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RESTRUCTURING CHARGES, LOSSES FROM DISCONTINUED OPERATIONS, ACCOUNTING METHOD CHANGE RESULT IN LOSSES FOR ALLIANT TECHSYSTEMS

 MINNEAPOLIS, Jan. 27 /PRNewswire/ -- Alliant Techsystems (NYSE: ATK) today said restructuring charges, losses from discontinued operations, and a charge related to the adoption of a new accounting rule resulted in losses for the third quarter and nine months ended Dec. 27, 1992.
 For the third quarter, Alliant Techsystems reported a net loss of $90.5 million or $9.37 per share, compared with net income of $8.0 million or 80 cents per share a year ago. The results reflect a $118.6 million pre-tax charge for the implementation of a restructuring program and an after-tax loss of $20.5 million from discontinued operations.
 Alliant Techsystems said the restructuring program will involve a workforce reduction of approximately 30 percent between now and the end of fiscal year 1994. In addition, the program will result in a reduction in facility space of approximately 30 percent.
 The company said the restructuring is in response to a previously announced expected decline in sales in fiscal year 1994, which begins April 1, 1993. Sales are projected to be approximately $800 million, compared with estimated sales of $1.0 billion to $1.1 billion in the current fiscal year. The expected drop in sales is due to declining production in several programs, a smaller U.S. defense budget, and delays in international orders.
 The restructuring program, which is expected to lower annual operating expenses by approximately $110 million, will be funded entirely by internally generated cash. Although no additional borrowing will be required, the company said it was necessary for its lenders to approve changes to financial covenants in existing credit agreements. As a condition of this approval, the lenders were granted the option to receive accelerated debt repayments from the cash flow generated from reductions in working capital beginning in fiscal year 1994. The minimum amount to be made available under this option is $37 million, which is expected to be generated within approximately one year's time.
 Toby G. Warson, president and chief executive officer, said the program will reduce Alliant Techsystems' cost structure to a level that is appropriate for the expected lower sales base.
 "It's important that we manage our business to the realities of the marketplace during this period of rapid change in the defense industry," Warson said. "With this restructuring effort, we are taking the difficult but necessary actions that will enable us to maintain our profitability and position us for maximum efficiency and competitiveness over the long term."
 Warson said the anticipated sales decline and the restructuring program will place extraordinary demands on the company's cash flow. In view of these demands and debt repayment requirements, he said the company's board of directors does not believe it is appropriate at this time to consider a share repurchase program or a cash dividend, as suggested by certain shareholders in a recent letter to the company.
 "Consistent with our efforts to increase shareholder value, we will be reviewing our capital allocation strategy with the help of our financial advisors, but it is premature to comment on what role a share repurchase program or a cash dividend might play in our long-term strategy," Warson said.
 Warson noted that Alliant Techsystems has recently won follow-on contracts for significant long-term programs, including the MK50 lightweight torpedo, the AN/SQQ-89 surface ship ASW combat system, and medium-caliber ammunition, and is bidding on more than $2 billion worth of new contracts. He also said the company is encouraged by recent decisions by U.S. allies to purchase American-made weapons platforms, which could have a positive effect on international sales beyond fiscal year 1994.
 Discontinued operations in the third quarter produced an after-tax loss of $20.5 million, due in large part to reversals of previously recorded tax benefits related to the disposition of Metrum Information Storage. The tax benefits will be available to reduce future taxable income. A loss on the sale of Metrum and operating losses also contributed to the third-quarter loss from discontinued operations. In the third quarter a year ago, Metrum's operating results were at a breakeven level.
 Metrum's results have been accounted for as discontinue operation since March 1992, when the company's board of directors authorized a plan for divestiture. On Jan. 5, Alliant Techsystems announced it had completed the sale of Metrum Information Storage to affiliates of Group Technologies Corporation for $14 million.
 Nine-Month Results
 For the nine months ended Dec. 27, Alliant Techsystems posted a net loss of $123.0 million or $12.76 per share, reflecting restructuring charges, losses from discontinued operations, and a charge for the adoption of Financial Accounting Standards (FAS) rule 106.
 Alliant Techsystems said the adoption of FAS rule 106 resulted in a one-time after-tax charge of $31.2 million. The new accounting rule requires corporations to change their accounting method for retiree health care benefits from a cash basis to an accrual basis. Since the charge is required to be reflected retroactive to the beginning of the current fiscal year, it contributed to the loss of the nine-month period.
 Restructuring charges for the nine-month period totaled $120.5 million on a pre-tax basis.
 Alliant Techsystems reported a loss from discontinued operations for the nine-month period of $37.8 million, reflecting a loss on the sale of Metrum Information Storage and Metrum operating losses. For the nine- month period a year ago, Metrum reported a net loss of $5.7 million.
 Results from Continuing Operations
 The net loss from continuing operations in the third quarter was $70.0 million or $7.25 per share, compared with net income of $7.9 million or 79 cents per share in the same period a year ago. Exclusive of the restructuring charges, income from continuing operations would have been $7.8 million or 77 cents per share.
 Sales from continuing operations were $237.5 million versus $230.1 million in the same period last year.
 Sales from Defense Systems were $192.3 million in the third quarter, compared with $158.4 million in the same period a year ago. Marine Systems reported third-quarter sales of $45.2 million versus $71.7 million last year.
 Warson said the company expects sales in the fourth quarter to be stronger than in the prior three quarters.
 Operating profit in the third quarter was $16.0 million, compared with $17.7 million last year. Defense Systems reported higher operating profit for the quarter, while Marine Systems reported a decline in operating profit for the period. (Operating profit is gross margin less operating expenses, exclusive of restructuring costs.)
 For the nine months ended Dec. 27, the net loss from continuing operations was $54.0 million or $5.60 per share, compared with net income of $34.1 million or $3.42 per share in the same period a year ago. Exclusive of restructuring charges, net income from continuing operations would have been $24.9 million or $2.48 per share.
 Sales from continuing operations in the nine-month period were $708.0 million, compared with $688.2 million last year. Operating profit for the period was $49.8 million versus $65.0 million last year. Last year's operating profit benefited significantly from the one-time recognition of income resulting from cost performance incentives on several torpedo contracts nearing completion.
 Alliant Techsystems supplies defense and marine systems to the U.S. government and its allies. The company is headquartered in Edina, Minn., and employs 5,600 people throughout the United States.
 ALLIANT TECHSYSTEMS INC.
 Income Statements
 (Unaudited)
 (In thousands except per share amounts)
 Quarter Ended Nine Months Ended
 12/27/92 12/29/91 12/27/92 12/29/91
 Sales $237,516 $230,109 $707,955 $688,198
 Cost of sales 198,095 188,003 585,904 555,459
 Gross margin 39,421 42,106 122,051 132,739
 Operating expenses:
 Research and development 4,577 4,246 11,543 12,780
 Selling 11,534 11,294 35,357 31,605
 General and
 administrative 7,343 8,896 25,332 23,292
 Restructuring charges 118,644 --- 120,481 ---
 Total operating expenses 142,098 24,436 192,713 67,677
 Income (loss) from
 operations (102,677) 17,670 (70,662) 65,022
 Other income (expense):
 Interest expense (3,113) (4,100) (9,910) (12,528)
 Interest income 86 100 490 463
 Miscellaneous income
 (expense) (7) (489) 1,029 2,217
 Total other income
 (expense) (3,034) (4,489) (8,391) (9,848)
 Income (loss) from
 continuing operations
 before income taxes (105,711) 13,181 (79,053) 55,214
 Income tax provision
 (benefit) (35,663) 5,260 (25,053) 21,077
 Income (loss) from
 continuing operations (70,048) 7,921 (54,000) 34,137
 Income (loss) from
 discontinued operations
 net of income taxes (20,498) 80 (37,811) (5,711)
 Cumulative effect of
 accounting change net
 of income taxes --- --- (31,181) ---
 Net income (loss) $(90,546) $8,001 $(122,992) $28,426
 Primary and fully
 diluted earnings (loss)
 per common and common
 equivalent share:
 Continuing operations $(7.25) $.79 $(5.60) $3.42
 Discontinued operations (2.12) (.01) (3.92) (.57)
 Cumulative effect of
 accounting change --- --- (3.24) ---
 Net income (loss) $(9.37) $.80 $(12.76) $2.85
 Average number of common
 and common equivalent
 shares 9,660 9,997 9,639 9,987
 ALLIANT TECHSYSTEMS INC.
 Balance Sheets
 (Unaudited)
 (Dollars in thousands)
 12/27/92 3/31/92
 Assets
 Current Assets
 Cash and cash equivalents $22,840 $74,451
 Receivables 137,656 105,953
 Net inventory 147,311 151,200
 Income tax refunds receivable 24,220 ---
 Deferred income taxes 485 8,101
 Other current assets 11,671 4,997
 Total current assets 344,183 344,702
 Net property, plant and equipment 90,371 121,832
 Goodwill and other long-term assets 15,438 18,644
 Net assets of discontinued operations 16,343 36,599
 Total assets $466,335 $521,777
 Liabilities and stockholders' equity
 Current liabilities:
 Current portion of long-term debt $36,800 $23,000
 Accounts payable 58,174 75,631
 Customer advances 22,320 32,144
 Accrued compensation 18,653 21,054
 Accrued income taxes --- 7,600
 Restructuring reserves -- current 54,602 ---
 Other accrued liabilities 52,954 49,115
 Total current liabilities 243,503 208,544
 Long-term debt 76,450 107,500
 Deferred income tax liability --- 12,606
 Post-retirement benefits reserves 33,981 ---
 Restructuring reserves -- long term 30,000 ---
 Pension and retirement liabilities 26,165 14,972
 Total liabilities 410,099 343,622
 Stockholders' equity:
 Common stock -- $.01 per value;
 authorized -- 20,000,000 shares;
 issued and outstanding 9,692,688 at
 Dec. 27, 1992 and 9,625,173 at
 March 31, 1992 97 96
 Additional paid-in capital 126,458 125,606
 Retained earnings (deficit) (69,760) 53,232
 Unearned compensation (559) (779)
 Total stockholders' equity 56,236 178,155
 Total liabilities and stockholders'
 equity $466,335 $521,777
 ALLIANT TECHSYSTEMS INC.
 Statements of Cash Flows
 (unaudited)
 (Dollars in thousands)
 Nine Months Ended
 12/27/92 12/29/91
 Cash flow from operating activities:
 Net income (loss) $(122,992) $28,426
 Adjustments to reconcile net income
 (loss) to cash provided by (used for)
 operations:
 Restructuring charges -- non-cash
 portion 115,732 ---
 Cumulative effect of change in
 accounting for post-retirement
 medical benefits costs 31,181 ---
 Depreciation 18,667 20,783
 Amortization 1,328 1,271
 Deferred income taxes (4,990) ---
 Losses on disposition of property 466 638
 Changes in:
 Receivables (31,703) 10,025
 Inventory 3,889 (49,012)
 Accounts payable (17,457) (6,217)
 Customer advances (9,824) 7,290
 Accrued compensation costs (2,401) 3,862
 Accrued income taxes (29,020) 3,283
 Other assets and liabilities (12,839) (19,358)
 Discontinued operations -- non-cash
 charges and working capital changes 33,070 1,186
 Cash provided by (used for) operations (26,893) 2,177
 Cash flow from investing activities:
 Capital expenditures (7,996) (10,494)
 Proceeds from disposition of property,
 plant and equipment 86 370
 Other -- discontinued operations (190) (1,937)
 Cash (used for) investing activities (8,100) (12,061)
 Cash flow from financing activities:
 Payments made on long-term debt (17,250) (17,250)
 Increase in bank credit line debt --- 10,000
 Proceeds from exercised stock options 880 1,218
 Other -- net (248) (6,735)
 Cash (used for) financing activities (16,618) (12,767)
 Net (decrease) in cash and cash
 equivalents (51,611) (22,651)
 Cash and cash equivalents -- beginning
 of period 74,451 22,658
 Cash and cash equivalents -- end of
 period $22,840 $7
 -0- 1/28/93
 /CONTACT: (Media) Rod Bitz, 612-939-2646, or Coleen Southwell, 612-939-2709; or (Investor) Richard N. Jowett, 612-939-2777, all of Alliant Techsystems/
 (ATK)


CO: Alliant Techsystems Inc. ST: Minnesota IN: ARO SU: ERN

MP -- MN010 -- 9722 01/27/93 13:52 EST
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Date:Jan 27, 1993
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