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Integrated Defense Technologies, Inc. to Acquire BAE Systems
Surveillance and Intelligence Operation for $146 million
Leader in surveillance and intelligence products will
increase Integrated Defense’s participation in the intelligence
community and Homeland Security initiative
Acquisition expected to be accretive
Huntsville, Alabama, September 13, 2002
-- Integrated Defense Technologies, Inc., a NYSE listed company,
(NYSE: “IDE”) announced today that it has reached
a definitive agreement to acquire BAE SYSTEMS Advanced Systems
Gaithersburg, Maryland operation for $146 million in cash.
The transaction is expected to close in the first half of
the fourth quarter of 2002, and will be accretive to earnings
in 2003.
BAE SYSTEMS Gaithersburg operation, which employs over 300
people, including 96 engineers, is a leading designer and
manufacturer of high performance radio frequency (RF) surveillance
equipment used in signals intelligence applications. The operation
has a long history of supplying U.S. and allied government
agencies with high quality surveillance and intercept equipment,
and can trace its origins to Watkins-Johnson Company, a legacy
defense sector contractor. With 65-70% of its business sole-sourced,
its diverse and large installed product offering of over 300
unique products include receivers, tuners, demodulators, and
signal analyzers designed to perform signal intercept, identification,
location and analysis functions. The division is well-positioned
to benefit from the projected increases in intelligence spending
and information technology intended to transform the U.S.
military’s intelligence and Homeland Security efforts.
“BAE SYSTEMS Gaithersburg operation is consistent with
the other acquisitions we have made in building Integrated
Defense Technologies. The company is a leader in its markets,
has above average growth prospects, high margins, proprietary
technology, and diversifies our customer base by opening up
domestic and friendly foreign nations’ intelligence
agencies to our products,” stated Robert B. McKeon,
Chairman of Integrated Defense Technologies.
“In its first 12 months of operation within our Communications
and Surveillance Systems group, Gaithersburg is expected to
add approximately $81 million to our annual revenue and generate
$17 million in EBITDA. We believe the transaction will allow
us to further capitalize on industry trends focusing on increased
intelligence and surveillance capabilities,” added McKeon.
The Gaithersburg operation will be integrated into Integrated
Defense’s Communications and Surveillance Systems division,
which currently represents approximately 22% of the company’s
total revenue, but will represent over 35% of total revenue
after the acquisition. Integrated Defense’s Communications
and Surveillance Systems group produces systems for RF transmitters
including for the U.S. submarine fleet, microwave subsystems
for the Predator and Global Hawk UAVs, and signals intelligence
for U.S. and foreign government intelligence collection.
The products contained in the Gaithersburg business are clear
market leaders, particularly in the high performance tuner
and receiver segments. Together, these two segments represented
the majority of the division’s revenues in 2001. Furthermore,
BAE SYSTEMS Gaithersburg business holds strong positions in
important markets for specialized communications intercept
and analysis equipment.
With its receivers historically being its core product line,
the division successfully leveraged its cutting edge receiver
design capabilities to become the leading supplier of HF/VHF/UHF
signal surveillance tuners. Furthermore, Gaithersburg’s
expertise in digital signal processing (DSP) and software
applications in signals intelligence requirements has become
a significant part of the company’s future growth strategy.
Moreover, the Gaithersburg operation has emerged as a leading
provider of select surveillance subsystems, most notably its
“N” Channel, a ready-to-program system with direction
finding and communications intercept capability.
Thomas J. Keenan, Chief Executive Officer of Integrated Defense
Technologies said, “BAE SYSTEMS Gaithersburg operation
strongly complements our Communications and Surveillance Systems
division, and we see many technical synergies among the two
units. We believe the transaction will significantly broaden
our capabilities and technological expertise in the surveillance
and intelligence sector, while introducing us to new valuable
customer relationships. Furthermore, we envision leveraging
the acquired technologies and products of Gaithersburg for
use on other DoD platforms in which Integrated Defense currently
participates, including our work on the Army’s Future
Combat System or FCS.”
“Gaithersburg has an outstanding reputation for engineering
and development work for its customers. We plan to keep all
of the existing employees of this excellent company and, working
with the management team, develop new ways of serving our
customers, increasing sales, and growing the business in the
coming years.”
The transaction will be financed by available cash and an
add-on to Integrated Defense’s existing senior credit
facility, and is contingent upon Hart-Scott-Rodino and other
governmental approvals.
Integrated Defense Technologies will provide an on-line,
real-time webcast to further discuss the details of this announcement
at 10:30 AM ET today. Listeners may access the conference
call live over the Internet from a link, on our website’s
investor relations page, at www.Integrateddefense.com
or at www.companyboardroom.com.
The dial-in-number to access this operator-assisted call is
toll free 1-800-388-8975 or toll (International): 973-694-2225.
Integrated Defense Technologies is a leading developer and
provider of advanced electronics and technology products to
the defense and intelligence industries. Our products are
installed on or used in support of a wide array of military
platforms to enhance their operational performance or extend
their useful life. Our products are incorporated into approximately
250 programs, which, in turn, are installed on or support
over 275 platforms. Integrated Defense employs more than 1,600
people in the United States and Canada.
For more information on Integrated Defense Technologies visit
its website, www.Integrateddefense.com.
And for more information on Veritas Capital, the company’s
majority owner, visit www.veritascapital.com.
Forward-Looking Statements
This press release contains statements that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on current
expectations, estimates and projections about the Company's
business based, in part, on assumptions made by management.
These statements are not guarantees of future performance
and involve risks, uncertainties and assumptions that are
difficult to predict. Therefore, actual outcomes and results
may differ materially from what is expressed or forecasted
in such forward-looking statements due to numerous factors,
including those described above and the following: changes
in demand for the Company's products, product mix, the timing
of customer orders and deliveries, the impact of competitive
products and pricing, difficulties encountered in the integration
of acquired businesses and other risks discussed from time
to time in the Company's Securities and Exchange Commission
filings and reports. In addition, such statements could be
affected by general industry and market conditions and growth
rates, the availability of government funding, and general
domestic and international business and political conditions.
Such forward-looking statements speak only as of the date
on which they are made, and the Company does not undertake
any obligation to update any forward-looking statement to
reflect events or circumstances after the date of this release.
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