Alliant Techsystems, Inc.: Alliant Techsystems, Inc.


ATK Background: ATK Background *ATK is in the Capital Goods Sector and a member of the S&P 600 Small Cap Index


ATK Background: ATK Background Alliant Techsystems—ATK—is a $2.1 billion aerospace and defense company with leading positions in propulsion, composite structures, munitions, and precision capabilities. The company employs approximately 12,000 people and has three business groups: Aerospace, Precision Systems, and Ammunition. In 1990, ATK became an independent company when Honeywell spun off its defense businesses, which had supplied defense products to the U.S. and its allies for 50 years. Since then, the company has grown to become a major aerospace and defense contractor through a combination of internal growth and a series of key strategic acquisitions


ATK Acquisitions: ATK Acquisitions Hercules Aerospace Company in 1995, which added new capabilities in the design and manufacture of solid propellant rocket motors and composite structures. Thiokol Propulsion in 2001, which made ATK the world's leading supplier of solid propellant rocket motors. The ammunition businesses of Blount International, Inc. in 2001, which transformed the company into the nation's largest manufacturer of ammunition. The ordnance business of Boeing in 2002, which brought together the ATK's munitions portfolio with the products and capabilities of a leading military gun producer. The assets of Science and Applied Technology, Inc. in 2002, which added critical precision seeker, guidance, and system-level expertise. Composite Optics, Inc. in 2003, which made ATK the world leader in composite space structures.


ATK’s 3 Business Groups: ATK’s 3 Business Groups Aerospace Precision Systems Ammunition


The Aerospace Group: A World Leader in Propulsion and Composite Structures: The Aerospace Group: A World Leader in Propulsion and Composite Structures Major Products and Programs * Reusable Solid Rocket Motor (RSRM) and support services for Space Shuttle * Propulsion systems for Delta, Pegasus®, Taurus®, Athena, and H-2A launch vehicles * SRMU boosters and support services for Titan IV B launch vehicle * Solid propulsion for Trident II Fleet Ballistic Missile * Propulsion for missile defense interceptors  * Replacement propulsion for Minuteman III strategic missile * Structures for ATK propulsion products * Structures for Delta III, Delta IV, Atlas V, and Ariane 5 space launch vehicles * Structures for Joint Strike Fighter, F-22 Raptor, and C-17 military aircraft * Structures for BA 609 and Boeing 767 commercial aircraft * Satellite components, optical benches, and dimensionally stable assemblies


Precision Systems Group: Precision Systems: Precision Strike Capabilities to America’s Warfighters.: Precision Systems Group: Precision Systems: Precision Strike Capabilities to America’s Warfighters. Major Products and Programs * Gun-launched precision munitions for naval fire support, artillery, and ground combat vehicles * Upper stages and divert/attitude control for missile defense interceptors * Propulsion systems, warheads, seekers, and guidance systems for tactical missiles * STAR upper-stage motors for satellite orbit insertion and interplanetary space probes * Precision metal and composite parts for tank ammunition * Composite structures for F-22 aircraft and JAVELIN anti-tank missile  * AN/AAR-47 Missile Warning System * 120mm training and tactical tank ammunition * Medium-caliber training and tactical ammunition * Co-production of 25mm and 30mm ammunition for European partners * Artillery and mortar products * Medium-caliber gun systems for ground, sea, and air platforms


Precision Systems Group Continued: Precision Systems Group Continued Products and Programs Next-generation tactical barrier systems Demolitions for special operations forces FMU-139B/B fuze Hard Target Smart Fuze for bombs DSU-33B/B proximity sensor for bombs Electronic Time Fuze for Mortars Portable Inductive Artillery Fuze Setter MFF Navy fuze  Lithium batteries for munitions fuzes and undersea vehicles Safe and arm device for M734 mortar fuze


Ammunition: The Nation’s Largest Supplier of Ammunition.: Ammunition: The Nation’s Largest Supplier of Ammunition. Major Products and Programs 5.56mm and 7.62mm ammunition .30-caliber and .50-caliber ammunition 20mm ammunition Environmentally friendly ammunition Propellants for ammunition and tactical rockets Modular Artillery Charge System (MACS) Gun powders for sporting re-loaders and ammunition manufacturers Management of Radford Army Ammunition Plant Federal® ammunition CCI® and Speer® ammunition Estate Cartridge ammunition Champion clay targets Outers® gun care and shooting accessories RCBS® re-loading equipment


Income Statement Balance Sheet Statement of Cash Flows: Income Statement Balance Sheet Statement of Cash Flows


Valuation Summary: Valuation Summary Basic Stock Valuation: 58.16 Free Cash Flow: 74.01 Fake Valuepro: 132.77 Valuepro using actual numbers: 60.73 Current Price at close on 3/25/03: 53.35


ATK vs. S&P 500: ATK vs. S&P 500


ATK vs. Industry: ATK vs. Industry


Fiscal Year 2002 News: Fiscal Year 2002 News Fiscal Year 2002 marked a major turning point for ATK. Two strategic acquisitions — Thiokol Propulsion and the Federal® and CCI®/Speer® ammunition and related businesses — doubled the size of the company and placed ATK into world leadership positions in propulsion and ammunition. ATK increased growth in precision munitions and missile defense programs — two areas where the company has significant capabilities and where ATK have already begun to form a solid foothold. ATK has increased the precision, lethality, and range of ordnance and propulsion systems. The company is focusing on capability used by soldiers, combat platforms on the ground, naval guns at sea, and kill vehicles in space.


Relationship between FCF and Net Income.: Relationship between FCF and Net Income. AKT’s total free cash flow (cash from operations less capital expenditures) of $372 million between the Fiscal Year 1997 and the Fiscal Year 2002 was nearly equal to net income of $389 million over the same period — the result of both good working capital management and the nature of AKT’s business model.


Slide21: Statements Made by Secretary Rumsfeld


Slide22: ”What will follow ... will be of a force and scope and scale that has been beyond what has been seen before." “What is taking place today is as targeted an air campaign as has ever existed.” "Every single target has been analyzed, and the weapon has been carefully selected, and the direction in which the weapon is delivered has been carefully analyzed.” "There is no comparison," Rumsfeld said. "The weapons that are being used today have a degree of precision that no one ever dreamt of in a prior conflict -- they didn't exist."


Slide23: in Operation Enduring Freedom in Afghanistan, where precision-guided munitions accounted for nearly 70 percent of all weapons used — compared with only 9 percent during the Persian Gulf War a little over 10 years ago. The need for stand-off precision strike capabilities will only grow in the future as the U.S. faces new and different threats. It is estimated that over 90% of weapons used in Operation Iraqi Freedom will be precision-guided weapons ATK has assembled under one roof all of the considerable precision capabilities and products that exist, including extended-range, gun-launched munitions, air-bursting munitions, and fuzes and sensors used in precision ordnance like the Joint Direct Attack Munition (JDAM). The company is well positioned across a broad spectrum of programs that provide unprecedented precision-fire capabilities for individual soldiers, armored vehicles, artillery, naval guns, and missile defense kill vehicles.


Riskgrades: Riskgrades 53% of tickers in US Markets are riskier than ATK


Recommendation: Recommendation Purchase 50 shares at $50.35 Requires an initial outlay of $2517.50 + transaction fees