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ANOTHER STRONG RESULT FOR DRS

ANOTHER STRONG RESULT FOR DRS TECHNOLOGIES – RECORD ORDER BOOK

13 May 05. DRS Technologies, Inc. (NYSE: DRS – News) today reported record financial results for the fourth quarter and fiscal year ended March 31, 2005. Results for the fiscal year included significant gains in revenues, operating income and diluted earnings per share. A quarterly record in new orders for products and services increased funded backlog at the end of the period to a new high.

“Fiscal 2005 results were outstanding,” said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. “Revenues were up 33 percent over last year, including double-digit organic growth, and free cash flow was very strong. Operating income was 39 percent higher, and earnings from continuing operations increased 33 percent, despite the impact of charges related to the settlement of litigation. We set a record in new orders, driving funded backlog at the end of the year to the highest level ever achieved by the company.”

Fiscal 2005 Results

Fiscal 2005 revenues from continuing operations were $1.31bn, 33 percent higher than revenues from continuing operations of $986.9m for fiscal 2004. Organic revenue growth accounted for approximately 11.5 percent of the increase, with the balance from acquisitions. Operating income of $143.1m for the year ended March 31, 2005 was 39 percent higher than the $103.3m reported for last fiscal year. Record operating income for fiscal 2005 was attributable to the higher overall sales volume and the strong performance of the company’s operating segments. Operating income as a percentage of sales was 10.9 percent, compared with 10.5 percent for the prior fiscal year. Operating income included a $6.5m provision during fiscal 2005 related to the settlement of litigation, $5.5m of which was recorded in the fourth quarter.

Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) were $181.2 million for fiscal 2005, 40 percent higher than EBITDA of $129.3 million reported a year earlier. EBITDA as a percentage of sales was 13.8 percent, compared with 13.1 percent a year ago.

Fiscal 2005 net earnings were $60.7m, or $2.18 per diluted share, including $2.6m from discontinued operations. Fiscal 2004 net earnings were $44.7m, or $1.80 per diluted share. Before the charge for litigation, pro forma earnings from continuing operations were $61.8m, or $2.22 per diluted share. After the litigation charge, earnings from continuing operations were $58.1m, 33 percent higher than a year ago, or $2.09 per diluted share, on weighted average diluted shares outstanding of 27.8 million. Last year’s earnings from continuing operations were $43.5m, or $1.76 per diluted share, on 24.8 million weighted average diluted shares outstanding. Net cash provided by operating activities of continuing operations for fiscal 2005 increased to $136.2m from $104.7m reported the year before. Free cash flow (net cash provided by operating activities of continuing operations less capital expenditures) was strong at $101.7m, 27 percent higher than free cash flow of $80.3m last year.

Mr. Newman said, “Fiscal 2005 was an excellent year for DRS, and we accomplished a number of important objectives, including:
Record financial results in both of our operating segments;
Record new orders for products and services of $1.43bn and record year-end funded backlog of $1.31bn;
Completion of the integration of our fiscal 2004 acquisition of
Integrated Defense Technologies, Inc. (IDT) and the sale of two former
IDT units operating in non-core business areas;
Completion of an acquisition during the year that broadened our thermal imaging soldier systems product line and customer base; and
Completion of an additional $200 million bond offering of 6-7/8 percent senior subordinated notes due 2013, which were priced at 105 percent of the principal amount and issued as additional debt

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