontrolling interest |
| 136,400 |
| 119,284 |
| 402,646 |
| 348,261 |
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Interest expense |
| (17,918 | ) | (21,551 | ) | (58,214 | ) | (66,828 | ) | ||||
Interest income |
| 164 |
| 142 |
| 374 |
| 741 |
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Income before income taxes and noncontrolling interest |
| 118,646 |
| 97,875 |
| 344,806 |
| 282,174 |
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Income tax provision |
| 40,245 |
| 36,528 |
| 124,305 |
| 104,867 |
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Net income |
| 78,401 |
| 61,347 |
| 220,501 |
| 177,307 |
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Less net income (loss) attributable to noncontrolling interest |
| 30 |
| (61 | ) | 189 |
| 45 |
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Net income attributable to Alliant Techsystems Inc. |
| $ | 78,371 |
| $ | 61,408 |
| $ | 220,312 |
| $ | 177,262 |
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Alliant Techsystems Inc.’s earnings per common share: |
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Basic |
| $ | 2.38 |
| $ | 1.88 |
| $ | 6.71 |
| $ | 5.41 |
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Diluted |
| $ | 2.33 |
| $ | 1.85 |
| $ | 6.60 |
| $ | 5.17 |
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Alliant Techsystems Inc.’s weighted-average number of common shares outstanding: |
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Average number of common shares |
| 32,878 |
| 32,628 |
| 32,818 |
| 32,758 |
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Average number of common and dilutive shares |
| 33,603 |
| 33,117 |
| 33,367 |
| 34,283 |
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(1) Restated due to the adoption of new accounting standards
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands except share data) |
| January 3, 2010 |
| March 31, 2009 (1) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 385,754 |
| $ | 336,700 |
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Net receivables |
| 895,658 |
| 899,543 |
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Net inventories |
| 213,140 |
| 238,600 |
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Income tax receivable |
| — |
| 34,835 |
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Deferred income tax assets |
| 69,028 |
| 29,223 |
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Other current assets |
| 114,066 |
| 39,843 |
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Total current assets |
| 1,677,646 |
| 1,578,744 |
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Net property, plant, and equipment |
| 533,082 |
| 540,041 |
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Goodwill |
| 1,186,233 |
| 1,195,986 |
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Deferred income tax assets |
| 10,305 |
| 69,582 |
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Deferred charges and other non-current assets |
| 298,784 |
| 192,992 |
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Total assets |
| $ | 3,706,050 |
| $ | 3,577,345 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Current portion of long-term debt |
| $ | 13,750 |
| $ | 289,859 |
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Accounts payable |
| 214,580 |
| 294,971 |
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Contract advances and allowances |
| 100,159 |
| 86,080 |
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Accrued compensation |
| 122,695 |
| 168,059 |
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Accrued income taxes |
| 18,264 |
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Other accrued liabilities |
| 214,672 |
| 166,341 |
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Total current liabilities |
| 684,120 |
| 1,005,310 |
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Long-term debt |
| 1,379,154 |
| 1,097,744 |
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Postretirement and postemployment benefits liabilities |
| 116,868 |
| 121,689 |
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Accrued pension liability |
| 415,026 |
| 552,671 |
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Other long-term liabilities |
| 139,847 |
| 125,362 |
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Total liabilities |
| 2,735,015 |
| 2,902,776 |
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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 33,015,889 shares at January 3, 2010 and 32,783,496 at March 31, 2009 |
| 330 |
| 328 |
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Additional paid-in-capital |
| 581,430 |
| 574,674 |
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Retained earnings |
| 1,640,774 |
| 1,420,462 |
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Accumulated other comprehensive loss |
| (600,028 | ) | (651,652 | ) | ||
Common stock in treasury, at cost, 8,539,560 shares held at January 3, 2010 and 8,771,565 at March 31, 2009 |
| (660,258 | ) | (677,841 | ) | ||
Total Alliant Techsystems Inc. stockholders’ equity |
| 962,248 |
| 665,971 |
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Noncontrolling interest |
| 8,787 |
| 8,598 |
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Total equity |
| 971,035 |
| 674,569 |
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Total liabilities and equity |
| $ | 3,706,050 |
| $ | 3,577,345 |
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(1) Restated due to the adoption of new accounting standards
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
| NINE MONTHS ENDED |
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(In thousands) |
| January 3, 2010 |
| December 28, 2008 (1) |
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Operating activities |
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Net income |
| $ | 220,501 |
| $ | 177,307 |
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Adjustments to net income to arrive at cash provided by operating activities: |
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Depreciation |
| 74,202 |
| 57,412 |
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Amortization of intangible assets |
| 3,757 |
| 4,213 |
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Amortization of debt discount |
| 15,779 |
| 17,751 |
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Amortization of deferred financing costs |
| 2,129 |
| 2,148 |
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Asset impairment |
| 11,405 |
| 3,753 |
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Deferred income taxes |
| (13,447 | ) | 18,431 |
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Gain on disposal of property |
| (1,885 | ) | (3,422 | ) | ||
Share-based plans expense |
| 13,447 |
| 14,753 |
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Excess tax benefits from share-based plans |
| (1,549 | ) | (3,235 | ) | ||
Changes in assets and liabilities: |
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Net receivables |
| (71,839 | ) | (121,375 | ) | ||
Net inventories |
| 23,075 |
| 295 |
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Accounts payable |
| (63,309 | ) | (16,299 | ) | ||
Contract advances and allowances |
| 14,079 |
| 1,385 |
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Accrued compensation |
| (49,271 | ) | (24,075 | ) | ||
Accrued income taxes |
| 64,053 |
| (32,051 | ) | ||
Pension and other postretirement benefits |
| (128,349 | ) | 19,744 |
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Other assets and liabilities |
| 26,948 |
| 40,779 |
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Cash provided by operating activities |
| 139,726 |
| 157,514 |
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Investing activities |
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Capital expenditures |
| (99,274 | ) | (80,352 | ) | ||
Acquisition of business, net |
| 5,002 |
| (13,560 | ) | ||
Proceeds from the disposition of property, plant, and equipment |
| 5,496 |
| 489 |
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Cash used for investing activities |
| (88,776 | ) | (93,423 | ) | ||
Financing activities |
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Payments made on bank debt |
| (10,479 | ) | — |
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Payments made to extinguish debt |
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| (10 | ) | ||
Payments made for debt issue costs |
| — |
| (5 | ) | ||
Net purchase of treasury shares |
| — |
| (31,609 | ) | ||
Proceeds from employee stock compensation plans |
| 7,034 |
| 6,617 |
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Excess tax benefits from share-based plans |
| 1,549 |
| 3,235 |
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Cash used for financing activities |
| (1,896 | ) | (21,772 | ) | ||
Increase in cash and cash equivalents |
| 49,054 |
| 42,319 |
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Cash and cash equivalents - beginning of period |
| 336,700 |
| 119,773 |
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Cash and cash equivalents - end of period |
| $ | 385,754 |
| $ | 162,092 |
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(1) Restated due to the adoption of new accounting standards