Airport Systems Announces New Strategic Initiative; Definitive Agreement Signed to Acquire DCI, Inc.

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OVERLAND PARK, Kan.--(BUSINESS WIRE)--Jan. 10, 2000

Airport Systems International, Inc. (AMEX:ASY) today announced that its Board of Directors has approved the implementation of a new strategic direction for the Company. This new initiative is focused, primarily through acquisition, on the diversification of the Company into the manufacture and sale of non-aviation-related electronic components and systems of both a proprietary and contract assembly nature. The company intends to change its name to reflect the new focus of the business.

The Company also announced that it has signed a definitive agreement to acquire 100% of the stock of DCI, Inc., and all of the assets of KHC, LLC, an entity related to DCI, for a purchase price of approximately $7.1 million. Consideration will consist of a combination of cash and notes, along with the issuance of 150,000 shares of the Company's common stock. Included in the purchase price is the assumption of approximately $4.4 million of existing indebtedness. DCI, Inc. is a designer and manufacturer of liquid crystal displays, digital panel instruments, circuit boards and performs contract electronic manufacturing services. DCI is located in Lenexa, Kansas and had sales for the calendar year ended December 31, 1999, of approximately $8.3 million. The closing of the transaction, which is subject to financing, is expected to occur in the first quarter of calendar year 2000 and will be treated as a purchase for accounting purposes. The acquisition is expected to be accretive to Airport Systems' earnings for the fiscal year ending April 30, 2000. Airport Systems is currently evaluating proposals for financing the DCI transaction.

Keith S. Cowan, President and Chief Executive Officer commented: "Contract electronic manufacturing is a $60 billion industry, growing at 30% per year. The acquisition of DCI, Inc. is an excellent opportunity to aggressively expand into this market. Complex electronic manufacturing is a core competency of Airport Systems and this strategy will leverage our electronics design and manufacturing expertise and management infrastructure. We intend to establish DCI as a wholly owned sister subsidiary separate from our navaids design, marketing and installation activities and drive its growth into the contract and proprietary electronic component manufacturing arena through additional acquisitions and aggressive marketing activities."

To access a portion of the capital necessary to pursue this new strategic direction, the Company announced that it has agreed to work with Kansas City Equity Partners (KCEP). "Kansas City Equity Partners is one of the premier regional private equity firms," Cowan said. "They have significant experience with manufacturing firms and growth by acquisition strategies and their involvement in the company in support of our new initiatives will be a tremendous asset," he continued. David Schulte a KCEP managing director, and former investment banker will join the Airport Systems Board of Directors.

"In recent years there has been a tremendous amount of investment activity in the electronic manufacturing service industry. Airport Systems is well suited to execute its new market strategy," said Schulte. "We're very excited about the greater growth opportunities for the company, and our new partnership with Keith Cowan and his management team."

Under terms of the initial investment, KCEP will provide $1.0 million of equity capital. KCEP will purchase $500,000 of Common Stock at $2.52 per share and a $500,000 subordinated debenture, which is convertible to Company common stock at $3.00 per share. KCEP will also receive a seven-year option to purchase an additional 46,000 shares of Company common stock at $3.30 per share. Closing of the financing, which is expected to occur in the first quarter of calendar year 2000, is subject to completion of due diligence and other closing conditions.

About Airport Systems

Airport Systems International, Inc. is a designer and manufacturer of electronic components, sub-assemblies and systems and a marketer of electronic contract assembly services. Its aerospace unit designs, manufactures, markets and installs ground based equipment (navaids) and airfield lighting to aid the in-flight navigation and ground movement of aircraft. These products are used worldwide to guide the navigation of aircraft in various phases of a flight and in all visibility conditions. Additionally, the Company intends to develop its non-aerospace proprietary and contract electronics manufacturing capabilities through its recently announced strategic initiative and proposed acquisition of DCI, Inc. -MORE- Airport Systems Announces New Strategic Direction Page 3 January 10, 2000

For more information, visit ASII at www.airportsystem.com and DCI at www.dciincorporated.com.

About KCEP

Founded by Paul Henson (former Sprint Chairman and CEO) in 1993, KCEP is a private venture capital firm with approximately $85 million under management. Investments are made primarily in the Midwest and range from $500,000 to $3 million. KCEP has successfully invested in several acquisition-oriented growth companies, including AmeriTel (specialty telecom services), Birch Telecom (CLEC), Inergy Partners (propane distribution), Hardware Corporation of America (contract hardware distribution), Tru-Circle Corporation (aerospace component manufacturing), and Taylor Products (packaging equipment manufacturing). For more information, visit KCEP at www.kcep.com.