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DRS TECHNOLOGIES ACQUIRES CODEM SYSTEMS

18 Apr 05. DRS Technologies, Inc. (NYSE: DRS – News) has acquired Codem Systems, Inc. in a stock purchase transaction valued at approximately $29m in cash, with additional consideration payable upon achievement of certain financial targets.

Established in 1972, Codem Systems is a privately-held business located in Merrimack, New Hampshire. It is a leading provider of signals intelligence (SIGINT) systems, network interface modules, and high-performance antenna control systems. Strongly positioned as a supplier of advanced technology products, Codem focuses on innovative solutions for communications and surveillance applications supporting the growing intelligence, military and homeland security markets. The company’s expertise is concentrated in systems engineering software and hardware development as well as end-user training.

“Codem enhances DRS’s position in intelligence and surveillance systems, while supporting greater access to emerging market opportunities, such as those related to homeland defense,” said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. “With a large installed base of products, longstanding customer relationships and an established position in growing markets, Codem builds on the existing domestic and international defense and government agency customer base within our C4I Group.”

Codem’s signal intelligence systems intercept, monitor and geographically locate radio and wireless signals. Its products, such as high-frequency (HF) SIGINT systems, are highly complementary to DRS’s core intelligence systems business and are employed in communications intelligence (COMINT), electronic warfare (EW) and radio spectrum management. Codem’s antenna controllers and monitoring software are used in satellite communications (SATCOM), remote sensing, tracking, telemetry, command and control, broadband wireless systems and ground surveillance, as well as in military communications on-the-move (COTM) applications. Like DRS’s intelligence and tactical systems, these product lines support Army ground force digital communications and direct broadcast satellite applications for ships and aircraft. Codem’s network access products contribute to the U.S. military’s transformation to a network-centric warfare environment and provide interoperability between modern network technologies and legacy transmission networks.

In its first twelve months of operation under DRS ownership, Codem is expected to be accretive to earnings and generate approximately $25m in annual revenues. DRS financed the acquisition by utilizing existing cash on hand. BB&T Capital Markets/Windsor Group, a division of Scott & Stringfellow, Inc., served as financial advisor to Codem.

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