ATK FY02 Earnings Per Share From Continuing Operations Rise 15 Percent To $3.67
FY02 Sales Increase 58 Percent To $1.8 Billion; Free Cash Flow Totals $119 Million
FY03 Sales Guidance Increased; EPS, Cash Guidance Confirmed
ATK Board Approves 3-For-2 Stock Split
Summary – Continued strong performance in core businesses and two major strategic acquisitions boosted ATK fiscal year 2002 sales, earnings, and cash flow ahead of the company’s guidance for the year. Record operating margins of 12.4 percent and a 58-percent rise in sales to $1.8 billion drove EPS from continuing operations up 15 percent to $3.67. Free cash flow more than doubled to $119 million, allowing the company to pay back more than $130 million of debt. The acquisitions of ATK Thiokol Propulsion and the Federal(R) and CCI(R)/Speer(R) ammunition and related businesses solidified the company’s leadership positions in propulsion and ammunition and set the stage for continued internal and external growth. Given favorable market conditions and strong operating momentum, the company is raising its sales guidance for FY03, confirming previous cash guidance, and confirming that it will be at the high end of its previous EPS guidance range. In recognition of prospects for continued growth, the board of directors approved a 3-for-2 stock split. – End summary
ATK (Alliant Techsystems,
NYSE: ATK), the world’s leading supplier of solid propulsion systems and the
nation’s largest manufacturer of ammunition, said fiscal year 2002 earnings
per share from continuing operations rose 15 percent to $3.67 from $3.20 a
year ago. (All per-share figures reflect a 3-for-2 common stock split
effective Sept. 7, 2001. They have not been adjusted for a 3-for-2 stock
split announced today that is payable on or about June 10, 2002.)
Sales for the year, which ended March 31, increased 58 percent to
$1.802 billion from $1.142 billion a year ago. New revenues resulting from
the acquisitions of ATK Thiokol Propulsion and the Federal and CCI/Speer
ammunition and related businesses and higher sales of small-caliber and
medium-caliber ammunition were the principle factors in the growth.
Fourth-quarter earnings per share from continuing operations rose
17 percent to $1.03 from 88 cents in the same period a year ago, while sales
for the quarter increased 59 percent to $515 million from $324 million last
year.
“Fiscal year 2002 was an outstanding year by every measure,” said Paul
David Miller (PDM), chairman and chief executive officer. “Performance in our
core businesses was strong as the ATK team delivered sales growth, improved
earnings, and robust cash flow. We also benefited from two major strategic
acquisitions that doubled the size of the company and solidified our
leadership positions in solid propulsion systems and ammunition. Our strong
operating momentum together with increasing opportunities in areas where we
excel, such as gun-launched precision munitions and propulsion for missile
defense programs, gives us increased confidence in our ability to continue to
deliver on our commitments.”
Other key FY02 performance factors:
* EBIT margins (earnings before interest and income taxes as a percentage
of sales) rose to a record 12.4 percent from 11.9 percent a year ago,
reflecting strong core business performance and acquisition synergies.* Cash flow as indicated by earnings before interest, taxes, depreciation,
and amortization (EBITDA) was $302 million or $12.89 per share in fiscal
year 2002, compared with $181 million or $8.53 per share last year.* Free cash flow (cash from operations less capital expenditures)
generated during the year increased to $119 million from $50 million a
year ago due to improved profitability, working capital management, and
the benefits of income tax strategies. This strong performance allowed
the company to pre-pay approximately $121 million of debt in addition to
approximately $11 million in scheduled debt payments.* Orders rose to $1.4 billion from $1.2 billion last year. Major orders
booked included propulsion for missile defense and strategic missile
programs, composite structures for space launch vehicles, the annual
portion of multi-year awards for ammunition production, and next-
generation tank ammunition.* Contracted backlog at year end was $3.5 billion. Total backlog, which
includes contracts awarded but for which the company is not yet
authorized to incur costs, plus the value of unexercised options, was
approximately $5.6 billion.* Aerospace Group sales more than doubled to $1.066 billion from
$506 million a year ago, reflecting new revenues from ATK Thiokol
Propulsion.* Defense Group sales rose 15 percent to $773 million from $674 million
last year, driven by higher volume from small-caliber and medium-caliber
ammunition programs and new revenues from the acquired ammunition
businesses.
Positioned for Continued Growth in FY03
“We are entering fiscal year 2003 with strong performance momentum and a
clear strategy for growth,” said PDM. “We have re-shaped the company
organizationally to key on keeping pace with all opportunities in the legacy
lanes of propulsion and ammunition. Most importantly, we took the step to
participate fully in the future of precision munitions — especially
gun-launched munitions. We are also continuing to pursue external growth
opportunities that will build on our acquisitions of ATK Thiokol Propulsion,
the Federal and CCI/Speer ammunition and related businesses, and most recently
the ordnance division of Boeing, which is expected to close by the end of May.
Strong cash flow will enable us to continue to aggressively pay down debt,
providing the strategic flexibility to pursue both internal and external
growth opportunities. We remain confident that we will continue to deliver on
our commitments in fiscal year 2003.”
ATK said it continues to expect fiscal year 2003 earnings per share from
continuing operations to be at the high end of the $4.77 to $4.81 range. The
guidance for FY03 sales has been increased to between $2.025 billion and
$2.050 billion. The projection for free cash flow remains in excess of
$100 million, and the EBIT margin rate is expected to be in excess of 13
percent. For both the first and second quarters of the year, the company
expects earnings per share from continuing operations to be in the $1.03 to
$1.06 range.
All estimates for fiscal year 2003 earnings per share and EBIT margin
rates reflect the adoption on April 1, 2002, of Statement of Financial
Accounting Standards (FAS) No. 142, “Goodwill and Other Intangible Assets,”
which, among other things, eliminates the amortization of goodwill and certain
intangibles. To facilitate comparisons of earnings per share estimates with
historical results, amortization of goodwill and other intangibles in the
first and second quarters of fiscal year 2002 was $2.6 million and
$4.2 million, respectively. Amortization of goodwill and other intangibles
for fiscal years 2002 and 2001, both of which ended March 31, was
$15.4 million and $2.7 million, respectively.
In recognition of ATK’s strong operating performance and prospects for
continued growth, the company’s board of directors has approved a 3-for-2
common stock split, which was announced in a separate news release today.
ATK is a $2 billion aerospace and defense company with leading positions
in propulsion, composite structures, munitions, and precision capabilities.
The company, which is headquartered in Edina, Minn., employs approximately
11,600 people and has three business groups: Aerospace, Precision Systems,
and Ammunition. ATK news and information can be found on the Internet at
http://www.atk.com.
The forecasts, projections, expectations, and opportunities for
anticipated earnings per share, sales, EBIT margins, and cash flow included in
this news release are “forward-looking statements” as defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve risks and uncertainties that could cause actual results to differ
materially from anticipated results, including changes in governmental
spending and budgetary policies, economic conditions, the company’s
competitive environment, the timing of awards and contracts, the outcome of
contingencies, including litigation and environmental remediation, program
performance, and sales projections, in addition to other factors identified in
ATK’s filings with the Securities and Exchange Commission.
Webcast Information: ATK will webcast its investor conference call on
fiscal year 2002 results at 10:00 a.m. Eastern Daylight Time today. The live
audio web cast will be available on the investor relations page of ATK’s web
site at http://www.atk.com. Information about downloading free Windows Media
Player software, which is required to access the webcast, is available on the
website. For those who cannot participate in the live webcast, a telephone
recording of the conference call will be available for one month after the
call. The telephone number is 719-457-0820, and the confirmation code is
726355.
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED INCOME STATEMENTS
(In thousands except QUARTERS ENDED YEARS ENDED
per share data) March 31 March 31 March 31 March 31
2002 2001 2002 2001
Sales $514,694 $323,897 $1,801,605 $1,141,949
Cost of sales 397,863 257,421 1,420,348 905,574
Gross margin 116,831 66,476 381,257 236,375
Operating expenses:
Research and development 6,274 4,571 20,589 11,575
Selling 16,505 5,963 44,063 24,372
General and administrative 31,324 19,988 92,923 64,334
Total operating expenses 54,103 30,522 157,575 100,281
Earnings before interest
and income taxes 62,728 35,954 223,682 136,094
Interest expense (19,928) (7,168) (84,005) (33,738)
Interest income 370 402 1,199 1,038
Earnings from continuing
operations before
income taxes 43,170 29,188 140,876 103,394
Income tax provision 16,405 10,040 53,533 35,473
Minority interest expense,
net of income taxes 1,240
Income from continuing
operations 26,765 19,148 86,103 67,921
Loss on disposal of discontinued
operations, net of income taxes (10) (4,660)
Income before
extraordinary loss 26,755 19,148 81,443 67,921
Extraordinary loss on early
extinguishments of debt,
net of income taxes (1,124) (12,116)
Net income $25,631 $19,148 $69,327 $67,921
Basic earnings per common share:
Income from continuing
operations $1.07 $0.91 $3.83 $3.28
Discontinued operations (0.21)
Extraordinary loss (.04) (0.54)
Basic earnings per common share $1.03 $0.91 $3.08 $3.28
Diluted earnings per common share:
Income from continuing
operations $1.03 $0.88 $3.67 $3.20
Discontinued operations (0.20)
Extraordinary loss (.04) (0.52)
Diluted earnings per common share $.99 $0.88 $2.95 $3.20
Average number of
common shares 24,965 21,059 22,497 20,723
Average number of common
and dilutive shares 25,931 21,800 23,464 21,233
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data) March 31, 2002 March 31, 2001
Assets
Current assets:
Cash and cash equivalents $8,513 $27,163
Net receivables 432,823 214,724
Net inventory 125,308 54,136
Deferred income tax asset 62,299 16,478
Other current assets 42,467 20,322
Total current assets 671,410 332,823
Net property, plant, and equipment 464,830 303,188
Goodwill 748,798 117,737
Prepaid and intangible pension assets 269,504 106,048
Other assets and deferred charges 56,750 19,708
Total assets $2,211,292 $879,504
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $4,805 $69,200
Accounts payable 84,602 71,758
Contract advances and allowances 61,257 34,494
Accrued compensation 97,670 38,487
Accrued income taxes 4,408 11,873
Other accrued liabilities 119,279 66,151
Total current liabilities 372,021 291,963
Long-term debt 867,638 207,909
Deferred income tax liability 65,091 28,636
Post-retirement and post-employment
benefits liability 235,639 108,203
Other long-term liabilities 114,102 44,461
Total liabilities 1,654,491 681,172
Contingencies
Common stock - $.01 par value
Authorized - 60,000,000 shares Issued
and outstanding 25,229,812 shares
at March 31, 2002 and
14,070,569 at March 31, 2001 289 185
Additional paid-in-capital 478,489 231,598
Retained earnings 334,507 265,180
Unearned compensation (4,864) (3,854)
Other comprehensive income (14,122) (6,140)
Common stock in treasury, at cost
3,625,702 shares held at March 31, 2002
and 4,426,202 at March 31, 2001 (237,498) (288,637)
Total stockholders' equity 556,801 198,332
Total liabilities and
stockholders' equity $2,211,292 $879,504
ALLIANT TECHSYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) YEARS ENDED
March 31, 2002 March 31, 2001
Operating activities
Net income $69,327 $67,921
Adjustments to net income to arrive
at cash provided by operating activities:
Depreciation 53,928 36,533
Amortization of intangible assets
and unearned compensation 24,745 8,447
Deferred income tax (4,387) 11,714
Loss (gain) on disposal of property 1,894 (251)
Minority interest expense, net of income taxes 1,240
Loss on disposal of discontinued
operations, net of income taxes 4,660
Extraordinary loss on early extinguishment
of debt, net of income taxes 12,116
Changes in assets and liabilities:
Receivables (15,846) 30,157
Inventory (6,872) (507)
Accounts payable (22,453) (6,224)
Contract advances and allowances 24,222 (37,188)
Accrued compensation 10,703 5,518
Accrued income taxes 19,450 4,443
Accrued environmental (5,009) (2,191)
Pension and post-retirement benefits (23,443) (35,028)
Other assets and liabilities 17,777 (8,724)
Cash provided by operating activities 162,052 74,620
Investing activities
Capital expenditures (42,884) (24,755)
Acquisition of businesses (714,353) (1,400)
Proceeds from sale of a
portion of a subsidiary (2,000)
Proceeds from sale of property,
plant, and equipment 276 9,709
Proceeds from sale of operations 17,800
Cash (used for) provided
by investing activities (758,961) 1,354
Financing activities
Net borrowings on line of credit (49,000)
Payments made on bank debt (452,866) (55,650)
Payments made to extinguish debt (276,800)
Proceeds from issuance of long-term debt 1,325,000
Proceeds from issuance of stock 13,011
Payments made for debt issue costs (43,985)
Payments made for stock issue costs (8,137)
Net purchase of treasury shares (2,697) (4,652)
Proceeds from employee stock compensation plans 24,733 14,726
Cash provided by (used for) financing activities 578,259 (94,576)
Decrease in cash and cash equivalents (18,650) (18,602)
Cash and cash equivalents -
beginning of period 27,163 45,765
Cash and cash equivalents - end of period $8,513 $27,163
