Alliant Techsystems Inc. has a market cap of $2.32 billion; its shares were traded at around $70.03 with a P/E ratio of 7.7 and P/S ratio of 0.5. ATK is in the portfolios of Ronald Muhlenkamp of Muhlenkamp Fund, Jean-Marie Eveillard of First Eagle Investment Management, LLC, David Dreman of Dreman Value Management, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations: · Orders for the quarter ended July 4, 2010 of $1.0 billion with total backlog of $6.7 billion
· a $64,500 decrease resulting from the wind-down of the Space Shuttle Program which was partially offset by $36,500 of higher Ares I program sales,
Net interest expense for the quarter ended July 4, 2010 was $17,629, a decrease of $3,220 compared to $20,849 in the comparable quarter of fiscal 2009 primarily due to the reduction in non-cash amortization of the debt discount (which declined primarily because amortization for the 2.75% Convertible Notes due 2024 was complete in August 2009, the first date that holders of these notes could have required ATK to repurchase the notes) as well as a decrease in the average borrowing rate.
ATK or one of its subsidiaries files income tax returns in the U.S. federal, various U.S. state, and foreign jurisdictions. With few exceptions, ATK is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years prior to 2004. As of July 4, 2010, the Internal Revenue Service had completed the audits of ATK through fiscal 2006 and on July 13, 2010, ATK settled the examination of the fiscal 2007 and 2008 tax returns with the IRS. This settlement will result in the recognition of approximately $22,000 of tax benefit in the second quarter of fiscal 2011, of which, approximately $2,000 relates to the reversal of a valuation allowance. This benefit includes both the federal and state impact from the closure of the federal audit as well a reduction to the reserves in subsequent years. We believe appropriate provisions for all outstanding issues have been made for all remaining open years in all jurisdictions.
Although the timing and outcome of audit settlements are uncertain, it is reasonably possible that a $27,951 reduction of the uncertain tax benefits will occur in the next 12 months. The settlement of these unrecognized tax benefits could result in earnings up to $22,125 based on current estimates.
Net income for the quarter ended July 4, 2010 was $74,777, an increase of $5,294 compared to $69,483 in the comparable period of fiscal 2009. This increase was due to decreases in operating expenses of $9,262, net interest expense of $3,220, and income tax expenses of $393, partially offset by a decrease of $7,581 in gross profit.
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