BAE SYSTEMS North America Completes Acquisition of ALPHATECH.

ROCKVILLE, Md. -- Acquisition Expands Company's Capabilities in Image and Signal Processing, Intelligence Fusion, and Information-Based National Security Systems

BAE Systems North America today completed its acquisition of ALPHATECH, Inc., for a cash consideration of $88.4 million. ALPHATECH, a premier provider of advanced information technologies, complements BAE Systems North America's significant presence in the system and subsystem levels in the C4ISR market, and enhances the company's position as a leading integrator of information-based systems, emphasizing horizontal integration and fusion.

ALPHATECH, which specializes in image and signal processing, multi-intelligence fusion and intelligent systems for the Department of Defense and other government intelligence agencies, becomes BAE Systems Advanced Information Technologies (AIT), operating within the company's National Security Solutions business unit.

"We're excited about the addition of AIT to the North America business," said Bill Ballhaus, president of BAE Systems National Security Solutions. "AIT will continue to serve the DoD research laboratories as well as other customers, and by working together with other organizations within the company, will facilitate the rapid transition of leading-edge technologies and deployment of transformational capabilities to our customers."

"BAE Systems is a full-spectrum, knowledge-based solutions provider focused on the expanding national security community, specifically the intelligence and defense markets. AIT will have a major role developing and integrating systems for these critical customers. We're proud to have them on the team," Ballhaus added.

Based in Burlington, Mass., and employing 322 people, AIT had recorded sales of $51 million for the year ending December 2003. Revenues for the six months ending June 2004 were $32 million. Founded in 1979 by faculty of the Massachusetts Institute of Technology (MIT), more than 80 percent of AIT's employees hold advanced degrees.

BAE Systems North America is a leading electronics, information systems and technology services company, and one of the largest providers of systems and services for the U.S. Department of Defense. BAE Systems North America currently employs approximately 30,000 people across some 30 states, generating sales of more than $5 billion. The company designs, develops, manufactures and supports a wide range of advanced aerospace products, electronic systems and information technology for the U.S. Government and commercial customers.

About BAE SYSTEMS:

BAE Systems is an international company engaged in the development, delivery and support of advanced defense and aerospace systems in the air, on land, at sea and in space. The company designs, manufactures and supports military aircraft, surface ships, submarines, fighting vehicles, radar, avionics, communications, electronics and guided weapon systems. It is a pioneer in technology with a heritage stretching back hundreds of years. It is at the forefront of innovation, working to develop the next generation of intelligent defense systems.

BAE Systems has major operations across five continents and customers in some 130 countries. The company has more than 90,000 people and generates annual sales of approximately $20 billion through its wholly-owned and joint venture operations.