Alliant Techsystems (NYSE: ATK) reported today that earnings per share (EPS) in the third quarter of fiscal year 2008 (FY08), which ended on December 30, 2007, were $1.65. EPS was up 16 percent compared to the prior-year quarter, excluding an 11-cent benefit recorded in the prior-year quarter due to the extension of the Federal research and development tax credit (see reconciliation table).

Sales in the quarter rose 17 percent to $1.1 billion. Organic sales in the quarter were up 13 percent. The company reported net income of $58 million, a 14 percent increase over the prior-year period, and continued margin improvements to 10.5 percent versus 10.2 percent in the prior year. Orders in the quarter were $670 million, bringing year-to-date orders to $4.3 billion compared to $2.4 billion at this time a year ago. The company continues to expect FY08 orders of approximately $6.0 billion.

"Our shareholders enjoyed another exceptional quarter and the company is well positioned to deliver the results they have come to expect -- double digit EPS growth and strong organic sales growth," said Dan Murphy, Chairman and CEO. "Looking ahead to FY09, our strategy of affordable innovation for our customers will continue to deliver on these expectations."

Earnings per share for the first nine months of FY08 rose 23 percent to $4.60 versus $3.74 in the prior year. Sales for the first nine months rose 19 percent to slightly more than $3.0 billion compared to $2.56 billion in the prior year. Net income was $162 million, a 25 percent increase over the prior-year period, and operating margins were 10.4 percent versus 9.9 in the prior year. Year-to-date free cash flow generated was $133 million compared to $106 million used in the prior year (see reconciliation table). The improvement in free cash flow reflects the company's prior-year decision to prefund its pension plan, and increased profitability in the current year.

SUMMARY OF REPORTED RESULTS

The following table presents the company's results for the year to date and third quarter ending December 30, 2007 (in thousands).

  External Sales:

                                          Quarters Ended
                           December 30,   December 31,               %
                               2007          2006       $ Change   Change

  ATK Ammunition Systems     $381,313      $330,549      $50,764    15.4%
  ATK Launch Systems          307,758       273,779       33,979    12.4%
  ATK Mission Systems         365,794       299,475       66,319    22.1%
  Total external sales     $1,054,865      $903,803     $151,062    16.7%


                                        Nine Months Ended
                          December 30,    December 31,                %
                               2007         2006        $ Change   Change

  ATK Ammunition Systems   $1,071,512      $900,136     $171,376    19.0%
  ATK Launch Systems          931,074       800,637      130,437    16.3%
  ATK Mission Systems       1,039,996       855,898      184,098    21.5%
  Total external sales     $3,042,582    $2,556,671     $458,911    19.0%

Income before Interest, Income Taxes, and Minority Interest (Operating Profit):

                                           Quarters Ended
                           December 30,   December 31,               %
                              2007          2006        $ Change   Change

  ATK Ammunition Systems      $37,261       $32,536      $4,725    14.5%
  ATK Launch Systems           43,317        34,611       8,706    25.2%
  ATK Mission Systems          36,666        30,054       6,612    22.0%
  Corporate                    (6,688)       (4,775)     (1,913)
  Total                      $110,556       $92,426     $18,130    19.6%


                                        Nine Months Ended
                            December 30,  December 31,               %
                               2007          2006       $ Change  Change

  ATK Ammunition Systems      $98,320       $78,550     $19,770    25.2%
  ATK Launch Systems          131,469       107,684      23,785    22.1%
  ATK Mission Systems         105,171        83,545      21,626    25.9%
  Corporate                   (17,825)      (16,056)     (1,769)
  Total                      $317,135      $253,723     $63,412    25.0%



  SEGMENT RESULTS

ATK operates three principal business groups: Ammunition Systems, Launch Systems, and Mission Systems.

ATK AMMUNITION SYSTEMS

Sales in the Ammunition Systems group increased by 15 percent to $381 million compared to $331 million in the prior-year quarter. The increase reflects strong sales growth in the company's civil ammunition and medium-caliber systems businesses.

Earnings before interest, taxes, and minority interest (operating profit) rose 15 percent to $37 million from $33 million in the prior-year quarter, reflecting higher sales and lower pension expenses. For the full-year, ATK continues to expect margins in the Ammunition Systems group in the mid-nine percent range.

ATK LAUNCH SYSTEMS

Sales in the Launch Systems group rose 12 percent to $308 million compared to $274 million in the prior-year quarter. The increase reflects higher sales in the first-stage and launch abort systems of the Ares I program. These were partially offset by anticipated lower sales in strategic missile programs.

Operating profit in the Launch Systems group rose by 25 percent to $43 million from $35 million in the prior-year quarter. The increase reflects higher sales on the Ares I program, the previously-forecasted, favorable resolution of certain prior-year overhead rate matters, and lower pension expenses. ATK continues to expect margins for the full year in the Launch Systems group to approach 14 percent.

ATK MISSION SYSTEMS

Sales in the Mission Systems group rose 22 percent to $366 million from $299 million in the prior-year quarter. Organic sales rose 10 percent, driven by the strength of sales in defense electronics, the Ares I Attitude Control Motor, and satellite subsystems. Sales from the acquisition of Swales Aerospace added $38 million to revenue.

Operating profit increased 22 percent to $37 million from $30 million in the prior-year quarter. The increase reflects higher sales (both organic and from the Swales acquisition), improved margins in defense electronics, and lower pension expenses. ATK continues to expect full-year margins in the Mission Systems group of approximately 10 percent.

CORPORATE AND OTHER

In the third quarter, corporate and other expenses totaled $6.7 million compared to $4.8 million in the prior-year period.

OUTLOOK

Based on continued strength in all three business groups and increasing visibility into the company's full-year performance, ATK is raising its full-year FY08 EPS guidance to a range of $6.25 - $6.35. The company's previous guidance was a range of $6.20 - $6.30. The company continues to expect full-year sales in excess of $4.1 billion.

For the year, the company continues to expect an average share count of approximately 35.5 million shares. The effective tax rate for the year is expected to be approximately 36 percent while pension expenses are expected to be approximately $50 million. ATK continues to expect full-year free-cash flow of approximately $260 million which includes capital expenditures approaching $100 million (see reconciliation table for details).

ATK is establishing FY09 guidance for EPS, sales and free cash flow. The company expects FY09 EPS in the range of $7.10 - $7.30, a 12-17 percent increase over anticipated FY08 performance and in line with the company's commitment to double-digit EPS growth. The company also expects to generate sales of approximately $4.5 billion, in line with organic growth expectations of 8-10 percent. ATK expects to generate free cash flow of approximately $260 million (see reconciliation table for details).

The FY08 and FY09 guidance the company is issuing today does not include any revenue, EBIT or free cash flow from the company's previously announced acquisition of MDA's space businesses. The company expects the transaction to close in the first quarter of FY09, be neutral to EPS during the year, and accretive thereafter.

  Reconciliation of Non-GAAP Financial Measures

  Free Cash Flow

Free cash flow is defined as cash provided by operating activities less capital expenditures. ATK management believes free cash flow provides investors with an important perspective on the cash available for debt repayment, share repurchase, and acquisitions after making the capital investments required to support ongoing business operations. ATK management uses free cash flow internally to assess both business performance and overall liquidity.

                           Nine         Nine
                          Months       Months      Projected     Projected
                          Ended        Ended      Year Ending   Year Ending
                       December 31,  December 30,  March 31,      March 31,
                           2006         2007         2008           2009
                    (in thousands)(in thousands)(in thousands)(in thousands)

  Cash (used for)
   provided by
   operating activities  $(52,701)    $197,315      $360,000     $370,000
  Capital expenditures    (52,990)     (63,959)     (100,000)    (110,000)
  Free cash flow        $(105,691)    $133,356      $260,000     $260,000



  Adjusted Non-GAAP Net Income

Adjusted non-GAAP net income is defined as net income adjusted for the income tax benefit for prior periods as a result of R&D tax credit extension. ATK management believes adjusted non-GAAP net income provides investors with an important perspective on the results of ATK's earnings.

                              Quarter Ended      Quarter Ended    Per share
                            December 31, 2006  December 30, 2007   increase

                             Dollars            Dollars
                              (in       Per       (in        Per
                           thousands)  share   thousands)   share
  GAAP net income           $51,230    $1.53    $58,330     $1.65
  Income tax benefit for
   prior periods as a
   result of the R&D tax
   credit extension          (3,856)   (0.11)         -         -
  Adjusted Non-GAAP
   net income               $47,374    $1.42    $58,330     $1.65     16%

ATK is an advanced weapon and space systems company with annual revenues in excess of $4.1 billion that employs approximately 17,000 people in 21 states.