L-3 Communications Announces Strong First Quarter 2001 Results; Sales, operating income and earnings per share increase 22.5%, 35.2% and 25.0%, respectively

Business Wire, April 25, 2001

    Business Editors

      NEW YORK--(BUSINESS WIRE)--April 25, 2001--L-3 Communications
(NYSE:LLL) today announced strong results for the first quarter of
2001, including significant increases in sales, operating income, and
earnings per share compared to the same period a year ago.
      For the 2001 first quarter, sales increased 22.5% to $461.9
million, compared to sales of $377.1 million for the same period in
2000.
      Operating income in the first quarter of 2001 was $46.9 million, a
35.2% increase over operating income of $34.7 million for the same
period in 2000. As a percentage of sales, operating income was 10.1%
in the first quarter of 2001, versus 9.2% in the same period in 2000.
      Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $67.2 million for the first quarter of 2001, compared to
$50.4 million for the same period in 2000, or an increase of 33.3%.
      Net income for the first quarter of 2001 rose 30.3% to $14.2
million, compared with net income of $10.9 million a year ago. Diluted
earnings per share rose 25.0% to $0.40 per diluted share, versus $0.32
per diluted share for the same period in 2000.
      The company reported free cash flow for the first quarter of 2001
of approximately $8.0 million compared with $10.7 million for the same
period in 2000. Net capital expenditures increased to $9.2 million for
the first quarter of 2001 from $4.4 million for the same period in
2000. The decline in free cash flow was also attributable to planned
increases in inventory related to the fixed wireless access business
and the continued effort to complete the AVCATT program, partially
offset by an adjustment on a services agreement in connection with an
acquisition. As of March 31, 2001, the company had $39.0 million in
cash, compared to $32.7 million at December, 31, 2000.
      Bookings for the company's products continued to exhibit strong
growth, with funded orders in the first quarter of 2001 increasing
29.5% to $508.4 million, compared to $392.7 million in the same period
a year ago. Funded backlog increased 15.5% to $1,400.5 million at
March 31, 2001, compared to $1,212.5 million at March 31, 2000.
      "We had a very good first quarter," said Frank C. Lanza, chairman
and chief executive officer of L-3 Communications. "Our key divisions
and products performed very well during the first quarter of 2001,
including secure data links, training and simulation, avionics and
microwave products."
      "Our Department of Defense business was a strong contributor to
our overall performance," continued Mr. Lanza. He noted that the
training and simulation business received several contracts, including
a U.S. Navy T-45C instrument flight trainer, U.S. Navy P-3C Partial
Aircrew Coordination Trainers and virtual domain simulation of actual
warfighting equipment, systems and munitions and an award from U.S.
Army STRICOM.
      "We also had some important milestones in our commercial
businesses," continued Mr. Lanza. "In our telecommunications business,
L-3 received a major contract to provide a fixed wireless access
system for selected cities in South America. We are making good
progress on this contract, and because our system is based on
cutting-edge broadband technology, we believe we have excellent
prospects for other international contracts in the future. In our
transportation business, we have taken our leadership in aviation
recorders and applied it to the maritime market to deliver our first
production Hardened Voyage Recorder (HVR) for the largest cruise
ferry, the Ulysses, owned and operated by Irish Ferries. Increased
regulations in the maritime industry mandating recorder technology on
cruise ships and ferry boats will create a new market into which L-3
can leverage its expertise."

      Mr. Lanza cited a number of key high technology wins and
milestones for L-3:

--  L-3 signed an agreement for the formation of a joint venture
    company with Thales Avionics purchasing a 30% interest. This joint
    venture will be called Aviation Communications & Surveillance
    Systems (ACSS), an L-3 Communications and Thales Company. ACSS
    will provide communications and surveillance systems and services
    and support for the global aviation marketplace.
--  Display Systems received an award to provide the Army's new
    Line-of-Sight-Anti-Tank Program with its advanced control and
    display manager and battle view and tactical displays.
--  IEC has been selected to combine and miniaturize its GPS receiver
    with its MEMS Internal Measurement Unit for inclusion in the Low
    Cost Guidance and Navigation (LCGNU) program, which will be used
    in a NATO initiative to upgrade "dumb" munitions to more
    navigation capable "smart" weapons.
--  Space & Navigation received an award for an additional 70 Position
    Navigation Units for the Army's Multiple Launch Rocket System
    (MLRS). This award is the result of L-3's continued high
    performance on this contract and maintains the division's position
    as a leader in precision pointing and navigation products.
--  Conic was selected by Greece to supply state-of-the-art tuneable
    microwave radios to support the 2004 Olympics. These high-speed
    digital radios will be used to transmit both video and audio from
    remote Olympic game sites to a central broadcast location for
    worldwide broadcast coverage.
--  Northrop Grumman selected Randtron to supply several of its
    advanced high frequency antennas to the Falcon Edge program, which
    is an F-16 based Electronic Warfare platform for a foreign ally.
--  Ocean Systems received funding from the U.S. Navy to demonstrate
    its new Untethered Mine/Hunter Destroyer, which is electronically
    controlled and deployed from either a ship or helicopter to search
    for and destroy mines.
--  L-3 Storm entered into a cooperative agreement with Inmarsat to
    provide systems integration and satellite services, including
    fully automated satellite command and control capabilities to the
    global commercial satellite market.
--  The Federal Aviation Administration awarded L-3 two contracts,
    purchasing a total of 14 of its eXaminer 3DX(TM) 6000 explosive
    detection systems for deployments at U.S. Airports. Additionally,
    the FAA certified L-3's eXaminer 3DX(TM) 3000 product for use in
    smaller air carrier stations throughout the United States.
--  L-3 supplied its RIFCA (Redundant Inertial Flight Controller
    Assembly) inertial guidance system for its 48th consecutive
    successful Boeing Delta Rocket launch. L-3's RIFCA is expected to
    fly on future Delta II, III and IV launches.
--  L-3 successfully demonstrated its Skyhawk UAV payload on the
    Hunter Tactical UAV. In an industry first, L-3's Skyhawk can
    detect and locate COMINT (communications intelligence) and (ELINT)
    electronic intelligence emitters, providing real-time data
    collection capabilities.
--  L-3 was selected by American Airlines to supply more than 600
    FA2100 Solid State Cockpit Voice Recorders (CVRs) to retrofit
    across its entire fleet.
--  L-3 formed Satellite Networks, a new division created by the
    combination of its LNR and Satellite Transmission Systems
    businesses to offer a wide range of satellite solutions, from
    top-of-the-line satellite products such as frequency converters
    and Fly Away Satellite Terminals, to complex satellite gateways,
    systems and networks. In addition, Satellite Networks further
    enhanced its product portfolio in the quarter with the acquisition
    of the ISAT (Integrated Services Access Terminal) product line of
    Gilat Florida.
--  L-3 assigned its newly acquired Coleman Research Corporation into
    the organizational structure of the company's MPRI division to
    provide increased business opportunities and operational
    efficiencies.

      "As we survey the acquisition landscape, the pipeline is full and
there is a lot of opportunity for L-3," said Mr. Lanza. "We are
currently looking at several key sectors at various size levels, and
we have a solid financial structure to make both smaller and larger
acquisitions."
      "We are very pleased with the efforts that the new administration
is making as it thoughtfully develops its defense plans," concluded
Mr. Lanza. "President George W. Bush is honoring his campaign pledge
to study the nation's military needs and is developing a realistic
plan that reflects current and future threats. We believe that his
goals to focus on the modernization of platforms and to move toward
leapfrog technology will play to the strengths that L-3 has as a major
defense electronics company. With our broad line of market leading
products and an acquisition pipeline that remains favorable, we look
forward to the rest of 2001."
      The $508.4 million in first quarter bookings included the
following notable contract awards:

--  Secure Communication Systems booked approximately $241.0 million
    in funded orders. Key bookings included awards for the company's
    core data link programs for the U-2, CHBDL, Predator and
    Globalhawk UAVs, and an award for L-3's Strategic/Tactical
    Airborne Recorder (S/TAR(TM)) on the SHARP (Shared Reconnaissance
    Pod) program. Additional strong orders for the company's secure
    terminal equipment (STE) and follow-on funding for communications
    systems on the International Space Station and various Signal/Data
    Link intelligence programs. In addition, L-3 received a follow-on
    production order for additional eXaminer 3DX(TM)6000 Explosive
    Detection Systems (EDS) for deployment at U.S. airports. The
    simulation and training business was awarded a contract for the
    U.S. Army's Simulation, Training and Instrumentation Command
    (STRICOM) to provide virtual domain simulation of war fighting
    equipment, follow-on orders for additional simulation and training
    requirements were received for the F-22, F-117 and F-16. Also, the
    company was awarded additional funding for the Army's ROTC
    program.
--  Specialized Communication Products booked approximately $267.4
    million in funded orders. Strong bookings in Ocean Products were
    led by awards for the U.S. Navy's Towed Array programs and various
    international orders for dipping sonars, follow-on orders for
    LPD-17 switchgear, and an award from the U.S. Navy for funding on
    the Untethered Mine Hunter/Destroyer program. In addition, L-3
    received follow-on orders to provide cockpit displays for the
    C-130J, T-38 and Jaguar platforms. The company was also awarded an
    initial contract to provide display systems for the Line-of-Sight
    Anti Tank program (LOSAT). Telemetry & Instrumentation and Space
    products included initial awards for F-16 antennas, incremental
    funding for the E2C TRAC-A, and follow-on funding for additional
    position navigation units on the Multiple Launch Rocket System
    (MLRS). Also booked were the initial award for L-3's upgraded TCM
    900 Point to Point microwave radio from Hellenic Aerospace. In
    addition, the company was awarded initial funding to develop a Low
    Cost Guidance Navigation Unit (LCGNU).

      In conjunction with this release, L-3 Communications will host a
conference call, which will be simultaneously broadcast live over the
Internet. Frank C. Lanza, Chairman and Chief Executive Officer, Robert
V. LaPenta, President and Chief Financial Officer, and Cynthia Swain,
Vice President-Corporate Communications, will host the call, which is
scheduled for tomorrow, April 26, 2001 at 4:00 p.m. EDT. Listeners can
access the conference call live and archived over the Internet at
http://www.streetfusion.com. Please allow 15 minutes prior to the call
to visit the site and download and install any necessary audio
software.
      Headquartered in New York City, L-3 Communications is a leading
merchant supplier of secure communications systems and products,
avionics and ocean products, training products, microwave components
and telemetry, instrumentation, space and wireless products. Its
customers include the Department of Defense, selected U.S. government
intelligence agencies, aerospace prime contractors and commercial
telecommunications and wireless customers.
      To learn more about L-3 Communications, please visit the company's
web site at www.L3Com.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, including the risks and
uncertainties discussed in the company's Safe Harbor Compliance
Statement for Forward-looking Statements included in the company's
recent filings, including Forms 10-K and 10-Q, with the Securities and
Exchange Commission.
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*T
                   L-3 COMMUNICATIONS HOLDINGS, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In millions, except per share data)
                              (Unaudited)

                                    Three Months Ended
                                          March 31,
                                  2001                 2000

Sales                            $461.9                $377.1

Costs and expenses                415.0                 342.4

Operating income                   46.9                  34.7

Interest and other income           0.5                   0.8
Interest expense                   24.4                  17.6

Income before income taxes         23.0                  17.9

Provision for income taxes          8.8                   7.0

Net income                        $14.2                 $10.9

Earnings per share:
  Basic                           $0.42                 $0.33
  Diluted                         $0.40                 $0.32

Weighted average common
 shares outstanding:
  Basic                            34.1                  33.0
  Diluted                          35.8                  34.5



                   L-3 COMMUNICATIONS HOLDINGS, INC.
                        SELECTED FINANCIAL DATA
                             (In millions)
                              (Unaudited)

                                      Three Months Ended
                                            March 31,
                                   2001                  2000

EBITDA (a)                        $67.2                 $50.4

Depreciation and amortization     $20.3                 $15.7

Capital expenditures               $9.3                  $5.4

Orders (funded)                  $508.4                $392.7

                                 March 31,            December 31,
Period end data:                   2001                  2000

  Backlog  (funded)            $1,400.5              $1,354.0

  Cash  &  cash  equivalents      $39.0                 $32.7

  Total  debt                  $1,105.0              $1,095.0

  Shareholders' equity           $726.2                $692.6

(a) EBITDA represents earnings before interest, taxes, depreciation
    and amortization, and is defined as operating income plus
    depreciation and amortization expenses.

      --30--ac/ny*

      CONTACT: L-3 Communications
               Cynthia Swain
               Vice President, Corporate Communications
               212/697-1111
                           or
               Morgen-Walke Associates
               Investors: Eric Boyriven
               Media: Scot Hoffman
               212/850-5600

      KEYWORD: NEW YORK
      INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS EARNINGS