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Alliant Techsystems Inc. (ATK - Analyst Report) has entered into an agreement with Israel Aerospace Industries (“IAI”) to supply solar array to power the latter’s Affordable Modular Optimized Satellite (“AMOS-6”). The company’s Space Components Division will be responsible for this contract. Alliant will supply the solar array from Goleta, California.

Per the contract, the company will supply the solar array within 18 months and there is also contract-extension option. Alliant might work on AMOS-7 solar array if communications satellite operator Spacecom gives follow-on contract to IAI.

IAI is engaged in developing and producing military and commercial aerospace and defense systems for the Israel Ministry of Defense and many other international customers for half a century.

AMOS satellite fleet consists of AMOS-2, AMOS-3 and AMOS-5 satellites. AMOS-2, AMOS-3 and AMOS-5 deliver a wide range of communications and broadcasting services to Europe, the Middle East and Africa. Currently, Spacecom is introducing AMOS-4 and AMOS-6 satellites for Asia and Russia.

This solar array comes under Alliant’s Planar Unfolding Modular Array (“PUMA”). It has low non-recurring engineering cost, low operation risk and is simple for satellite implementation. It is suitable for both small and large satellites.

In addition, this array has 100% flight success track-record with installation of roughly 50 solar array wings on-orbit. High demand in this solar array is primarily due to its strong success rate. Earlier, Alliant supplied this solar array to The Boeing Company (BA - Analyst Report) and Orbital Sciences Corporation (ORB - Snapshot Report) for their GPS-IIF satellites and STAR2 geosynchronous satellites, respectively.

Alliant tied-up with Israeli defense manufacturers for more than a decade. In 1998, the company along with Israeli counterpart, Israel Military Industries Limited, created non-lethal, muzzle-launched ordnance for the U.S. Army Armament Research, Development, and Engineering Center. In 2006, Alliant and Boeing signed an agreement to support the new Israeli Short-Range Ballistic Missile Defense system.

Alliant’s two biggest clients are the National Aeronautics and Space Administration and the U.S. Department of Defense. So, any cutbacks in the U.S. defense budget could limit the company’s future growth prospects. In addition, higher level of competition from a number of players in each of its business segments is also our major concern.

In this scenario, we consider this international contract as a finance-booster for Alliant and will enable the company to further strengthen alliance with its international clients.

Arlington, Virginia-based Alliant Techsystems Inc. provides aerospace and defense products to the U.S. government agencies. The company currently has a short-term Zacks Rank #3 (Hold).

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