SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 28, 1998 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____________ to_____________
Commission file number 1-10582
ALLIANT TECHSYSTEMS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 41-16726904
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 SECOND STREET N.E.
HOPKINS, MINNESOTA 55343-8384
(Address of principal executive office) (Zip Code)
(612) 931-6000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year
if changed from last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed under Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
As of July 31, 1998, the number of shares of the registrant's common
stock, par value $.01 per share, outstanding was 12,662,288 (excluding 1,201,325
treasury shares).
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Income Statements (Unaudited)
(In thousands except QUARTERS ENDED
per share data) --------- ---------
June 28 June 29
1998 1997
--------- ---------
Sales $ 256,321 $ 251,639
Cost of sales 211,089 207,919
--------- ---------
Gross margin 45,232 43,720
Operating expenses
Research and development 1,595 2,038
Selling 8,752 10,249
General and administrative 10,918 10,144
--------- ---------
Total operating expenses 21,265 22,431
--------- ---------
Income from operations 23,967 21,289
Miscellaneous income (expense) (37) 98
--------- ---------
Earnings before interest and taxes 23,930 21,387
Interest expense (5,685) (7,556)
Interest income 344 826
--------- ---------
Income before income taxes 18,589 14,657
Income tax provision 2,788
--------- ---------
Net income $ 15,801 $ 14,657
========= =========
Basic earnings per common share $ 1.24 $ 1.13
========= =========
Diluted earnings per common share $ 1.21 $ 1.10
========= =========
Average number of common shares (thousands) 12,713 13,005
========= =========
Average number of common and
dilutive shares (thousands) 13,027 13,299
========= =========
See Notes to Financial Statements
Balance Sheets (Unaudited)
------------- --------------
(In thousands except share data) June 28, 1998 March 31, 1998
------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 33,809 $ 68,960
Receivables 200,557 209,915
Net inventory 45,917 49,072
Deferred income tax asset 38,280 38,280
Other current assets 9,835 6,803
--------- ---------
Total current assets 328,398 373,030
Net property, plant, and equipment 328,695 333,538
Goodwill 131,135 131,600
Prepaid and intangible pension assets 86,846 85,539
Other assets and deferred charges 7,957 8,473
--------- ---------
Total assets $ 883,031 $ 932,180
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 17,838 $ 17,838
Accounts payable 60,303 80,071
Contract advances and allowances 55,586 64,318
Accrued compensation 27,139 32,275
Accrued income taxes 9,744 8,049
Accrued restructuring and facility consolidation 1,257 2,637
Other accrued liabilities 61,749 72,214
--------- ---------
Total current liabilities 233,616 277,402
Long-term debt 176,351 180,810
Post-retirement and post-employment benefits liability 134,530 136,889
Pension liability 32,719 33,991
Other long-term liabilities 37,194 37,334
--------- ---------
Total liabilities 614,410 666,426
Contingencies
Redeemable common shares (542,000 and 813,000 shares, $.01 par value, redeemable
at prescribed prices totaling $29,986 and $44,979, at June 28, 1998 and
March 31, 1998, respectively. Redeemable quarterly, in equal lots of
271,000 shares each, during calendar 1998.) 29,986 44,979
Common stock - $.01 par value
Authorized - 20,000,000 shares
Issued and outstanding 12,630,155 shares at June
28, 1998 and 12,855,511 at March 31, 1998 121 121
Additional paid-in-capital 216,593 201,728
Retained earnings 88,345 72,544
Unearned compensation (1,178) (1,251)
Pension liability adjustment (4,743) (4,743)
Common stock in treasury, at cost (1,233,458 shares held at
June 28, 1998 and 1,008,102 at March 31, 1998) (60,503) (47,624)
--------- ---------
Total liabilities and stockholders' equity $ 883,031 $ 932,180
========= =========
See Notes to Financial Statements
Statements of Cash Flows (Unaudited)
(In thousands) QUARTERS ENDED
------------- -------------
June 28, 1998 June 29, 1997
------------- -------------
OPERATING ACTIVITIES
Net income $ 15,801 $ 14,657
Adjustments to net income to arrive at cash used for operations:
Depreciation 9,739 10,317
Amortization of intangible assets and unearned
compensation 1,540 1,544
Loss (gain) on disposal of property 84 (21)
Changes in assets and liabilities:
Receivables 9,358 (485)
Inventory 3,155 (9,292)
Accounts payable (19,768) (33,081)
Contract advances and allowances (8,732) 21,808
Accrued compensation (5,136) (1,811)
Accrued income taxes 1,695 (149)
Accrued restructuring and facility consolidation (1,380) (7,727)
Accrued environmental liability (139) (273)
Pension and post-retirement benefits (3,631) (3,722)
Other assets and liabilities (15,650) (10,163)
--------- ---------
Cash used for operations (13,064) (18,398)
--------- ---------
INVESTING ACTIVITIES
Capital expenditures (4,550) (3,004)
Proceeds from disposition of property, plant, and equipment 38 131
--------- ---------
Cash used for investing activities (4,512) (2,873)
--------- ---------
FINANCING ACTIVITIES
Payments made on long-term debt (4,459) (7,256)
Net purchase of treasury shares (13,883) (5,015)
Proceeds from exercised stock options 767 431
Other financing activities, net (11)
--------- ---------
Cash used for financing activities (17,575) (11,851)
--------- ---------
Decrease in cash and cash equivalents (35,151) (33,122)
Cash and cash equivalents - beginning of period 68,960 122,491
--------- ---------
Cash and cash equivalents - end of period $ 33,809 $ 89,369
========= =========
See Notes to Financial Statements
Notes to Financial Statements (Unaudited)
1. During the three months ended June 28, 1998, the Company made principal
payments on its Bank Term Loan of $4.5 million. No borrowings were
outstanding against its revolving line of credit at June 28, 1998. Letters
of credit totaling $38.7 million reduced the available line of credit to
$236.3 million.
The remaining scheduled minimum loan payments on outstanding long-term debt
are as follows: fiscal 1999, $13.4 million; fiscal 2000, $17.8 million;
fiscal 2001, $13.0 million; fiscal 2002, $0, and fiscal 2003, $150.0
million.
2. The major categories of other current and long-term accrued liabilities are
as follows (in thousands):
PERIOD ENDING
--------------------------------------------------
JUNE 28, 1998 MARCH 31, 1998
-----------------------------------------------------------------------------------------
Employee benefits and insurance 27,011 29,196
Legal accruals 12,603 21,495
Other accruals 22,135 21,523
-----------------------------------------------------------------------------------------
Other accrued liabilities-current 61,749 72,214
-----------------------------------------------------------------------------------------
Environmental remediation liability 17,124 17,264
Deferred tax liability 19,499 19,498
Other long-term 571 572
-----------------------------------------------------------------------------------------
Other long-term liabilities 37,194 37,334
-----------------------------------------------------------------------------------------
The decrease in legal accruals since March 31, 1998 is reflective of
payments made during the quarter ended June 28, 1998, for legal settlements
agreed to (and reserved for) in previous periods including the $4.5 million
installment paid in April 1998 in connection with the Accudyne "qui tam"
settlement, reached in June 1995. See Note 5 for further discussion of
legal settlements.
3. Alternative minimum taxes of $1.1 million were paid during the three-month
period ended June 28, 1998. No taxes were paid for the comparable period of
the prior year. The effective income tax rate of 15 percent on continuing
operations in the current three-month period reflects recognition and
utilization of $11.3 million of available federal and state loss
carryforwards (gross) for tax purposes.
4. On October 24, 1997, the Company entered into an agreement with Hercules
Incorporated (Hercules) providing for the disposition of the 3.86 million
shares of Alliant common stock held by Hercules. The shares represent the
stock issued by the Company in connection with the March 15, 1995
acquisition of the Hercules Aerospace Company operations from Hercules
(Aerospace acquisition).
Under the agreement with Hercules, during the quarter ended December 28,
1997 the Company registered for public offering approximately 2.78 million
shares (previously unregistered) held by Hercules. The offering was
completed on November 21, 1997. No new shares were issued in the offering
nor did the Company receive any proceeds from the offering. The remaining
1.1 million shares held by Hercules became subject to a put/call
arrangement under which Hercules can require the Company to purchase the
shares in four equal installments of 271,000 shares during each of the four
calendar quarters of 1998. The Company can likewise require Hercules to
sell the shares to the Company in four equal installments during each of
the four calendar quarters of 1998. The price for shares purchased under
the put/call arrangement is equal to the per share net proceeds realized by
Hercules in the secondary public offering, $55.32. In late fiscal 1998, the
Company did repurchase the first installment of 271,000 shares, for
approximately $15 million. In May and August 1998, the Company repurchased
the second and third installments, respectively, of 271,000 shares, each
for approximately $15 million. The Company's
present intention is to purchase the remaining 271,000 shares covered by
the put/call arrangement, although no definitive decision has been made to
do so.
During the first quarter of fiscal 1998, the Company completed a $50
million stock repurchase program started in fiscal 1996. In connection with
that program, the Company made repurchases in the three months ended June
29, 1997 of approximately 140,000 shares, for approximately $6.0 million.
On October 22, 1997, the Company's Board of Directors authorized the
Company to repurchase up to an additional 1.0 million shares of its common
stock. It is currently expected that any purchases made under this buy-back
plan would be subject to market conditions and the Company's compliance
with its debt covenants. Effective November 10, 1997, the Company entered
into an agreement to amend its Credit Agreement that provides the Company
expanded flexibility with respect to certain restricted payments, including
payments for stock repurchases. As of June 28, 1998, the Company's revised
debt covenants permit it to expend up to an additional $58.3 million in
total, in connection with all share repurchases. In connection with this
new repurchase program, the Company has repurchased 165,300 shares through
June 28, 1998, at a cumulative cost of $10.0 million, or $60.34 per share.
No repurchases were made under this plan during the three-month period
ended June 28, 1998. While it is currently the Company's intention to
continue stock repurchases under the program, there can be no assurance
that the Company will repurchase all or any portion of the remaining shares
or as to the timing or terms thereof.
5. Contingencies:
As a U.S. Government contractor, the Company is subject to defective
pricing and cost accounting standards non-compliance claims by the
Government. Additionally, the Company has substantial Government contracts
and subcontracts, the prices of which are subject to adjustment. The
Company believes that resolution of such claims and price adjustments made
or to be made by the Government for open fiscal years (1987 through 1998)
will not materially exceed the amount provided in the accompanying balance
sheets.
The Company is a defendant in numerous lawsuits that arise out of, and are
incidental to, the conduct of its business. Such matters arise out of the
normal course of business and relate to product liability, intellectual
property, Government regulations, including environmental issues, and other
issues. Certain of the lawsuits and claims seek damages in large amounts.
In these proceedings, no director, officer, or affiliate is a party or a
named defendant.
The Company is involved in three "qui tam" lawsuits brought by former
employees of the Aerospace operations acquired from Hercules in March 1995.
The first involves allegations relating to submission of false claims and
records, delivery of defective products, and a deficient quality control
program. The second involves allegations of mischarging of work performed
under government contracts, misuse of government equipment, other acts of
financial mismanagement and wrongful termination claims. The Government did
not join in either of these lawsuits. Under the terms of the agreements
relating to the Aerospace acquisition, all litigation and legal disputes
arising in the ordinary course of the acquired operations will be assumed
by the Company except for a few specific lawsuits and disputes including
the two qui-tam lawsuits referred to above. On May 15, 1998, Hercules
announced that it had agreed to a settlement in the first qui tam lawsuit,
which has since been approved by the court. Under terms of the purchase
agreement with Hercules, the Company's maximum combined settlement
liability for both of these qui tam matters is approximately $4 million,
for which the Company has fully reserved. In July, 1998 the Company paid
such amount in satisfaction of its liability related to the matter. The
Company also agreed to reimburse Hercules for 40 percent of all legal costs
incurred after March 15, 1995, relating to these two actions. In the third
qui tam lawsuit, the Company received a partially unsealed complaint in
March, 1997 alleging labor mischarging to the Intermediate Nuclear Force
(INF) contract, and other contracts. Damages are not specified in this
civil suit. The Company and Hercules have agreed to share equally the
external attorney's fees and investigative fees and related costs and
expenses of this action until such time as a determination is
made as to the applicability of the indemnification provisions of the
purchase agreement. In March 1998, the Company and Hercules settled with
the Department of Justice on the portion of the complaint alleging labor
mischarging to the INF contract and agreed to pay $2.25 million each,
together with relator's attorney's fees of $150 thousand each, which was
paid in April 1998. The Department of Justice has declined to intervene in
the remaining portion of the complaint.
The Company has also been served with a complaint in a civil action
alleging violation of the False Claims Act and the Truth in Negotiations
Act. The complaint alleges defective pricing on a government contract.
Based upon documents provided to the company in connection with the action,
the Company believes that the U.S. Government may seek damages and
penalties of approximately $5 million.
The Company is a defendant in a patent infringement case brought by Cordant
Technologies (formerly Thiokol Corporation), which the Company believes is
without merit. The complaint does not quantify the amount of damages
sought. Through its analysis of an October 27, 1997, court filing, the
Company now believes that, based on an economist's expert testimony,
Cordant Technologies may seek lost profits, interest and costs of
approximately $240 million. Even if the Company is found liable, it
believes that damages should be based upon a reasonable royalty of less
than $5 million. The court has bifurcated the trial, with the liability
issue being tried first, and if liability is found, the damages issue being
tried second. The liability issue was tried in January 1998, after which
the court requested, and the parties submitted, post-trial briefs. A
decision on the liability issue is not expected until several months after
submission of the parties' post-trial briefs. In the judgment of
management, the case will not have a material adverse effect upon the
Company's future financial condition or results of operations. However,
there can be no assurance that the outcome of the case will not have a
material adverse effect on the Company.
During fiscal 1998, the Company substantially completed the requirements of
the M117 Bomb reclamation contract. The contract contained a priced option,
having approximate contract value less than $5 million, whereby the
customer could require the reclamation of additional quantities, given that
such option be exercised within the terms and conditions of the contract.
On August 4, 1997, the customer informed the Company that it was exercising
the option. The Company, based on advise from its counsel, maintains that
the option exercise was invalid and has therefore not performed on the
option. The Company is currently appealing the validity of the option to
the United States Court of Appeals, based on the Company's continued belief
that such exercise was invalid. In late December 1997, the Company was
informed by the customer that the Company was being terminated for default
on the contract. The Company expects the appeals process to conclude in
calendar 1998. Depending on the outcome of the appeal, which will drive the
outcome of the termination for default, management currently estimates that
the range of possible adverse impact to the Company's operating earnings is
from $0-$4 million.
The Company is subject to various local and national laws relating to
protection of the environment and is in various stages of investigation or
remediation of potential, alleged, or acknowledged contamination. At June
28, 1998, the accrued liability for environmental remediation of $31.7
million represents management's best estimate of the present value of the
probable and reasonably estimable costs related to the Company's known
remediation obligations. It is expected that a significant portion of the
Company's environmental costs will be reimbursed to the Company. As
collection of those reimbursements is estimated to be probable, the Company
has recorded a receivable of $9.6 million, representing the present value
of those reimbursements at June 28, 1998. Such receivable primarily
represents the expected reimbursement of costs associated with the
Aerospace operations, acquired from Hercules in March, 1995, whereby the
Company generally assumed responsibility for environmental compliance at
Aerospace facilities. It is expected that much of the compliance and
remediation costs associated with these facilities will be reimbursable
under U.S. government contracts, and that those environmental remediation
costs not covered through such contracts will be covered by Hercules under
various indemnification agreements. The Company's accrual for environmental
remediation liabilities and the associated receivable for reimbursement
thereof, have been discounted to reflect the present value of the expected
future cash flows, using a discount rate, net of estimated inflation, of
4.5 percent. The following is a summary of the Company's amounts recorded
for environmental remediation at June 28, 1998 (in millions):
ACCRUED ENVIRONMENTAL ENVIRONMENTAL COSTS -
LIABILITY REIMBURSEMENT RECEIVABLE
---------------------------------------------------------------------------------------------
Amounts (Payable)/Receivable $(40.7) $12.5
Unamortized Discount 9.0 (2.9)
---------------------------------------------------------------------------------------------
Present Value Amounts
(Payable)/Receivable $(31.7) $9.6
---------------------------------------------------------------------------------------------
At June 28, 1998, the estimated discounted range of reasonably possible
costs of environmental remediation is between $31.7 and $56.0 million. The
Company does not anticipate that resolution of the environmental
contingencies in excess of amounts accrued, net of recoveries, will
materially affect future operating results.
In future periods, new laws or regulations, advances in technologies,
outcomes of negotiations/litigations with regulatory authorities and other
parties, additional information about the ultimate remedy selected at new
and existing sites, the Company's share of the cost of such remedies,
changes in the extent and type of site utilization, the number of parties
found liable at each site, and their ability to pay are all factors that
could significantly change the company`s estimates.
It is reasonably possible that management's current estimates of
liabilities for the above contingencies could change in the near term, as
more definitive information becomes available.
6. Interest paid during the three-month periods ended June 28, 1998 and June
29, 1997 totaled $2.4 and $3.1 million, respectively.
During fiscal 1998, the Company entered into treasury rate-lock agreements
to hedge against increases in market interest rates on the anticipated
refinancing of its senior subordinated notes, which are callable on March
1, 1999. These agreements provide for rate locks between 6.04 and 6.25
percent on the most recently issued U.S. 10-year treasury note through
March 1, 1999, on a notional amount of $100 million. The Company's actual
refinancing rate will depend on its credit rating and respective borrowing
margin over the treasury rate at that time.
In January, 1998, the Company entered into a swap agreement relating to $50
million face amount (approximately $48.7 million of accreted value) of its
11.75 percent senior subordinated notes. The agreement locks in the price
at which the Company can pre-pay $50 million of its senior subordinated
notes, which the Company currently anticipates doing in March 1999. The
agreement provides for the Company to receive 11.75 percent interest on a
notional amount of $50 million and to pay interest at one-month LIBOR plus
1 percent (approximately 6.7 percent at June 28, 1998) on a notional amount
of $55 million. Additionally, the agreement provides that during the term
of the swap, which expires in February, 1999, any increases (decreases) in
the market value of the notes will be received (paid), respectively, by the
Company. The Company simultaneously entered into an additional swap
agreement to hedge against increases in the one-month LIBOR interest rate
relating to the above swap. Under the agreement, the Company pays a fixed
rate of 5.54 percent, and receives interest at a rate of one-month LIBOR
(approximately 5.7 percent at June 28, 1998) on a notional amount of $55
million. Both swap agreements expire February 1, 1999, and have certain
cancellation options.
7. In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share", which requires companies to present
BASIC earnings per share (EPS) and DILUTED EPS, instead of the primary and
fully diluted EPS that were previously required. The Company adopted the
provisions of SFAS 128 during fiscal 1998, as required under the Statement.
Accordingly, the financial statements have been reported consistent with
the requirements of SFAS 128.
Basic EPS is computed based upon the weighted average number of common
shares outstanding for each period presented. Diluted EPS is computed based
on the weighted average number of common shares and common equivalent
shares. Common equivalent shares represent the effect of redeemable common
stock (see Note 4) and stock options outstanding during each period
presented, which, if exercised, would have a dilutive effect on EPS. The
diluted EPS calculation results in the same EPS that the Company has
historically reported as fully diluted.
In computing EPS for the three month periods ended June 28, 1998 and June
29, 1997, net income as reported for each respective period, is divided by:
QUARTERS ENDED
----------------------------------------
JUNE 28, 1998 JUNE 29, 1997
--------------------------------------------------------------------------
Basic EPS:
- Average Shares Outstanding 12,713 13,005
==========================================================================
Diluted EPS:
- Average Shares Outstanding 12,713 13,005
- Dilutive effect of options and 314 294
redeemable common shares
--------------------------------------------------------------------------
Diluted EPS Shares Outstanding 13,027 13,299
==========================================================================
For the quarter ended June 28, 1998, the 542,000 common shares subject to
the put/call agreement with Hercules (see Note 4) were not included in the
calculation of diluted EPS, as inclusion of those redeemable shares would
have been anti-dilutive. There were also 137,350 stock options that were
not included in the computation of diluted EPS for the quarter ended June
28, 1998, due to the option price being greater than the average market
price of the common shares.
8. Certain reclassifications have been made to the fiscal 1998 financial
statements, as previously reported, to conform to the current
classification. These reclassifications did not affect the net income from
operations, as previously reported.
9. The figures set forth in this quarterly report are unaudited but, in the
opinion of the Company, include all adjustments necessary for a fair
presentation of the results of operations for the three-month periods ended
June 28, 1998, and June 29, 1997. The Company's accounting policies are
described in the notes to financial statements in its fiscal 1998 Annual
Report on Form 10-K.
10. In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income," which requires businesses to disclose comprehensive income and its
components in the Company's general-purpose financial statements. Effective
April 1, 1998, the Company adopted SFAS No. 130. The Company's net income
(as reported) is identical to its "comprehensive income", as defined by
SFAS 130, for the three-month periods ended June 28, 1998, and June 29,
1997, respectively.
In June 1997, the FASB issued SFAS No. 131 "Disclosures About Segments of
an Enterprise and Related Information," which requires additional
disclosure only, and as such, is expected to have no financial impact to
the Company. The statement is effective for the Company's fiscal year ended
March 31, 1999.
In March, 1998, the AICPA issued Statement of Position (SOP) 98-1
"Accounting for the Costs of Computer software Developed or Obtained for
Internal Use." The SOP provides guidance on when costs incurred for
internal use computer software are to be capitalized. The SOP is currently
not expected to have a material impact to the company's results of
operations or its financial position. The SOP is effective for the
Company's fiscal year beginning April 1, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SALES
Sales for the quarter ended June 28, 1998, totaled $256.3 million, an increase
of $4.7 million, or 1.9 percent, from $251.6 million for the comparable quarter
in the prior year. Conventional Munitions Group sales were $121.7 million for
the current year quarter, an increase of $2.5 million, compared to $119.2
million in the comparable quarter of the prior year. Space and Strategic Systems
Group sales were $91.2 million for the current year quarter, an increase of
$13.1 million, or 16.8 percent, compared to $78.1 million in the comparable
quarter of the prior year. The increase is attributable to higher space
propulsion sales, up $25 million compared to the comparable quarter of the prior
year. These space propulsion sales increases were partially offset by an $8
million decrease in composite structures sales on the nearly completed X-33
contract for the development and sub-assembly of liquid hydrogen fuel tanks for
the next-generation Space Shuttle. Defense Systems Group sales were $43.6
million for the current year quarter, a decrease of $9.0 million, or 17.1
percent, compared to $52.6 million in the comparable quarter of the prior year.
The decrease was primarily attributable to reduced volume on various fuzing
programs. Company sales for fiscal 1999 are expected to be approximately $1.1
billion.
GROSS MARGIN
The Company's gross margin in the quarter ended June 28, 1998, was $45.2 million
or 17.6 percent of sales, compared to $43.7 million, or 17.4 percent of sales
for the comparable quarter of the prior year. The slight increase in margin was
due to a combination of factors, including improved margins on space propulsion
contracts, due primarily to improved cost performance, and incentive fees. These
margin improvements were partially offset due to decreased volume and cost
performance issues on certain Defense Systems Group fuzing programs.
The Company continues to work closely with the Government customer to address
potential safety and technical issues on the Explosive "D" contract, to resolve
these matters on a mutually agreeable basis. During fiscal 1998, the Company
identified potential technical and safety issues that, depending on the outcome
of the continuing evaluation of these risks and the potentially mitigating
solutions, could add cost growth to the program. These potential technical and
safety issues would similarly result in cost growth on another fixed price
Explosive "D" contract (for 6 and 8 inch gun projectiles) for which contract
performance efforts are yet to begin. Based on information known at this time,
management's estimated range of possible additional cost growth that could occur
as a result of the potential technical and safety issues on Explosive "D" is
currently $0-$4 million, on which ultimate outcome is dependent on the extent to
which the Company is able to mitigate these potential risks, and obtain
additional contract funding from the customer for work performed. Additionally,
the customer has the ability to exercise a fixed price option for additional
reclaimed quantities of the 6 and 8-inch projectiles. The Company believes that
it is unlikely that these options will be exercised.
Fiscal 1999 gross margin, as a percent of sales, is expected to be in the 17.5 -
18.5 percent range.
OPERATING EXPENSES
The Company's operating expenses for the quarter ended June 28, 1998, totaled
$21.3 million, or 8.3 percent of sales, compared to $22.4 million, or 8.9
percent of sales for the comparable quarter of the prior year. The decrease in
current year expenses is due primarily to the absence of approximately $3
million of selling expenses incurred during the comparable quarter of the prior
year in the company's pursuit of the Intercontinental Ballistic Missile (ICBM)
Prime Integration Program. The absence of those costs in the current year period
was partially offset by increased selling costs on other pursuits. Fiscal 1999
operating expenses, as a percent of sales, are expected to be approximately 8.5
percent.
INTEREST EXPENSE
The Company's interest expense for the quarter ended June 28, 1998 was $5.7
million, a decrease of $1.9 million compared to $7.6 million for the comparable
quarter in the prior year. The large decrease was driven by significantly
reduced borrowings outstanding in the current quarter, as compared to the
comparable quarter of the prior year. Total borrowings outstanding (including
notes payable, and the current and long-term portions of the long-term debt) at
June 28, 1998, were $64.6 million less than total borrowings outstanding at June
29, 1997, due to scheduled debt repayments, as well as debt pre-payments made in
fiscal 1998.
INTEREST INCOME
Interest income for the quarter ended June 28, 1998, was $.3 million, compared
to $.8 million for the comparable quarter of the prior year, a decrease of $.5
million. The decrease in the fiscal 1999 quarter is driven by the absence of
interest income earned on higher average cash balances in the fiscal 1998
quarter, as cash balances during the fiscal 1998 quarter included approximately
$40 million in proceeds from the Company's February, 1997 sale of its former
Marine Systems Group. These proceeds were later used in fiscal 1998 to pre-pay a
portion of the Company's outstanding long-term debt.
INCOME TAXES
The quarters ended June 28, 1998, and June 29, 1997, respectively, reflect
effective income tax rates of 15 and 0 percent. These tax rates differ from
statutory tax rates due to the partial recognition of available tax-loss
carryforwards. Recognition of such carryforwards is expected to continue to
reduce future tax expense. It is currently expected that required payments for
taxes in fiscal 1999 will also be reduced due to the aforementioned tax-loss
carryforwards. However, the Company may be subject to the provisions of the
Alternative Minimum Tax (AMT), in which case tax payments could be required. To
the extent that AMT is required to be paid currently, the resulting deferred tax
asset can be carried forward indefinitely, and can be recovered via reductions
in tax payments on future taxable income.
NET INCOME
Net income reported for the quarter ended June 28, 1998, was $15.8 million, an
increase of $1.1 million, or 7.8 percent, when compared with net income of $14.7
million for the comparable quarter of the prior year. The increase was primarily
due to a
combination of increased sales volume, improved gross margins, lower operating
expenses, and reduced interest costs, partially offset by $2.8 million higher
tax expense in the current quarter ended June 28, 1998, as compared to the
comparable quarter of the prior year.
LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL CONDITION
Cash used by operations totaled $13.1 million for the quarter ended June 28,
1998, a reduction in cash usage of $5.3 million, when compared with cash used by
operations of $18.4 million in the comparable quarter of the prior year. The
reduced level of cash usage in the quarter ended June 28, 1998, resulted from a
combination of factors, the most significant of which included improved working
capital management and improved profitability for the quarter ended June 28,
1998, as compared to the comparable quarter of the prior year. Cash usage for
the quarter ended June 28, 1998, also included approximately $8 million in
payments for legal settlements settled in prior years. See "Contingencies"
below.
Cash used in investing activities for the quarter ended June 28, 1998, was $4.5
million, a $1.6 million increase in cash used, compared to cash used by
investing activities of $2.9 million in the comparable quarter of the prior
year. This difference primarily represented increased capital expenditures in
the current year. The Company currently expects capital expenditures to be as
much as $45-$50 million for fiscal 1999. This represents a significant increase
in capital spending relative to fiscal 1998. The increased planned expenditures
are the result of facilitization costs required to prepare for significant
expected growth in the space propulsion business. The increase is primarily
associated with orders received from Boeing in fiscal 1999, totaling
approximately $1.7 billion, for the production related to solid rocket boosters
for the Delta Space Launch Vehicle family. Planned expenditures also include
facilitization spending associated with moving the Company's Joliet, Illinois
operations to the Radford Army Ammunition Plant in Virginia, and capital
spending relating to the electronic fuze business, acquired from Motorola in
fiscal 1998. At June 28, 1998, the Company had no borrowings outstanding against
its bank revolving credit facility. Outstanding letters of credit of $38.7
million reduced amounts available on this facility to $236.3 million at June 28,
1998.
On October 24, 1997, the Company entered into an agreement with Hercules
Incorporated (Hercules) providing for the disposition of the 3.86 million shares
of Company common stock held by Hercules. The shares represent the stock issued
by the Company in connection with the March 15, 1995 acquisition of the Hercules
Aerospace Company operations from Hercules (Aerospace Operations).
Under the agreement with Hercules, during the quarter ended December 28, 1997
the Company registered for public offering approximately 2.78 million shares
(previously unregistered) held by Hercules. The offering was completed on
November 21, 1997. No new shares were issued in the offering nor did the Company
receive any proceeds from the offering. The remaining 1.1 million shares held by
Hercules became subject to a put/call arrangement under which Hercules can
require the Company to purchase the shares in four equal installments of 271,000
shares during each of the four calendar quarters of 1998. The Company can
likewise require Hercules to sell the shares to the Company in four equal
installments during each of the four calendar quarters of 1998. The price for
shares purchased under the put/call arrangement is equal to the per share net
proceeds realized by Hercules in the secondary public offering, $55.32. In late
fiscal 1998, the Company did repurchase the first installment of 271,000 shares,
for approximately
$15 million. In May and August 1998, the Company repurchased the second and
third installments, respectively, of 271,000 shares, each for approximately $15
million. The Company's present intention is to purchase the remaining 271,000
shares covered by the put/call arrangement, although no definitive decision has
been made to do so.
During the first quarter of fiscal 1998, the Company completed a $50 million
stock repurchase program started in fiscal 1996. In connection with that
program, the Company made repurchases in the three months ended June 29, 1997 of
approximately 140,000 shares, for approximately $6.0 million. On October 22,
1997, the Company's Board of Directors authorized the Company to repurchase up
to an additional 1.0 million shares of its common stock. It is currently
expected that any purchases made under this buy-back plan would be subject to
market conditions and the Company's compliance with its debt covenants.
Effective November 10, 1997, the Company entered into an agreement to amend its
Credit Agreement that provides the Company expanded flexibility with respect to
certain restricted payments, including payments for stock repurchases. As of
June 28, 1998, the Company's revised debt covenants permit it to expend up to an
additional $58.3 million in total, in connection with all share repurchases. In
connection with this new repurchase program, the Company has repurchased 165,300
shares through June 28, 1998, at a cumulative cost of $10.0 million, or $60.34
per share. No repurchases were made under this plan during the three-month
period ended June 28, 1998. While it is currently the Company's intention to
continue stock repurchases under the program, there can be no assurance that the
Company will repurchase all or any portion of the remaining shares or as to the
timing or terms thereof.
The Company's total debt (notes payable, current portion of long-term debt, and
long-term debt) as a percentage of total capitalization decreased to 42 percent
on June 28, 1998, from 43 percent on March 31, 1998. This decrease reflects
principal repayments of $4.5 million on the bank term debt during the quarter
ended June 28, 1998, as well as increased equity, due primarily to fiscal 1999
net earnings to date.
In June 1995, the Company and claimants reached an agreement to settle the
Accudyne "qui tam" lawsuit. Terms of the agreement include payments by the
Company of $12.0 million, consisting of payments of $.5 million, $3.0 million,
$4.0 million, and $4.5 million, to be made in June 1995, April 1996, April 1997,
and June 1998, respectively, plus interest at the three year Treasury Bill rate.
The final payment of $4.5 million was paid during the quarter ended June 28,
1998.
Based on the financial condition of the Company at June 28, 1998, the Company
believes that future operating cash flows, combined with existing cash balances,
and the availability of funding under its line of credit, will be adequate to
fund the future growth of the Company, as well as to service its long-term debt
obligations.
CONTINGENCIES
As a U.S. Government contractor, the Company is subject to defective pricing and
cost accounting standards non-compliance claims by the Government. Additionally,
the Company has substantial Government contracts and subcontracts, the prices of
which are subject to adjustment. The Company believes that resolution of such
claims and price adjustments made or to be made by the Government for open
fiscal years (1987 through 1998) will not materially exceed the amount provided
in the accompanying balance sheets.
The Company is a defendant in numerous lawsuits that arise out of, and are
incidental to, the conduct of its business. Such matters arise out of the normal
course of business and relate to
product liability, intellectual property, Government regulations, including
environmental issues, and other issues. Certain of the lawsuits and claims seek
damages in large amounts. In these proceedings, no director, officer, or
affiliate is a party or a named defendant.
The Company is involved in three "qui tam" lawsuits brought by former employees
of the Aerospace operations acquired from Hercules in March 1995. The first
involves allegations relating to submission of false claims and records,
delivery of defective products, and a deficient quality control program. The
second involves allegations of mischarging of work performed under government
contracts, misuse of government equipment, other acts of financial mismanagement
and wrongful termination claims. The Government did not join in either of these
lawsuits. Under the terms of the agreements relating to the Aerospace
acquisition, all litigation and legal disputes arising in the ordinary course of
the acquired operations will be assumed by the Company except for a few specific
lawsuits and disputes including the two qui-tam lawsuits referred to above. On
May 15, 1998, Hercules announced that it had agreed to a settlement in the first
qui tam lawsuit, which has since been approved by the court. Under terms of the
purchase agreement with Hercules, the Company's maximum combined settlement
liability for both of these qui tam matters is approximately $4 million, for
which the Company has fully reserved. In July, 1998 the Company paid such amount
in satisfaction of its liability related to the matter. The Company also agreed
to reimburse Hercules for 40 percent of all legal costs incurred after March 15,
1995, relating to these two actions. In the third qui tam lawsuit, the Company
received a partially unsealed complaint in March, 1997 alleging labor
mischarging to the Intermediate Nuclear Force (INF) contract, and other
contracts. Damages are not specified in this civil suit. The Company and
Hercules have agreed to share equally the external attorney's fees and
investigative fees and related costs and expenses of this action until such time
as a determination is made as to the applicability of the indemnification
provisions of the purchase agreement. In March 1998, the Company and Hercules
settled with the Department of Justice on the portion of the complaint alleging
labor mischarging to the INF contract and agreed to pay $2.25 million each,
together with relator's attorney's fees of $150 thousand each, which was paid in
April 1998. The Department of Justice has declined to intervene in the remaining
portion of the complaint.
The Company has also been served with a complaint in a civil action alleging
violation of the False Claims Act and the Truth in Negotiations Act. The
complaint alleges defective pricing on a government contract. Based upon
documents provided to the company in connection with the action, the Company
believes that the U.S. Government may seek damages and penalties of
approximately $5 million.
The Company is a defendant in a patent infringement case brought by Cordant
Technologies (formerly Thiokol Corporation), which the Company believes is
without merit. The complaint does not quantify the amount of damages sought.
Through its analysis of an October 27, 1997, court filing, the Company now
believes that, based on an economist's expert testimony, Cordant Technologies
may seek lost profits, interest and costs of approximately $240 million. Even if
the Company is found liable, it believes that damages should be based upon a
reasonable royalty of less than $5 million. The court has bifurcated the trial,
with the liability issue being tried first, and if liability is found, the
damages issue being tried second. The liability issue was tried in January 1998,
after which the court requested, and the parties submitted, post-trial briefs. A
decision on the liability issue is not expected until several months after
submission of the parties' post-trial briefs. In the judgment of management, the
case will not have a material adverse effect upon the Company's future financial
condition or results of operations. However, there can be no assurance that the
outcome of the case will not have a material adverse effect on the Company.
During fiscal 1998, the Company substantially completed the requirements of the
M117 Bomb reclamation contract. The contract contained a priced option, having
approximate contract value less than $5 million, whereby the customer could
require the reclamation of additional quantities, given that such option be
exercised within the terms and conditions of the contract. On August 4, 1997,
the customer informed the Company that it was exercising the option. The
Company, based on advise from its counsel, maintains that the option exercise
was invalid and has therefore not performed on the option. The Company is
currently appealing the validity of the option to the United States Court of
Appeals, based on the Company's continued belief that such exercise was invalid.
In late December 1997, the Company was informed by the customer that the Company
was being terminated for default on the contract. The Company expects the
appeals process to conclude in calendar 1998. Depending on the outcome of the
appeal, which will drive the outcome of the termination for default, management
currently estimates that the range of possible adverse impact to the Company's
operating earnings is from $0-$4 million.
The Company is subject to various local and national laws relating to protection
of the environment and is in various stages of investigation or remediation of
potential, alleged, or acknowledged contamination. At June 28, 1998, the accrued
liability for environmental remediation of $31.7 million represents management's
best estimate of the present value of the probable and reasonably estimable
costs related to the Company's known remediation obligations. It is expected
that a significant portion of the Company's environmental costs will be
reimbursed to the Company. As collection of those reimbursements is estimated to
be probable, the Company has recorded a receivable of $9.6 million, representing
the present value of those reimbursements at June 28, 1998. Such receivable
primarily represents the expected reimbursement of costs associated with the
Aerospace operations, acquired from Hercules in March, 1995, whereby the Company
generally assumed responsibility for environmental compliance at Aerospace
facilities. It is expected that much of the compliance and remediation costs
associated with these facilities will be reimbursable under U.S. government
contracts, and that those environmental remediation costs not covered through
such contracts will be covered by Hercules under various indemnification
agreements. The Company's accrual for environmental remediation liabilities and
the associated receivable for reimbursement thereof, have been discounted to
reflect the present value of the expected future cash flows, using a discount
rate, net of estimated inflation, of 4.5 percent. The following is a summary of
the Company's amounts recorded for environmental remediation at June 28, 1998
(in millions):
ACCRUED ENVIRONMENTAL ENVIRONMENTAL COSTS -
LIABILITY REIMBURSEMENT RECEIVABLE
--------------------------------------------------------------------------------------
Amounts (Payable)/Receivable $(40.7) $12.5
Unamortized Discount 9.0 (2.9)
--------------------------------------------------------------------------------------
Present Value Amounts
(Payable)/Receivable $(31.7) $9.6
--------------------------------------------------------------------------------------
At June 28, 1998, the estimated discounted range of reasonably possible costs of
environmental remediation is between $31.7 and $56.0 million. The Company does
not anticipate that resolution of the environmental contingencies in excess of
amounts accrued, net of recoveries, will materially affect future operating
results.
In future periods, new laws or regulations, advances in technologies, outcomes
of negotiations/litigations with regulatory authorities and other parties,
additional information about the ultimate remedy selected at new and existing
sites, the Company's share of the cost of such remedies, changes in the extent
and type of site utilization, the number of parties found liable at each site,
and their ability to pay are all factors that could significantly change the
company`s estimates.
It is reasonably possible that management's current estimates of liabilities for
the above contingencies could change in the near term, as more definitive
information becomes available.
YEAR 2000
The company utilizes a significant amount of computer hardware and software
programs and operating systems across the entire organization, including
applications used in manufacturing, product development, financial business
systems, and various administrative functions. To the extent that this hardware
and software contains source code that is unable to appropriately interpret the
upcoming calendar year 2000, some level of modification, or even replacements of
such applications will be necessary.
The company's process for becoming "Year 2000" compliant includes activities to
increase awareness of the issue across the company, assess where the company has
issues, determine proposed resolutions, validate those proposed resolutions, and
finally, implement system solutions. The Company has substantially completed its
assessment of applications within the Company that are not Year 2000 compliant
and is in varying stages of determining appropriate resolutions to the issues
identified. The Company currently expects to complete all business critical
internal hardware and software modification and testing by early calendar 1999.
In addition, the Company has initiated formal communications with all of its
significant suppliers and customers to determine their Year 2000 compliance
readiness and the extent to which the company is vulnerable to any third party
Year 2000 issues. However, there can be no guarantee that the systems of other
companies on which the Company's systems rely will be converted to Year 2000
compliant systems in a timely manner, or that a failure to convert by another
company, or a conversion that is incompatible with the Company's systems, would
not have a material adverse effect on the company.
Given information known at this time about the Company's systems having such
issues, coupled with the Company's ongoing, normal course-of-business efforts to
upgrade or replace business critical systems and software applications as
necessary, it is currently expected that Year 2000 costs, the majority of which
are expected to be incurred in fiscal 1999, will not have an impact exceeding a
range of $5-$10 million on the Company's liquidity or its results of operations.
These expected impacts have been incorporated into the Company's operating plans
for fiscal 1999. These costs include incremental personnel costs, consulting
costs, and costs for the modification of existing hardware and software. These
costs will be funded through cash flows from operations and are expensed as
incurred. Purchased hardware and software will be capitalized in accordance with
normal policy. The costs of the project and the timing in which the Company
believes it will complete the necessary Year 2000 modifications are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain resources,
third party modification plans, and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could differ
materially from those anticipated. Specific factors that might cause such
material differences include, but are not limited to, the success of the Company
in identifying systems and
programs having Year 2000 issues, the nature and amount of programming required
to upgrade or replace the affected programs, the availability and cost of
personnel trained in this area, and the extent to which the company might be
adversely impacted by third party (suppliers, customers, etc.) failure to
remediate their own Year 2000 issues. Failure by the Company and/or its
suppliers and customers (in particular, the U.S. Government, on which the
Company is materially dependent) to complete Year 2000 compliance work in a
timely manner could have a material adverse effect on the Company's operations.
INFLATION
In the opinion of management, inflation has not had a significant impact upon
the results of the Company's operations. The selling prices under contracts, the
majority of which are long term, generally include estimated cost to be incurred
in future periods. These cost projections can generally be negotiated into new
buys under fixed-price government contracts, while actual cost increases are
recoverable on cost-type contracts.
RISK FACTORS
Certain of the statements made and information contained in this report,
excluding historical information, are "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include those relating to fiscal 1999 sales, gross margin, operating
expenses, senior subordinated debt prepayment, tax payments and capital
expenditures. Also included are statements relating to cost growth and
reimbursement prospects for the Explosive "D" contract and the likelihood that
the contract's option will be exercised, the realization of net deferred tax
benefits, the repurchase of Company common stock generally, and from Hercules in
particular, the funding of future growth and long-term debt repayment,
environmental remediation costs and reimbursement prospects, the financial and
operating impact of the resolution of environmental and litigation contingencies
in general, resolution of the Cordant Technologies matter and M117 contract
termination for default in particular, and the ultimate cost and impact of the
Company's Year 2000 compliance effort. Such forward-looking statements involve
risks and uncertainties that could cause actual results or outcomes to differ
materially. Some of these risks and uncertainties are set forth in connection
with the applicable statements. Additional risks and uncertainties include, but
are not limited to, changes in government spending and budgetary policies,
governmental laws and other rules and regulations surrounding various matters
such as environmental remediation, contract pricing, changing economic and
political conditions in the United States and in other countries, international
trading restrictions, outcome of union negotiations, customer product
acceptance, the Company's success in program pursuits, program performance,
continued access to technical and capital resources, supply and availability of
raw materials and components, timely compliance with the technical requirements
of the Year 2000 issue, including timely compliance by the Company's vendors and
customers, and merger and acquisition activity within the industry. All
forecasts and projections in this report are "forward-looking statements", and
are based on management's current expectations of the Company's near-term
results, based on current information available pertaining to the Company,
including the aforementioned risk factors. Actual results could differ
materially.
PART II -- OTHER INFORMATION
ITEM 2. LEGAL PROCEEDINGS
The registrant has previously reported that, at the time it acquired
Hercules Aerospace Company ("HAC") from Hercules Incorporated ("Hercules"), HAC
was involved in two lawsuits alleging violations of the False Claims Act (known
as "QUI TAM" actions) brought by former employees who had been subject to a HAC
reduction-in-force. The first QUI TAM action, captioned UNITED STATES EX REL.,
KATHERINE A. COLUNGA, ET. AL. V. HERCULES INCORPORATED (the "Colunga Case"), was
filed in the U.S. District Court for the District of Utah, Central Division. The
first complaint was filed under seal on October 24, 1989. The second amended
complaint was filed on April 16, 1992. The alleged false claims appear to be
principally based on an allegedly deficient quality control program. The second
QUI TAM action, captioned UNITED STATES EX REL., BENNY D. HULLINGER, ET. AL. V.
HERCULES INCORPORATED, was filed under seal in the U.S. District Court for the
District of Utah, Central Division. The original complaint was filed under seal
on March 11, 1992, and removed from under seal on August 15, 1994. The first
amended complaint was filed on November 9, 1994. The complaint alleges various
causes of action, including labor and material mischarging and misuse of special
tooling and government property. Damages are not specified. The U.S. Government
investigated both QUI TAM cases and declined to take part in either lawsuit.
Under the terms of the Purchase Agreement relating to the acquisition
of HAC: (i) all liability associated with and all responsibility for continuing
defense of litigation incurred in the ordinary course of business of HAC has
been assumed by the registrant, except for the QUI TAM lawsuits described above;
and (ii) the registrant agreed to indemnify and reimburse Hercules for a portion
of the claims (collectively, the "Litigation Claims") arising out of, relating
to, or incurred in connection with the above HAC QUI TAM actions (collectively,
the "Hercules Actions"). The Company's liability to Hercules for the Litigation
Claims (other than with respect to Litigation Claims consisting of external
attorney's and investigative fees and related costs and expenses (collectively,
the "Legal Costs")) is limited to approximately $4 million, which has been paid.
The Company also has agreed to reimburse Hercules for 40 percent of all Legal
Costs incurred from and after the closing of the HAC Acquisition with respect to
the Hercules Actions. The Company and Hercules have also entered into a Joint
Defense Agreement with respect to the Hercules Actions. On May 15, 1998,
Hercules announced an agreement to settle the Colunga Case, subject to Court
approval. On July 7, 1998, the Court approved the settlement and dismissed the
case.
The registrant has previously reported that, in March 1997 the Company
received a partially unsealed complaint, filed on an unknown date, in a QUI TAM
action by a former employee alleging violations of the False Claims Act. The
action has since been identified as UNITED STATES OF AMERICA EX REL. P. ROBERT
PRATT AND P. ROBERT PRATT, INDIVIDUALLY VS. ALLIANT TECHSYSTEMS INC. AND
HERCULES INCORPORATED, which was filed in the United States District Court,
Central District of California. The action alleges labor mischarging to the
Intermediate Nuclear Force ("INF") contract and other contracts at the
registrant's Bacchus Works facility in Magna, Utah. Damages are not specified.
The registrant and Hercules have agreed to share equally the external attorney's
fees and investigative fees and related costs and expenses of this action until
such time as a determination is made as to the applicability of the
indemnification provisions of the HAC Purchase Agreement. In March 1998, the
registrant and Hercules settled with the Department of Justice on the portion of
the complaint alleging labor mischarging to the INF contract and agreed to pay
$2.25 million each, together with relator's attorney's fees of $150,000 each,
which amounts were paid in April 1998. The Department of Justice has declined to
intervene in the remaining portion of the complaint.
Incorporated herein by reference is note 5 of Notes to Financial
Statements included in Item 1 of Part I of this report.
ITEM 5. OTHER INFORMATION
Attached to this report as Exhibit 99 is a list of the registrant's
directors and executive officers, as of the date of this report, which reflects
the following changes since June 1, 1998: Deletion: Galen K. Johnson, Vice
President and Treasurer; New title: Scott S. Meyers, Vice President, Treasurer
and Chief Financial Officer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit No. Description
----------- -----------
10.1 Separation Agreement and General Release dated April 15, 1998,
between the registrant and Donald E. Willis
10.2 Consulting/retirement arrangement between the registrant and
Richard Schwartz
27 Financial Data Schedule
99 Alliant Techsystems Inc. Directors and Executive Officers
(b) Reports on Form 8-K.
During the quarterly period ended June 28, 1998, the registrant
filed no reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLIANT TECHSYSTEMS INC.
Date: August 6, 1998 By: /s/ Charles H. Gauck
Name: Charles H. Gauck
Title: Secretary
(On behalf of the registrant)
Date: August 6, 1998 By: /s/ Scott S. Meyers
Name: Scott S. Meyers
Title: Vice President, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
ALLIANT TECHSYSTEMS INC.
FORM 10-Q
EXHIBIT INDEX
Exhibit No. Description Method of Filing
----------- ----------- ----------------
10.1 Separation Agreement and General Release dated April 15, 1998,
between the registrant and Donald E. Willis . . . . . . . . . Filed herewith electronically
10.2 Consulting/retirement arrangement between the registrant and Incorporated by reference to
Richard Schwartz. . . . . . . . . . . . . . . . . . . . . . . registrant's proxy statement dated
July 2, 1998--Other Plans and
Agreements with Executive
Officers, page 24
27 Financial Data Schedule. . . . . . . . . . . . . . . . . . . . Filed herewith electronically
99 Alliant Techsystems Inc. Directors and Executive Officers . . . Filed herewith electronically