BAE SYSTEMS - 'On Track'.

    Business Editors

      LONDON--(BUSINESS WIRE)--Sept. 13, 2001--BAE SYSTEMS today
announced half-year results with profit before interest, excluding
exceptional items and goodwill amortization, up 8.7% to (pound)551
million (2000 (pound)507 million) as the company continued to perform
in line with plan.

      --  Profit before interest increased(a) 8.7% to (pound)551m

      --  Profit before tax increased(a) 3.9% to (pound)482m

      --  Diluted earnings per share(a) 10.2p

      --  Dividend per share 3.5p

      --  Net debt (pound)1,035m

      --  Half year order book (pound)45.4bn

    [pilcrow (paragraph sign)]   (a) excluding goodwill amortization and
exceptional items

      Sales rose to (pound)6,292 million (2000 (pound)5,663 million),
and the company maintained a strong order book, which at the end of
June 2001 had grown larger, to (pound)45.4 billion. The 6% increase in
the interim dividend to 3.5 pence per share is a reflection of our
confidence in the group's outlook.
      BAE SYSTEMS said that stronger trading is expected in the second
half. Seasonality continues to be a feature of a number of the
company's business groups. In particular in the second half,
Programmes will benefit from cost reduction actions and the
achievement of a significantly higher number of milestones on
Eurofighter Typhoon.
      The order book reflects strong order books from Airbus and
Customer Solutions & Support, the latter driven by more spares and
repairs activity. Integration of the former BAe and MES businesses has
been highly successful and is essentially complete. Anticipated
synergy savings are being achieved in line with plan.
      In the naval business, the medium and long-term outlook for BAE
SYSTEMS Marine shipyard business is more stable since the UK
Government announced its Type 45 procurement strategy in July.
Additionally, all major procurement items have been awarded under the
prime contract for Astute, the next generation nuclear powered attack
submarine, the first of which is now under construction.
      The North American business group, which operates in the company's
largest global market, has achieved strong order intake. This business
now delivers 20% of the company's sales, strong and consistent
cashflow and profits. This includes the recent acquisitions from
Lockheed Martin.
      Good progress has been made in restructuring to align business
capacity with anticipated throughput, and this work continues.
Prospects for the sale of further Hawk aircraft remain good with
campaigns leading to potential sales of 100 - 200 aircraft over the
next 10 years.
      Chairman, Sir Richard Evans, said: "These results for the first
half are in line with the plan we have been following. The trading
bias this year, like last, is to the second half. Business performance
for the full year remains on track. We expect growth in the company's
performance to resume in 2002 as planned."
      A full copy of the interim statement is available at
www.baesystems.com.

      About BAE SYSTEMS:

      BAE SYSTEMS is the truly global systems, defense and aerospace
company.
      BAE SYSTEMS employs some 100,000 people and has annual sales of
around (pound)12 billion. The company offers a global capability in
air, sea, land and space with a world-class prime contracting ability
supported by a range of key skills.
      BAE SYSTEMS designs and manufactures civil and military aircraft,
surface ships, submarines, space systems, radar, avionics,
communications, electronics, guided weapon systems and a range of
other defense products.

      Issued by: BAE SYSTEMS, Farnborough, Hampshire GU14 6YU, UK Tel:
[phone] Fax: [phone] www.baesystems.com

    --30--AD/ph*

    CONTACT: BAE SYSTEMS, Farnborough
             Phil Soucy, [phone]
                or
             Richard Coltart, [phone]
             Fax: [phone]

    KEYWORD: UNITED KINGDOM INTERNATIONAL EUROPE
    INDUSTRY KEYWORD: AEROSPACE/DEFENSE BANKING
COMPUTERS/ELECTRONICS EARNINGS
    SOURCE:  BAE SYSTEMS