U.S. Navy Awards Litton $49.8 Million Contract to Begin Work on Eighth LHD.

Business Editors

WOODLAND HILLS, Calif.--(BUSINESS WIRE)--July 31, 2000

Litton Industries (NYSE:LIT) today announced that the U.S. Navy has placed Litton Ingalls Shipbuilding under contract to begin working toward the construction of an eighth WASP (LHD 1) Class large-deck multipurpose amphibious assault ship.

Under a $49.8 million contract awarded by the Navy late Friday, July 28, 2000, Litton Ingalls will begin design work on LHD 8. With this new contract, Litton Ingalls will develop both the contract design and the detailed engineering design for the new ship.

Much of the design effort will focus on the ship's all-new gas turbine propulsion and electrical power-generation systems. The first seven LHDs were powered by steam propulsion systems.

Thus far, Congress has appropriated a total of $880 million in design and material procurement funding for the $1.5 billion LHD 8. This includes $460 million in a Fiscal Year 2001 Defense Appropriations measure passed this month in both houses of Congress, in addition to $420 million appropriated in 1999 and 2000.

Today's contract to Litton Ingalls will be followed by additional incremental funding modifications over the next year, eventually leading to a ship-construction contract.

Six of the huge ships designed to carry some 2,000 Marines to world trouble spots have already been delivered to the Navy by Litton and are active in the Fleet. LHD 7, recently christened IWO JIMA, is under construction and will be delivered in mid-2001.

"This announcement is good news not only for Litton, but also for the Navy/Marine Corps team -- and the American taxpayer," said Jerry St. Pe, Litton executive vice president and chief operating officer of Litton Ship Systems.

"Starting work on LHD 8 takes full advantage of an ongoing active production line at Litton Ingalls, resulting in more efficient, more cost-effective production of the ship -- and savings of hundreds of millions of taxpayer dollars over the life of the procurement process.

"Both the U.S. Navy/Marine Corps team and the U.S. Congress have expressed strong support for starting construction of LHD 8 as soon as possible," St. Pe said.

As the large-deck centerpiece of a Navy/Marine Corps Amphibious Ready Group (ARG), LHDs embark, transport, deploy, command and fully support a Marine Expeditionary Unit (MEU). The ships are fully capable of amphibious assault, advance force and special-purpose operations, as well as noncombatant evacuation and other humanitarian missions. The ships are 844 feet long and displace 40,500 tons.

For operational support, the ship carries its own AV-8B Harrier II jets and Osprey (MV-22) tiltrotor aircraft, as well as a full range of Navy/Marine Corps helicopters, amphibious vehicles and tanks.

Additionally, the ships are fully equipped with command and control (C 4 I) systems for flagship command duty, and have medical facilities -- including a 600-bed hospital -- second only to the Navy's Hospital Ships in capability.

Pat Keene, president of Litton Ingalls Shipbuilding, said work under the contract would begin immediately.

"The immediate start of work under this contract will enable Litton Ingalls to capture the efficiencies which have resulted from the construction of the seven previous LHDs," Keene said. "Now, in partnership with the Navy, Litton Ingalls will begin significant work in order to accommodate gas turbine propulsion for LHD 8, as well as other preliminary design requirements associated with the new ship."

Litton Ship Systems (LSS), with headquarters in Pascagoula, Miss., includes Litton Ingalls Shipbuilding and the Litton Ship Systems Full Service Center, both located in Pascagoula, as well as Litton Avondale Industries, located in New Orleans, La., and Gulfport, Miss.

LSS, which currently employs more than 17,000 shipbuilding professionals, primarily in Mississippi and Louisiana, is one of the nation's leading full-service systems companies for the design, engineering, construction and life-cycle support of major surface ships for the U.S. Navy, U.S. Coast Guard and international navies, and for commercial vessels of all types.

LSS has a firm business backlog exceeding $5.6 billion, in a variety of naval and commercial shipbuilding programs.

Litton is the nation's largest builder of non-nuclear ships for the U.S. Navy, and designs, builds and overhauls surface ships for government and commercial customers worldwide. The company is a leading information technology (IT) contractor to the U.S. government and provides specialized IT services to commercial customers and government customers in local/foreign jurisdictions.

Litton is a leading provider of defense and commercial electronics technology, components and materials for customers worldwide. With headquarters in Woodland Hills, Litton has more than 40,000 employees and $5 billion in annual revenue. For more information, visit Litton's Web site at www.litton.com.