<PAGE>
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 September 29, 1996 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 October 31, 1996, the number of shares of the registrant's common
stock, par value $.01 per share, outstanding was 13,021,876 (excluding 841,737
treasury shares).
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Income Statements (Unaudited)
(In thousands except QUARTERS ENDED SIX MONTHS ENDED
per share data) -------------------------- ---------------------------
September 29 October 1 September 29 October 1
1996 1995 1996 1995
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Sales $272,498 $267,650 $530,521 $560,598
Cost of sales 223,685 217,354 438,500 459,358
------------ ----------- ------------ -----------
Gross margin 48,813 50,296 92,021 101,240
Operating expenses
Research and development 4,686 3,336 7,674 6,781
Selling 9,499 9,539 18,164 20,208
General and administrative 10,595 10,914 21,778 25,221
------------ ----------- ------------ -----------
Total operating expenses 24,780 23,789 47,616 52,210
------------ ----------- ------------ -----------
Income from operations 24,033 26,507 44,405 49,030
Miscellaneous income (expense) (77) (122) 989 1,521
------------ ----------- ------------ -----------
Earnings before interest and taxes 23,956 26,385 45,394 50,551
Interest expense (10,381) (11,735) (20,936) (22,604)
Interest income 62 316 323
------------ ----------- ------------ -----------
Income from continuing operations
before income taxes 13,637 14,650 24,774 28,270
Income tax provision 3,223 6,219
------------ ----------- ------------ -----------
Income from continuing operations 13,637 11,427 24,774 22,051
Loss from discontinued operations net of
income taxes (241) (800)
------------- ----------- ------------ -----------
Net income $ 13,637 $ 11,186 $ 24,774 $ 21,251
============= =========== ============ ===========
Earnings per common and common
equivalent share:
Continuing operations $ 1.02 $ .86 $ 1.85 $ 1.64
Discontinued operations (.02) (.06)
------------ ----------- ------------ -----------
Net income $ 1.02 $ .84 $ 1.85 $ 1.58
============= =========== ============ ===========
Average number of common and
common equivalent shares (thousands) 13,421 13,382 13,383 13,479
============= =========== ============ ===========
</TABLE>
See Notes to Financial Statements
<PAGE>
Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
------------------ ------------------
(In thousands except share data) September 29, 1996 March 31, 1996
------------------ ------------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 4,368 $ 45,085
Marketable securities 348 348
Receivables 242,515 246,567
Net inventory 108,350 100,246
Deferred income tax asset 28,462 28,462
Other current assets 14,673 4,723
-------- ----------
Total current assets 398,716 425,431
Net property, plant, and equipment 399,050 413,541
Goodwill 130,826 132,623
Deferred charges 13,971 14,751
Other assets 27,272 31,063
-------- ----------
Total assets $969,835 $1,017,409
======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 47,500 $ 45,000
Notes payable 14,324 2,756
Accounts payable 55,535 82,285
Contract advances and allowances 57,780 56,837
Accrued compensation 27,470 31,908
Accrued income taxes 9,104 9,310
Restructuring liability - current 16,069 26,782
Other accrued liabilities 101,006 112,365
-------- ----------
Total current liabilities 328,788 367,243
Long-term debt 325,000 350,000
Post-retirement and post-employment benefits liability 87,866 88,930
Pension and other long-term liabilities 40,388 43,219
Restructuring liability - long-term 515 2,040
Litigation settlement charges - long-term 4,500 8,500
-------- ----------
Total liabilities 787,057 859,932
Stockholders' Equity:
Common stock - $.01 par value
Authorized - 20,000,000 shares
Issued and outstanding 13,012,817 shares at September
29, 1996 and 12,965,542 at March 31, 1996 130 130
Additional paid-in-capital 249,367 249,814
Retained earnings (deficit) (30,024) (54,798)
Unearned compensation (2,541) (2,552)
Pension liability adjustment (1,189) (1,189)
Common stock in treasury, at cost (850,796 shares held at
September 29, 1996 and 898,071 at March 31, 1996) (32,965) (33,928)
-------- ----------
Total stockholders' equity 182,778 157,477
-------- ----------
Total liabilities and stockholders' equity $969,835 $1,017,409
======== ==========
</TABLE>
See Notes to Financial Statements
<PAGE>
Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
(In thousands) SIX MONTHS ENDED
------------------ ---------------
September 29, 1996 October 1, 1995
------------------ ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 24,774 $ 21,251
Adjustments to net income to arrive at cash
used for operations:
Depreciation 24,617 28,196
Amortization of intangible assets and unearned
compensation 4,130 4,541
Gain on disposal of property (22) (353)
Changes in assets and liabilities:
Receivables 4,050 (1,505)
Inventory (8,232) (19,629)
Accounts payable (27,022) (7,733)
Contract advances and allowances 944 (9,740)
Accrued compensation (4,438) 5,337
Accrued income taxes (206) 5,716
Accrued restructure liability (12,238) (15,334)
Other assets and liabilities (25,582) (28,130)
------------------ ---------------
Cash used for operations (19,225) (17,383)
------------------ ---------------
INVESTING ACTIVITIES
Capital expenditures (12,614) (8,581)
Business acquisition:
Purchase price finalization 29,891
Accrued transaction fees paid (5,770)
Proceeds from disposition of property,
plant, and equipment 2,380 813
Other investing activities, net 301 410
------------------ ---------------
Cash provided by (used for) investing activities (9,933) 16,763
------------------ ---------------
FINANCING ACTIVITIES
Net borrowings on line of credit 12,000 45,000
Payments made on long-term debt (22,500) (15,000)
Net purchase of treasury shares (2,341) (36,261)
Proceeds from exercised stock options 1,715 387
Other financing activities, net (433) (60)
------------------ ---------------
Cash used for financing activities (11,559) (5,934)
------------------ ---------------
Decrease in cash and cash equivalents (40,717) (6,554)
Cash and cash equivalents - beginning of period 45,085 26,138
------------------ ---------------
Cash and cash equivalents - end of period $ 4,368 $ 19,584
================== ===============
</TABLE>
See Notes to Financial Statements
<PAGE>
Notes to Financial Statements (Unaudited)
1. In interim accounting periods, the Company absorbs operating expenses
based upon sales volume using the anticipated relationship of such costs
to sales for the year. Accordingly, the Company had $7.2 million and $1.8
million of underabsorbed operating expenses recorded in other current
assets at September 29, 1996 and October 1, 1995, respectively.
2. During the six month period ended September 29, 1996, the Company made
principal payments on its Bank Term Loan of $22.5 million. Borrowings of
$12.0 million were outstanding against its revolving line of credit at
September 29, 1996. Letters of credit totaling $53.4 million reduced the
available line of credit to $159.6 million.
The remaining scheduled minimum loan payments on outstanding long-term
debt are as follows: fiscal 1997, $22.5 million; fiscal 1998, $50.0
million; fiscal 1999, $55.0 million; fiscal 2000, $55.0 million; fiscal
2001 and thereafter, $190.0 million.
3. No income taxes were paid for the six months ended September 29, 1996, or
October 1, 1995. The effective income tax rate of 0 percent in the current
six month period reflects the utilization of $24.8 million of available
federal and state loss carryforwards for tax purposes.
4. During fiscal 1996, the Company began a program to repurchase up to $50.0
million of its common stock. In connection with that program, the Company
had repurchased approximately 1.05 million shares of common stock as of
September 29, 1996, at an average price of $38.26 per share, for an
aggregate amount of $40.4 million.
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 1996)
will not materially exceed the amount provided in the accompanying balance
sheets.
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. The
Company records environmental remediation-related liabilities when the
event obligating the Company has occurred and the cost is both probable
and reasonably estimable. As of September 29, 1996, the Company had
reserves totaling $9.6 million available to cover all environmental clean-
up costs. In future periods, new laws, rules and 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, changes in the extent and type
of site utilization, the number of parties found liable at each site, and
their ability to pay could significantly change the Company's estimates.
As part of the acquisition of the Aerospace operations (Aerospace) from
Hercules, Inc. (Hercules), the Company has generally assumed
responsibility for environmental compliance at the Aerospace facilities.
There may also be significant environmental remediation costs associated
with the Aerospace facilities that will, at some locations, be initially
funded by the Company. It is expected that most of the compliance and
remediation costs associated with the Aerospace facilities will be
reimbursable under U.S. government contracts and that the portion of those
environmental
<PAGE>
remediation costs not covered through such contracts will be covered by
Hercules under various agreements. The estimated nondiscounted range of these
reasonably possible costs of study and remediation in the Aerospace
operations is between $0 and $27 million. Where the Company is required to
first conduct the remediation and then seek reimbursement from the U.S.
Government or Hercules, the Company's working capital may be materially
affected until the Company receives such reimbursement.
The estimated nondiscounted study and remediation costs to be incurred,
generally over the next three years for sites not acquired through the
Aerospace acquisition, could range from $4.6 million to $24.5 million.
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, government
regulations, including environmental issues, and other issues. Certain of the
lawsuits and claims seek damages in very large amounts. In these legal
proceedings, no director, officer, or affiliate is a party or a named
defendant.
The Company is involved in two "qui tam" lawsuits brought by former employees
of the Aerospace operations acquired from Hercules. One involves allegations
relating to submission of false claims and records, delivery of defective
products, and a deficient quality control program. The other 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 Aerospace operations will be assumed by the Company except for a few
specific lawsuits including the two qui tam lawsuits referred to above. The
Company has agreed to indemnify and reimburse Hercules for a portion of
litigation costs incurred, and a portion of damages, if any, awarded in these
lawsuits. Under terms of the purchase agreement with Hercules, the Company's
maximum settlement liability is approximately $4 million, for which the
Company has fully reserved at September 29, 1996.
While the results of litigation cannot be predicted with certainty,
management believes, based upon the advice of counsel, that the actions
seeking to recover damages against the Company either are without merit, are
covered by insurance and reserves, do not support any grounds for
cancellation of any contract, or are not likely to materially affect the
financial condition or results of operations of the Company, although the
resolution of any of such matters during a specific period could have a
material effect on the quarterly or annual operating results for that period.
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 and six month periods ended September 29,
1996 totaled $14.5 and $20.0 million, respectively. Interest paid during the
three and six month periods ended October 1, 1995 totaled $14.1 and $20.0
million, respectively.
The Company has entered into hedging transactions to protect against
increases in market interest rates on its long term debt. At September 29,
1996, the notional amount of amortizing interest rate swap agreements was
$143.75 million. Under the swap agreements, the Company currently pays an
average fixed rate of 6.9 percent and receives interest at a rate equal to
three-month LIBOR. The interest rate cap agreements limit the Company's LIBOR
exposure to 7.0 percent. The notional amount of these amortizing interest
rate cap agreements was $37.5 million at September 29, 1996.
<PAGE>
7. Effective April 1, 1996, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation." As permitted by SFAS No. 123, the Company has
elected to continue following the guidance of Accounting Principles Board
No. 25, "Accounting for Stock Issued to Employees" for measurement and
recognition of stock-based transactions with employees, and therefore the
adoption of SFAS No. 123 will not have a significant impact on the
Company's financial position or results of operations.
8. Earnings per common share are computed based upon the weighted average
number of common shares and common equivalent shares, consisting of the
dilutive effect of stock options outstanding during each year. Earnings
per common share assuming full dilution are substantially the same.
9. Certain reclassifications have been made to the fiscal year 1996 financial
statements, as previously reported, to conform to the current
classification. These reclassifications did not affect the net income from
operations, as previously reported.
10. 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 and six month
periods ended September 29, 1996, and October 1, 1995. The Company's
accounting policies are described in the notes to financial statements in
its fiscal year 1996 Annual Report on Form 10-K.
11. On October 10, 1996, the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position 96-1 (SOP 96-1) entitled
"Environmental Remediation Liabilities." The SOP provides authoritative
guidance on specific accounting issues relative to recognition,
measurement, display, and disclosure of environmental remediation
liabilities. The Company will be required to adopt the rule on April 1,
1997, although earlier adoption would be permitted. The Company is
currently in the process of determining what effect this new accounting
rule may have on the Company's operating results and financial condition.
Adoption will have no impact on cash flow.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Sales
Sales from continuing operations for the quarter ended September 29, 1996,
totaled $272.5 million, an increase of 4.8 million, or 1.8 percent, from $267.7
million for the comparable quarter in the prior year. Aerospace Systems Group
sales were $136.8 million for the quarter ended September 29, 1996, a decrease
of $9.7 million, or 6.6 percent, compared to $146.5 million in the comparable
quarter of the prior year. The decrease was due primarily to reduced Titan
program sales in the current quarter compared to the same period of the prior
year, as the program has transitioned from the development phase into the
initial stages of production. Defense Systems Group sales were $109.5 million
for the quarter ended September 29, 1996, an increase of $23.2 million, or 26.9
percent, compared to $86.3 million in the comparable quarter of the prior year.
The sales increase was primarily due to higher volume from tank ammunition and
medium caliber ammunition programs of $12 million and $6 million, respectively,
compared to the comparable quarter of the prior year, as well as revenues from
new programs, including sales of approximately $6 million from the Tactical
Unmanned Aerial Vehicle (TUAV) contract awarded to the Company in the first
quarter of fiscal 1997, and approximately $5 million of sales generated by the
Vehicle Launched Smart Anti-tank Systems (VLSAS) program. These sales increases
for the quarter ended September 29, 1996, were offset by approximately $10
million compared to the comparable quarter of the prior year due to the fiscal
1996 completion of the Combined Effects Munitions (CEM) program. Marine Systems
Group sales were $24.9 million for the quarter ended September 29, 1996, a
decrease of $7.2 million, or 22.4 percent, compared to $32.1 million in the
comparable quarter of the prior year, due primarily to reduced international
volume on the Mk 46 torpedo program. Emerging Business Group sales from
continuing operations were $9.0 million for the quarter ended September 29,
1996, compared to $7.9 million in the comparable quarter of the prior year.
Sales from continuing operations for the six month period ended September 29,
1996, totaled $530.5 million, a decrease of $30.1 million, or 5.4 percent, from
$560.6 million for the comparable period in the prior year. Aerospace Systems
Group sales were $281.3 million, a decrease of $6.2 million, or 2.2 percent,
from $287.5 million for the comparable period of the prior year, due primarily
to reduced Titan program sales in the current period compared to the same period
of the prior year, as the program has transitioned from the development phase
into the initial stages of production. Defense Systems Group sales were $192.8
million, an increase of $5.1 million, or 2.7 percent, from $187.7 million for
the comparable period in the prior year. The increased sales were primarily the
result of volume increases on tank ammunition and medium caliber ammunition
totaling approximately $13 million, as well as sales increases provided by new
programs including TUAV, Volcano (anti-tank munitions dispensers) and VLSAS.
These increases were offset by decreased sales of $30 million due to the fiscal
1996 program completion of CEM. Marine Systems Group sales were $52.7 million,
a decrease of $27.0 million, or 33.9 percent, from $79.7 million for the
comparable period in the prior year. The decrease was driven primarily by a $20
million sales decrease on the MK50 light weight torpedo program and an $8
million decrease on the Mine Neutralization System (MNS) program, due to
completion of those programs. Emerging Business Group sales from continuing
operations were $16.6 million, compared to $17.4 million for the comparable
period in the prior year. The Company expects sales for fiscal 1997 to be
approximately $1.2 billion.
<PAGE>
Gross Margin
The Company's gross margin for the quarter ended September 29, 1996, was $48.8
million, or 17.9 percent of sales, compared to $50.3 million, or 18.8 percent of
sales, for the comparable quarter of the prior year. Gross Margin for the
quarter decreased compared to the prior year quarter due to sales mix, as well
as cost growth, primarily due to technical issues on certain programs in the
Company's tactical propulsion business unit and on medium caliber ammunition and
fuzing programs. As a result of ongoing negotiations, these decreases were
offset by $3 million, which represents recognition of the reimbursement received
from a customer for indirect costs allocated to cost reimbursable contracts in
the Aerospace group.
Gross Margin for the six month period ended September 29, 1996, totaled $92.0
million, or 17.3 percent of sales, compared to $101.2 million, or 18.1 percent
of sales for the comparable period of the prior year. The decrease in gross
margin dollars was primarily driven by reduced volume on programs which were
substantially completed in fiscal 1996, primarily the MK50 torpedo program.
Margin rate decreased slightly due to sales mix, as well as cost growth,
primarily due to technical issues on certain programs in the Company's tactical
propulsion business unit and on medium caliber ammunition and fuzing programs.
As a result of ongoing negotiations, these gross margin decreases were offset by
$3 million, which represents recognition of the reimbursement received from a
customer for indirect costs allocated to cost reimbursable contracts in the
Aerospace group. Fiscal 1997 gross margin, as a percentage of sales, is
expected to be in the 16.5 - 17.5 percent range, down from 18.6% recorded in
fiscal 1996, due to the likely investment in certain significant program
opportunities which are critical to the Company's continued long term earnings
growth.
Operating Expenses
The Company's operating expenses for the quarter ended September 29, 1996,
totaled $24.8 million, 9.1 percent of sales, an increase of $1.0 million, or 4.2
percent, compared to $23.8 million, 8.9 percent of sales, in the comparable
quarter of the prior year. The increase, as a percentage of sales, was
primarily driven by increased research and development costs, as compared to the
same quarter of the prior year. These costs, as a percentage of sales, were
higher in the quarter ended September 29, 1996, due to increased research and
development spending associated with the Company's pursuit of the U.S.
Government's Evolved Expendable Launch Vehicle (EELV) program.
Operating expenses for the six month period ended September 29, 1996, totaled
$47.6 million, 9.0 percent of sales, a decrease of $4.6 million, or 8.8 percent,
compared to $52.2 million, 9.3 percent of sales, in the comparable six month
period of the prior year. The decrease, as a percentage of sales, was primarily
driven by decreased selling, and general and administrative costs as compared to
the comparable period of the prior year. These costs, as a percentage of sales,
were lower in the current period due to a more complete realization of the
synergistic benefits of combining selling resources and in having a larger
business base, both results of the Aerospace acquisition. Operating expenses
for fiscal 1997, as a percentage of sales, are expected to be approximately 8.5
to 9.0 percent, consistent with fiscal 1996.
<PAGE>
Miscellaneous Income
The Company's miscellaneous income decreased approximately $.5 million in the
six month period ending September 29, 1996, compared to the comparable period of
the prior year, due primarily to decreased royalty income received on the Mk 46
commercial torpedo program with Japan, which is nearing completion.
Interest Expense
The Company's interest expense decreased approximately $1.3 million during the
quarter ending September 29, 1996, primarily due to lower average balances
borrowed, as well as lower interest rates for the period, as compared to the
comparable quarter of the prior year. The Company's interest expense decreased
approximately $1.7 million during the six month period ending September 29,
1996, also due to lower average balances borrowed, as well as lower interest
rates for the period as compared to the comparable six month period of the prior
year.
Income Taxes
The three and six month periods ended September 29, 1996, reflect an effective
income tax rate of 0 percent compared to 22 percent for the comparable periods
of the prior fiscal year. The tax rate for the periods ended September 29,
1996, differs from statutory tax rates due to the utilization of available tax
loss carry forwards. Such carry forwards are expected to reduce future tax
expense and the associated tax payments.
Adoption of Accounting Standard
Effective April 1, 1996, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation." As
permitted by SFAS No. 123, the Company has elected to continue following the
guidance of Accounting Principles Board No. 25, "Accounting for Stock Issued to
Employees" for measurement and recognition of stock-based transactions with
employees, and therefore the adoption of SFAS No. 123 will not have a
significant impact on the Company's financial position or results of operations.
LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL CONDITION
- -----------------------------------------------------
Cash used by operations totaled $19.2 million for the six month period ended
September 29, 1996, an increase in cash usage of $1.8 million, when compared
with cash used by operations of $17.4 million in the comparable period of the
prior year. The slightly higher level of cash usage in the period ended
September 29, 1996 resulted from increased cash used for working capital. Cash
used in investing activities for the six month period ended September 29, 1996
was $9.9 million, a $26.7 million decrease from cash provided by investing
activities of $16.8 million in the comparable six month period of the prior
year. This difference was primarily the result of a $29.9 million payment
received in the prior year period, which reflected a purchase price adjustment
for the Aerospace operations, acquired from Hercules Inc., related to
accelerated receivables collections, and was offset by $5.8 million in payments
made by the Company in the same period for accrued transaction fees related to
the acquisition.
Net outlays for capital expenditures for the six month period ended September
29, 1996, totaled $12.6 million, or 2.4 percent of sales, an increase as a
percentage of sales, compared to capital expenditures of $8.6 million, or 1.5
percent of sales, in the comparable period of the prior year.
<PAGE>
The increased expenditures in the current period were primarily the result of
increased tooling expenditures for an Aerospace contract. The Company expects
capital expenditures, as a percentage of sales, to be approximately 2.5 percent
of sales for fiscal 1997.
At September 29, 1996, the Company had borrowings of $12.0 million outstanding
against its bank revolving credit facility. The borrowings were used primarily
to finance on-going operational needs. Outstanding letters of credit of $53.4
million further reduced amounts available on this facility to $159.6 million at
September 29, 1996.
The Company began a program to repurchase up to $50.0 million of its common
stock during fiscal 1996. In connection with that program, the Company had
repurchased approximately 1.05 million shares of common stock as of September
29, 1996, at an average price of $38.26 per share for an aggregate amount of
$40.4 million. Cash expenditures during the six month period ended September
29, 1996, were $3.6 million.
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 67.9
percent on September 29, 1996, compared to 71.6 percent on March 31, 1996. This
decrease reflects principal repayments on the bank term debt during the six
month period ended September 29, 1996, of $22.5 million, offset by $12 million
in borrowings under the bank revolving credit facility.
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 and $3.0
million, made in June 1995 and April 1996, respectively, and subsequent payments
to be made of $4.0 million and $4.5 million in April 1997 and June 1998,
respectively, plus interest at the three-year Treasury Bill rate. In addition,
legal costs of approximately $3.0 million have been paid. Accordingly, the
Company recorded an unusual charge of $15.0 million as of the fourth quarter of
the fiscal year ended March 31, 1995.
Based on the financial condition of the Company at September 29, 1996, the
Company believes that internal cash flows, combined with 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.
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 costs 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 in cost-type contracts.
<PAGE>
RISK FACTORS
- ------------
Except for the historical information contained herein, certain of the matters
discussed in this report are "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995, which involves risks and
uncertainties, including, but not limited to, changes in governmental 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, continued access to capital markets, 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.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 2. LEGAL PROCEEDINGS
Incorporated herein by reference is note 5 of Notes to Financial Statements
included in Item 1 of Part I of this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On August 6, 1996, the registrant held its annual meeting of
stockholders.
(b) At the above meeting, the following persons were elected directors to
serve until the next annual meeting of stockholders: R. Keith Elliott;
Thomas L. Gossage; Joel M. Greenblatt; Jonathan G. Guss; David E.
Jeremiah; Gaynor N. Kelley; Joseph F. Mazzella; Daniel L. Nir; and
Richard Schwartz.
(c) At the above annual meeting, the stockholders voted upon the following
proposals: (1) election of directors; (2) ratification of the
selection of Deloitte & Touche as independent accountants for the
fiscal year ending March 31, 1997; and (3) approval of a Non-Employee
Director Restricted Stock Plan. The votes cast on each of the above
proposals were as follows:
<TABLE>
<CAPTION>
Proposal Number (1):
-------------------
Votes Cast
----------
For Withheld
---------- --------
<S> <C> <C>
R. Keith Elliott 11,771,453 365,398
Thomas L. Gossage 11,770,925 365,926
Joel M. Greenblatt 11,749,225 387,626
Jonathan G. Guss 11,763,272 373,579
David E. Jeremiah 11,659,701 477,150
Gaynor N. Kelley 11,777,682 359,169
Joseph F. Mazzella 11,651,261 485,590
Daniel L. Nir 11,757,249 379,602
Richard Schwartz 11,766,393 370,458
Broker non-votes: None
</TABLE>
<TABLE>
<CAPTION>
Proposal Number (2):
-------------------
Votes Cast
----------
For Against Abstain
---------- ------- -------
<S> <C> <C> <C>
12,070,421 46,598 19,832
Broker non-votes: None
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Proposal Number (3):
----------------------
Votes Cast
----------
For Against Abstain
---------- --------- ----------
<S> <C> <C> <C>
10,791,282 1,280,888 64,681
Broker non-votes: None
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Alliant Techsystems Inc. Non-Employee Director
Restricted Stock Plan
10.2 Form of Restricted Stock Agreement
11 Computation of Earnings Per Common and Common
Equivalent Share
27 Financial Data Schedule
(b) Reports on Form 8-K.
During the quarterly period ended September 29, 1996, the registrant
filed no reports on Form 8-K.
<PAGE>
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: November 8, 1996 By: /s/ Charles H. Gauck
Name: Charles H. Gauck
Title: Secretary
(On behalf of the registrant)
Date: November 8, 1996 By: /s/ Scott S. Meyers
Name: Scott S. Meyers
Title: Vice President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
ALLIANT TECHSYSTEMS INC.
FORM 10-Q
EXHIBIT INDEX
The following exhibits are filed herewith electronically or incorporated herein
by reference. The applicable Securities and Exchange Commission File Number is
1-10582.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Method of Filing
------- ------------------------ ----------------
<S> <C> <C>
10.1 Alliant Techsystems Inc. Incorporated herein by
Non-Employee Director reference to Appendix B
Restricted Stock Plan to Proxy Statement dated
........................ July 3, 1996
10.2 Form of Restricted Filed herewith
Stock Agreement......... electronically
11 Computation of Earnings
Per Common and Common Filed herewith
Equivalent Share........ electronically
27 Financial Data Schedule. Filed herewith
electronically
</TABLE>
<PAGE>
Exhibit 10.2
RESTRICTED STOCK AGREEMENT
Award Granted To Award Grant Date Number of Shares
---------------- ---------------- ----------------
1. THE AWARD. Alliant Techsystems Inc., a Delaware corporation (the
"Company"), hereby awards to the individual named above (the "Director"), as of
the above Award Grant Date, the above Number of Shares of Common Stock, par
value $.01 per share, of the Company (the "Restricted Stock") on and subject to
the terms, conditions and restrictions set forth in this Restricted Stock
Agreement (this "Agreement") and in the Alliant Techsystems Inc. Non-Employee
Director Restricted Stock Plan (the "Plan").
2. RESTRICTIONS. The Restricted Stock is subject to the restrictions
described in Section 2.7 of the Plan for the Restricted Period defined in
Section 2.4 of the Plan, subject in each case to the other provisions of the
Plan.
3. INCOME TAXES. The Director is liable for any federal, state and local
income taxes applicable upon receipt of the Restricted Stock upon expiration of
the Restricted Period. The Director shall promptly pay to the Company, upon
demand, any withholding amount required by the Company to be collected as a
result of any such applicable income taxes.
4. ACKNOWLEDGEMENT. Certificates representing the Restricted Stock will
not be issued in the name of the Director until the Director dates and signs the
form of Acknowledgement below and returns to the Company a signed copy of this
Agreement and the stock power required by Section 2.7(c) of the Plan. By
signing the Acknowledgement, the Director agrees to the terms and conditions
referred to in Paragraph 1 above and acknowledges receipt of a copy of the Plan.
ACKNOWLEDGMENT: ALLIANT TECHSYSTEMS INC.
- --------------------------- -----------------------------------
Director's Signature Richard Schwartz
President and Chief
- --------------------------- Executive Officer
Date
- ---------------------------
Social Security Number
<PAGE>
Exhibit 11
Computation of Earnings Per Common and Common Equivalent Share
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Quarters Ended Six Months Ended
September 29 October 1 September 29 October 1
1996 1995 1996 1995
Primary calculation:
<S> <C> <C> <C> <C>
Net income $13,637 $11,186 $24,774 $21,251
======= ======= ======= =======
Weighted average shares outstanding during the
period 13,002 12,964 12,976 13,126
Shares issuable in connection with stock plans less
shares purchasable with proceeds using the average
per share purchase price for the respective periods as
shown below 419 418 407 353
------- ------- ------- -------
Total common and common equivalent shares -
primary 13,421 13,382 13,383 13,479
======= ======= ======= =======
Primary earnings per common and common
equivalent share $ 1.02 $ .84 $ 1.85 $ 1.58
======= ======= ======= =======
Average share price for the period $ 49.65 $ 45.41 $ 48.24 $ 41.55
======= ======= ======= =======
Fully diluted calculation:
Net income $13,637 $11,186 $24,774 $21,251
======= ======= ======= =======
Weighted average shares outstanding during the
period 13,002 12,964 12,976 13,126
Shares issuable in connection with stock plans less
shares purchasable with proceeds using the higher of
the average or period end share price as shown below 455 441 460 431
------- ------- ------- -------
Total common and common equivalent shares - fully
diluted 13,457 13,405 13,436 13,557
======= ======= ======= =======
Fully diluted earnings per common and common
equivalent share $ 1.01 $ .83 $ 1.84 $ 1.57
======= ======= ======= =======
Higher of average or period end share price $ 52.38 $ 47.00 $ 52.38 $ 47.00
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the 10-Q filing for the quarter ending 9/29/96 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1996
<PERIOD-START> JUL-01-1996 JUL-03-1995
<PERIOD-END> SEP-29-1996 OCT-01-1995
<CASH> 4,368 45,085
<SECURITIES> 348 348
<RECEIVABLES> 242,515 246,567
<ALLOWANCES> 330 380
<INVENTORY> 108,350 100,246
<CURRENT-ASSETS> 398,716 425,431
<PP&E> 581,297 571,171
<DEPRECIATION> 182,247 157,630
<TOTAL-ASSETS> 969,835 1,017,409
<CURRENT-LIABILITIES> 328,788 367,243
<BONDS> 325,000 350,000
<COMMON> 130 130
0 0
0 0
<OTHER-SE> 182,648 157,347
<TOTAL-LIABILITY-AND-EQUITY> 969,835 1,017,409
<SALES> 530,521 560,598
<TOTAL-REVENUES> 530,521 560,598
<CGS> 438,500 459,358
<TOTAL-COSTS> 438,500 459,358
<OTHER-EXPENSES> 7,674 6,781
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 20,936 22,604
<INCOME-PRETAX> 24,774 28,270
<INCOME-TAX> 0 6,219
<INCOME-CONTINUING> 24,774 22,051
<DISCONTINUED> 0 (800)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 24,774 21,251
<EPS-PRIMARY> 1.85 1.58
<EPS-DILUTED> 1.84 1.57
</TABLE>
