U.S. Army Awards AAI Sole-Source Contract for Continued Lightweight Small Arms Technologies Development

Business Wire, Dec 11, 2008

HUNT VALLEY, Md. -- AAI Corporation, an operating unit of Textron Systems, a Textron Inc. (NYSE: TXT) company, announced today that it has received a three-year, sole-source contract from the U.S. Army's Joint Service Small Arms Program Office, based at the Armament Research, Development & Engineering Center in Picatinny, N.J., for continued development of Lightweight Small Arms Technologies (LSAT). Initial funding for this contract totals $5.8 million, with incremental funding up to a total potential contract value of $28 million.

Under this follow-on contract, AAI will continue work it began under a prior contract to develop the 5.56-millimeter light machine gun and two lightweight ammunition technologies, including a cased telescoped (plastic-cased) design and a caseless design. With a focus on increasing the maturity of these technologies even further, AAI also will begin development of a new cased telescoped carbine rifle variant, a valuable addition to this family of high-performance, lightweight weaponry.

The contract is expected to culminate in an operational demonstration of LSAT in 2011, for which AAI will provide 100,000 rounds of cased telescoped ammunition and eight light machine guns. Options under the contract that the Army may exercise include development of a caseless carbine, fabrication of additional caseless ammunition, a subcompact weapon study, and implementation of alternate bullet configurations.

"There is nothing more important to our team than getting the best possible systems into the hands of America's warfighters," says AAI Vice President of Business Development and Advanced Systems David Phillips. "By continuing our work on the LSAT program, AAI can advance these armament and ammunition technologies, looking toward a time when they will be the standard for our nation's warfighters. Not only will LSAT provide a lightweight alternative to existing weaponry, but these technologies will deliver precise, repeatable and reliable performance."

The LSAT program seeks to reduce the weight and size (or volume) of the small arms and ammunition carried by America's warfighters, with a 45 percent weight reduction goal for the light machine gun and ammunition system. Additional program objectives include improvements in system reliability, accuracy, dispersion, and ergonomics, as well as reductions in training and maintenance requirements. AAI is continuing its development of LSAT technologies along with the experienced team of companies from the prior contract including ARES Inc., Alliant Techsystems, Battelle Memorial Institute, MSC Software, Omega Training Group (a Cubic company), St. Marks Powder (a General Dynamics company), and Veritay Technology.

About AAI

AAI Corporation designs, produces, and supports aerospace and defense systems through its direct and indirect wholly owned subsidiaries, AAI Services Corporation, Aerosonde Pty Ltd, ESL Defence Limited, and Symtx, Inc. Its high-technology products and services include unmanned aircraft systems, training and simulation systems, automated aerospace test and maintenance equipment, armament systems, aviation ground support equipment, and logistical, engineering, and supply chain services. AAI Corporation is an indirect wholly owned subsidiary of Textron Inc. More information is available at www.aaicorp.com.

About Textron Systems

Textron Systems Corporation has been providing innovative solutions to the defense, homeland security and aerospace communities for over 50 years. Known for its precision smart weapons, intelligent battlefield systems, surveillance systems, intelligence software solutions, aircraft control components, piston engines, armored vehicles and unmanned aircraft systems, Textron Systems includes AAI, HR Textron, Lycoming Engines, Overwatch Tactical Operations, Overwatch Geospatial Operations, Textron Defense Systems, and Textron Marine & Land Systems. Textron Systems Corporation is an indirect wholly owned subsidiary of Textron Inc. More information is available at www.textronsystems.com.

About Textron Inc.

Textron Inc. is a $12.6 billion multi-industry company operating in 28 countries with approximately 42,000 employees. The company leverages its global network of aircraft, defense and intelligence, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell Helicopter, Cessna Aircraft Company, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, Textron Systems and Textron Financial Corporation. More information is available at www.textron.com.

Forward-looking Information: Certain statements in this press release are forward-looking statements and speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including but not limited to the following: (a) changes in worldwide economic and political conditions that impact demand for our products, interest rates and foreign exchange rates; (b) the interruption of production at Textron facilities or at Textron's customers or suppliers; (c) changing priorities or reductions in the U.S. Government defense budget, including those related to Operation Iraqi Freedom, Operation Enduring Freedom and the Global War on Terrorism; (d) our ability to perform as anticipated and to control costs under contracts with the U.S. Government; (e) the U.S. Government's ability to unilaterally modify or terminate its contracts with us for the U.S. Government's convenience or for our failure to perform, to change applicable procurement and accounting policies, and, under certain circumstances, to suspend or debar us as a contractor eligible to receive future contract awards; (f) changes in delivery schedules or cancellation of orders; and (g) legislative or regulatory actions impacting defense operations.