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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 1997 or
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[ ] 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
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Alliant Techsystems Inc.
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(Exact name of registrant as specified in its charter)
Delaware 41-1672694
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
600 Second Street N.E., Hopkins, Minnesota 55343-8384
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 931-6000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, par value $.01 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by 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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of May 31, 1997, 12,977,830 shares of the registrant's voting common stock
were outstanding (excluding 885,783 treasury shares). The aggregate market
value of such stock held by non-affiliates of the registrant on such date was
$425,853,842.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Annual Report to stockholders for the fiscal year ended March
31, 1997 are incorporated by reference into Parts I, II and IV. Portions of the
definitive Proxy Statement for the 1997 Annual Meeting of stockholders are
incorporated by reference into Part III.
PART I
ITEM 1. BUSINESS
(a) General Development of Business
Alliant Techsystems Inc. (the "Company" or the "Registrant") was
incorporated as a Delaware corporation and a wholly owned subsidiary of
Honeywell Inc. ("Honeywell") on May 2, 1990, in connection with Honeywell's plan
to spin off to its stockholders the following business operations (the
"Businesses") of Honeywell: Defense and Marine Systems Business; Test
Instruments Division (subsequently renamed Metrum Information Storage); and
Signal Analysis Center. On September 28, 1990, (i) Honeywell declared a
distribution (the "Spin-off") payable to the holders of record of Honeywell
common stock on October 9, 1990 (the "Record Date") of one share of the
Company's common stock, par value $.01 per share (the "Common Stock"), together
with the associated preferred stock purchase rights, for every four shares of
Honeywell common stock outstanding on the Record Date, and (ii) Honeywell
transferred to the Company substantially all of the assets and liabilities of
the Businesses. As a result of the Spin-off, 100% of the Company's Common Stock
was distributed to Honeywell's stockholders on a pro rata basis.
In January 1991, the Company changed its fiscal year end from December 31
to March 31, effective with the fiscal year that began April 1, 1991 and ended
March 31, 1992.
In December 1992, the Company divested the Metrum Information Storage
business.
In October 1993, the Company acquired Accudyne Corporation ("Accudyne") and
Kilgore Corporation ("Kilgore"), and in November 1993, the Company acquired
Ferrulmatic, Inc. ("Ferrulmatic"). Each of these acquisitions was accounted for
as a purchase, and the financial statements included in this report include the
acquired companies' assets and liabilities and their results of operations since
the date of their acquisition. Effective March 31, 1994, Accudyne, Kilgore and
Ferrulmatic were merged into the Company.
In March 1995, the Company acquired certain assets and operations of the
Hercules Aerospace Company division ("HAC") of Hercules Incorporated
("Hercules"). The acquisition of HAC (the "HAC Acquisition") was accounted for
as a purchase, and the financial statements included in this report include the
acquired operations' assets and liabilities and their results of operations
since the date of their acquisition.
In March 1996, Company management, after evaluating its strategic plans for
the future, elected to discontinue its role as an owner of foreign
demilitarization businesses located in the former Soviet republics of Ukraine
and Belarus.
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In February 1997 the Company divested its Marine Systems Group. The
financial statements included in this report account for this divested business
as a discontinued operation.
The Company's principal executive offices are located at 600 Second Street
N.E., Hopkins, Minnesota 55343-8384 (telephone number: (612) 931-6000).
(b) Financial Information About Industry Segments
The Company's business is conducted in a single industry segment.
Incorporated herein by reference are the following portions of the Company's
Annual Report to Stockholders (the "Annual Report") for the fiscal year ended
March 31, 1997 ("fiscal year 1997"):
Page Number(s)
Portion of Annual Report in Annual Report
Note 22 of Notes to Financial Statements................... 39
(c) Narrative Description of Business
General
During fiscal year 1997, the Company conducted its business through four
business groups: Aerospace Systems, Defense Systems, Marine Systems (which was
sold in February 1997) and Emerging Business. Effective April 1, 1997, the
Company reorganized its business into four business groups -- Conventional
Munitions, Defense Systems, Space and Strategic Systems, and Emerging Business
- -- and a program office established to pursue the ICBM Prime Integration
Program. The description of the Company's business that follows reflects the
reorganized business structure currently in effect.
Conventional Munitions
Conventional Munitions supplies, designs and develops medium caliber
ammunition, tank ammunition, munitions propellants, commercial gun powders,
solid rocket propulsion systems, flares, warheads, and composite structures for
the U.S. and allied governments as well as for commercial applications. It
operates in four business units: Ammunition Systems, Ordnance, Tactical
Propulsion and Kilgore Operations.
Ammunition Systems - The Ammunition Systems business unit produces,
designs, and develops medium caliber ammunition, tank ammunition, submunitions,
and advanced warhead systems for missiles and other weapon systems.
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The Company is a leading supplier of medium caliber ammunition and fuzes.
Production programs include 25mm Bushmaster rounds for the U.S. Army's Bradley
Fighting Vehicle, the Marine Corps Light Armored Vehicle, the U.S. Navy's
shipboard defense systems, and platforms of the U.S. allies; the PGU-32 25mm
round for the AV-8B aircraft; PGU-38 25mm enhanced combat rounds for the U.S.
Air Force's AC-130 gunship; Lightweight 30mm ammunition for the Apache
helicopter; and GAU-8/A 30mm family of armor-piercing, high-explosive
incendiary, and target practice rounds currently used by the U.S. Air Force's
A-10 aircraft. Development efforts include improving the performance of medium
caliber ammunition for the advanced threats of the future. The Company is also
the sole source producer of the M758/M759 fuze for medium caliber ammunition.
In the tank ammunition area the Company produces and develops tactical and
training tank rounds which are used for the M1A1/M1A2 Abrams tanks of the U.S.
Army, Army Reserve, National Guard, Marine Corps, and U.S. allies. Such rounds
include the M830A1 multi-purpose round and the M831A1 and M865 training rounds.
The Company is the sole producer of the M830A1 multi-purpose round, which is the
U.S. Army's most advanced tactical ammunition round in production. The Company
is one of two suppliers to the U.S. Government for the M831A1 and M865 training
rounds. Opportunities being pursued include advanced kinetic-energy rounds,
developed for future threats, and rounds that will meet specifications for
international sales.
In submunitions and advanced warhead systems, the Company currently has a
three-year engineering contract to develop a new multi-mode Anti-Materiel
warhead for the U.S. Air Force. The Company's Advanced Medium Range Air-to-Air
Missile ("AMRAAM") P3I warhead has passed a critical design review, and is being
qualified by Raytheon, which could lead to the Company being a supplier of
warheads for the AMRAAM missiles.
Ammunition Systems operations are conducted at Hopkins, Elk River and New
Brighton, Minnesota, Totowa, New Jersey, and Wilmington, Illinois.
Ordnance - The Ordnance business unit has the capability to manufacture
annually over 100 million pounds of solid extruded propellant for ammunition and
rockets for the U.S. and foreign military services. The unit, through New River
Energetics, Inc., a wholly owned subsidiary, also manufactures and commercially
markets gun powders for both reloaders and manufacturers of sporting ammunition.
Primary production programs include propellants for multiple training and
war reserve 120mm tank rounds, for artillery propelling charges, and for 30mm
ammunition and 25mm ammunition. The Company is also the sole source supplier of
Mk90 propellant grains for use in the HYDRA 70 rocket and launch motors for the
TOW II missile.
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In addition to the military programs, the Company produces a wide range of
commercial gun powders and has activated stand-by military capacity for
commercial chemical commodity sales.
Development opportunities being pursued include automotive air bag
propellants, improved smokeless gun powders, and modular charges for advanced
artillery systems.
Ordnance operations are conducted at two locations: Radford Army
Ammunition Plant in Radford, Virginia and the Sunflower Army Ammunition Plant in
DeSoto, Kansas. Military and commercial gun powder was produced at a facility
in Kenvil, New Jersey until late 1996, when those operations were consolidated
at the Radford facility, which is also the U.S. Army's Group Technology Center
for propellant development and production.
Tactical Propulsion - The Tactical Propulsion business unit supplies and
develops solid propulsion systems for various U.S. Department of Defense ("DoD")
tactical weapons. Principal products include solid rocket motors, gas
generators and tactical missile warheads for the U.S. Army, Navy and Air Force.
Other Products include high-strength, low-weight pressure vessels and structures
made of metals and composites.
Current production programs include propulsion systems for AMRAAM, AGM-130,
Sparrow, Sensor Fuzed Weapon ("SFW"), Hellfire II/Longbow, Maverick and TOW II.
AMRAAM and SFW are the unit's largest production programs and have firm funding
support through the end of the decade. AGM-130 is an air-to-ground stand-off
attack missile used by the U.S. Air Force. Boeing North American is the sole
prime contractor for AGM-130 and the Company is the sole source propulsion
supplier. The SFW system is presently in Full Rate Production and has become
one of the unit's largest programs. The Company is the sole source supplier on
the SFW submunition propulsion deployment system. The unit has been the U.S.
Army's primary supplier of flight motors for TOW II since the program's
inception in 1981. Production programs in related areas include warheads for
the Maverick and AMRAAM missile systems, metal cases for the U.S. Army's
Tactical Missile System ("ATACMS") surface-to-surface missile, gas generators
for the Trident II (D5) and Tomahawk Cruise missiles, composite launch tubes for
the Army's Javelin anti-tank missile, and composite overwrapped pressure vessels
for use on satellites.
Major development programs include the propulsion systems for the Evolved
Sea Sparrow Missile ("ESSM"), the AIM-9X Evolved Sidewinder, the AMRAAM
Propulsion Enhancement Program ("PEP"), the Predator anti-tank system
("Predator"), and the advanced smart 120mm kinetic energy tank round ("TERM-
KE"). The Company recently completed successful development tests on the ESSM
and AMRAAM PEP programs. The Company is co-developing the propulsion system for
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the ESSM Program which is a NATO program involving 13 nations. Hughes Missile
Systems Company is the prime contractor. The Company is the sole developer of a
higher performance AMRAAM rocket motor, under contract from the U.S. Navy, with
production planned to commence in U.S. Government fiscal year 1998. The prime
contractor on Predator is Lockheed Martin, and the prime contractor on TERM-KE
is Alliant Defense Electronics Systems, Inc., a subsidiary of the Company. The
Company is the sole propulsion source on both Predator and TERM-KE. The Company
recently won a contract with Hughes on a propulsion and thrust vector control
system for the U.S. Navy/Air Force advanced short range air-to-air missile.
Other new business opportunities being pursued include: Standard Missile Second
Stage and Follow-on-to-TOW.
The Tactical Propulsion business unit is located in Rocket Center, West
Virginia.
Kilgore Operations - The Kilgore Operations business unit produces and
develops infrared countermeasure flares, 20mm ammunition, and a wide spectrum of
pyrotechnic devices for the U.S. and foreign governments. It also makes
pyrotechnics for various commercial activities.
Kilgore is the world's leading supplier of infrared countermeasure
products. Production programs include the MJU-7A/B, M206, MJU-10/B, MJU-32/B
and MJU-38/B U.S. countermeasures. In addition, Kilgore-designed flare
products, such as the 55mm KC-004/A flares, are routinely provided for export.
Kilgore is currently manufacturing an Israeli flare design under a Foreign
Military Funding contract. Kilgore has manufactured over six (6) million
infrared flares over the last decade. Kilgore was the original designer for the
MJU-10/B and first sequenced version of the MJU-7 and 1x1 inch flares. Kilgore
has patented a variety of advanced countermeasure designs. On-going
development efforts include sole source supplier to Lockheed Martin for the
infrared flares for the F-22 aircraft and performing development efforts for
advanced flares for the U.S. Navy. Kilgore is also the only current producer of
the MK 186 TORCH shipboard countermeasure.
Kilgore has been one of the two suppliers for the U.S. Navy Phalanx MK149
20mm ammunition as well as an international supplier of 20mm ammunition.
Current production programs include the M55 TP ammunition. New business
opportunities include the M56 high explosive series.
Over 100 different pyrotechnic products have been produced by Kilgore. The
pyrotechnic product lines include impulse cartridges, marine location markers,
explosive squibs, colored smoke and signaling devices, screening devices, and
commercial day/night signals. Current programs include efforts for NATO and
non-NATO countries for improved signaling and screening devices as well as
standard pyrotechnic products.
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Kilgore also supports a variety of intra-company production programs such
as primers and tracers for tank ammunition, flashtubes for the GAU-8/A, and
critical components for the TERM-KE program.
Kilgore operations are conducted in Toone, Tennessee.
Defense Systems
Defense Systems develops and supplies smart munitions, electronic systems,
and unmanned vehicles through three business areas: Tactical Systems, Defense
Electronics Systems, and Unmanned Vehicle Systems.
Tactical Systems - The Tactical Systems business area develops and produces
electronics and fuzes, demolition munitions, weapons systems, and guided
weapons.
In the electronics and fuzing area, the Company develops and manufactures
stand-alone fuzes for mortar, artillery, and rocket munitions; electronic
systems; and battlefield management systems. Sole source fuze production
programs are the M734/M745 fuzes for mortar rounds; and the M732A2 proximity
fuze for artillery. The Company is also developing the XM773 Multi-Option Fuze
Artillery, which provides point detonation, delay, variable time, and proximity
functions. In electronics, the Company has developed and is producing an
automatic fire control system and integrated on-board electronics for the
Paladin self-propelled Howitzer, which provides the Paladin with a "shoot and
scoot" capability for increased survivability and effectiveness. The Company is
also developing advanced Global Positioning Systems applications for secure
guidance and communications. In the battlefield monitoring systems, the Company
has developed a Remote Sentry system that utilizes proprietary acoustic sensor
technology in combination with other sensors, signal processing and advanced
communication techniques to autonomously detect, identify and locate hostile
forces well behind enemy lines. The Remote Sentry system is in the process of
completing Advanced Technology Demonstration testing in the summer of 1997,
which will be followed by the Rapid Force Projection Initiative Advanced Concept
Technology Demonstration phase for the next two years. It will have application
for future reconnaissance, surveillance and target acquisition systems.
In the demolition munitions area, the Company develops and produces
munition systems, demolitions, and air delivered systems. In munitions systems
the Company is currently working on advanced systems for delivery from
artillery, trucks, tracked vehicles and helicopters. Primary production programs
are the Volcano system, a modular system delivered from ground and air
platforms, and Shielder, a Vehicle-Launched Smart Anti-tank Munition System, for
which the Company is systems prime to the U.K.'s Ministry of Defence. The
Company is pursuing several other international opportunities in this area. The
Company is also producing the Selectable Lightweight
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Attack Munition, a hand-emplaced anti-materiel munition with multiple activation
modes for the U.S. Special Forces and the U.S. Army. The Company has also
developed the Penetration Augmentation Munition ("PAM") for applications such as
concrete bridge abutments and the Badger Fighting Position Excavator ("Badger")
for U.S. and international applications. The Badger allows the soldier to
significantly reduce foxhole digging time while increasing his safety and
effectiveness. In the air-delivered munitions area, the Company is the sole
producer of the Gator air-delivered scatterable munition system and provides
tactical munitions dispensers ("TMDs") for the Combined Effects Munition, Gator
and the Sensor Fuzed Weapon programs.
In the weapon systems area, the Company is developing the Objective
Individual Combat Weapon ("OICW") and is jointly pursuing the Cased Telescoped
Weapon System ("CTWS") with some foreign partners. OICW is a lightweight,
shoulder-fired weapon to selectively replace the M16 rifle/M203 grenade
launcher. The OICW is the lethality element of the Force XXI Land Warrior. The
system consists of a combinatorial weapon, ballistic fire control system with
thermal sight, and both a 20mm high explosive ("HE") bursting munition with a
remote autonomous fuze and a 5.56mm kinetic energy round. The Company is
responsible for systems integration and development of the HE ammunition. The
Company was one of two recipients in February 1995 of a 12-month system design
and subsystem technology demonstration. In March, 1996 both firms were selected
to continue phase 3 work under a Proof of Principle contract, which includes
firing tests of a prototype OICW in the fall of 1997, leading to a downselect in
early 1998. CTWS is a non-developmental item consisting of a medium caliber
gun, ammunition and an ammunition handling system. It is a candidate weapon
system for the Future Scout and Cavalry System, the Advanced Amphibious Assault
Vehicle and the U.K.'s Tracer vehicle programs. It is based on a French/British
developed product. The Company executed an exclusive business relationship with
the developer, Case Telescoped Ammunition International, in April, 1997 to sell
a single UK/US/French product.
In the guided weapons area, the primary programs are the Sense and Destroy
Armor ("SADARM") munition and the Smart Target Activated Fire and Forget 120mm
tank round ("STAFF"). SADARM is being developed by the Company together with
the prime contractor, Aerojet (a business segment of GenCorp., Inc.). SADARM has
entered low rate initial production, and is presently the only tube artillery
smart munition in production. The SADARM munition is used on 155mm Howitzers and
combines millimeter wave and infrared sensor and signal processing technologies.
In addition, SADARM is currently being evaluated for potential application to
air and rocket delivery systems. The Company is also participating in a
Northrop-Grumman competitive program to develop an improved seeker for the
Brilliant Anti Tank ("BAT") munition Preplanned Product Improvement ("BAT
P/3/I") Program. The objective of the program is to demonstrate systems
performance against cold/stationary tank and armored combat vehicle units and
sparsely located Surface to Surface Transporter Erector Launcher vehicles. BAT
is a hit-to-kill guided submunition intended for delivery on the battlefield
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by the ATACMS missile. Downselect for the Engineering/Manufacturing Development
("EMD") phase is scheduled during the fiscal year ending March 31, 1999 ("fiscal
year 1999"). The Company is also in engineering development with STAFF, a smart
top-attack projectile. The Company is currently pursuing the XM982 155mm smart
extended range artillery projectile and is teamed with Talley Defense Systems
and Motorola in the competition for the EMD phase which will be awarded in the
fiscal year ending March 31, 1998 ("fiscal year 1998").
Tactical Systems operations are conducted at Hopkins and New Brighton,
Minnesota and Janesville, Wisconsin,
Defense Electronics Systems - The Defense Electronics business unit is
conducted through Alliant Defense Electronics Systems, Inc., a wholly owned
subsidiary of the Company. Principal products include millimeter wave and laser
radar "LADAR") seeker technology and products, smart weapon systems, missile
warning systems, electronic warfare systems, test equipment, chaff and chaff
dispensing systems, and advanced imaging and document management software.
Principal customers are U.S. and foreign governments. Software capabilities are
marketed to both commercial and government customers.
Major programs include the XM-1007 smart tank cartridge, the AAR-47 Missile
Warning System, the Common Munitions BIT/Reprogramming Equipment ("CMBRE"), and
Demonstration of Advanced Solid State Laser Radar ("DASSL").
The XM-1007 is currently in development for application to a recently
redirected tank extended range munition ("TERM") requirement that includes
beyond line of sight missions using scout vehicles for target location and
potential target designation. The Company is the sole development prime
contractor for the XM-1007. Production is anticipated to begin early in the
next decade.
The AAR-47 Missile Warning System is a passive electro-optic threat warning
device used to protect low, slow flying helicopters and fixed wing aircraft
against missile attack from ground to air missiles. The Company recently
completed a production contract for the system and is currently engaged in a
central processor unit ("CPU") upgrade (both hardware and software) for improved
probabilities of detection, longer warning times, and lower false alarm rates.
Production deliveries of the upgraded CPU will begin in fiscal year 1999. The
Company will enter a competitive bid for an upgraded sensor program during
fiscal year 1998.
The CMBRE is a portable field tester with a common interface to support the
U.S. inventory of smart weapons. The Company recently completed First Article
Testing ahead of contract schedule and anticipates shipping pre-production
units in fiscal year 1998 and production units in fiscal year 1999.
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LADAR is the preferred seeker technology for future precision guided
weapons surpassing Imaging InfraRed ("IIR") and Synthetic Aperture Radar
("SAR"). It combines the active ranging capability of SAR with the optical
resolution of IIR at a cost less than either. The Company, teamed with prime
contractor Texas Instruments, was recently selected by a joint service
evaluation team for Phases 2-4 of the DASSL program after a six month Phase I
system design and technology competition.
The Company is one of the foremost developers and producers of chaff and
chaff dispensing systems. The Company intends to pursue technology initiatives
to provide the U.S. and its allies with vanishing and environmentally
degradeable chaff which permits more realistic training world wide.
The Company through its Advanced Imaging Strategies provides a family of
software products known as DocMaestro /TM/. These are state-of-the-art imaging
and document management tools that provide easy access and navigation to
electronic documents with automatic hyperlinks, and electronic documents on
demand through the internet/intranet.
Defense Electronic Systems operations are conducted in Clearwater, Florida.
Unmanned Vehicle Systems - Unmanned Vehicle Systems develops and produces
unmanned vehicles and tactical control systems.
In May 1996 the Company was awarded a contract for a 24-month Advanced
Concept Technology Demonstration of the Outrider(TM) Tactical Unmanned Aerial
Vehicle. The program, which includes options for low rate initial production,
involves the development, production, and deployment of an unmanned aerial
vehicle ("UAV") system that will provide near-real time reconnaissance,
surveillance and target acquisition information to U.S. Marine air/ground task
forces, Army brigades, and deployed Navy units. The Outrider(TM) UAV will have
an operational range of 200 kilometers and a target on-station time of three
hours.
The Tactical Control System ("TCS") is an interoperable command, control
and data receipt platform for all tactical UAV's. The TCS will provide a
complete UAV control and data dissemination capability. The Company is under
contract for building and demonstrating TCS control of the Outrider(TM) UAV.
Unmanned Vehicle Systems operations are conducted in Hopkins, Minnesota and
Hondo, Texas.
Space and Strategic Systems
Space and Strategic Systems designs and produces solid rocket propulsion
systems for space launch vehicles, strategic missile systems, and provides
reinforced composite structures and components for aircraft and spacecraft.
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The space propulsion business represents the largest portion of the group's
sales base and includes a broad product portfolio encompassing all vehicle
payload classes (small to heavy lift). The Company is presently producing solid
propulsion systems for Titan IVB, Delta II, Delta III, Pegasus(R), and Taurus
launch vehicles. The Company produces the Titan SRMU space boosters, which
serve as the strap-on propulsion system (two per vehicle) for the U.S. Air Force
upgraded Titan IVB heavy-lift launch vehicle. The Company also has a follow-on
contract for Titan launch operations support which extends into 2003. Delta II
is a medium-lift expendable launch vehicle developed for both government and
commercial applications. Each Delta II vehicle employs nine solid strap-on
boosters, all of which are produced by the Company for McDonnell Douglas
Corporation. In fiscal year 1997, McDonnell Douglas awarded the Company
additional production quantities for Delta II. The Company is presently
developing and will produce, under contract to McDonnell Douglas, a new strap-on
booster for the new, larger medium-lift Delta III expendable launch vehicle. The
Pegasus(R) air launched vehicle is used to deploy small U.S. Government, foreign
government and commercial payloads. Each Pegasus(R) vehicle contains three
solid propulsion stages, all of which are produced by the Company. The
Pegasus(R) motors are also used as upper stages on the Taurus ground launched
vehicle which was first launched in 1994, and is also used to deploy small U.S.
Government and commercial payloads. The Company has a long-term, exclusive
supply agreement with Orbital Sciences Corporation for Pegasus(R) and Taurus
motors.
The strategic propulsion business, which now consists of one large
production program and various operational service contracts, has been involved
with substantially all of the land and sea based strategic propulsion systems
since their inception. Currently, the principal strategic propulsion production
program is Trident II (D5), a submarine-launched intercontinental ballistic
missile composed of three solid propulsion stages. The Company, through a joint
venture with Thiokol Corporation, developed and produced the first and second
propulsion stages of the Trident II (D5) missile under a contract with Lockheed
Martin Corporation and has recently completed qualification process to also
produce the third stage of the missile. In addition to the Trident II
production contract, the Company has contracts with Lockheed Martin to support
both the U.S. Navy's existing fleet of Trident I (C4) missiles and the
operational D5 units. The Company developed and produced the Peacekeeper third
stage motor for the U.S. Air Force, and continues to provide aging and
surveillance services support to the missile system. The Company also continues
to provide surveillance services to the U. S. Air Force for Minuteman third
stage motors it previously produced.
The composite structures operation designs and fabricates a broad range of
structures from carbon/carbon, graphite, aramid, and glass fiber reinforced
composite materials. Applications include instrument benches and dimensionally
stable assemblies for satellites, space based antennae, aircraft and engine
components, space launch vehicle tanks and structures, and other specialty
structures. Target markets include both government and commercial users. Key
programs are
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concentrated primarily in the commercial and government satellite, launch
vehicle and aircraft segments. The Company is under contract to Lockheed Martin
to develop composite cryogenic liquid hydrogen fuel tanks for the NASA X-33
Phase II reusable launch vehicle. It is also working jointly with Lockheed
Martin to build the fiber-placed liquid hydrogen tank for the full-scale
operational VentureStar(TM) when production begins in 2000. The Company recently
received a contract from Lockheed Martin to produce the inlet duct for its
version of the Joint Strike Fighter aircraft to be built for the U.S. Navy, Air
Force and Marines. The Company is presently under contract to develop the inlet
bypass offtake screens and pivot shafts on the U.S. Air Forces' F-22 fighter
aircraft. The Company is also under contract to produce a counterbalance
mechanism for the C-17 transport aircraft and the production of composite door
springs for the Boeing Company's 767 aircraft. Development of a counterbalance
mechanism for the Boeing Company's 767 aircraft is underway. Other programs and
opportunities include additional aircraft and engine structures, other
components and assemblies for spacecraft, military land vehicles, and various
structures for reusable and expendable launch vehicles.
Space and Strategic Systems operations are conducted in Magna and
Clearfield, Utah.
Emerging Business
Emerging Business activities include environmental remediation/facility
management, safety management services, ordnance reclamation, battery production
and advanced technology applications. It operates primarily through three
business units: Global Environmental Solutions, Power Sources Center and
Advanced Technology Applications.
Global Environmental Solutions - The Company's environmental remediation/
facility management ("ER"), safety management services ("SMS"), and ordnance
reclamation ("OR") businesses are conducted through Global Environmental
Solutions ("GES"). GES is a relatively new business venture that has generated
modest sales through fiscal year 1997.
The ER business provides services to handle waste and contaminants
associated with the disposal of propellant, explosives and pyrotechnic
materials. GES has a contract at Twin City Army Ammunition Plant to perform
environmental monitoring and remediation.
The SMS business assists customers in analyzing and safeguarding against
potential manufacturing hazards and in meeting both internal and external safety
requirements. Primary emphasis is placed on meeting OSHA and EPA regulatory
compliance.
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The OR business disassembles and disposes of surplus munitions items, and
dismantles and recycles military rocket motors and munitions. The brass, steel,
aluminum and energetic material by-products of the dismantled surplus munitions
are reclaimed for sale into commercial markets. Through fiscal year 1996, this
activity consisted primarily of Company-financed projects in the former Soviet
Union which were conducted jointly with agencies or representatives of the
governments of Belarus and Ukraine through two joint stock companies, Belconvers
and Alliant Kiev, respectively. In March 1996, Company management, after
evaluating its strategic plans for the future, elected to discontinue its role
as an owner of foreign demilitarization businesses located in the former Soviet
republics of Ukraine and Belarus. During fiscal year 1997, the Company
completed its withdrawal from the Company's joint venture in Belarus. During
fiscal year 1997, the Company also entered into an agreement with the government
of Ukraine under which the Company intends to transfer its ownership interest in
its Ukraine joint venture to the government of Ukraine or its representative
after the joint venture has repaid its debt to the Company, which is expected to
take at least five years.
In the United States, GES has contracts with the Naval Undersea Warfare
Center in Newport, Rhode Island, to dispose of lithium-filled boilers that power
the MK50 torpedo, and with the U.S. Army at Rock Island, Illinois, for
reclamation of eight inch gun projectiles, six inch gun projectiles and M117
bombs. The torpedo boiler and six inch and eight inch gun projectile operations
are conducted on a Company facility, but any resulting hazardous components are
shipped to a hazardous waste disposer for treatment and disposal. GES recently
transferred its rocket motor demilitarization system from the Company's Magna,
Utah facility to the Redstone Arsenal in Huntsville, Alabama, where the U.S.
Government intends to operate the system to demilitarize large rocket motors.
The M117 bomb disposal is being conducted at a government-owned, government-
operated facility in Crane, Indiana.
The environmental contracting and ordnance reclamation businesses are
highly regulated and environmental contractors can face exposure to liability
for releases of hazardous materials under environmental laws. The operations of
GES are in substantial compliance with regulatory requirements.
GES operations are conducted principally at Elk River and Hopkins,
Minnesota, and Magna, Utah.
Power Sources Center - Power Sources Center develops and manufactures
specialty batteries for use in the Company's own products, and to U.S. and
foreign military and aerospace customers. Its principal products are lithium
reserve batteries which have very long shelf lives, and the newly emerging
lithium-ion polymer batteries, which offer very high energy density combined
with packaging flexibility. The Company is developing a new miniature battery
production line capable of producing six million batteries per year for
artillery fuzes, and a flexible manufacturing line for "wearable" lithium-ion
polymer batteries for the U.S. Army. The Company was recently selected by
12
the U.S. Navy to supply large rechargeable batteries for underwater vehicles.
The Company also produces specialty batteries, such as space-qualified battery
modules for space probes such as Galileo and Huygens. Power Sources Center
operations are conducted at Horsham, Pennsylvania.
Advanced Technology Applications - The Advanced Technology Applications
("ATA") business includes Rugged Mobile Computing Solutions, Sensor Systems
Solutions and Information Systems Solutions.
Rugged Mobile Computing Solutions provides the RoughWriter(TM), a rugged
version of the IBM Thinkpad(R), into the public safety, industrial and
transportation markets. It also supplies several rugged devices built to DoD
specifications. Sensor Systems Solutions is a technology leader in real time,
high fidelity, physics-based simulation. Its principal project is in
simulating/stimulating the Navy's Aegis radar. It has also developed, in support
of the National Institutes of Justice, the System for Effective Control of Urban
Environmental Security (SECURES(TM)), a system for the real time detection and
location of gunshots in an urban environment. The SECURES(TM) system was
demonstrated in Dallas, Texas in late 1996, and is now being marketed
commercially. Information Systems Solutions provides a variety of products and
services into the intelligence and DoD markets. The principal product lines
include ADARIO and BANDIT, which are high performance intelligent data
formatting and multiplexing front ends for recording systems; and
Electromagnetic Emissions testing and related design and engineering services,
which involve testing, design and product modification, to meet a breadth of
commercial, DoD and security requirements.
In addition, ATA provides communication engineering services and wireless
video surveillance equipment to federal, state and local law enforcement
organizations and DoD Special Operations Forces. ATA operations are conducted
at Annapolis, Maryland, Arlington, Virginia, Wanamassa, New Jersey and San
Antonio, Texas.
ICBM Prime Integration Program
The ICBM Prime Integration Program office was established to compete for
the contract to become the Prime Integrator of the InterContinental Ballistic
Missile (ICBM) program for the U.S. Air Force. The Air Force is currently
transitioning from an associated contractors concept to a prime integrating
contractor concept. A stated objective of the Air Force in implementing this
program change is to integrate the ICBM weapon system in accordance with
applicable contract compliance documents for the remainder of their life cycles
while ensuring this change in management structure remains transparent to
operators and sustainers (i.e., no increase in current repair times and, as a
minimum, no degradation to weapon system accuracy, reliability, availability and
survivability performance characteristics as defined in applicable contract
compliance documents).
The Prime Integrator who is awarded this contract will be responsible for:
13
. Distributing the System Engineering/Technical Assistance ("SE/TA") work scope
between the Prime Integrator as the prime and its team members where the tasks
can be most efficiently accomplished.
. Taking over responsibility for a significant number of subcontracts. This will
entail assignment of some of the contracts from the Air Force to the Prime
Integrator and negotiation/new subcontract issue for several others.
. Providing the necessary personnel/organization, facilities, business systems,
management information systems, training/certification to facilitate the Prime
Integrator functioning in the prime contractor role.
. Determining the best approach for two large scale hardware replacement
programs (Guidance Replacement Program, Propulsion Replacement Program).
. Assisting the Air Force in its transition from an oversight to an insight role
in management of the ICBM weapon system.
The Company's key team members and their areas of responsibility are Boeing
North American, Inc. (ground systems, guidance and control), Textron, Inc. (re-
entry systems), Logicon R & D Associates (software), and Thiokol Corporation in
a joint venture with the Company (propulsion). The Company's proposal to act as
Prime Integrator is due in August 1997, and the contract award is scheduled to
be made in January 1998.
The ICBM Prime Integration Program office is located in Magna, Utah.
Raw Materials
Key raw materials used in the Company's operations include aluminum, steel,
steel alloys, graphite fiber, hydroxy terminated polybutadiene, epoxy resins and
adhesives, nitrocellulose, diethylether, x-ray film, plasticizers and nitrate
esters, and ammonium perchlorate. The Company also purchases chemicals,
electronic, electro-mechanical and mechanical components, subassemblies, and
subsystems which are integrated with the Company's own manufactured parts for
final assembly into finished products and systems.
The Company closely monitors its sources of supply in order to assure an
adequate supply of raw materials and other supplies needed in its manufacturing
processes. U.S. Government contractors like the Company are frequently limited
to procuring materials and components from sources of supply approved by the
DoD. In addition, as defense budgets contract, suppliers of specialty chemicals
and materials consider dropping low volume items from their product lines, which
has required qualification of new suppliers for raw materials on several
programs.
14
Major Customers
The Company's sales are predominantly derived from contracts with agencies
of, and prime contractors to, the U.S. Government. The various U.S. Government
customers exercise independent purchasing decisions, and sales to the U.S.
Government generally are not regarded as constituting sales to one customer, but
instead, each contracting entity is considered to be a separate customer.
U.S. Government sales, including sales to U.S. Government prime
contractors, for fiscal year 1997, fiscal year 1996 and fiscal year 1995, were
$927.1 million, $887.5 million, and $441.2 million, respectively. During fiscal
year 1997, approximately 85 percent of the Company's sales were derived from
contracts with the U.S. Government or U.S. Government prime contractors.
U.S. Government Contracts and Regulations
The Company's U.S. Government business is performed under cost-plus
contracts (cost-plus-fixed-fee, cost-plus-incentive-fee, or cost-plus-award fee)
and under fixed-price contracts (firm fixed-price, fixed-price incentive, or
fixed-price-level-of-effort).
Cost-plus-fixed-fee contracts provide for reimbursement of costs, to the
extent that such costs are allowable, and the payment of a fixed fee. Cost-
plus-incentive-fee contracts and cost-plus-award-fee contracts provide for
increases or decreases in the contract fee, within specified limits, based upon
actual results as compared to contractual targets for such factors as cost,
quality, schedule and performance. Cost-plus contracts accounted for
approximately 36 percent of the Company's U.S. Government business in fiscal
year 1997. Cost-plus-fixed-fee contracts accounted for approximately 22 percent
of the business; and cost-plus-incentive-fee and cost-plus-award-fee contracts
accounted for approximately 14 percent of the business.
Under firm fixed-price contracts, the Company agrees to perform certain
work for a fixed price and, accordingly, realizes all the benefit or detriment
resulting from decreases or increases in the costs of performing the contract.
Fixed-price incentive contracts are fixed-price contracts providing for
adjustment of profit and establishment of final contract prices by a formula
based on the relationship which final total costs bear to total target cost.
The final contract price under a fixed-price incentive contract is a function of
cost, which may be affected by schedule and performance. Fixed-price-level-of-
effort contracts are generally structured with a fixed price per labor hour
subject to the customers' labor hour needs up to a contract cap. Fixed-price
contracts accounted for approximately 64 percent of the Company's U.S.
Government business in fiscal year 1997. Firm fixed price contracts accounted
for approximately 55 percent of the business; and fixed price incentive and
fixed-price-level-of-effort contracts accounted for approximately 9 percent of
the business.
15
Under U.S. Government regulations, certain costs, including certain
financing, research and development, and marketing costs and expenses related to
the preparation of competitive bids and proposals and international sales, are
not reimbursable. The U.S. Government also regulates the methods under which
costs are allocated to U.S. Government contracts.
U.S. Government contracts are, by their terms, subject to termination by
the U.S. Government either for its convenience or default by the contractor.
Cost-plus contracts provide that, upon termination, the contractor is entitled
to reimbursement of its allowable costs; and if the termination is for
convenience, a total fee proportionate to the percentage of the work completed
under the contract. Fixed-price contracts provide for payment upon termination
for items delivered to and accepted by the U.S. Government; and, if the
termination is for convenience, for payment of fair compensation for work
performed plus the costs of settling and paying claims by terminated
subcontractors, other settlement expenses, and a reasonable profit on the costs
incurred or committed. If a contract termination is for default, however, (i)
the contractor is paid an amount agreed upon for completed and partially
completed products and services accepted by the U.S. Government, (ii) the U.S.
Government is not liable for the contractor's costs with respect to unaccepted
items, and is entitled to repayment of advance payments and progress payments,
if any, related to the terminated portions of the contracts, and (iii) the
contractor may be liable for excess costs incurred by the U.S. Government in
procuring undelivered items from another source.
In addition to the right of the U.S. Government to terminate, U.S.
Government contracts are conditioned upon the continuing availability of
Congressional appropriations. Congress usually appropriates funds for a given
program on a fiscal-year basis even though contract performance may take many
years. Consequently, at the outset of a major program, the contract is usually
partially funded, and additional monies are normally committed to the contract
by the procuring agency only as appropriations are made by Congress for future
fiscal years.
Licenses are required from U.S. Government agencies for export from the
United States of many of the Company's products. Certain of the Company's
products currently are not permitted to be exported.
In common with other companies which derive a substantial portion of their
sales from contracts with the U.S. Government for defense-related products, the
Company is subject to business risks, including changes in governmental
appropriations, national defense policies or regulations, and availability of
funds. Any of these factors could adversely affect the Company's business with
the U.S. Government in the future.
16
Competitive Bidding for Major Programs
The Company obtains defense contracts through the process of competitive
bidding. Contracts from which the Company has derived and expects to derive a
significant portion of its sales (including contracts relating to certain
program opportunities discussed or referenced herein) were or will be obtained
through competitive bidding in which, in many instances, numerous bidders
participated or will participate. There can be no assurance that the Company
will continue to be successful in having its bids accepted or, if accepted, that
awarded contracts will generate sufficient sales to result in profitability for
the Company. Additionally, inherent in the competitive bidding process is the
risk that if a bid is submitted and a contract is subsequently awarded, actual
performance costs may exceed the projected costs upon which the submitted bid or
contract price was based. To the extent that actual costs exceed the projected
costs on which bids or contract prices were based, the Company's profitability
could be materially adversely affected.
Competition
The Company's ability to compete for defense contracts depends to a large
extent on the effectiveness and innovativeness of its research and development
programs, its ability to offer better program performance than its competitors
at a lower cost to the U.S. Government customer, and its readiness in
facilities, equipment and personnel to undertake the programs for which it
competes. In some instances, programs are sole sourced or work directed by the
U.S. Government to a single supplier. In such cases, there may be other
suppliers who have the capability to compete for the programs involved, but they
can only enter or reenter the market if the U.S. Government should choose to
reopen the particular program to competition. The Company's principal sole
source contracts are for the following programs: Trident (D5) missile (through
the joint venture with Thiokol), Titan IV SRMU space boosters, AGM-130 and SFW
propulsion systems, M830A1 multi-purpose tank ammunition round, Volcano mine and
M758 fuze for medium caliber ammunition, the M732A2 proximity fuze, and the
M734/M735 mortar fuzes.
The Company generally faces competition from a number of competitors in
each business area. However, Primex Technologies, Inc. ("Primex") is the sole
competitor in the Conventional Munitions Ammunition Systems business area for
medium caliber ammunition and tank ammunition, and the sole domestic competitor
for commercial gun powders produced by the Conventional Munitions Ordnance
business unit. The Company shares the production of tank ammunition training
rounds with Primex, and Primex is currently the sole source for the M829A2
Kinetic Energy round, while the Company is the sole source for the M830A1 multi-
purpose round. The Company also shares the 25mm and 30mm medium-caliber
ammunition market with Primex, its sole domestic competitor.
17
The downsizing of the munitions industrial base has resulted in a reduction
in the number of competitors, through consolidations and departures from the
industry. This has reduced the number of competitors for some programs, but has
strengthened the capabilities of some of the remaining competitors. In
addition, it is possible that there will be increasing competition from the
remaining competitors in business areas where they do not currently compete,
particularly in those business areas dealing with electronics.
Novation of U.S. Government Contracts
As required by federal procurement regulations providing for the U.S.
Government to recognize the Company as the successor in interest to Honeywell on
contracts between Honeywell and the U.S. Government, Honeywell has entered into
novation agreements with the Company and the U.S. Government which provide,
among other things, for Honeywell to directly or indirectly guarantee or
otherwise become liable for the performance of the Company's obligations under
such contracts (the "Guaranteed Contracts") which were transferred to the
Company in connection with the Spin-off. Such novation agreements provide that
the Company assumes all obligations under the Guaranteed Contracts and that the
U.S. Government recognizes the transfer of such Guaranteed Contracts and related
assets. While these Guaranteed Contracts are scheduled to be performed over a
period of time, it is not expected that they will be fully and finally
discharged for a number of years. The Company has agreed to perform all of its
obligations under each Guaranteed Contract and to indemnify Honeywell against
any liability Honeywell may incur under the novation agreements by reason of any
failure by the Company to perform such obligations.
The Company has entered into similar novation agreements in connection with
the divestiture of Metrum Information Storage ("MIS") and the former Marine
Systems Group. In these cases, however, the Company, as the seller, has
guaranteed performance of the buyer's obligations under the contracts
transferred to the buyer, and the buyers of MIS and Marine Systems,
respectively, rather than the Company, have the performance and indemnification
obligations described in the last sentence of the preceding paragraph.
The Company and Hercules have agreed to use all reasonable efforts to enter
into novation agreements with the U.S. Government, as required by federal
procurement regulations applicable to contracts between or relating to HAC and
the U.S. Government (the "Acquired Government Contracts") which were acquired by
the Company in the HAC Acquisition. Such novation agreements are expected to
provide, among other things, that the Company assumes all obligations under the
Acquired Government Contracts and that the U.S. Government recognizes the
transfer to the Company of the Acquired Government Contracts and related assets.
The Acquired Government Contracts are scheduled to be performed over time; it is
not expected that they will be fully and finally discharged for several years.
Hercules has agreed to
18
indemnify the Company against any liability which the Company may incur under
such novation agreements by reason of any prior failure by Hercules to perform
its obligations under the novated contracts. The Company has agreed to indemnify
Hercules against any liability which Hercules may incur under such novation
agreements by reason of any failure by the Company to perform its obligations
under the novated contracts.
Research and Development
The expense incurred on Company-sponsored research and development
activities related to new products or services and the improvement of existing
products or services was $16.2, $14.1, and $11.8 million for fiscal year 1997,
fiscal year 1996 and fiscal year 1995, respectively. The expense incurred
during the same periods for research and development activities that were
customer-sponsored (primarily funded by the U.S. government) was $231.3, $281.8,
and $117.7 million, respectively.
Backlog
The aggregate amount of contracted backlog orders on April 1, 1997, and
April 1, 1996, was $1,438.9, and $1,682.7 million, respectively. It is expected
that approximately 84 percent of sales during the fiscal year ending March 31,
1998, will fill orders that were in backlog at April 1, 1997. The backlog
represents the value of contracts for which goods and services are yet to be
provided. The backlog consists of firm contracts and although they can be and
sometimes are modified or terminated, the amount of modifications and
terminations historically has been limited compared to total contract volume.
Seasonality
The Company's business is not seasonal in nature. However, since the
Company's sales on certain production contracts are not recorded until product
is delivered to the customer, extra effort is expended to complete and deliver
product prior to fiscal year end, which has typically resulted in higher sales
in the fourth fiscal quarter.
Export Sales
Export sales from the United States to unaffiliated customers for the
Company were $75.0, $71.9 million, and $52.0 million for fiscal year 1997,
fiscal year 1996, and fiscal year 1995, respectively.
Employees
As of March 31, 1997, the Company employed approximately 6,800 active
employees (including approximately 1,350 employees of government-owned company-
19
operated facilities), of which approximately 1,975 were covered by collective
bargaining agreements. Set forth below is a table indicating the number of such
agreements, the number of employees covered and the expiration dates of the
agreements:
Number of Expiration Number of Employees
Location Contracts Date Represented
- -------- --------- ---------- -----------
Rocket Center, WV........... 2 8/14/97 210
9/14/97 10
Magna, UT................... 1 2/15/99 220
Janesville, WI.............. 1 3/21/01 166
Minneapolis, MN area........ 1 9/30/99 328
Radford, VA................. 2 10/06/98 1,012
DeSoto, KS.................. 1 11/18/98 29
Although relations between the Company and its unionized and non-unionized
employees and their various representatives are generally considered
satisfactory, there can be no assurance that new labor contracts can be
concluded without work stoppages.
Patents
As of March 31, 1997, the Company owned approximately 260 U.S. patents,
approximately 280 foreign patents, and had approximately 50 U.S. patent
applications and 90 foreign patent applications pending. Although the conduct
of the Company's business involves the manufacture of various products that are
covered by patents, the Company's management does not believe that any one
single existing patent or license is material to the success of its business as
a whole. Management believes that research, development and engineering skills
make a more important contribution to the Company's business. The U.S.
Government typically receives royalty-free licenses to inventions made under
U.S. Government contracts, with the Company retaining all other rights,
including all commercial rights, with respect to such inventions. In addition,
the Company's proprietary information, including trade secrets, is protected
through the requirement that employees execute confidentiality agreements as a
condition of employment, and the Company's policy of protecting proprietary
information from unauthorized disclosure.
Environmental Matters
The Company's operations are subject to a number of federal, state and
local environmental laws and regulations. For example, under the federal Clean
Water Act ("CWA"), the Company's facilities may be required to obtain permits
and to construct pollution control equipment to reduce the levels of pollutants
being discharged into surface waters. Under the federal Clean Air Act ("CAA"),
the Company's facilities may be required to obtain permits and install pollution
control equipment to limit the
20
emission of various kinds of air pollutants. The Company may also be required to
comply with the provisions of the federal Resource Conservation and Recovery Act
("RCRA") which regulates the generation, storage, handling, transportation,
treatment and disposal of hazardous and solid wastes. In addition, the Company
could be subject to the federal Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), which imposes liability for the
cleanup of releases of hazardous substances. Such liability may involve, for
example, releases at off-site locations as well as at presently and formerly
owned or leased facilities. Environmental laws and regulations change
frequently, and it is difficult to predict what impact these environmental laws
and regulations may have on the Company in the future. When the Company becomes
aware of environmental concerns for which it is potentially liable, the Company
works with the various governmental agencies in investigating the situation,
proposing remedial and/or corrective action and performing the agreed-upon
action without unreasonable delay.
With respect to the disposal of material at environmental treatment,
recycling, storage, disposal, or similar sites that occurred prior to the Spin-
off, the Company has agreed to assume the liability and indemnify Honeywell for
the Company's proportional share of the costs of remedial and/or corrective
action allocated to Honeywell as a "potentially responsible party." The
Company's proportional share is the percentage that the volume of such material
generated by the Businesses bears to the total volume of such material generated
by Honeywell at each such site. The Company does not believe that its ultimate
contribution or liability relating to these matters, individually or in the
aggregate, would be reasonably likely to have a material adverse effect on the
business of the Company taken as a whole.
As part of the HAC Acquisition, the Company has generally assumed
responsibility for environmental compliance at the facilities utilized by the
operations acquired in the HAC Acquisition (the "Aerospace Facilities"). There
may also be significant environmental remediation costs associated with the
Aerospace Facilities that will, with respect to some facilities, be funded in
the first instance by the Company, subject to reimbursement or indemnification
as described below. Management believes that much of the compliance and
remediation costs associated with the Aerospace Facilities will be reimbursable
under U.S. Government contracts, and that those environmental remediation costs
not covered through such contracts will be covered by Hercules under agreements
entered into in connection with the HAC Acquisition (the "Environmental
Agreements"). Under the Environmental Agreements, Hercules has agreed to
indemnify the Company for environmental conditions relating to releases or
hazardous waste activities occurring prior to the closing of the HAC
Acquisition, fines relating to pre-closing environmental compliance,
environmental claims arising out of breaches of Hercules' representations and
warranties and certain compliance requirements at the Kenvil, New Jersey
facility ("Kenvil Facility"). The indemnity obligation is subject to a total
deductible of $1.0 million for all claims (including non-environmental claims)
that the Company may assert under the HAC Acquisition purchase agreement (the
"Purchase Agreement"). In addition, Hercules is not required
21
to indemnify the Company for any individual claims below $50,000. Hercules is
obligated to indemnify the Company for the lowest cost response of remediation
required at the facility. The limitations of Hercules' indemnification
obligations do not apply to amounts incurred by Hercules in connection with the
performance of remedial actions relating to preacquisition conditions at the
Clearwater, Florida facility ("Clearwater Facility") or in connection with its
obligation to comply with certain environmental regulations at the Kenvil
Facility. The Clearwater Facility is being leased from Hercules on a year-to-
year basis. Pursuant to the Environmental Agreements, Hercules will be
responsible for conducting any remedial activities and seeking reimbursement
from the U.S. Government with respect to the Kenvil Facility and the Clearwater
Facility.
There can be no assurance that the U.S. Government or Hercules will
reimburse the Company for any particular environmental costs or reimburse the
Company in a timely manner. U.S. Government reimbursements for non-CERCLA
cleanups are financed out of a particular agency's operating budget. The
ability of a particular governmental agency to make timely reimbursements for
cleanup costs will be subject to national budgetary constraints. 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.
Additional Information
Incorporated herein by reference are the following portions of the Annual
Report:
Page Number(s)
Portion of Annual Report in Annual Report
Business Groups; Business Overview;
Sales as a percent of total revenues; Inside Front
Competencies; Major Programs; End Users........ Cover Foldout
Conventional Munitions........................... 5-7
Space and Strategic Systems...................... 8-11
ICBM Prime Integration Program................... 11
Defense Systems.................................. 12-14
Emerging Business................................ 15-16
Selected Financial Data.......................... 18
Discontinued Operations.......................... 21
Environmental Matters............................ 23
Risk Factors..................................... 24
Note 6 of Notes to Financial Statements.......... 31
Note 15 of Notes to Financial Statements......... 36-37
Note 17 of Notes to Financial Statements......... 37
Note 18 of Notes to Financial Statements......... 37-38
Note 19 of Notes to Financial Statements......... 38
Note 21 of Notes to Financial Statements......... 39
22
ITEM 2. PROPERTIES
At March 31, 1997, the Company occupied manufacturing/assembly, warehouse,
test, research and development and office properties having an aggregate floor
space of approximately 11.8 million square feet, which either is owned or leased
by the Company, or is occupied under facilities contracts with the U.S.
Government. The table below provides summary information regarding these
properties, and indicates whether they are used principally by Conventional
Munitions ("CM"), Defense Systems ("DS"), Space and Strategic Systems ("SSS"),
Emerging Business ("EB"), and/or ICBM Prime Integration Program ("ICBM"):
23
Government
Owned Leased Owned (2) Total
-----------------------------------------------
Principal Properties(1) (thousands of square feet)
-----------------------
Florida
Clearwater (DS)............................. -- 112 -- 112
Illinois
Wilmington (CM)............................. -- -- 440 440
Iowa
Burlington (CM)............................. -- 20 -- 20
Kansas
DeSoto (CM)................................. -- -- 730 730
Maryland
Annapolis (EB).............................. 60 -- -- 60
Minnesota
Elk River (CM/EB)........................... 143 -- -- 143
Hopkins (CM/DS/EB)(3)....................... 536 -- -- 536
New Brighton (CM/DS)........................ -- -- 1,522 1,522
New Jersey
Totowa (CM)................................. 93 20 -- 113
Pennsylvania
Horsham (EB)................................ -- 53 -- 53
Tennessee
Toone (CM).................................. 224 -- -- 224
Texas
Hondo (DS).................................. -- 25 -- 25
Utah
Clearfield (SSS)............................ -- 658 -- 658
Magna (EB/ICBM/SSS)......................... 1,869 -- 498 2,367
Tekoi (SSS)................................. -- 25 -- 25
Virginia
Arlington (EB).............................. -- 11 -- 11
Radford (CM)................................ -- -- 3,726 3,726
West Virginia
Rocket Center (CM).......................... 96 -- 826 922
Wisconsin
Janesville (DS)............................. 219 13 -- 232
----- ---- ----- ------
Subtotal........................ 3,240 937 7,742 11,919
Other Properties(4)
-------------------
EB................................................. -- 24 -- 24
CM/DS.............................................. -- 17 -- 17
----- ---- ----- ------
Subtotal........................ -- 77 -- 77
----- ---- ----- ------
TOTAL....................................... 3,240 978 7,742 11,996
===== ==== ===== ======
(27%) (8%) (65%) (100%)
24
(1) Excludes properties in the following states aggregating 576,700 square feet
of space that is owned or leased, but is no longer occupied by the Company:
Colorado (265,000 owned square feet, 106,000 square feet of which is
leased); Minnesota (306,000 leased square feet, which is subleased); and
Virginia (5,700 leased square feet, which is subleased).
(2) These properties are occupied rent-free under five-year facilities
contracts that require the Company to pay for all utilities, services, and
maintenance costs.
(3) This facility also serves as the Company's corporate headquarters.
(4) Principally sales and other offices, each of which has less than 10,000
square feet of floor space.
In addition to the properties listed above, the Company owns proving
grounds totaling 3,045 acres, with several small storage and testing buildings,
in Elk River, Minnesota, and 1,200 acres of undeveloped land in Hot Springs,
South Dakota. The Company leases an aggregate of 1,400 acres of land in Socorro,
New Mexico for use as a test range and load-assemble-and-pack facility.
Since the Spin-off, the Company has implemented a significant program of
consolidating its operations and facilities, due in part to an underutilization
of facilities. The Company continues to explore opportunities for further
facility consolidations. The Company considers its properties to be in generally
good condition and adequate for the needs of its business.
Incorporated herein by reference are the following portions of the Annual
Report:
Page Number(s)
Portion of Annual Report in Annual Report
Property and Depreciation...................... 29
Note 4 of Notes to Financial Statements........ 30
Note 12 of Notes to Financial Statements....... 34
Note 13 of Notes to Financial Statements....... 34
Facilities and Offices......................... 43
ITEM 3. LEGAL PROCEEDINGS
At the time of its acquisition, HAC was involved in two lawsuits alleging
violations of the False Claims Act (known as "qui tam" actions) brought by
former employees who had been subject to a HAC reduction-in-force. The first qui
tam action captioned United States ex rel., Katherine A. Colunga, et al. v.
Hercules Incorporated was filed in the U.S. District Court for the District of
Utah, Central Division. The first complaint was filed under seal on October 24,
1989. The second amended complaint was filed on April 16, 1992. With respect
to the first qui tam action, the alleged false claims appear to be principally
based on an allegedly deficient quality control program. Hercules' management
has advised the Company that it does not believe that alleged
25
recordkeeping violations provide a valid basis for statutory penalties when
viewing the integrity of the overall quality control process. The second qui tam
action captioned United States ex rel., Benny D. Hullinger, et al. v. Hercules
Incorporated was filed under seal in the U.S. District Court for the District of
Utah, Central Division. The original complaint was filed under seal on March 11,
1992, and removed from under seal on August 15, 1994. The first amended
complaint was filed on November 9, 1994. The complaint alleges various causes of
action, including labor and material mischarging and misuse of special tooling
and government property. Damages are not specified. The U.S. Government
investigated both qui tam cases and declined to take part in either lawsuit.
Pursuant to the terms of the Purchase Agreement, all liability associated
with and all responsibility for continuing defense of litigation incurred in the
ordinary course of business of HAC has been assumed by the Company, except for
the qui tam lawsuits described above. In addition, pursuant to the terms of the
Purchase Agreement, the Company has agreed to indemnify and reimburse Hercules
for a portion of the claims arising out of, relating to, or incurred in
connection with Hercules' qui tam lawsuits. Specifically, the Company has agreed
to indemnify and reimburse Hercules for a portion of the claims (collectively,
the "Litigation Claims") arising out of, relating to, or incurred in connection
with the above HAC qui tam actions (collectively, the "Hercules Actions"). The
Company's liability to Hercules for the Litigation Claims (other than with
respect to Litigation Claims consisting of external attorney's and investigative
fees and related costs and expenses (collectively, the "Legal Costs")) is
limited to approximately $4 million. The Company also has agreed to reimburse
Hercules for 40 percent of all Legal Costs incurred from and after the closing
of the HAC Acquisition with respect to the Hercules Actions. The Company and
Hercules have also entered into a Joint Defense Agreement with respect to the
Hercules Actions.
In addition to the qui tam actions, at the time of its acquisition, HAC was
subject to the administrative orders described below. Pursuant to a letter to
Hercules, dated March 9, 1995, the New Jersey Department of Environmental
Protection (the "NJDEP") informed Hercules that it is considering enforcement
actions in connection with the Kenvil Facility's alleged failure to comply with
prior Administrative Consent Orders ("ACOs") and other alleged violations
previously identified by the NJDEP. Under the Environmental Agreements, Hercules
is responsible for the ACO's, for addressing preacquisition environmental
conditions at the Kenvil Facility, and for related penalties, costs, and
business interruption losses incurred by the Company. Penalties associated with
these alleged violations are being negotiated with the NJDEP, and it is expected
that, under the Environmental Agreements, Hercules will be responsible for all
or substantially all of any monetary sanctions assessed against the Company. In
January 1993, the federal Environmental Protection Agency ("EPA") issued an
administrative Complaint, Compliance Order and Notice of Opportunity on Hearing
(the "Complaint") to the Radford, Virginia facility (the "Radford Facility")
alleging non-compliance with certain performance standards and closure
requirements established by the EPA for underground storage tanks ("USTs"). The
Complaint requires the Radford Facility to
26
bring the USTs into compliance and imposes a penalty assessment of approximately
$235,000. The Company settled with the EPA for $70,000, which was paid in April
1997, and is subject to indemnification by Hercules under the Environmental
Agreements.
In connection with the GAU-8/A contract for target practice rounds, the
Company has been served with three grand jury subpoenas, dated February 4, 1991,
July 19, 1994 and October 27, 1994, for documents. All subpoenas were issued by
the U.S. District Court, Northern District of Illinois, Eastern Division. The
Company has supplied all documents requested to date.
In March 1997 the Company received a partially unsealed complaint, filed on
an unknown date, in a qui tam action by a former employee alleging violations of
the False Claims Act. The action alleges labor mischarging to the Intermediate
Nuclear Force contract at the Company's Bacchus Works facility in Magna, Utah.
Damages are not specified. The Company and Hercules have agreed to share
equally the external attorney's fees and investigative fees and related costs
and expenses of this action until such time as a determination is made as to the
applicability of the indemnification provisions of the Purchase Agreement.
The Company has also been served with complaints in two civil actions, each
captioned United States v. Alliant Techsystems Inc. and filed in the U.S.
District Court for the District of Minnesota, alleging violations of the False
Claims Act, the Truth in Negotiations Act, and common law and equitable theories
of recovery. The first complaint was filed February 21, 1997, and relates to a
contract for 120mm tank ammunition, and the second complaint was filed March 10,
1997, and relates to a contract for the AT4 shoulder-fired weapon. Both
complaints allege that the contracts in question were defectively priced.
Damages are not specified.
Under the provisions of the False Claims Act, a civil penalty of between
$5,000 and $10,000 can be assessed for each claim, plus three times the amount
of any damages sustained by the U.S. Government. In addition to damages, a
judgment against the Company in such a suit or a finding of liability in a
separate criminal action could carry penalties of suspension or debarment which
would make some or all of the Company's operations ineligible to be awarded any
U.S. Government contracts for a period of up to three years. The amount of
damages, if any, involved in the above actions filed under the False Claims Act
cannot be determined at this time.
The Company is also a defendant in other suits and claims, some of which
are covered by insurance, and in other investigations of varying natures. While
the results of litigation and other proceedings cannot be predicted with
certainty, in the opinion of management, 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
27
during a specific period could have a material effect on the quarterly or annual
operating results for that period.
Incorporated herein by reference is the following portion of the Annual
Report:
Page Number(s)
Portion of Annual Report in Annual Report
Environmental Matters............................... 23
Environmental Remediation and Compliance............ 29
Note 6 of Notes to Financial Statements............. 31
Note 15 of Notes to Financial Statements............ 36-37
Note 17 of Notes to Financial Statements............ 37
Note 19 of Notes to Financial Statements............ 38
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of fiscal year 1997.
28
SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company and their ages and positions (in each
case as of June 1, 1997) are as follows:
Name (Age) Position
Richard Schwartz (61)....... Chairman of the Board, President and Chief
Executive Officer
Peter A. Bukowick (53)...... Executive Vice President
Hugo Fruehauf (57).......... Group Vice President--Defense Systems
Robert E. Gustafson (48).... Vice President--Human Resources
Roger P. Heinisch (59)...... Vice President--Engineering
Arlen D. Jameson (56)....... Vice President--ICBM Prime Integration Program
Galen K. Johnson (43)....... Vice President and Treasurer
William R. Martin (56)...... Vice President--Washington, D.C. Operations
Scott S. Meyers (43)........ Vice President and Chief Financial Officer
Paula J. Patineau (43)...... Vice President and Controller
Paul A. Ross (60)........... Group Vice President--Space and Strategic Systems
Kristi Rollag Wangstad (42). Vice President--Public Affairs
Donald E. Willis (53)....... Group Vice President--Emerging Business; Vice
President--Strategic Planning
Daryl L. Zimmer (54)........ Vice President and General Counsel
Charles H. Gauck (58)....... Secretary
Except as noted below, each of the above individuals became an executive
officer at or about the time of the Spin-off (September 28, 1990), serves at the
pleasure of the Company's Board of Directors, and is subject to reelection
annually on the date of the Company's Annual Meeting of stockholders. The
following became executive officers on the dates indicated: Mr. Schwartz,
January 9, 1995; Mr. Bukowick, March 15, 1995; Mr. Fruehauf, September 11, 1995;
Mr. Gustafson, July 22, 1996; Mr. Jameson, April 1, 1997; Mr. Johnson, May 27,
1992; Mr. Martin, January 8, 1996; Mr. Meyers, March 1, 1996; Ms. Patineau,
January 29, 1997; and Mr. Ross, April 1, 1997. No family relationship exists
between any of the executive officers or between any of them and any director of
the Company. Information regarding the five-year employment history (in each
case with the Company unless otherwise indicated) of each of the executive
officers is set forth below.
29
Mr. Schwartz has been Chairman of the Board of Directors since January
1997, and President and Chief Executive Officer since January 1995. Prior to
that, he was Executive Vice President of Hercules since January 1991 and the
President of HAC since October 1989, in each case until January 1995. He also
served as a director of Hercules from 1989 until January 1995.
Mr. Bukowick has held his present position since April 1997. From March
1995 until April 1997, he was Group Vice President - Aerospace Systems. Prior to
that, he was President pro tempore of HAC from January 1995 until March 1995,
and Vice President, Technology of HAC from 1992 until December 1994. From 1989
until 1992, he was President, Packaging Films Group of Hercules.
Mr. Fruehauf has held his present position since September 11, 1995. Prior
to that, he was President of EFRATOM Time and Frequency Products, Inc. since
1983.
Mr. Gustafson has held his present position since July 1996. From the Spin-
off until July 1996 he served as Director of Compensation and Benefits.
Mr. Heinisch has held his present position since May 1997. From January
1995 until May 1997, he served as Vice President - Engineering, Information
Systems and Technology. From October 1990 until January 1995, he served as Vice
President - Engineering.
Mr. Jameson has held his present position since April 1997. Prior to that
he was President of Arrowsmith Technologies, Inc., a software company, from
March 1996 until November 1996. From 1962 until February 1996, he served in the
U.S. Air Force, most recently as Deputy Commander-in-Chief, U.S. Strategic
Command from 1994 until February 1996, and prior to that, as Commander,
Twentieth Air Force, from 1992 until 1994.
Mr. Johnson has been Vice President since April 1997 and Treasurer since
May 1992.
Mr. Martin has held his present position since January 1996. From March
1995 until January 1996, he served as Vice President - Business Development of
the Company's Aerospace Systems Group. From July 1991 until March 1995 he served
as Vice President - Business Development and Washington Office Operations of
HAC.
Mr. Meyers has held his present position since March 1996. Prior to that,
he was Executive Vice President and Chief Financial Officer of Magnavox
Electronic Systems Company since January 1990.
Ms. Patineau has held her present position since January 1997. From June
1996 until January 1997, she served as acting Controller. From April 1992 until
July 1996, she served as Director of Financial Reporting/Accounting Services.
30
Mr. Ross has held his present position since April 1997. From April 1995
until April 1997, he served as Vice President and General Manager, Space and
Strategic Division, Aerospace systems Group. From August 1994 until March 1995,
he was Vice President of Operations of HAC. Prior to joining HAC, he was
employed by Rockwell International, most recently as Vice President of
Production Operations, Rocketdyne Division, from June 1991 until August 1994.
Ms. Rollag Wangstad has held her present position since October 1992. From
the Spin-off until October 1992, she served as Vice President--External
Relations.
Mr. Willis has been Vice President - Strategic Planning since April 1997,
and Group Vice President - Emerging Business since March 1995. From the Spin-off
until March 1995, he served as Vice President--Strategic Development and
Planning.
Mr. Zimmer has held his present position since the Spin-off.
Mr. Gauck has held his present position since the Spin-off.
31
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Company Common Stock is listed and traded on the New York Stock Exchange
("NYSE") under the symbol ATK. The following table sets forth the high and low
sales prices of the Common Stock for each full quarterly period within the two
most recent fiscal years, as reported on the NYSE Composite Tape:
Period High Low
Fiscal year ended March 31, 1997:
Quarter ended June 30, 1996.................. $49.125 43.75
Quarter ended September 29, 1996............. 53.50 46.25
Quarter ended December 29, 1996.............. 57.375 47.625
Quarter ended March 31, 1997................. 54.75 42.00
Fiscal year ended March 31, 1996:
Quarter ended July 2, 1995................... $ 41.75 $35.625
Quarter ended October 1, 1995................ 47.50 41.50
Quarter ended December 31, 1995.............. 53.00 44.625
Quarter ended March 31, 1996................. 50.50 46.25
The number of holders of record of Company Common Stock as of May 31, 1997,
was 13,019.
The Company has not, since the Spin-off, paid cash dividends. The Company's
dividend policy will be reviewed by the Board of Directors of the Company at
such future times as may be appropriate in light of relevant factors existing at
such times, including the extent to which the payment of cash dividends may be
limited by covenants contained in its bank Credit Agreement (the "Credit
Agreement") and the Indenture pursuant to which its 11-3/4% Senior Subordinated
Notes due 2003 (the "Notes") were issued (collectively, the "Debt Agreements").
The Credit Agreement, as amended and restated in November 1996, currently limits
the aggregate sum of dividends plus certain other restricted payments to $75
million. The Notes limit the Company's dividends and certain other restricted
payments to an amount equal to 50% of cumulative net income after March 15,
1995, provided that after such payments the Company's ratio of earnings (before
interest, taxes, depreciation and amortization) to fixed charges equals or
exceeds three to one. The Debt Agreements also prohibit
32
dividend payments if loan defaults exist or certain financial covenant ratios
are not maintained.
Incorporated herein by reference are the following portions of the Annual
Report:
Page Number(s)
Portion of Annual Report in Annual Report
Consolidated Income Statements -- Primary and fully diluted
earnings (loss) per common and common equivalent share............. 26
Earnings Per Share Data.............................................. 30
Note 7 of Notes to Financial Statements.............................. 31-32
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference is the following portion of the Annual
Report:
Page Number(s)
Portion of Annual Report in Annual Report
Selected Financial Data.............................................. 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Incorporated herein by reference is the following portion of the Annual
Report:
Page Number(s)
Portion of Annual Report in Annual Report
Management's Discussion and Analysis................................. 19-24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated herein by reference are the following portions of the Annual
Report:
33
Page Number(s)
Portion of Annual Report in Annual Report
Financial Highlights................................................. 1
Report of Independent Auditors....................................... 25
Report of Management................................................. 25
Consolidated Income Statements....................................... 26
Consolidated Balance Sheets.......................................... 27
Consolidated Statements of Cash Flows................................ 28
Notes to the Consolidated Financial Statements....................... 29-40
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the executive officers of the Company is set forth
following Item 4 in Part I of this Report. The other information required by
this Item will be included in the definitive proxy statement for the 1997 Annual
Meeting of stockholders (the "Proxy Statement"), to be filed within 120 days
after the Company's fiscal year ended March 31, 1997, and is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item will be included in the Proxy
Statement and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item will be included in the Proxy
Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item will be included in the Proxy
Statement and is incorporated herein by reference.
34
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report
Annual
Report Page Form 10-K
Numbers(s) Page Number
1. Financial Statements (incorporated by reference
from the Annual Report):
Financial Highlights............................ 1
Report of Independent Auditors.................. 25
Consolidated Income Statements.................. 26
Consolidated Balance Sheets..................... 27
Consolidated Statements of Cash Flows........... 28
Notes to the Consolidated Financial Statements.. 29-40
2. Financial Statement Schedules (included
in this Report):
Independent Auditors' Report...................................... 44
Schedules:
II - Valuation Reserves..................................... 45
All schedules, other than indicated above, are omitted because of the
absence of the conditions under which they are required or because the
information required is shown in the financial statements or notes thereto.
3. Exhibits. (The following exhibits are filed with this Report unless the
exhibit number is followed by an asterisk (*), in which case the exhibit is
incorporated by reference from the document listed. The applicable
Securities and Exchange Commission File Number is 1-10582 unless otherwise
indicated. Exhibit numbers followed by a pound sign (#) identify exhibits
that are either a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K. Excluded from this
list of exhibits, pursuant to Paragraph (b) (4) (iii) (A) of Item 601 of
Regulation S-K, may be one or more instruments defining the rights of
holders of long-term debt of the Registrant. The Registrant hereby agrees
that it will, upon request of the Securities and Exchange Commission,
furnish to the Commission a copy of any such instrument.)
35
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
3(i).1* Restated Certificate of Incorporation, effective July 20, 1990
(Exhibit 3.1 to Amendment No. 1 to Form 10 Registration Statement
filed with the Securities and Exchange Commission on July 20, 1990
(the "Form 10")).
3(i).2* Certificate of Correction, effective September 21, 1990 (Exhibit 3.1
to Registration Statement on Form S-4, File No. 33-91138, filed with
the Securities and Exchange Commission on April 13, 1995 (the "Form
S-4")).
3(i).3* Certificate of Designations, Preferences and Rights of Series A Junior
Participating Preferred Stock of the Registrant, effective September
28, 1990 (Exhibit 3.3 to the Form S-4).
3(ii)* By-Laws, as amended through May 27, 1992 (Exhibit 3.3 to Form 10-K for
the fiscal year ended March 31, 1992 (the "FY92 Form 10-K")).
4.1* Form of Certificate for common stock, par value $.01 per share
(Exhibit 4.1 to Amendment No. 1 to the Form 10).
4.2* Rights Agreement, dated as of September 24, 1990, between the
Registrant and Manufacturers Hanover Trust Company (Exhibit 4.2 to
Post-Effective Amendment No. 1 to the Form 10).
4.2.1* First Amendment to Rights Agreement, dated as of August 4, 1992,
between the Registrant and Chemical Bank (successor to Manufacturers
Hanover Trust Company) (Exhibit 4.2.1 to Form 10-K for the fiscal year
ended March 31, 1993 (the "FY93 Form 10-K")).
4.2.2* Rescission Agreement, dated as of May 26, 1993, between the Registrant
and Chemical Bank (Exhibit 4.2.2 to FY93 Form 10-K).
4.2.3* Second Amendment to Rights Agreement, dated as of October 28, 1994,
between the Registrant and Chemical Bank (Exhibit 4 to Form 8-K dated
October 28, 1994 (the "October 1994 Form 8-K")).
4.3* Indenture, dated as of March 1, 1995, between the Registrant and First
Bank National Association, as trustee (including a form of Initial
Note) (Exhibit 4.1 to the Form S-4).
4.4* Form of Exchange Note (Exhibit 4.2 to Form S-4).
36
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
4.5* Registration Rights Agreement, dated as of March 14, 1995, among the
Registrant, the Lenders referred to therein, Morgan Guaranty Trust
Company of New York, as Documentation Agent, and Chemical Bank, as
Administrative Agent (Exhibit 4.3 to the Form S-4).
4.6* Amended and Restated Credit Agreement dated as of March 15, 1995 and
amended and restated as of November 14, 1996 among the Registrant, the
Lenders referred to therein, Morgan Guaranty Trust Company of New
York, as Documentation Agent, and The Chase Manhattan Bank, as
Administrative Agent (including forms of Note, Assignment and
Assumption Agreement, and Amended and Restated Subsidiary Guaranty
Agreement (Exhibit 4 to Form 8-K dated November 14, 1996).
4.7* Security Agreement, dated as of March 15, 1995, between the Registrant
and J.P. Morgan Delaware, as Collateral Agent (without exhibits)
(Exhibit 10.4 to Form S-4).
4.8* Patent Security Agreement, dated as of March 15, 1995, between the
Registrant and J.P. Morgan Delaware, as Collateral Agent (without
exhibits) (Exhibit 10.5 to the Form S-4).
4.9* Pledge Agreement, dated as of March 15, 1995, between the Registrant
and J.P. Morgan Delaware, as Collateral Agent (Exhibit 10.6 to
Form S-4).
4.10* Purchase Agreement, dated March 7, 1995, among the Registrant and the
Initial Purchasers (Exhibit 10.37 to Form S-4).
10.1* Distribution Agreement, dated as of September 24, 1990, between
Honeywell Inc. and the Registrant (Exhibit 10.1 to Amendment No. 2 to
the Form 10).
10.2* Environmental Matters Agreement, dated as of September 24, 1990,
between Honeywell Inc. and the Registrant (Exhibit 10.3 to Post-
Effective Amendment No. 1 to the Form 10).
10.3* Intellectual Property Agreement, dated as of September 24, 1990,
between Honeywell Inc. and the Registrant (Exhibit 10.4 to Amendment
No. 2 to the Form 10).
10.3.1* Amendment No. 1 to Intellectual Property Agreement, dated as of
September 24, 1990 (Exhibit 10.4.1 to FY92 Form 10-K).
37
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
10.3.2* Amendment No. 2 to Intellectual Property Agreement, dated as of
September 24, 1990 (Exhibit 10.4.2 to FY92 Form 10-K).
10.3.3* Amendment No. 3 to Intellectual Property Agreement, dated July 30,
1992 (Exhibit 10.4.3 to Form 10-Q for the quarter ended October 3,
1993 (the "FY94 Second Quarter Form 10-Q")).
10.4* Tax Sharing Agreement, dated as of September 28, 1990, between
Honeywell Inc. and the Registrant (Exhibit 10.5 to Amendment No. 2 to
the Form 10).
10.5* Government Subpoena Agreement between Honeywell Inc. and the
Registrant (Exhibit 10.11 to Amendment No. 2 to the Form 10).
10.6*# Separation Agreement, dated as of November 4, 1994, between the
Registrant and Toby G. Warson (Exhibit 10.4 to Form 10-Q for the
quarter ended October 2, 1994 (the "FY95 Second Quarter 10-Q")).
10.7*# Form of Non-Qualified Stock Option Agreement (Exhibit 10.3 to FY95
Second Quarter 10-Q).
10.7.1*# Form of Non-Qualified Stock Option Agreement (Exhibit 10.1 to
Form 10-Q for the quarter ended July 4, 1994).
10.7.2*# Form of Non-Qualified Stock Option Agreement (Exhibit 10.35 to Form
10-K for the fiscal year ended March 31, 1996 (the "FY96 Form 10-K").
10.8*# Form of Deferral Agreement (Exhibit 10.2 to FY95 Second Quarter 10-Q).
10.9*# Form of Indemnification Agreement between the Registrant and its
directors and officers (Exhibit 10.6 to Amendment No. 1 to the Form
10).
10.10*# Split Dollar Life Insurance Plan (Exhibit 10.0 to Form 10-Q for the
quarter ended June 30, 1996 (the "FY97 First Quarter 10-Q").
10.11*# Form of Retention Agreement between the Registrant and certain of its
officers (Exhibit 10.18 to Amendment No. 1 to the Form 10).
10.12*# Amended and Restated Alliant Techsystems Inc. 1990 Equity Incentive
Plan (Appendix D to Proxy Statement, dated February 11, 1995).
10.13*# Form of Non-Qualified Stock Option Agreement (Exhibit 10.12 to Form
10-K for the fiscal year ended December 31, 1990 (the "1990 Form
10-K")).
38
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
10.14*# Form of Employment Restrictions Agreement (Exhibit 10.13 to the 1990
Form 10-K).
10.15*# Hercules Supplementary Employee Retirement Plan (SERP) (assumed by the
Registrant as to certain of its employees) (Exhibit 10.38 to Form S-
4).
10.16*# Management Compensation Plan (Exhibit 10.14 to Amendment No. 1 to the
Form 10).
10.17*# Flexible Perquisite Account description. (Exhibit 10.1 to FY95 Second
Quarter 10-Q).
10.18*# Restricted Stock Plan for Non-Employee Directors (Exhibit 10.13 to
Amendment No. 1 to Form 10).
10.18.1*# Non-Employee Restricted Stock Plan (Appendix B to Proxy Statement
dated July 3, 1996).
10.18.2*# Form of Restricted Stock Agreement (Exhibit 10.2 to Form 10-Q for the
quarter ended September 29, 1996).
10.19*# Deferred Fee Plan for Non-Employee Directors (as amended and restated
November 24, 1992) (Exhibit 10.18 to FY93 Form 10-K).
10.20*# Change of Control Employment Agreement (Exhibit 10.19 to the 1990 Form
10-K).
10.21*# Non-employees directors per diem arrangement (Exhibit 10.20 to FY92
Form 10-K).
10.22*# Form of Employment Agreement (Exhibit 10.1 to Form 10-Q for the
quarter ended October 1, 1995 ("FY96 Second Quarter 10-Q")).
10.23# Income Security Plan.
10.24*# Retirement Plan for Non-Employee Directors (Exhibit 10.25 to FY94
Second Quarter Form 10-Q).
10.25*# Form of Employment Letter Agreement, dated October 27, 1994, between
the Registrant and Richard Schwartz (Exhibit 10.1 to Form 10-Q for the
quarter ended January 1, 1995 ("FY95 Third Quarter 10-Q")).
39
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
10.26*# Indemnification Agreement, dated as of October 28, 1994, between the
Registrant and Richard Schwartz (Exhibit 10.2 to FY95 Third Quarter
10-Q).
10.30*# Restricted Stock Agreement, dated as of January 9, 1995, between the
Registrant and Richard Schwartz (Exhibit 10.9.1 to Form S-4).
10.30.1*# Restricted Stock Agreement, dated as of January 9, 1995, between the
Registrant and Richard Schwartz (Exhibit 10.9.2 to Form S-4).
10.31*# Compensation Arrangement between the Registrant and Hugo Fruehauf
(Exhibit 10.2 to FY96 Second Quarter 10-Q).
10.31.1*# Restricted Stock Agreement between the Registrant and Hugo Fruehauf
(Exhibit 10.31.2 to FY96 Form 10-K).
10.32*# Compensation Arrangement between the Registrant and Scott S. Meyers
(Exhibit 10.32 to FY96 Form 10-K).
10.33*# Compensation Arrangement between the Registrant and Lawrence H.
Tveten (Exhibit 10.33 to FY96 Form 10-K).
10.33.1*# Arrangements with Executive (Exhibit 10 to Form 10-Q for the quarter
ended December 29, 1996).
10.33.2*# Arrangement with Executive (Exhibit 10 to Form 8-K dated February 28,
1997).
10.34*# Letter Agreement between the Registrant and Dean M. Fjelstul (Exhibit
10.34 to FY96 Form 10-K).
10.35# Compensation Arrangement with Arlen D. Jameson.
10.35.1# Performance Share Agreement between the Registrant and Arlen D.
Jameson.
10.36*# Honeywell Supplementary Retirement Plan (SRP) (assumed by the
Registrant as to certain of its employees) (Exhibit 10.22 to FY92
Form 10-K)
10.37*# Honeywell Supplementary Executive Retirement Plan for Compensation in
Excess of $200,000 (assumed by the Registrant as to certain of its
employees (Exhibit 10.23 to FY92 Form 10-K)
40
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
10.38*# Honeywell Supplementary Executive Retirement Plan for CECP
Participants (assumed by the Registrant as to certain of its
employees formerly employed by Honeywell) (Exhibit 10.24 to FY92 Form
10-K)
10.39* Purchase and Sale Agreement, dated as of October 28, 1994, between
the Registrant and Hercules Incorporated (the "Purchase Agreement"),
including certain exhibits and certain schedules and a list of
schedules and exhibits omitted (Exhibit 2 to October 1994 Form 8-K).
10.40* Master Amendment to Purchase Agreement, dated as of March 15, 1995,
between the Registrant and Hercules Incorporated, including exhibits
(Exhibit 2.2 to Form 8-K dated March 15, 1995).
10.41* Asset Purchase Agreement dated as of December 22, 1996 by and between
the Registrant and Hughes Aircraft Company (excluding schedules and
exhibits) (Exhibit 2.1 to Form 8-K dated February 28, 1997).
10.41.1* Amendment to Asset Purchase Agreement dated February 28, 1997 by and
between the Registrant and Hughes Aircraft Company (excluding
schedules and exhibits) (Exhibit 2.2 to Form 8-K dated February 28,
1997).
11 Computation of Earnings Per Common and Common Equivalent Share.
13 Annual Report (only those portions specifically incorporated herein
by reference shall be deemed filed with the Securities and Exchange
Commission).
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Powers of Attorney.
27 Financial Data Schedule
41
(b) Reports on Form 8-K
During the quarter ended March 31, 1997, the Company filed the following report
on Form 8-K:
Date of Report Items Reported
- -------------- --------------
February 28, 1997 Item 2. Acquisition or Disposition of Assets
Item 7(b). Pro forma financial information
Item 7(c). Exhibits
42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: June 23, 1997 By /s/ Charles H. Gauck
--------------------
Charles H. Gauck
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title
/s/ Richard Schwartz Director, Chairman of the Board, President and
- --------------------------- Chief Executive Officer (Principal Executive
Richard Schwartz Officer)
/s/ Scott S. Meyers Vice President and Chief Financial Officer
- --------------------------- (Principal Financial Officer)
Scott S. Meyers
/s/ Paula J. Patineau Vice President and Controller (Principal
- --------------------------- Accounting Officer)
Paula J. Patineau
* Director
- ---------------------------
R. Keith Elliott
* Director
- ---------------------------
Thomas L. Gossage
* Director
- ---------------------------
Joel M. Greenblatt
* Director
- ---------------------------
Jonathan G. Guss
* Director
- ---------------------------
David E. Jeremiah
* Director
- ---------------------------
Gaynor N. Kelley
* Director
- ---------------------------
Joseph F. Mazzella
* Director
- ---------------------------
Daniel L. Nir
Date: June 23, 1997 *By /s/ Charles H. Gauck
--------------------------
Charles H. Gauck
Attorney-in-Fact
43
INDEPENDENT AUDITORS' REPORT
Alliant Techsystems Inc.:
We have audited the consolidated financial statements of Alliant Techsystems
Inc. and subsidiaries as of March 31, 1997 and 1996, and for each of the years
ended March 31, 1997, March 31, 1996, and March 31, 1995 and have issued our
report thereon dated May 14, 1997; such financial statements and report are
included in your 1997 Annual Report to Stockholders (Exhibit 13) and are
incorporated herein by reference. Our audit also included the financial
statement schedule of Alliant Techsystems Inc., listed in Item 14. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
May 14, 1997
44
SCHEDULE II
ALLIANT TECHSYSTEMS INC.
VALUATION RESERVES
For the Years Ended March 31, 1997, 1996 and 1995
(Dollars in thousands)
Balance
Beginning Additions Charged Deductions from Balance at
of Period Purchased Company to Income Reserves Close of Period
--------- ----------------- ----------------- --------------- ---------------
Reserves deducted from assets to
which they apply--allowance
for doubtful accounts:
Receivables--Current
--------------------
Year ended March 31, 1997.... $ 60 -- $ 61 (1) $ 14 (2) $ 107
Year ended March 31, 1996.... $ 75 -- -- $ 15 (2) $ 60
Year ended March 31, 1995.... $ 76 -- -- $ 1 (2) $ 75
Reserves deducted from assets to
which they apply--reserve for
estimated loss on disposal of
discontinued operations:
Net Assets of Discontinued
--------------------------
Operations
----------
Year ended March 31, 1997.... $13,700 -- -- $2,574 (2) $11,126
Year ended March 31, 1996.... -- -- $ 13,700 -- $13,700
Year ended March 31, 1995.... -- -- -- -- --
Reserves deducted from assets to
which they apply--allowance for
amortization of intangibles:
Goodwill
--------
Year ended March 31, 1997.... $ 3,940 -- $3,315 (3) $ 7,255
Year ended March 31, 1996.... $ 668 -- $3,272 (3) $ 3,940
Year ended March 31, 1995.... $ 246 -- $ 422 (3) $ 668
Debt Issuance Costs
-------------------
Year ended March 31, 1997.... $ 2,433 -- $4,666 (4) -- $ 7,099
Year ended March 31, 1996.... -- -- $2,433 (4) -- $ 2,433
Year ended March 31, 1995.... $ 3,405 -- $ 820 (4) $4,225 (5) --
Notes: (1) Represents amounts included in operating expense.
(2) Represents uncollectible amounts written off less recoveries.
(3) Represents amounts included in cost of sales.
(4) Represents amounts included in interest expense.
(5) Represents debt issuance costs written off in connection with retirement of debt.
45
ALLIANT TECHSYSTEMS INC.
FORM 10-K
EXHIBIT INDEX
The following exhibits are filed electronically with this report unless the
exhibit number is followed by an asterisk (*), in which case the exhibit is
incorporated by reference from the document listed. The applicable Securities
and Exchange Commission File Number is 1-10582 unless otherwise indicated.
Exhibit Description of Exhibit (and document
Number which incorporated by reference, if applicable)
3(i).1* Restated Certificate of Incorporation, effective July 20, 1990
(Exhibit 3.1 to Amendment No. 1 to Form 10 Registration Statement
filed with the Securities and Exchange Commission on July 20, 1990
(the "Form 10")).
3(i).2* Certificate of Correction, effective September 21, 1990 (Exhibit 3.1
to Registration Statement on Form S-4, File No. 33-91138, filed with
the Securities and Exchange Commission on April 13, 1995 (the "Form
S-4")).
3(i).3* Certificate of Designations, Preferences and Rights of Series A Junior
Participating Preferred Stock of the Registrant, effective September
28, 1990 (Exhibit 3.3 to the Form S-4).
3(ii)* By-Laws, as amended through May 27, 1992 (Exhibit 3.3 to Form 10-K for
the fiscal year ended March 31, 1992 (the "FY92 Form 10-K")).
4.1* Form of Certificate for common stock, par value $.01 per share
(Exhibit 4.1 to Amendment No. 1 to the Form 10).
4.2* Rights Agreement, dated as of September 24, 1990, between the
Registrant and Manufacturers Hanover Trust Company (Exhibit 4.2 to
Post-Effective Amendment No. 1 to the Form 10).
4.2.1* First Amendment to Rights Agreement, dated as of August 4, 1992,
between the Registrant and Chemical Bank (successor to Manufacturers
Hanover Trust Company) (Exhibit 4.2.1 to Form 10-K for the fiscal year
ended March 31, 1993 (the "FY93 Form 10-K")).
4.2.2* Rescission Agreement, dated as of May 26, 1993, between the Registrant
and Chemical Bank (Exhibit 4.2.2 to FY93 Form 10-K).
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
4.2.3* Second Amendment to Rights Agreement, dated as of October 28, 1994,
between the Registrant and Chemical Bank (Exhibit 4 to Form 8-K dated
October 28, 1994 (the "October 1994 Form 8-K")).
4.3* Indenture, dated as of March 1, 1995, between the Registrant and First
Bank National Association, as trustee (including a form of Initial
Note) (Exhibit 4.1 to the Form S-4).
4.4* Form of Exchange Note (Exhibit 4.2 to Form S-4).
4.5* Registration Rights Agreement, dated as of March 14, 1995, among the
Registrant, the Lenders referred to therein, Morgan Guaranty Trust
Company of New York, as Documentation Agent, and Chemical Bank, as
Administrative Agent (Exhibit 4.3 to the Form S-4).
4.6* Amended and Restated Credit Agreement dated as of March 15, 1995 and
amended and restated as of November 14, 1996 among the Registrant, the
Lenders referred to therein, Morgan Guaranty Trust Company of New
York, as Documentation Agent, and The Chase Manhattan Bank, as
Administrative Agent (including forms of Note, Assignment and
Assumption Agreement, and Amended and Restated Subsidiary Guaranty
Agreement (Exhibit 4 to Form 8-K dated November 14, 1996)).
4.7* Security Agreement, dated as of March 15, 1995, between the Registrant
and J.P. Morgan Delaware, as Collateral Agent (without exhibits)
(Exhibit 10.4 to Form S-4).
4.8* Patent Security Agreement, dated as of March 15, 1995, between the
Registrant and J.P. Morgan Delaware, as Collateral Agent (without
exhibits) (Exhibit 10.5 to the Form S-4).
4.9* Pledge Agreement, dated as of March 15, 1995, between the Registrant
and J.P. Morgan Delaware, as Collateral Agent (Exhibit 10.6 to Form
S-4).
4.10* Purchase Agreement, dated March 7, 1995, among the Registrant and the
Initial Purchasers (Exhibit 10.37 to Form S-4).
10.1* Distribution Agreement, dated as of September 24, 1990, between
Honeywell Inc. and the Registrant (Exhibit 10.1 to Amendment No. 2 to
the Form 10).
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
10.2* Environmental Matters Agreement, dated as of September 24, 1990,
between Honeywell Inc. and the Registrant (Exhibit 10.3 to Post-
Effective Amendment No.1 to the Form 10).
10.3* Intellectual Property Agreement, dated as of September 24, 1990,
between Honeywell Inc. and the Registrant (Exhibit 10.4 to Amendment
No. 2 to the Form 10).
10.3.1* Amendment No. 1 to Intellectual Property Agreement, dated as of
September 24, 1990 (Exhibit 10.4.1 to FY92 Form 10-K).
10.3.2* Amendment No. 2 to Intellectual Property Agreement, dated as of
September 24, 1990 (Exhibit 10.4.2 to FY92 Form 10-K).
10.3.3* Amendment No. 3 to Intellectual Property Agreement, dated July 30,
1992 (Exhibit 10.4.3 to Form 10-Q for the quarter ended October 3,
1993 (the "FY94 Second Quarter Form 10-Q")).
10.4* Tax Sharing Agreement, dated as of September 28, 1990, between
Honeywell Inc. and the Registrant (Exhibit 10.5 to Amendment No. 2 to
the Form 10).
10.5* Government Subpoena Agreement between Honeywell Inc. and the
Registrant (Exhibit 10.11 to Amendment No. 2 to the Form 10).
10.6* Separation Agreement, dated as of November 4, 1994, between the
Registrant and Toby G. Warson (Exhibit 10.4 to Form 10-Q for the
quarter ended October 2, 1994 (the "FY95 Second Quarter 10-Q")).
10.7* Form of Non-Qualified Stock Option Agreement (Exhibit 10.3 to FY95
Second Quarter 10-Q).
10.7.1* Form of Non-Qualified Stock Option Agreement (Exhibit 10.1 to Form 10-
Q for the quarter ended July 4, 1994).
10.7.2* Form of Non-Qualified Stock Option Agreement (Exhibit 10.35 to Form
10-K for the fiscal year ended March 31, 1996 (the "FY96 Form 10-K").
10.8* Form of Deferral Agreement (Exhibit 10.2 to FY95 Second Quarter 10-Q).
10.9* Form of Indemnification Agreement between the Registrant and its
directors and officers (Exhibit 10.6 to Amendment No. 1 to the Form
10).
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
10.10* Split Dollar Life Insurance Plan (Exhibit 10.0 to Form 10-Q for the
quarter ended June 30, 1996 (the "FY97 First Quarter 10-Q").
10.11* Form of Retention Agreement between the Registrant and certain of its
officers (Exhibit 10.18 to Amendment No. 1 to the Form 10).
10.12* Amended and Restated Alliant Techsystems Inc. 1990 Equity Incentive
Plan (Appendix D to Proxy Statement, dated February 11, 1995).
10.13* Form of Non-Qualified Stock Option Agreement (Exhibit 10.12 to Form
10-K for the fiscal year ended December 31, 1990 (the "1990 Form 10-
K")).
10.14* Form of Employment Restrictions Agreement (Exhibit 10.13 to the 1990
Form 10-K).
10.15* Hercules Supplementary Employee Retirement Plan (SERP) (assumed by
the Registrant as to certain of its employees (Exhibit 10.38 to Form
S-4).
10.16* Management Compensation Plan (Exhibit 10.14 to Amendment No. 1 to the
Form 10).
10.17* Flexible Perquisite Account description. (Exhibit 10.1 to FY95 Second
Quarter 10-Q).
10.18* Restricted Stock Plan for Non-Employee Directors (Exhibit 10.13 to
Amendment No. 1 to Form 10).
10.18.1* Non-Employee Restricted Stock Plan (Appendix B to Proxy Statement
dated July 3, 1996).
10.18.2* Form of Restricted Stock Agreement (Exhibit 10.2 to Form 10-Q for the
quarter ended September 29, 1996).
10.19* Deferred Fee Plan for Non-Employee Directors (as amended and restated
November 24, 1992) (Exhibit 10.18 to FY93 Form 10-K).
10.20* Change of Control Employment Agreement (Exhibit 10.19 to the 1990
Form 10-K).
10.21* Non-employees directors per diem arrangement (Exhibit 10.20 to FY92
Form 10-K).
10.22* Form of Employment Agreement (Exhibit 10.1 to Form 10-Q for the
quarter ended October 1, 1995 ("FY96 Second Quarter 10-Q")).
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
10.23 Income Security Plan.
10.24* Retirement Plan for Non-Employee Directors (Exhibit 10.25 to FY94
Second Quarter Form 10-Q).
10.25* Form of Employment Letter Agreement, dated October 27, 1994, between
the Registrant and Richard Schwartz (Exhibit 10.1 to Form 10-Q for the
quarter ended January 1, 1995 ("FY95 Third Quarter 10-Q")).
10.26* Indemnification Agreement, dated as of October 28, 1994, between the
Registrant and Richard Schwartz (Exhibit 10.2 to FY95 Third Quarter
10-Q).
10.30* Restricted Stock Agreement, dated as of January 9, 1995, between the
Registrant and Richard Schwartz (Exhibit 10.9.1 to Form S-4).
10.30.1* Restricted Stock Agreement, dated as of January 9, 1995, between the
Registrant and Richard Schwartz (Exhibit 10.9.2 to Form S-4).
10.31* Compensation Arrangement between the Registrant and Hugo Fruehauf
(Exhibit 10.2 to FY96 Second Quarter 10-Q).
10.31.1* Restricted Stock Agreement between the Registrant and Hugo Fruehauf
(Exhibit 10.31.2 to FY96 Form 10-K).
10.32* Compensation Arrangement between the Registrant and Scott S. Meyers
(Exhibit 10.32 to FY96 Form 10-K).
10.33* Compensation Arrangement between the Registrant and Lawrence H. Tveten
(Exhibit 10.33 to FY96 Form 10-K).
10.33.1* Arrangements with Executive (Exhibit 10 to Form 10-Q for the quarter
ended December 29, 1996).
10.33.2* Arrangement with Executive (Exhibit 10 to Form 8-K dated February 28,
1997).
10.34* Letter Agreement between the Registrant and Dean M. Fjelstul (Exhibit
10.34 to FY96 Form 10-K).
10.35 Compensation Arrangement with Arlen D. Jameson.
10.35.1 Performance Share Agreement between the Registrant and Arlen D.
Jameson.
Exhibit Description of Exhibit (and document from
Number which incorporated by reference, if applicable)
10.36* Honeywell Supplementary Retirement Plan (SRP) (assumed by the
Registrant as to certain of its employees) (Exhibit 10.22 to FY92
Form 10-K)
10.37* Honeywell Supplementary Executive Retirement Plan for Compensation in
Excess of $200,000 (assumed by the Registrant as to certain of its
employees)(Exhibit 10.23 to FY92 Form 10-K)
10.38* Honeywell Supplementary Executive Retirement Plan for CECP
Participants (assumed by the Registrant as to certain of its
employees formerly employed by Honeywell) (Exhibit 10.24 to FY92 Form
10-K)
10.39* Purchase and Sale Agreement, dated as of October 28, 1994, between
the Registrant and Hercules Incorporated (the "Purchase Agreement"),
including certain exhibits and certain schedules and a list of
schedules and exhibits omitted (Exhibit 2 to October 1994 Form 8-K).
10.40* Master Amendment to Purchase Agreement, dated as of March 15, 1995,
between the Registrant and Hercules Incorporated, including exhibits
(Exhibit 2.2 to Form 8-K dated March 15, 1995).
10.41* Asset Purchase Agreement dated as of December 22, 1996 by and between
the Registrant and Hughes Aircraft Company (excluding schedules and
exhibits) (Exhibit 2.1 to Form 8-K dated February 28, 1997).
10.41.1* Amendment to Asset Purchase Agreement dated February 28, 1997 by and
between the Registrant and Hughes Aircraft Company (excluding
schedules and exhibits) (Exhibit 2.2 to Form 8-K dated February 28,
1997).
11 Computation of Earnings Per Common and Common Equivalent Share.
13 Annual Report (only those portions specifically incorporated herein
by reference shall be deemed filed with the Securities and Exchange
Commission).
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Powers of Attorney.
27 Financial Data Schedule