New USAF Contracts For Alliant’s Launch Systems Group In Jeopardy

Alliant Techsystems has been notified by the Department of the Air Force that the Launch Systems Group has temporarily been placed on the Excluded Parties List. Such could result in limitations being temporarily placed on the group’s ability to be awarded new contracts. The action is related to a previously disclosed, ongoing lawsuit regarding LUU-19 illumination flare performance testing in the late 1990’s by then Thiokol Corporation. The company believes this action is unjustified and will have no material affect to its near or long term financial performance. This assumption is based on the conclusions of internal and external counsel who have thoroughly reviewed the action. Existing contracts are not affected by the action. The Department of the Air Force decision is limited in scope to the Launch Systems Group only. Consequently, the company is reaffirming the FY08 and FY09 sales, earnings per share and free cash flow guidance it established on January 31. The company fully intends to resolve this administrative action through discussions with appropriate U.S. Air Force officials. ATK believes that the original lawsuit and its allegations are without merit. More than 40,000 of the illumination flares in question have been used in combat and all information available to the company indicates that there has never been a reported incident of a malfunction. The company has filed a motion to dismiss the lawsuit in Federal court. Based on the merits of the case, the company believes the court will rule in its favor—Minneapolis, Minnesota