Raises FY09 EPS Guidance to $7.15 - $7.35
Fourth Quarter Earnings Per Share up 17 Percent to $1.83; Full Year
Earnings Per Share up 21 Percent to $6.43
Fourth Quarter Net Income up 19 Percent to $64 Million; Full Year Net
Income up 23 percent to $226 Million
Fourth Quarter Sales up 12 Percent to More Than $1.1 Billion; Full Year
Sales up 17 Percent to $4.2 Billion
FY08 Orders Reach Record $6.5 Billion; Free Cash Exceeds $280 Million
MINNEAPOLIS, May 8 /PRNewswire-FirstCall/ -- Alliant Techsystems (NYSE:
ATK) reported today that earnings per share (EPS) in the fourth quarter of
fiscal year 2008, which ended on March 31, rose 17 percent over the
prior-year quarter to $1.83. Sales for the quarter surpassed $1.1 billion,
a 12 percent increase over the prior-year quarter. Net income for the
quarter rose 19 percent to $64 million.
For the full-year, EPS increased 21 percent to $6.43 and sales were up
17 percent to $4.2 billion. The company reported full-year net income of
$226 million, a 23 percent increase compared to the prior year, and
year-end free cash flow of $282 million (see reconciliation table for
details). The company recorded record orders for the year of $6.5 billion.
Full-year margins increased to 10.5 percent, up from 9.5 percent in the
prior year.
"2008 was another strong year for our company and our shareholders,"
said Dan Murphy, Chairman and CEO. "Our success in FY08 and the strength of
our orders profile position us for continued double-digit earnings growth
in FY09 and beyond."
SUMMARY OF REPORTED RESULTS
The following table presents the company's results for fiscal year 2008
and the fourth quarter ending March 31, 2008 (in thousands).
External Sales:
Quarters Ended
March 31, %
2008 March 31, 2007 $ Change Change
ATK Armament Systems $405,204 $376,092 $29,112 7.7%
ATK Launch Systems 286,387 277,557 8,830 3.2%
ATK Mission Systems 437,552 354,752 82,800 23.3%
Total external sales $1,129,143 $1,008,401 $120,742 12.0%
Years Ended
March 31, %
2008 March 31, 2007 $ Change Change
ATK Armament Systems $1,476,716 $1,276,228 $200,488 15.7%
ATK Launch Systems 1,217,461 1,078,194 139,267 12.9%
ATK Mission Systems 1,477,548 1,210,650 266,898 22.0%
Total external sales $4,171,725 $3,565,072 $606,653 17.0%
Income before Interest, Income Taxes, and Minority Interest (Operating
Profit):
Quarters Ended
%
March 31, 2008 March 31, 2007 $ Change Change
ATK Armament Systems $41,283 $34,064 $7,219 21.2%
ATK Launch Systems 40,388 39,656 732 1.8%
ATK Mission Systems 44,995 31,021 13,974 45.0%
Corporate (6,706) (18,736) 12,030
Total $119,960 $86,005 $33,955 39.5%
Years Ended
%
March 31, 2008 March 31, 2007 $ Change Change
ATK Armament Systems $139,603 $112,614 $26,989 24.0%
ATK Launch Systems 171,857 147,340 24,517 16.6%
ATK Mission Systems 150,166 114,566 35,600 31.1%
Corporate (24,531) (34,792) 10,261
Total $437,095 $339,728 $97,367 28.7%
SEGMENT RESULTS
In FY08, ATK operated three principal business groups: Armament Systems
(formerly known as Ammunition Systems); Launch Systems; and Mission
Systems.
ATK ARMAMENT SYSTEMS
On April 1, the Ammunition Systems group name changed to the Armament
Systems group. This change reflects the breadth of the group's business,
which includes ammunition, medium-caliber gun systems, energetics, and
accessories. Sales in the group increased eight percent to $405 million
compared to $376 million in the prior-year quarter. The increase reflects
continued strength in civil ammunition.
Earnings before interest, taxes, and minority interest (operating
profit) rose 21 percent to $41 million from $34 million in the prior-year
quarter, reflecting higher sales volume in civil ammunition, lower pension
expenses, and the absence of prior-year costs associated with an energetics
program. These were partially offset by higher raw material costs.
For the full year, sales in the Armament Systems group increased 16
percent to $1.5 billion compared to $1.3 billion in the prior year.
Operating profit for the year increased 24 percent to $140 million, from
$113 million in FY07.
ATK LAUNCH SYSTEMS
Sales in the Launch Systems group rose three percent to $286 million
compared to $278 million in the prior-year quarter. The increase reflects
higher sales in NASA programs, partially offset by anticipated lower sales
in strategic propulsion programs. Operating profit was $40 million, up
approximately $1 million from the prior-year quarter due to higher sales
volume and lower pension expenses.
For the full year, sales in the Launch Systems group rose 13 percent to
$1.2 billion, up from $1.1 billion in the prior year. Full-year operating
profit rose 17 percent to $172 million compared to $147 million in the
prior year.
ATK MISSION SYSTEMS
Sales in the Mission Systems group rose 23 percent to $438 million from
$355 million in the prior-year quarter. Organic sales rose 10 percent,
driven primarily by Ares I, advanced weapons, and composite structure
sales. Sales from the acquisition of Swales Aerospace added $48 million to
revenue, including revenue from a NASA service contract which is nearly
complete. Operating profit increased sharply to $45 million, a 45 percent
rise from the $31 million recorded in the prior-year quarter. The increase
reflects higher organic sales, additional sales from Swales Aerospace and
the absence of a one-time discretionary expense related to the pursuit of
an advanced weapons program, and lower pension expenses.
For the full year, sales in the Mission Systems group rose 22 percent
to $1.5 billion, compared to $1.2 billion in the prior year. Organic sales
increased 11 percent while sales from the acquisition of Swales Aerospace
contributed $134 million. Full-year operating profit rose 31 percent to
$150 million from $115 million in the prior year.
CORPORATE AND OTHER
In the fourth quarter, corporate and other expenses totaled $7 million
compared to $19 million in the prior-year period. The decrease was
primarily the result of prior-year expenses related to the termination of
an internal information system.
For the full year, corporate and other expenses totaled $25 million,
compared to $35 million in the previous year. The decrease resulted from
the same factors that drove the quarterly expenses.
OUTLOOK
The FY08 fourth-quarter and year-end results announced today do not
include potential charges related to the previously announced intention to
acquire the Information Systems and Geospatial businesses of MacDonald,
Dettwiler and Associates. If the transaction does not close, ATK could
incur a charge for transaction-related expenses that could be applied to
the fourth quarter. Additionally, the company's FY09 guidance does not
include any revenue, EBIT or free cash flow from the potential MDA
acquisition.
ATK is raising its FY09 EPS guidance to a range of $7.15 - $7.35, up
from its previous guidance of $7.10 - $7.30. The company continues to
expect sales of approximately $4.5 billion, in line with long-term organic
growth rates of 8-10 percent. Based primarily on increased operating
efficiencies, with additional benefit from reduced pension expenses, the
company projects FY09 operating margins to approach 11 percent.
In FY09, the company expects its average share count to be slightly
more than 36 million. The effective tax rate for the year is expected to be
approximately 37 percent. The tax rate assumes that the Federal R&D tax
credit will be extended retroactively. Pension expenses are expected to be
approximately $40 million. Capital expenditures in FY09 are anticipated to
be approximately $115 million. ATK expects to generate free cash flow of
approximately $260 million (see reconciliation table for details).
Reconciliation of Non-GAAP Financial Measures
Free Cash Flow
Free cash flow is defined as cash provided by operating activities less
capital expenditures. ATK management believes free cash flow provides
investors with an important perspective on the cash available for debt
repayment, share repurchase, and acquisitions after making the capital
investments required to support ongoing business operations. ATK management
uses free cash flow internally to assess both business performance and
overall liquidity.
Projected
Year Ended Year Ending
March 31, March 31,
2008 2009
(in thousands) (in thousands)
Cash provided by operating activities $382,751 $~375,000
Capital expenditures (100,709) ~(115,000)
Free cash flow $282,042 $~260,000
ATK is a premier aerospace and defense company with more than 17,000
employees in 21 states and over $4.5 billion in revenue. News and
information can be found on the Internet at http://www.atk.com.
Certain information discussed in this press release constitutes
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. Although ATK believes that the expectations reflected
in such forward-looking statements are based on reasonable assumptions, it
can give no assurance that its expectations will be achieved.
Forward-looking information is subject to certain risks, trends, and
uncertainties that could cause actual results to differ materially from
those projected. Among these factors are: assumptions relating to the
closing of the recently announced acquisition of MDA's Information Systems
and Geospatial Services businesses including the timing of the transaction,
financing, and transaction costs; delays in NASA's human-rated launch
programs; changes in governmental spending, budgetary policies and product
sourcing strategies; the company's competitive environment; risks inherent
in the development and manufacture of advanced technology; increases in
commodity costs, energy prices, and production costs; the terms and timing
of awards and contracts; program performance; program terminations; changes
in cost estimates related to relocation of facilities; the outcome of
contingencies, including litigation and environmental remediation; actual
pension asset returns and assumptions regarding future returns, discount
rates and service costs; the availability of capital market financing;
changes to accounting standards; changes in tax rules or pronouncements;
economic conditions; and the company's capital deployment strategy,
including debt repayment, share repurchases, pension funding, mergers and
acquisitions and any integration thereof. ATK undertakes no obligation to
update any forward-looking statements. For further information on factors
that could impact ATK, and statements contained herein, please refer to
ATK's most recent Annual Report on Form 10-K and any subsequent quarterly
reports on Form 10-Q and current reports on Form 8-K filed with the U.S.
Securities and Exchange Commission.
Media Contact: Investor Contact:
Bryce Hallowell Steve Wold
Phone: 952-351-3087 Phone: 952-351-3056
E-mail: bryce.hallowell@atk.com E-mail: steve.wold@atk.com
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands except per
share data) QUARTERS ENDED YEARS ENDED
March 31, March 31, March 31, March 31,
2008 2007 2008 2007
Sales $1,129,143 $1,008,401 $4,171,725 $3,565,072
Cost of sales 886,051 810,993 3,325,410 2,878,711
Gross profit 243,092 197,408 846,315 686,361
Operating expenses:
Research and development 23,965 22,521 68,333 61,533
Selling 38,638 30,296 131,068 99,687
General and administrative 60,529 58,586 209,819 185,413
Total operating expenses 123,132 111,403 409,220 346,633
Income before interest,
income taxes, and
minority interest 119,960 86,005 437,095 339,728
Interest expense (17,567) (21,903) (81,578) (76,144)
Interest income 425 469 1,431 1,212
Income before income taxes
and minority interest 102,818 64,571 356,948 264,796
Income tax provision 38,506 10,346 130,306 80,217
Income before minority
interest 64,312 54,225 226,642 184,579
Minority interest, net of
income taxes (45) 127 376 451
Net income $64,357 $54,098 $226,266 $184,128
Earnings per common share:
Basic $1.97 $1.64 $6.87 $5.43
Diluted 1.83 1.57 6.43 5.32
Average number of common
shares 32,682 33,040 32,924 33,885
Average number of common
and dilutive shares 35,112 34,553 35,208 34,591
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) March 31, 2008 March 31, 2007
Assets
Current assets:
Cash and cash equivalents $119,773 $16,093
Net receivables 797,988 733,304
Net inventories 205,825 170,602
Deferred income tax assets 88,282 75,333
Other current assets 35,568 33,686
Total current assets 1,247,436 1,029,018
Net property, plant, and equipment 492,336 454,748
Goodwill 1,236,196 1,163,186
Prepaid and intangible pension assets 25,280 27,998
Deferred charges and other non-current
assets 201,034 199,732
Total assets $3,202,282 $2,874,682
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $215,755 $153,572
Contract advances and allowances 81,624 80,904
Accrued compensation 147,287 123,696
Accrued income taxes 44,329 11,791
Other accrued liabilities 144,060 133,309
Total current liabilities 633,055 503,272
Long-term debt 1,455,000 1,455,000
Deferred income tax liabilities 38,316 22,278
Postretirement and postemployment
benefits liabilities 138,378 163,709
Accrued pension liability 84,267 89,383
Other long-term liabilities 108,238 83,159
Total liabilities 2,457,254 2,316,801
Contingencies
Common stock - $.01 par value
Authorized - 90,000,000 shares
Issued and outstanding 32,795,800 shares at
March 31, 2008 and 33,075,268 at
March 31, 2007 328 331
Additional paid-in-capital 467,857 477,554
Retained earnings 1,319,844 1,112,649
Accumulated other comprehensive loss (376,636) (424,075)
Common stock in treasury, at cost,
8,759,261 shares held at March 31, 2008
and 8,479,793 at March 31, 2007 (666,365) (608,578)
Total stockholders' equity 745,028 557,881
Total liabilities and
stockholders' equity $3,202,282 $2,874,682
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) YEARS ENDED
March 31, 2008 March 31, 2007
Operating activities
Net income $226,266 $184,128
Adjustments to net income to arrive at
cash provided by operating activities:
Depreciation 71,511 69,380
Amortization of intangible assets 5,975 6,772
Amortization of deferred financing costs 3,851 3,999
Write-off of debt issuance costs
associated with convertible notes 5,600 -
Deferred income taxes (15,742) 81,725
Loss on disposal of property 2,505 9,295
Minority interest, net of income taxes 376 451
Share-based plans expense 23,415 38,076
Excess tax benefits from share-based
plans (9,459) (3,539)
Changes in assets and liabilities:
Net receivables (27,028) 5,605
Net inventories (33,608) (30,726)
Accounts payable 49,066 (12,514)
Contract advances and allowances 720 31,237
Accrued compensation (1,143) 5,470
Accrued income taxes 54,786 (5,312)
Pension and other postretirement
benefits 32,179 (348,303)
Other assets and liabilities (6,519) 8,724
Cash provided by operating activities 382,751 44,468
Investing activities
Capital expenditures (100,709) (81,086)
Acquisition of business (103,685) -
Proceeds from the disposition of property,
plant, and equipment 362 603
Cash used for investing activities (204,032) (80,483)
Financing activities
Change in cash overdrafts - (63,036)
Payments made on bank debt - (20,250)
Payments made to extinguish debt - (225,346)
Proceeds from issuance of long-term debt - 575,000
Purchase of call options - (50,850)
Sale of warrants - 23,220
Payments made for debt issue costs (740) (10,564)
Net purchase of treasury shares (100,068) (208,027)
Proceeds from employee stock compensation
plans 16,310 19,332
Excess tax benefits from share-based plans 9,459 3,539
Cash (used for) provided by financing
activities (75,039) 43,018
Increase in cash and cash equivalents 103,680 7,003
Cash and cash equivalents - beginning of
period 16,093 9,090
Cash and cash equivalents - end of period $119,773 $16,093
SOURCE ATK
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Related links:
http://www.ATK.com
CONTACT:
Media, Bryce Hallowell, +1-952-351-3087,
bryce.hallowell@atk.com, Investors, Steve Wold, +1-952-351-3056,
steve.wold@atk.com, both of Alliant Techsystems
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