ATK Reports FY13 Third Quarter Operating Results

               ATK Reports FY13 Third Quarter Operating Results

ATK Increases FY13 Full-Year Sales and EPS Guidance

PR Newswire

ARLINGTON, Va., Feb. 5, 2013

ARLINGTON, Va., Feb. 5, 2013 /PRNewswire/ -- ATK (NYSE: ATK) today reported
operating results for the third quarter of its Fiscal Year 2013, which ended
on December 30, 2012. Orders for the quarter were $1.4 billion, up from $701
million in the prior-year quarter, bringing the year-to-date book-to-bill
ratio to 1.2, driven by strong orders in ATK's Aerospace and Sporting Groups.
Third quarter year-over-year sales of $1.0 billion were down 5.5 percent,
largely driven by the loss of the contract for operation and maintenance of
the U.S. Army's Radford Army Ammunition Plant (RFAAP).

Margins of 10.1 percent in the third quarter were up compared with the
prior-year quarter of 9.4 percent. Excluding sales and associated profit from
contracts at RFAAP and the absence of an accrual regarding a previously
disclosed settlement related to the LUU flares litigation (the LUU flares
accrual), FY13 third quarter margins as adjusted were 9.8 percent compared to
11.7 percent in the prior year quarter (see reconciliation table for details).
The decrease was driven by higher pension expense and lower sales on higher
margin programs in the energetics division and the lack of the reversal of the
2010-2012 long-term incentive accrual recorded in the prior year, partially
offset by increased profit in the Sporting and Aerospace Groups. Fully diluted
earnings per share were $1.93 compared to $1.51 in the prior-year period.
Excluding sales and associated profit from the RFAAP contract and the LUU
flares accrual, as adjusted fully diluted EPS was $1.84 compared to the
prior-year quarter of $2.03 (see reconciliation table for details). Please see
segment and corporate results below.

Key contract awards for the company in the third quarter include NASA's Space
Launch System and Advanced Booster projects, commercial aircraft business, a
U.S. Air Force Weather Satellite study and spacecraft structures orders. The
Defense Group also recorded key contract awards including the AAR-47 and the
XM25 programs, and orders and sales volumes were strong in the Sporting Group,
where ATK also continued its trend of improved operating margins.

"Our results this past quarter reflect ATK's strength in our core markets,
expanding capabilities, improved competitiveness, and successful execution
across the enterprise," said Mark DeYoung, ATK President and CEO. "We are
focused on delivering sustainable revenues, improved earnings, free-cash flow
and shareholder value."

SUMMARY OF REPORTED RESULTS
The following table presents the company's results for the third quarter of
the fiscal year, which ended December 30, 2012 (in thousands).

Sales:
          Quarters Ended                              Nine Months Ended
          December    January     $         %         December     January     $         %
          30, 2012    1, 2012               Change    30, 2012     1, 2012               Change
                                  Change                                       Change
Aerospace $                                       $          $
Group              $ 301,843   $ (720)  (0.2)%    906,078      988,148    $(82,070) (8.3)%
          301,123
Defense   467,477     572,580     (105,103) (18.4)%   1,466,089    1,593,032   (126,943) (8.0)%
Group
Sporting  287,582     243,061     44,521    18.3%     836,104      720,977     115,127   16.0%
Group
Total     $           $           $         (5.5)%    $            $           $(93,886) (2.8)%
sales     1,056,182   1,117,484   (61,302)            3,208,271   3,302,157



Income before Interest, Income Taxes, and Noncontrolling Interest (Operating Profit):
          Quarters Ended                           Nine Months Ended
          December   January    $        %         December   January    $         %
          30, 2012   1, 2012             Change    30, 2012   1, 2012              Change
                                Change                                   Change
Aerospace $        $        $       7.6%      $         $          $         (4.8)%
Group     37,478     34,839     2,639              109,506   115,060    (5,554)
Defense   53,389     87,000     (33,611) (38.6)%   209,295    241,695    (32,400)  (13.4)%
Group
Sporting  30,215     22,786     7,429    32.6%     76,142     75,436     706       0.9%
Group
Corporate (14,223)   (39,201)   24,978   63.7%     (46,839)   (48,820)   1,981     4.1%
Total     $         $         $                 $         $
operating 106,859    105,424    1,435    1.4%      348,104   383,371    $(35,267) (9.2)%
profit



SEGMENT RESULTS
ATK operates in a three business group structure: the Aerospace Group, the
Defense Group and the Sporting Group.

AEROSPACE GROUP
Third quarter sales were flat at $301 million compared to $302 million in the
prior-year quarter reflecting strength in the space structures and components
division, offset by lower sales in the space systems operations division.

Operating profit in the quarter increased 8 percent to $37 million compared to
$35 million in the prior-year quarter, reflecting higher award fees in ATK's
propulsion business.

DEFENSE GROUP
Sales in the third quarter decreased 18 percent to $467 million compared to
$573 million in the prior-year quarter. Absent sales related to RFAAP in the
prior year, sales were $461 million compared to $526 million in the prior-year
quarter (see reconciliation table for details). The decrease was driven by
lower domestic and international sales in the small caliber systems and
energetics divisions.

Operating profit for the quarter fell 39 percent to $53 million compared to
$87 million in the prior-year quarter. Absent sales and profit related to
RFAAP, adjusted profit was down 33 percent (see reconciliation table for
details), driven by lower sales and mix as noted above.

SPORTING GROUP
Third quarter sales increased by 18 percent to $288 million compared to $243
million in the prior-year quarter. The increase in sales was driven primarily
by higher unit volume and a previously announced price increase for
ammunition.

Operating profit in the third quarter increased by 33 percent to $30 million
compared to $23 million in the prior-year quarter, driven by increased sales
as noted above. Margin performance in the third quarter continues the trend of
improved margins year over year.

CORPORATE AND OTHER
In the third quarter, corporate and other expenses totaled $14 million
compared to $39 million in the prior-year quarter, reflecting the absence of
the LUU flares accrual, partially offset by increased pension expense. The tax
rate for the quarter was 31.9 percent compared to 42.0 percent in the prior
year. The lower tax rate is primarily due to the absence of the impact of the
non-deductible portion of the LUU flares accrual from the prior year and
increased benefits from the Domestic Manufacturing Deduction. Interest expense
was $14 million compared to $20 million in the prior-year quarter, reflecting
lower rates and borrowings compared to the prior year. Year-to-date free cash
flow was $57 million compared to $27 million in the prior-year period (see
reconciliation table for details), reflecting collection of a significant
receivable and lower capital expenditures, partially offset by higher pension
contributions and tax payments. 

OUTLOOK
ATK is raising its full-year FY13 sales guidance to a range of approximately
$4.25 billion to $4.3 billion, up from previous guidance of $4.1 billion to
$4.2 billion. Full-year FY13 EPS guidance is now $7.90 to $8.10, up from
previous guidance of $7.40 to $7.70, reflecting the higher sales expectations
as well as improved operating performance. Full-year FY13 free cash flow
guidance remains in the range of $175 million to $200 million.

"ATK's outlook for the remainder of the fiscal year reflects strengthened
revenue and profitability as well as continued strong free cash flow," said
Neal Cohen, ATK Executive Vice President and Chief Financial Officer.

On February 4, 2013, ATK announced it is changing the pension formula for
affected employees who currently earn a benefit under ATK's defined benefit
pension plans. Effective July 1, 2013, affected employees will earn benefits
under a new cash balance pension formula and will also be eligible for an
enhanced company match under the ATK 401(k) Plan. All of the changes are
prospective and all benefits earned through June 30, 2013, will remain
unchanged.

"In order to win new business and to remain competitive, ATK is making the
change to better manage our benefit costs," said Cohen. "The new program
provides an industry-competitive retirement benefit to our employees that
allows the company to have predictable and sustainable benefit costs for the
long run."

The effective tax rate for the year is expected to be approximately 30
percent, consistent with previously reported expectations. This expected tax
rate reflects the retroactive extension of the Federal R&D tax credit as a
result of the American Taxpayer Relief Act of 2012, signed into law on January
2, 2013.

Reconciliation of Non-GAAP Financial Measures

Sales, Margins, and Earnings Per Share

The Sales, Margins, and Earnings Per Share (EPS) excluding the results of
Radford and the LUU flares accrual are non-GAAP financial measures that ATK
defines as Sales, Margins, and EPS excluding the impact of these items. ATK
management is presenting these measures so a reader may compare Sales,
Margins, and EPS excluding these items as the measures provide investors with
an important perspective on the operating results of the Company. ATK
management uses these measurements internally to assess business performance,
and ATK's definition may differ from those used by other companies.

Total ATK for the Quarter Ending
December 30, 2012:
                  Sales      EBIT     Margin Taxes   After-tax EPS
As reported       $1,056,182 $106,859 10.1%  $29,693 $63,231   $1.93
Radford           (6,741)    (4,259)         (1,661) (2,598)   (0.09)
As adjusted       $1,049,441 $102,600 9.8%   $28,032 $60,633   $1.84
January 1, 2012:
                  Sales      EBIT     Margin Taxes   After-tax EPS
As reported       $1,117,484 $105,424 9.4%   $36,085 $49,759   $1.51
Radford           (46,275)   (13,565)        (5,290) (8,275)   (0.25)
LUU Flare Accrual            33,305          8,065   25,240    0.77
As adjusted       $1,071,209 $125,164 11.7%  $38,860 $66,724   $2.03



Defense Group for the Quarter Ending
December 30, 2012:
            Sales    EBIT     Margin
As reported $467,477 $53,389  11.4%
Radford     (6,741)  (4,259)
As adjusted $460,736 $49,130  10.7%
January 1, 2012:
            Sales    EBIT     Margin
As reported $572,580 $87,000  15.2%
Radford     (46,275) (13,565)
As adjusted $526,305 $73,435  14.0%



Free Cash Flow

Free cash flow is defined as cash provided by (used for) operating activities
less capital expenditures. ATK management believes free cash flow provides
investors with an important perspective on the cash available for debt
repayment, cash dividends, share repurchases 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.

                             Nine Months   Nine Months
                             Ended         Ended         Projected Year Ending

                             December 30,  January 1,    March 31, 2013
                             2012          2012
Cash used for/provided by    $  118,400   $  124,740   $275,000‒$300,000
operating activities
Capital expenditures         (61,351)      (97,916)      ~(100,000)
Free cash flow               $   57,049  $   26,824  $175,000‒$200,000



ATK is an aerospace, defense, and commercial products company with operations
in 21 states, Puerto Rico, and internationally. News and information can be
found on the Internet at www.atk.com.

Certain information discussed in this press release constitutes
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. Although ATK believes that the expectations reflected in
such forward-looking statements are based on reasonable assumptions, it can
give no assurance that its expectations will be achieved. Forward-looking
information is subject to certain risks, trends, and uncertainties that could
cause actual results to differ materially from those projected. Among these
factors are: assumptions related to the profitability of commercial aerospace
structures programs; uncertainties related to the development of NASA's new
Space Launch System; demand for commercial and military ammunition; changes in
federal and state firearms and ammunition regulation; changes in governmental
spending, budgetary policies, including the impacts of potential sequestration
under the Budget Control Act of 2011, and product sourcing strategies; the
company's competitive environment; risks inherent in the development and
manufacture of advanced technology; risks associated with diversification into
new markets; assumptions regarding the company's long-term growth strategy;
assumptions regarding growth opportunities in international and commercial
markets; increases in commodity costs, energy prices, and production costs;
the terms and timing of awards and contracts; program performance; program
terminations; changes in cost estimates related to relocation of facilities;
the outcome of contingencies, including litigation and environmental
remediation; actual pension asset returns and assumptions regarding future
returns, discount rates and service costs; capital market volatility and
corresponding assumptions related to the company's shares outstanding; the
availability of capital market financing; changes to accounting standards;
changes in tax rules or pronouncements; economic conditions; and the company's
capital deployment strategy, including debt repayment, dividend payments,
share repurchases, pension funding, mergers and acquisitions – including the
related costs and any integration thereof. ATK undertakes no obligation to
update any forward-looking statements. For further information on factors that
could impact ATK, and statements contained herein, please refer to ATK's most
recent Annual Report on Form 10-K and any subsequent quarterly reports on Form
10-Q and current reports on Form 8-K filed with the U.S. Securities and
Exchange Commission.



ALLIANT TECHSYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(preliminary and unaudited)
                      QUARTERS ENDED                NINE MONTHS ENDED
(In thousands except  December 30,   January 1,     December 30,  January 1,
per share data)       2012                          2012
                                     2012                        2012
Sales                 $   1,056,182  $  1,117,484   $  3,208,271  $ 3,302,157
Cost of sales         836,555        871,680        2,510,754     2,549,873
Gross profit          219,627        245,804        697,517       752,284
Operating expenses:
Research and          13,947         14,624         43,869        41,711
development
Selling               41,535         39,989         121,670       121,421
General and           57,286         85,767         183,874       205,781
administrative
Income before
interest, loss on
extinguishment of     106,859        105,424        348,104       383,371
debt, income taxes,
and noncontrolling
interest
Interest expense      (14,074)       (19,783)       (51,986)      (69,933)
Interest income       139            203            326           431
Loss on
extinguishment of     -              -              (11,773)      -
debt
Income before income
taxes and             92,924         85,844         284,671       313,869
noncontrolling
interest
Income tax provision  29,693         36,085         85,330        112,308
Net income            63,231         49,759         199,341       201,561
Less net income
attributable to       56             74             276           368
noncontrolling
interest
Net income
attributable to       $   63,175     $  49,685      $  199,065    $ 201,193
Alliant Techsystems
Inc.
Alliant Techsystems
Inc.'s earnings per
common share:
Basic                 $   1.95       $  1.52        $  6.13       $ 6.10
Diluted               1.93           1.51           6.10          6.06
 Cash dividends    0.26           0.20           0.66          0.60
paid per share
Alliant Techsystems
Inc.'s
weighted-average
number of common
shares outstanding:
Basic                     32,454        32,781         32,493       32,966
Diluted               32,652         32,955         32,641        33,181
Net Income (from      63,231         49,759         199,341       201,561
above)
Other comprehensive
income (loss), net
of tax:
Pension and other
postretirement
benefit
liabilities:
Reclassification of
prior service
(credit) costs for
pension and
postretirement
benefit plans         (1,352)        (1,346)        (4,055)       (4,039)
recorded to net
income (loss), net
of tax (expense)
benefit of $841,
$844, $2,524, and
$2,533
Reclassification of
net actuarial loss
for pension and
postretirement
benefit plans
recorded to net       19,519         15,198         58,561        45,475
income (loss), net
of tax benefit of
$(12,279),
$(9,569),
$(36,897), and
$(28,705)
Valuation
adjustment for
pension and
postretirement        -              -              1,268         -
benefit plans, net
of tax benefit of
$0, $0, $(732), and
$0
Change in fair
value of
derivatives, net of
income taxes of       (1,064)        6,061          (2,399)       (32,056)
$681, $(3,875),
$1,534, and
$20,495,
respectively
Change in fair
value of
available-for-sale
securities, net of    41             (95)           (191)         (54)
income taxes of
$(26), $60, $122,
and $34,
respectively
Total other                                         $           $     
comprehensive         $   17,144  $   19,818  53,184        9,326
income(loss)
Comprehensive         80,375         69,577         252,525       210,887
income
Less comprehensive
income attributable   56             74             276           368
to noncontrolling
interest
Comprehensive
income attributable   $   80,319  $           $  252,249  $     
to Alliant                           69,503                       210,519
Techsystems Inc.



ALLIANT TECHSYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(preliminary and unaudited)
(Amounts in thousands except share data)      December 30, 2012 March 31, 2012
ASSETS
Current assets:
 Cash and cash equivalents                $   361,921    $   568,813
 Net receivables                          1,254,710         1,341,998
 Net inventories                          303,252           258,495
Income tax receivable                    22,098            -
 Deferred income tax assets               108,123           101,720
 Other current assets                     48,192            51,512
 Total current assets                2,198,296         2,322,538
Net property, plant, and equipment            581,055           604,498
Goodwill                                      1,251,536         1,251,536
Noncurrent deferred income tax assets         112,518           134,719
Deferred charges and other non‑current assets 216,523           228,455
Total assets                        $  4,259,928    $ 4,541,746
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt             $     50,000  $    30,000
 Accounts payable                         210,010           333,980
 Contract advances and allowances         125,348           119,824
 Accrued compensation                     114,958           121,901
 Accrued income taxes                     -                 6,433
 Other accrued liabilities                260,260           307,642
 Total current liabilities           760,576           919,780
Long‑term debt                                1,047,118         1,272,002
Postretirement and postemployment benefits    104,665           111,392
liabilities
Accrued pension liability                     763,689           878,819
Other long‑term liabilities                   126,083           123,002
 Total liabilities                   $  2,802,131    $ 3,304,995
Commitments and contingencies (Note 14)
Common stock—$.01 par value:
 Authorized—180,000,000 shares
 Issued and outstanding—32,742,750 shares
at December 30, 2012 and 33,142,408 shares at 328               332
March 31, 2012
Additional paid‑in‑capital                    545,917           537,921
Retained earnings                             2,419,213         2,241,711
Accumulated other comprehensive loss          (857,414)         (910,598)
Common stock in treasury, at cost— 8,812,699
shares held at December 30, 2012 and          (660,479)         (642,571)
8,413,014 shares held at March 31, 2012
 Total Alliant Techsystems Inc.      1,447,565         1,226,795
stockholders' equity
Noncontrolling interest                       10,232            9,956
 Total equity                        1,457,797         1,236,751
 Total liabilities and equity        $  4,259,928    $ 4,541,746



ALLIANT TECHSYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(preliminary and unaudited)
                                           NINE MONTHS ENDED
(In thousands)                             December 30, 2012  January 1, 2012
Operating activities
Net income                                 $     199,341      $    201,561
Adjustments to net income to arrive at
cash used for operating activities:
Depreciation                               73,578             69,165
Amortization of intangible assets          8,400              8,357
Amortization of debt discount              5,116              10,651
Amortization of deferred financing costs   2,948              3,753
Deferred income taxes                      (17,655)           (7,945)
Loss on extinguishment of debt             11,773             -
Loss (gain) on disposal of property        638                (4,679)
Share-based plans expense                  10,878             8,321
Excess tax benefits from share-based       (2)                (23)
plans
Changes in assets and liabilities:
Net receivables                            87,288             (112,251)
Net inventories                            (44,757)           (91,197)
Accounts payable                           (113,411)          (55,274)
Contract advances and allowances           5,525              (1,289)
Accrued compensation                       (7,076)            (40,852)
Accrued income taxes                       (22,976)           37,500
Pension and other postretirement benefits  (30,975)           25,780
Other assets and liabilities               (50,233)           73,162
Cash provided by operating activities      118,400            124,740
Investing activities
Capital expenditures                       (61,351)           (97,916)
Proceeds from the disposition of           19                 7,329
property, plant, and equipment
Cash used for investing activities         (61,332)           (90,587)
Financing activities
Payments made on bank debt                 (10,000)           (15,000)
Payments made to extinguish debt           (409,000)          (300,000)
Proceeds from issuance of long-term debt   200,000            -
Payments made for debt issue costs         (1,458)            -
Purchase of treasury shares                (24,997)           (49,991)
Dividends paid                             (21,563)           (19,921)
Proceeds from employee stock compensation  3,056              3,943
plans
 Excess tax benefits from           2                  23
share-based plans
Cash used for financing activities         (263,960)          (380,946)
Decrease in cash and cash equivalents      (206,892)          (346,793)
Cash and cash equivalents - beginning of   568,813            702,274
period
Cash and cash equivalents - end of period  $     361,921      $    355,481
Supplemental Cash Flow Disclosure:
 Noncash investing activity:
                                           $     4,418        $    2,102
 Capital expenditures included in
accounts payable

Media Contact:                   Investor Contact:
Amanda Covington                 Steve Wold
Phone: 703-412-3231              Phone: 952-351-3056
E-mail: amanda.covington@atk.com E-mail: steve.wold@atk.com

SOURCE ATK

Website: http://www.atk.com
 
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