DRS Technologies Posts First Quarter Results.

PARSIPPANY, N.J.--(BUSINESS WIRE)--Aug. 5, 1998--DRS Technologies, Inc. (ASE: DRS) today reported financial results for the first quarter of fiscal 1999.

Revenues for the quarter ended June 30, 1998 were $45,988,000, compared with revenues of $38,997,000 reported a year earlier.

First quarter operating income was $2,066,000, compared with $2,899,000 reported a year ago.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $4,380,000 in the first quarter of fiscal 1999, compared with $4,529,000 for the same three-month period in fiscal 1998.

Net earnings for the quarter were $324,000, versus $1,343,000 earned for the first quarter a year ago. Diluted earnings per share were $0.05, compared with $0.20 for the same three months in the prior year.

Funded backlog at June 30, 1998 was a record $182 million, up from $177 million at March 31, 1998, the company's fiscal 1998 year end. Backlog included new orders valued at approximately $52.8 million received during the first quarter.

Higher revenues during the first quarter were positively impacted by businesses acquired in fiscal 1998, primarily associated with the company's flight safety and communications subsidiary.

The decrease in operating income was affected by lower margins in the company's magnetic head business influenced, in part, by start-up costs associated with the company's Bulgarian manufacturing facility. The company expects this facility to increase production during the second quarter of this fiscal year. Additionally, operating income continued to be impacted by slowdowns in the computer disk drive industry.

Results for the first quarter also were affected by the inability of a subsidiary of the company to ship certain boresighting systems to defense customers. This was due to a government investigation, during the period, into a product substitution allegation against an employee of the subsidiary. On June 26, 1998, the complaint against the employee was dismissed without prejudice by the United States Attorney for the Eastern District of New York.

Net earnings for the three-month period were impacted by the decrease in operating income and by approximately $700,000 of additional interest expense, primarily related to acquisitions.

Mark S. Newman, chairman, president and chief executive officer of DRS Technologies, remarked: "Although net earnings were disappointing, we are encouraged that DRS set new first quarter records in revenues and bookings, and posted the highest backlog in the company's history. The company is actively taking steps to continue our cost reduction and consolidation program, and we are optimistic that these measures will produce positive results as the fiscal year progresses. We remain focused on our strategic objectives and are confident of achieving the company's goals for growth in fiscal 1999."

In a separate news release issued today, DRS announced the signing of an agreement with Raytheon Company for the purchase of a portion of both the Second Generation Ground Electro-Optical Systems business based in El Segundo, California and the Focal Plane Array business located in Dallas, Texas for an undisclosed purchase price. The transaction is subject to approval by the Department of Defense and the Department of Justice. With combined estimated backlog of $180 million, the proposed acquisition is expected to position DRS as a leading merchant supplier of military ground vehicle sighting and weapons systems.

Mr. Newman continued, "In addition to our ongoing acquisition program, our internal growth plan was recently aided by the award of the seven-year UYQ-70 Advanced Display Systems program, which will generate significant core business sales for many years to come." The award of the UYQ-70 contract to the Lockheed Martin team, consisting of Lockheed Martin, DRS Technologies and Raytheon, was announced by the U.S. Navy on July 17, 1998 and is expected to significantly exceed its current $281 million estimated value.

DRS Technologies is a diversified, high-technology company serving government and commercial niche markets worldwide. The company develops and manufactures a variety of leading edge systems and components used for the processing, display and storage of data. DRS provides its customers with a broad range of products, including electronic sensor, electronic imaging and electro-optical systems, and offers a full complement of technical support services. The company's defense electronics products serve all branches of the armed forces. Its commercial and industrial products are used by the airline, banking, computer disk drive, security, transportation, retail sales and broadcast industries.

Additional information is available on the company's web site at www.drs.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Except for historical information contained herein, the matters set forth in this news release are forward-looking statements. The forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, and include, without limitation, demand and competition for the Company's products and other risks or uncertainties detailed in the Company's Securities and Exchange Commission filings. -0-

               DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                             (UNAUDITED)


                                        Three Months Ended June 30,
                                         1998                1997

Revenues                             $45,988,000         $38,997,000
Operating Income                     $ 2,066,000         $ 2,899,000
Earnings before Income Taxes         $   515,000         $ 2,131,000
Net Earnings                         $   324,000         $ 1,343,000

Net Earnings per Share of Common Stock:

     Basic                           $       .05         $       .24

     Diluted                         $       .05         $       .20


Weighted Average Number of Shares
of Common Stock Outstanding:

      Basic                            6,197,000           5,588,000

      Diluted                          6,518,000           8,967,000

CONTACT: DRS Technologies, Parsippany

Patricia M. Williamson

973/898-1500