UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 8, 2010
ALION SCIENCE AND TECHNOLOGY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware | 333-89756 | 54-2061691 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
1750 Tysons Boulevard
Suite 1300
McLean, VA 22102
(703) 918-4480
Area Code, of Principal Executive Offices)
Suite 1300
McLean, VA 22102
(703) 918-4480
(Address, including Zip Code and Telephone Number, including
Area Code, of Principal Executive Offices)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Cautionary Note Regarding Forward-Looking Statements
The statements contained in this Form 8-K that are not purely historical are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements relate to the Companys future plans, objectives, expectations and intentions and are
for illustrative purposes only. These statements may be identified by the use of words such as
believe, expect, intend, plan, anticipate, likely, forecast, projections, could,
estimate, may, potential, should, would and similar expressions and may also include
references to assumptions. The forward-looking statements are based on the Companys current
expectations and are subject to certain risks, uncertainties and assumptions. The Companys actual
results could differ materially from results anticipated in these forward-looking statements. All
forward-looking statements included in this document are based on information available to the
Company on the date hereof, and the Company assumes no obligation to update any such
forward-looking statements.
Item 7.01 Regulation FD Disclosure
Pursuant to Regulation FD, the Company wishes to disclose the following:
The Companys Consolidated EBITDA compound annual growth rate from fiscal year 2005 to fiscal year
2009 was 10.3%.
The following branches of the Department of Defense (DoD) contributed to the Companys revenue for
the fiscal year 2009: the Navy (50.2%), the Army (12.1%), the Air Force (26.4%) and all other
branches of the DoD (3.1%).
No one active task order or single-award contract accounted for more than 9.5% of the Companys
revenue for fiscal year 2009.
Approximately 31% of the Companys employees have Ph.D.s and masters degrees, and another 36% of
the Companys employees have bachelor degrees. Approximately 80% of the Companys employees have
security clearances, with approximately 27% holding security clearances at the Top Secret or higher
level.
The following sets forth the Companys overall contract pipeline:
a. Tracking (identified for fiscal year 2011-fiscal year 2012): $14.7 billion
b. Pursuing (qualified for fiscal year 2010): $6.0 billion
c. In process (as of fiscal year end 2009): $361 million
d. Submitted (as of fiscal year end 2009): $1.49 billion
The Companys corporate family credit ratings at Standard & Poors and Moodys Investors Service
were lowered in fiscal year 2009 to B- and Caa3.
The Company expects to enter into a new $25 million revolving credit facility (Revolving Credit
Facility) to replace the revolving facility under the Companys existing Term B Senior Credit
Agreement. The terms of the new Revolving Credit Facility have not been finalized and are subject
to negotiation and documentation. However, the Company expects that the new Revolving Credit
Facility will allow for up to $25 million in outstanding borrowings
at any time, include a $15 million letter of credit subfacility, mature approximately four and one
half years from the closing date, bear cash interest at either LIBOR plus a specified margin or a
base rate plus a specified margin, be available for working capital and general corporate purposes,
and include an uncommitted incremental term and revolving credit facility in an amount to be agreed
upon between the parties.
Revenue grew at 8.5% in fiscal year 2009, with strong growth outlook, the Company believes, over
the next several years.
The Companys 2010 outlook:
Continued strong revenue growth and financial performance is expected in 2010.
Fourth quarter of fiscal year 2009 and first quarter of fiscal year 2010 contract wins
establish basis for fiscal year 2010 revenue.
Increased emphasis on more business development personnel.
New market penetration expected to start paying off for reset, logistics, and intelligence.
Seeking higher margins on the Companys programs and continued success in managing all indirect
rates to result in further increases to gross margin and EBITDA margins.
Days sales outstanding (DSO) improved over fiscal year 2009 and are expected to continue to improve in
fiscal year 2010.
The Companys free cash flow is expected to improve through margin expansion.
The Company submitted approximately $3.5 billion in contract proposals in fiscal year 2009. Alion
currently estimates that it will submit approximately $3.5 billion of contract proposals during
fiscal year 2010 that will strengthen contract backlog.
The Company has a re-compete win rate of 87% and total win rate of 65% over the past three years.
The Company believes the federal government will continue to rely heavily on technology services
providers experienced with existing government systems whose personnel have the required security
clearances and can sustain mission-critical operations.
The following table lists the top five contracts from which we derived revenue in fiscal year 2009.
Percentage of Total | ||||||||||||
Contract | End Date | FY2009 Revenue | ||||||||||
1. | SeaPort Multiple Award
Contracts (MAC) Naval Sea
Systems
Command (NAVSEA) |
2019 | 23.0 | %* | ||||||||
2. | Secretary of Air Force
Technical and Analytical
Support |
2015 | 9.5 | % | ||||||||
3. | NAVSEA MAC (former JJMA MAC) |
2016 | 7.0 | %* | ||||||||
4. | Modeling and Simulation
Information Analysis Center
(MSIAC)
DMSO |
2010 | 6.8 | %* | ||||||||
5. | Weapons System Technology
Information Analysis Center
(WSTIAC)
DISA |
2010 | 5.5 | %* |
* | Multiple task orders |
Two of the Companys current top five revenue-generating contracts are scheduled to expire in 2010.
First, the Modeling and Simulation Information Analysis Center for the Defense Modeling and
Simulation Office contract is scheduled to expire on March 31, 2010, and is up for recompete. Task
orders under this contract may continue for up to two years if this contract expires. Second, the
Weapons System Technology Information Analysis Center for the Defense Information Systems contract
is scheduled to expire on March 30, 2010. A sole source extension for this contract for up to three
years is currently in process. Task orders under this contract may continue for up to three years
if the contract expires.
As of December 31, 2008, the Companys total backlog was $5.5 billion, comprised of $365 million of
funded backlog, $2.2 billion of unfunded backlog and $2.9 billion of contract ceiling value.
Management expects a one-day reduction in DSO in fiscal year 2010.
*
Quarter end DSOs in fiscal year 2008 calculated on a trailing twelve month basis; quarter end DSOs
in fiscal year 2009 calculated on trailing three month basis.
Billed receivables greater than 30 days has been reduced by $30.9 million or 6.6% from the period
ending March 31, 2008 to the period ending September 30, 2009. Similarly, unbilled balances were reduced
by
$15.5 million or 17% over the same period. Historically, the Company has achieved these reductions
through aggressive collections and improvements to invoice quality, as well as increased controls
on accruals and at risk revenues, payments, and increased pressure and visibility on problem areas.
In fiscal years 2009, 2008 and 2007, DoD contracts accounted for approximately 92%, 89% and 89% of
our total revenue while contracts with other government agencies accounted for approximately 5%, 5%
and 4% of our total revenue for the same years.
As of September 30, 2009, the Company had a portfolio of approximately 1,100 individual active
contracts and task orders, of these approximately 380 were stand alone contracts, approximately 180
were contract vehicles and approximately 530 were task orders.
The Company derived approximately 80% of its revenue from
prime government contracts in fiscal year 2009.
Since entering into the Term B Senior Credit Agreement in 2004, we have miscalculated several
components of Consolidated EBITDA over numerous periods of time.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 8, 2010
ALION SCIENCE AND TECHNOLOGY CORPORATION | ||||||
By: Name: |
/s/ Joshua J. Izenberg
|
|||||
Title: | Vice President, Associate General Counsel and Assistant Secretary |