DRS Technologies Signs Agreement to Acquire Certain Businesses of Raytheon.

PARSIPPANY, N.J.--(BUSINESS WIRE)--Aug. 5, 1998--DRS Technologies, Inc. (ASE: DRS) announced today that it has entered into an agreement with Raytheon Company (NYSE: RTN/A, RTN/B) for the purchase of a portion of both its Second Generation Ground Electro-Optical Systems (Ground EO) business and a portion of its Focal Plane Array (FPA) business for an undisclosed purchase price. The transaction is subject to approval by the U.S. Department of Defense and Department of Justice.

The Ground EO and FPA businesses provide products used in the detection, identification and acquisition of targets based on infrared data. Primary programs include the U.S. Army's Horizontal Technology Integration Second Generation FLIR (Forward Looking Infra-Red) (HTI SGF), the Long Range Advanced Scout Surveillance System (LRAS3), the Improved Bradley Acquisition System (IBAS) and the JAVELIN missile programs. The Ground EO business is based in El Segundo, California; the FPA business is located in Dallas, Texas. Combined these businesses employ approximately 280 people.

Mark S. Newman, chairman, president and chief executive officer of DRS Technologies, commented, "With combined estimated backlog of approximately $180 million, the proposed acquisition is expected to significantly enhance the scope of our electro-optical systems capabilities, substantially increase revenues and backlog, and position DRS as a leading merchant supplier of military ground vehicle sighting and weapons systems. We expect the acquisition to be accretive to earnings within the first twelve months and significantly accretive in the second year. This acquisition is consistent with DRS's long-term growth strategy to expand our core businesses into closely related markets."

The divestitures are required as part of Raytheon's agreement with the Department of Justice relating to Raytheon's July 1997 acquisition of the defense business of Texas Instruments and its December 1997 merger with the defense business of Hughes. The Ground EO business is formerly a part of Hughes Aircraft Company, and the FPA business is formerly a part of Texas Instruments. Raytheon will continue to own and operate a ground electro-optical systems business based in Dallas, Texas and a focal plane array business based in Goleta, California.

DRS has retained Bear, Stearns & Co. Inc. as financial advisor for the transaction.

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.

CONTACT: DRS Technologies, Parsippany

Patricia M. Williamson

973/898-1500