DRS Technologies to Acquire Boeing's Sensors and Electronic Systems Business.

Business Editors

PARSIPPANY, N.J.--(BUSINESS WIRE)--Aug. 3, 2001

DRS Technologies, Inc. (AMEX: DRS) announced today that it has signed a definitive agreement to acquire the assets and certain liabilities of the Sensors and Electronic Systems (SES) business of The Boeing Company (NYSE: BA) for approximately $84 million, subject to adjustment. SES, located in Anaheim, California, is a leading provider of advanced electro-optical airborne and naval surveillance and targeting systems, high-performance military infrared cooled sensor systems, and cutting edge infrared uncooled sensor systems for military and commercial applications. The transaction is expected to close during DRS's fiscal third quarter.

Recognized as a world leader in helicopter and surface ship surveillance and targeting systems, SES also is known for technical superiority in the development of high-performance focal plane array (FPA) sensors for space-, ground- and air-based applications. Operating as part of Boeing's Battle Management Command, Control and Communications (BMC3) and Strategic Systems business in the Boeing Space and Communications Group, SES has provided products and services for over 40 years to the U.S. Department of Defense, U.S. defense industry and international military forces. It maintains extensive engineering, manufacturing, assembly, integration and product support capabilities.

"SES is a preeminent worldwide supplier of advanced electro-optical systems, subsystems and components and is recognized as a national resource for infrared sensor technology," said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. "The addition of SES to our Electro-Optical Systems Group is expected to increase this segment's annual sales by approximately 50 percent and will contribute a sizable contract base, supporting multiple, established military platforms and related programs strongly complementing our own. Its diversified revenue streams, significant intellectual property, experienced management team and well-regarded reputation for large-scale, complex system integration are expected to be strategically significant to our long-term goals for growth in the defense-related electro-optical systems business. This acquisition is expected to add approximately $75 million to our annual sales and be accretive to earnings within DRS's next fiscal year."

DRS expects to finance the acquisition through bank borrowings.

"Specifically, SES will broaden our electro-optical systems product lines and customer base, providing a close strategic fit with our current offerings," Mr. Newman continued. "This transaction also will add a fundamental technology building block and the engineering talent to support growth in our Electro-Optical Systems segment, as well as position the company to become a leading supplier of uncooled infrared sensor systems, opening up a new market for us. It also will provide an opportunity for DRS to participate in national missile defense programs. The technological and business synergies of this acquisition will provide immediate integration opportunities. This transaction reinforces DRS's commitment as a leading mid-tier defense electronics industry consolidator."

Allen B. Ashby, vice president and general manager of Boeing's BMC3 and Strategic Systems, a unit of Boeing Space and Communications, commented, "The divestiture of the Sensors and Electronic Systems business reflects the overall direction of the Boeing defense business to focus on system-of-systems opportunities. DRS is a strong player in the sensors and electronics market, and views this acquisition as an important asset to its core electro-optical systems capabilities."

The transaction is subject to the satisfaction of customary closing conditions. Bear, Stearns & Co. Inc. is serving as financial advisor to DRS on the transaction.

DRS Technologies is a leader in Second Generation infrared sighting and targeting systems used on the most critical front-line U.S. Army ground vehicle and weapons platforms in existence. The company also is a key supplier of multicolor cooled FPA sensors for ground targeting and missile guidance systems.

The surveillance and targeting systems of SES are deployed on hundreds of U.S. Army and international military helicopters, many U.S. Navy frigates, and will be deployed on the Navy's aircraft carriers. The strong track record of these systems and high level of customer satisfaction have positioned SES to expand its pursuit of large programs associated with international military helicopters and U.S. Navy cruisers and destroyers.

SES produces some of the world's most accurate and sensitive infrared cooled sensor systems through the integration of electronics, cryogenic cooling assemblies and optical components. These sensors operate on the U.S. Government's most advanced satellite and space telescope programs, including Defense Support Program satellites and NASA's Hubble Space Telescope.

The uncooled infrared sensor components, such as those produced by SES, are revolutionizing the thermal imaging systems market. Designed for low-cost military and commercial applications, these systems are expected to offer accelerated growth in such markets as automotive, surveillance and security systems, fire fighting and medical devices.

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.

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.