DRS Technologies Reports Record Second Quarter Results.

Business Editors

PARSIPPANY, N.J.--(BUSINESS WIRE)--Nov. 6, 2001

Operating Income, Net Earnings and Diluted EPS Advance 26%,

100% and 70%, Respectively; Backlog At an All Time High

DRS Technologies, Inc. (AMEX: DRS) today reported record results for the second quarter and first six months of fiscal 2002. The company ended the quarter with the highest level of funded backlog in its history.

Revenues for the three months ended September 30, 2001 were a second quarter record at $116.2 million, an 8 percent increase above revenues of $107.2 million for the same period last year.

Record second quarter operating income of $10.7 million was 26 percent higher than the $8.5 million reported for the second quarter a year ago. Operating income as a percentage of sales was 9.2 percent, versus 7.9 percent for the second quarter of fiscal 2001.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were a second quarter record at $13.4 million, a 7 percent rise over EBITDA of $12.6 million for the same three months in the previous fiscal year. EBITDA as a percentage of sales was 11.5 percent, essentially the same as the prior year's second quarter.

Record second quarter net earnings were $4.5 million, or $0.34 per diluted share, more than twice net earnings of $2.2 million, or $0.20 per diluted share, posted for the three months ended September 30, 2000.

"DRS completed the second quarter of fiscal 2002 with excellent results, establishing new records in revenues, operating income, earnings and backlog," said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. "Noteworthy was the continued increase in profitability that we've demonstrated quarter over quarter, complemented by top line growth, with solid performance in each of our major operating segments."

Record fiscal 2002 second quarter revenues were primarily attributable to increased shipments of Naval display workstations, related engineering development contracts and higher shipments of second generation infrared ground vehicle sighting systems.

Second quarter record operating income was primarily the result of higher sales volume overall, as well as improved program performance in the company's flight safety and communications segment. In addition, the company's adoption of Statements of Financial Accounting Standards No. 141 and 142, "Goodwill and Other Intangible Assets," effective April 1, 2001, contributed $1.2 million to operating income, $0.9 million to net earnings and $0.07 to earnings per share for the period.

Mr. Newman continued, "During the second quarter, we completed two acquisitions that enhance our strategic position in core technology areas of interest to us within the aerospace and defense industry. In conjunction with these transactions, we secured a new $240 million credit facility, consisting of a term loan valued at $140 million and a $100 million revolving line of credit. Key to meeting our plans for growth, this new facility, which replaced the previous one, will be used for general corporate purposes, including future acquisitions."

On September 28, the company acquired the Sensors and Electronic Systems business of The Boeing Company (NYSE: BA), renamed DRS Sensors & Targeting Systems, located in Anaheim, California. The acquisition contributed approximately $76 million to funded backlog at September 30.

Commenting on the transaction, Mr. Newman said, "Recognized as a leader in helicopter and surface ship surveillance and targeting systems, DRS Sensors & Targeting Systems broadens the product lines and customer base of our Electro-Optical Systems Group, particularly in those areas associated with naval and air-based applications, and provides a strong complement to our own offerings in ground-based Forward Looking Infrared (FLIR) technology supporting the U.S. Army. DRS Sensors & Targeting Systems is strategically significant to our long-term goals for growth in the defense-related electro- optical systems business, and provides an opportunity to participate in missile defense and advanced countermeasures programs."

During the quarter, DRS also acquired the assets of Electro-Mechanical Systems, a small operating unit of Lockheed Martin Corporation (NYSE: LMT) based in Largo, Florida. Renamed DRS Surveillance Support Systems, this operation produces pedestals, support systems and antennae for radar and other surveillance sensor systems, including the antenna for the AN/SPS-67 Radar System, currently produced by DRS for the U.S. Navy. The shared participation on this program and other product synergies provide vertical business integration opportunities and a strong strategic fit for the company. The acquisition did not have a significant impact on the company's operating results for the second quarter.

DRS secured new orders for products and services valued at approximately $105.2 million in the second quarter and a record $244.9 million in contract awards during the first half of fiscal 2002. Backlog of approximately $569 million at September 30, 2001 was the highest in the company's history - 34 percent above the $426 million in backlog at the end of last year's second quarter and 25 percent above backlog of $457 million at March 31, 2001, the company's fiscal 2001 year end. Backlog reflected the addition of two acquisitions completed by the company in the second quarter.

Second quarter contract awards included:

- $36.1 million in new contracts from Lockheed Martin to manufacture and
provide engineering development for combat display systems associated with the
U.S. Navy's AN/UYQ-70 Advanced Display Systems program in support of ships,
aircraft and submarines;

- $18.0 million in new awards for second generation infrared ground vehicle and
aircraft sighting, targeting and weapons systems, and electro-optical
technology development, primarily supporting the U.S. Army;

- $15.3 million in new awards for electronic manufacturing services for
defense, commercial and space-based applications;

- $14.6 million in orders for rugged computers and peripheral equipment for
U.S. Army, intelligence and international military programs;

- $9.9 million in new awards for high-speed digital imaging systems, avionics
and mission recording systems for U.S. and international military, scientific
and industrial applications.

The company's Electronic Systems Group achieved solid results for the second quarter, posting increases in revenues, operating income and backlog. Sales of $53.1 million were up 16 percent from a year ago, while operating income was $4.2 million, a 12 percent rise over the same prior-year period. Notable performance was achieved on programs associated with U.S.-based rugged computer programs for the Army and government intelligence agencies, as well as engineering development contracts related to U.S. Navy display workstations. The group's operating margin remained essentially the same at 8 percent. Strong bookings of $54.5 million, in combination with the addition of $13.1 million in acquisition-related backlog, contributed to a record in funded backlog of approximately $164.2 million at September 30, 2001, 8 percent higher than the same time last year.

DRS's Electro-Optical Systems Group achieved a 9 percent increase in sales for the second quarter to $40.4 million, due primarily to higher shipments in Second Generation infrared sighting and targeting systems associated with U.S. Army ground vehicles and aircraft applications. Operating income remained essentially the same at $5.3 million, reflecting the continuance of a healthy operating margin of 13.2 percent. New orders valued at $20.6 million, combined with acquisition-related backlog of approximately $75.5 million, boosted funded backlog for this segment to a record $283.7 million, up 67 percent from the same time a year ago.

The company's Flight Safety and Communications Group posted substantial improvements in operating income, operating margin, bookings and backlog. Operating income of $1.5 million for the second quarter on sales of $20.4 million represented an operating margin of 7.3 percent, versus a loss of $0.8 million for the comparable period last year. Increased profitability was due to lower operating expenses, as a result of a facility consolidation, and improved performance related to ultra high-speed digital imaging systems for international customers. Revenues were 7 percent lower than last year's second quarter, due primarily to timing of shipments in the company's data link communications product lines. Record backlog of $120.8 million was a 17 percent improvement over the second quarter of fiscal 2001, driven by bookings of $28.0 million, which were 25 percent above last year's level. New contracts associated with international electronic manufacturing services and high-speed digital cameras for domestic and international customers were primarily responsible for the increase.

"We continue to see positive results from our ongoing efforts toward implementing operating efficiencies and proven business strategies that focus on our core strengths," Mr. Newman added. "Delivering a sustained high level of profitability and strong top line growth in the second half of the fiscal year will remain key goals."

For the first six months of fiscal 2002, DRS posted record revenues of $219.5 million, 9 percent above revenues of $201.7 million for the same period last year. Record sales for the six-month period were primarily attributable to increased product deliveries and progress achieved on engineering development work associated with the company's electro-optical system product lines, primarily in support of U.S. Army ground vehicle and aircraft infrared sensor systems. A full six months of revenues generated by the company's DRS Communications Company unit, as a result of the acquisition of this operation in the first quarter last year, also contributed to higher sales.

Operating income was a first-half record at $20.4 million, a 30 percent increase above the $15.7 million reported for the comparable period a year earlier. Six-month operating income as a percentage of sales was 9.3 percent, versus 7.8 percent for the same period a year earlier, a 19 percent improvement. Record operating income during the first half of fiscal 2002 was the result of the overall increase in sales and improved program performance in the company's flight safety and communications segment. The company's adoption of SFAS No. 141 and 142, effective April 1, 2001, also contributed to record operating income for the period.

For the first six months of the fiscal year, the company posted record EBITDA of $25.7 million, 9 percent higher than the $23.6 million reported for the prior year's first half. EBITDA as a percentage of sales was 11.7 percent, the same as last year.

Record net earnings for the first two quarters of fiscal 2002 were $8.4 million, or $0.64 per diluted share, more than twice net earnings of $4.1 million, or $0.38 per diluted share, for the same six-month period a year ago.

The positive impact of the company's adoption of SFAS No. 141 and 142 on six- month operating income, net earnings and earnings per share was $2.5 million, $1.7 million and $0.13, respectively.

"During the first six months of fiscal 2002, we made important progress toward our strategic goals for long-term growth by completing a significant acquisition, securing an expanded credit facility, reducing expenses and achieving record financial results," Mr. Newman said. "DRS's excellent performance in the first half is an encouraging indication that we are well positioned for achieving another great fiscal year."

He concluded, "In light of the U.S. response to the tragic events of September 11, government plans to provide increased capital for the defense budget and accelerate the modernization of legacy military platforms are creating a market climate that continues to favor DRS's core defense technology product offerings and bolster our business outlook. As a leading supplier of defense electronics systems for ground, sea and air combat, surveillance, reconnaissance and intelligence gathering missions, DRS is in a strong position to increase our support of U.S. and allied forces to meet the challenges of asymmetrical, conventional or covert military operations."

DRS Technologies provides leading edge products and services to government and commercial customers worldwide. Focused on defense electronics, the company develops and manufactures a broad range of mission critical systems and components in the areas of communications, combat systems, rugged computers, electro-optics, data storage, digital imaging, flight safety and space.

For more information about DRS Technologies, please visit 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.

Note to investors:

DRS Technologies will host a conference call, which will be simultaneously broadcast live over the internet. Mark S. Newman, chairman, president and chief executive officer, Richard A. Schneider, executive vice president, chief financial officer and treasurer, and Patricia M. Williamson, vice president, corporate communications/investor relations, will host the call, which is scheduled for today, Tuesday, November 6, 2001 at 10:00 a.m. EST. Listeners can access the call live and archived at DRS's site on page http://www.drs.com/ investor/index.html or at CCBN's institutional investor site at http://www.streetevents.com or individual investor center at http://www.companyboardroom.com. Please allow 15 minutes prior to the call to visit these sites and download and install any necessary audio software.

                DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                              (UNAUDITED)
                 (Millions Except Earnings per Share)

                                      Three Months Ended September 30,
                                      --------------------------------
                                          2001(a)           2000
                                          -----
Revenues                                 $ 116.2          $ 107.2

Operating Income                         $  10.7          $   8.5

Interest and Related Expenses            $   1.8          $   3.5

Earnings before Income Taxes             $   8.5          $   4.7

Net Earnings                             $   4.5          $   2.2

Net Earnings per Share of Common Stock:
         Basic                           $   .37          $   .22
         Diluted                         $   .34          $   .20

Weighted Average Number of Shares of

Common Stock Outstanding:
         Basic                              12.1             10.0
         Diluted                            13.2             12.3

                                        Six Months Ended September 30,
                                        ------------------------------
                                          2001 (a)(b)         2000
                                          ----                ----
Revenues                               $   219.5          $ 201.7

Operating Income                       $    20.4          $  15.7

Interest and Related Expenses          $     4.0          $   6.6

Earnings before Income Taxes           $    15.8          $   8.5

Net Earnings                           $     8.4          $   4.1

Net Earnings per Share of Common Stock:
         Basic                         $     .69          $   .43
         Diluted                       $     .64          $   .38

Weighted Average Number of Shares of

Common Stock Outstanding:
         Basic                              12.1              9.7
         Diluted                            13.1             12.2


(a) Fiscal 2002 second quarter and six-month results include the
    operations of DRS Surveillance Support Systems, Inc., as a result
    of the acquisition of Electro-Mechanical Systems, Inc., a unit of
    Lockheed Martin Corporation, on August 22, 2001.

(b) Fiscal 2002 six-month results include a full six months of
    operations from DRS Communications Company, LLC, as a result of
    the acquisition of General Atronics Corporation in the first
    quarter of fiscal 2001 (June 14, 2000).



                DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
                        SELECTED FINANCIAL DATA
                              (UNAUDITED)
                             ($ Millions)


                                     Three Months      Six Months
                                        Ended            Ended
                                     September 30,    September 30,

                                     2001(a)  2000   2001(a)(b)  2000
                                     ----     ----   ----        ----

EBITDA                             $  13.4 $  12.6 $  25.7     $  23.6

Depreciation and Amortization      $   3.1 $   4.4 $   6.0     $   8.5

Capital Expenditures               $   4.0 $  5.8  $   7.5     $   8.4

Bookings                           $ 105.2 $ 126.1 $ 244.9     $ 218.7


                                         September 30,    March 31,
                                             2001(a)        2001
                                             ----           ----

Backlog(c)                               $   569.2       $  456.5

Cash and Cash Equivalents                $     4.2       $    2.3

Total Debt                               $   162.5       $   83.1

Stockholders' Equity                     $   122.1       $  111.9


(a) Fiscal 2002 second quarter and six-month results include the
    operations of DRS Surveillance Support Systems, Inc., as a result
    of the acquisition of Electro-Mechanical Systems, Inc., a unit of
    Lockheed Martin Corporation, on August 22, 2001.

(b) Fiscal 2002 six-month results include a full six months of
    operations from DRS Communications Company, LLC, as a result of
    the acquisition of General Atronics Corporation in the first
    quarter of fiscal 2001 (June 14, 2000).

(c) Backlog at September 30, 2001 includes approximately $75.5 million
    from DRS Sensors & Targeting Systems, Inc., as a result of the
    acquisition of the Sensors and Electronic Systems business of The
    Boeing Company on September 28, 2001, and $13.1 million from DRS
    Surveillance Support Systems, Inc., as a result of the acquisition
    of Electro-Mechanical Systems, Inc., a unit of Lockheed Martin
    Corporation, on August 22, 2001.