aerospace and defense quarterly update - kippsdesanto

Fall 2012

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(1) Office of Management and Budget Report Pursuant to the Sequestration Transparency Act of 2012 2


Fall 2012

Operational / Funding Environment In one of the hardest fought elections in recent history, the Democratic Party maintained control of both the White House and Senate. The election has important implications for the aerospace / defense and government services sectors. Uncertainty over budgetary issues persist as lawmakers face major challenges ahead. Leaders from both parties have indicated they are prepared for heavy negotiations over the coming months in an effort to avoid the “fiscal cliff” with regard to sequestration and the expiration of Bush-era tax cuts. The re-election of Obama suggests defense spending will likely decline, but the path to these defense cuts remains a question. In its FY2013 – 2017 plan, the Administration had called for relatively flat defense budgets with a slight decline over the five years at a CAGR of (0.9%). This can be seen as a best-case scenario moving forward, as it does not take into account the effects of sequestration or a possible budget deal. Given the split Congress and the lame-duck session, reaching an agreement that avoids sequestration is far from certain. If, however, a compromise is reached, defense spending is likely to decline, but not to extreme levels. Attempts to drastically reduce defense spending as a means of avoiding sequestration are likely to be opposed by the House of Representatives, which remains under Republican control after the election. On the other hand, any proposal lacking defense cuts is likely to be blocked by the Senate and the Administration. Thus, if a “grand bargain” on the budget is reached, it will likely see defense spending levels similar to those in the President’s original proposal. Further, if defense cuts do occur, it remains unclear what agencies and programs will be affected and to what extent. Under sequestration, all programs and projects that are not deemed exempt by the President would be cut evenly, facing a projected 9.4% reduction

(1). However, if an agreement avoiding automatic cuts is reached, which the

Administration has stated is a priority coming out of the election, then certain programs are likely to get hit harder than others. The President, in announcing his budget proposal earlier in the year, indicated a funding shift away from outdated, legacy systems and equipment, while unmanned systems, counterterrorism, and cybersecurity would remain priority areas in the proposed military budget.

This stagnant budget environment also suggests continued growth challenges for government services firms. Federal IT services spending is forecasted to remain flat at roughly $60 billion per year through 2017. As a result, agencies will continue to need to do more with less and require the same from their contracting partners. In this spirit, one area of particular focus is procurement reform. For example, the GSA is reorganizing and simplifying supply schedules to drive efficiencies. According to the GSA’s Director of Acquisition Operations, the agency may group schedules into similar fields and will move towards a “demand-based model,” effectively consolidating current schedules deemed obsolete. Other reforms include the Small Business Administration (“SBA”) raising the revenue threshold qualifying contractors to pursue set-asides. As the budgetary pressures continue to intensify, this change may encourage increased small business participation as a way to keep pricing lower. One recent example of a large contract going small is the $851 million U.S. Air Force ETASS II that was recently awarded to five small businesses after six years of being held by a large.

Near-Term Congressional Timeline & Upcoming Challenges

Dem.44%

Rep.56%

Dem.51%

Ind.2%

Rep.47%

Dem.46%

Rep.54%

Dem.53%

Ind.2%

Rep.45%

20132012

Nov 6:

Re-election of

President ObamaJan 20 – 21:

Inauguration Day

Lame-Duck Session of 112th Congress 113th Congress

Senate

House of

RepresentativesSenate

House of

Representatives

Administration and Congress Work to Avoid Fiscal Cliff

Jan 1: “Fiscal Cliff”

• Bush-era Tax Cut Expirations

• Sequestration

Spring

• New Debt Ceiling is Reached

(1) As of June 30, 2012

(2) Represents only the Defense, Space, & Security Segment of Boeing 3


Fall 2012

Capital Markets and Public Market Valuation Trends

In keeping with the broader market, aerospace and defense shares have seen relatively flat performance overall despite some volatility over the past three months. Continued uncertainty within the marketplace over macroeconomic variables, such as the fiscal cliff, elections, and sequestration, has been a drag on stocks, especially in the defense industry, with shares of the large primes up only 0.8% over the last three months. This uncertainty has been a theme throughout the earnings season, with a number of firms offering muted outlooks for the coming year. Some firms, such as Rockwell Collins, go so far as to explicitly assume sequestration in their guidance. Such concerns are somewhat balanced by positive earnings reports from a number of defense contractors including Raytheon and Lockheed Martin, who beat analyst expectations. Such results, however, do not necessarily portend a healthy environment. Defense companies have relied largely on operating improvements and margin expansion in order to drive share performance. As illustrated in the table below, defense contractors have been effectively managing their bottom lines despite pressure on their top lines. Raytheon, for example, beat EPS estimates despite lower sales for the quarter. Lockheed Martin also reported decreased revenue for the quarter and forecasted a mid-single-digit decline in revenue for 2013. This theme is consistent with the 2Q12 earnings season which focused on diversification and operating efficiencies in order to counter the negative effects of shrinking worldwide defense spending. Despite underperforming the broader market for the past year, aerospace shares have outperformed the S&P 500 over the past three months, returning 3.4% over this period. Commercial OEMs have a positive outlook, with third quarter aircraft deliveries for Boeing and Airbus growing 17.3% and 8.6%, respectively, resulting in anticipated growth for OEM suppliers. However, the aerospace industry is somewhat tempered by the business jet sector and aftermarket suppliers. As we saw firsthand at the NBAA conference in Orlando, FL from October 30

th to November 1

st, the

conference was subdued, as industry players acknowledge that a long-awaited rebound in the business jet sector is apparently still in a holding pattern. As an example, Honeywell forecasts 2013 to be similar to its 2012 forecast of 680 – 720 new business jets, demonstrating a relatively flat outlook. Aftermarket suppliers anticipate slowing growth rates, with several players, including BE Aerospace and Honeywell, specifically citing slowing growth concerns in earnings reports. The aftermarket outlook is partly driven by a slowdown forecasted for air traffic growth, with September air traffic increasing only 0.8% versus a 2.4% increase in August.

Public government services shares have also faced continued headwinds this quarter, as Federal budget uncertainty has magnified the general market downturn for this segment. Government services firms generally reported organic revenue declines and lower than expected margins for 3Q12. Moreover, the peer group generally has yet to factor sequestration into their forward guidance, heightening analysts’ and investors’ caution. Of note, ICF (share price down 15.7% in 3Q12) showed relatively strong earnings among the group; however, this was largely based on strong commercial growth. CACI (down 5.9% in 3Q12 YTD) also delivered better than expected earnings, helped by top-line growth from acquisitions. CACI has since announced its intent to forgo near-term dividends in lieu of its acquisition strategy, a deviation from peers such as ManTech and SAIC that have turned to dividends to help drive shareholder value. The most notable announcement of 3Q12 was SAIC’s planned split into two publicly traded companies – technical services ($4 billion of pro forma revenue) and IT solutions ($7 billion of pro forma revenue). SAIC anticipates the split will allow both companies to pursue a broader scope of work clearing select OCI and better positioning each company for future growth from a market and cost / rate perspective.

Relative Stock Price Performance As of November 7, 2012

Defense Primes Margin Performance As of September 30, 2012

EBIT Margin

2010 2011 2012YTD Δ ('10 - '12)

10.0% 12.4% 12.3% 2.3%

10.4% 11.7% 12.4% 2.0%

8.7% 8.1% 9.5% 0.8%

8.6% 12.2% 9.3% 0.7%

9.0% 9.9% 9.5% 0.5%

12.2% 12.0% 11.7% (0.5%)80

85

90

95

100

105

110

115

120

Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12

Defense Primes Aerospace Government Services S&P 500

4.5%

10.8%

10.6%

7.6%

Last 12 Months

(1)

(2)

(1) Capital IQ, company filings, and KippsDeSanto research 4


Fall 2012

M&A Trends and Activity

With 179 aerospace, defense, and government services transactions announced in the first three quarters of 2012, compared with 174 in the same period of 2011, overall M&A volume has picked up slightly compared to 2011. Notably, the 74 deals announced in the aerospace sector in the first three quarters of 2012 outpaced the same period in every year since 2008. Defense and government services M&A volume in the first three quarters was at its lowest level since 2009, with 105 transactions announced. The uncertainty surrounding sequestration and reduced financial performance stemming from reduced contracting activity have contributed to the drop in M&A activity in the defense and government services sectors. With the re-election of President Obama, the industry has a bit more clarity on the next four years and can forge ahead with implementing appropriate business strategies, including M&A as a means for growth.

Over the last few months, the proposed merger between BAE and EADS was the talk of the industry. The deal would have created the world’s largest aerospace and defense firm. Despite the deal’s commercial logic, it was thwarted by political deadlock between the UK, French, and German governments. Amidst reductions in defense spending and other macroeconomic challenges, the potential for further attempts at consolidation of the defense industrial base exists as large manufacturers experience organic growth challenges and seek supply chain consolidation and new avenues of growth utilizing strong balance sheets. While some large defense players have been noticeably quiet on the acquisition front (e.g., Northrop Grumman), others have taken a more opportunistic and proactive view. General Dynamics, for example, has made six acquisitions in 2012 across its portfolio, in areas as diverse as surface ship MRO (Earl Industries), rocket tubes (Gayston), and cybersecurity (Fidelis Security). Furthering a trend that began in earnest in late 2011, aerospace M&A activity has continued to be strong. On September 14

th, The Carlyle Group announced its acquisition of fixed base operator Landmark Aviation from GTCR and

Platform Partners. On September 17th, TransDigm Group continued its acquisition streak with the announcement that it

had acquired Aero-Instruments Company, a manufacturer of highly engineered air data sensors for new and aftermarket aircraft applications for $35 million. United Technologies Corp.’s Goodrich announced two divestitures in October. Safran, a French aero-engine and equipment maker, announced its pending acquisition of the electrical power systems business of Goodrich on October 16

th for €310 million, or 2.00x 2012 expected revenue, to contribute to

its “all-electric aircraft” strategy. Precision Castparts Corp. has completed seven acquisitions in 2012 and was quoted to have an “extremely full” M&A pipeline with plenty of headroom on its balance sheet for purchases. Another factor supporting continued aerospace M&A activity is that aircraft OEMs, particularly Airbus, have been encouraging the consolidation of their supply chain. As Airbus’ CFO commented recently, the consolidation “could help create more robust suppliers in terms of operational capability, their own supply-chain management capability, and at the end of the day, also their balance-sheet quality.” We predict that aerospace M&A activity should continue to be robust into 2013. Through September 30

th, government services M&A activity has lagged the last few years with just 59 announced deals

compared to 67 and 73 in 2011 and 2010, respectively. While buyers have continued to be extremely selective in their target candidates, deals are getting done. Strategic buyers are proactively shaping their portfolios through either acquisitions or divestitures to prepare for a hypercompetitive environment over the next few years. Both larger and midsized strategics have continued to prioritize the hot growth areas of health, cybersecurity, and intelligence, while private equity has shown a broader appetite to also include more diverse businesses. For example, Novetta has made two acquisitions to further expand its cybersecurity capabilities since being acquired by Arlington Capital – White Cliffs Consulting (cybersecurity / SIGINT) in August and International Biometric Group (identity intelligence) in September. KEYW announced two cybersecurity / intelligence acquisitions in September – Poole & Associates ($126 million) and Sensage Inc. ($35 million).

M&A Transaction Volume(1).

e

3138

43

24 20 2110

17 1924

1727

2115 17 17

11

2015

6

3225

26

24

1218

1410

1514

23

17

15

15

2432

19

37

18

4

24 21

26

20

9

20

2226

25 17

31 26

17 28

22

22

18

23

18

6

8784

95

68

41

59

46

53

5955

71 70

5358

63

71

48

80

51

16

0

10

20

30

40

50

60

70

80

90

100

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 Q409 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

Defense Aerospace Government

2009199 deals announced

2010255 deals announced 2011

245 deals announced

(1) Capital IQ, company filings, and KippsDeSanto research

(2) Company filings

(3) Congressional Research Service 5


Fall 2012

Defense Update

YTD Defense Earnings Update(1)

Similar to 2Q12 earnings releases, defense companies noted higher operating margins offsetting lower revenue for the quarter. Raytheon, Lockheed Martin, and Northrop Grumman all raised full-year 2012 EPS guidance, but lowered 2013 EPS estimates due to required pension funding. In addition, these three defense primes noted lower revenue assumptions in 2013. General Dynamics missed consensus estimates due to lower revenue and operating margins, as well as a write-down of inventory in the Information Systems & Technology business. All companies were cautious to mention impacts of the continuing resolution and the potential effects of sequestration in 2013. Those with greater international exposure, such as Raytheon, which has approximately a quarter of sales from non-U.S. customers, are relatively better positioned.

BAE & EADS Revenue by Product / Region(2)

2011 (%)

The “deal of the decade” between BAE Systems and EADS broke down under political objections between the UK, French, and German governments. Notably, the UK wanted its counterparts to agree to limit their influence in the merged firm in order to maintain BAE's strong working relations with the U.S. Diplomats also believe German chancellor Angela Merkel was unwilling to compromise on certain positions regarding the structure of the deal. BAE and EADS had agreed to a unified management and board structure and had identified cost and revenue synergies by the time the deal was cancelled. Ian King, BAE chief executive, said “We are obviously disappointed that we were unable to reach an acceptable agreement with our various government stakeholders.”

JLTV Program Awardee History Technology Development (“TD”) to EMD Phase

On August 22, 2012, the U.S. Army awarded three firm-fixed price JLTV Engineering and Manufacturing Development (“EMD”) contracts totaling approximately $185 million. The three awardees—AM General, Lockheed Martin, and Oshkosh—will receive funding of $28 million to $36 million for an initial 27 months, with funding up to the full contract amount provided in FY2013 and FY2014. After a year, each team will be required to deliver 22 fully-operating prototypes and contractor support for a 14-month government testing program, which will include blast, automotive, and user evaluation testing. Non-winning bidders—Navistar, BAE Systems, and General Tactical Vehicles—are permitted to continue developing a JLTV candidate at their own expense for final source selection submission. Potential issues for the program include questions about Australia’s commitment to the EMD phase, as well as Army plans for downsizing its overall tactical wheeled fleet by 60,000 vehicles.

EPS (Latest Quarter Releases)Defense Estimated Actual Earnings Release

$0.36 $0.37 25-Oct-2012

1.77 1.70 24-Oct-2012

1.87 1.98 1-Nov-2012

1.85 2.21 24-Oct-2012

1.70 1.73 24-Oct-2012

1.28 1.51 25-Oct-2012

HIGHER OPERATING MARGINS IN 3Q12; 2013 PENSION HEADWINDS

BAE / EADS FAILED MEGA-MERGER

JOINT LIGHT TACTICAL VEHICLE (“JLTV”) EMD PHASE AWARDED

(3)

Civil Aerospace Defense & Security Helicopters

Space Other

Europe Asia Pacific Middle East

North America Rest of the World

61%16%

11%

10%2%

EADS

2%

98%

BAE

41%

43%

7%

7%2%

Comb.40%

22%

11%

22%

5%

Comb.

42%

29%

10%

12%

7%

EADS

35%

8%

14%

41%

2%

BAE

BAE Systems / Navistar General Tactical

TD

In

cu

mb

en

ts

Lockheed Martin

EM

D B

idd

ers

EM

D A

wa

rde

es

AM General OshkoshLockheed Martin


(2) Company websites and company filings

(3) KippsDeSanto research 6


Fall 2012

Aerospace Update

YTD Aerospace Earnings Update(1)

BE Aerospace reported 3Q12 revenues of $766.7 million, a 20.6% increase over 3Q11. The Company’s EPS of $0.74 excluded a one-time debt payment, which when included drops EPS to $0.18. BE Aerospace raised FY2012 EPS guidance exclusive of further debt payments. Hexcel 3Q12 sales and profit grew 11.3% and 24.0%, respectively, over 2Q12. The Company noted that commercial aerospace sales rose 12.9% to $234.0 million due to new programs at Airbus and Boeing. Textron missed sales and EPS estimates due to lower-than-expected profits despite strong performance from Bell Helicopter in both commercial and military aircraft sales. UTC expects full-year revenue to be near the low end of its prior forecast of $58.0 to $59.0 billion. CEO Louis Chenevert noted the target reflects "the lack of recovery in the commercial aerospace aftermarket and continued uncertainty in the global economy."

20-Year Demand for New Aircraft(2)

Boeing and Airbus recently published their global market outlooks through 2031. Airbus forecasts new aircraft deliveries of 28,200 passenger and freighter airplanes, worth $4.0 trillion over the next 20 years. Over the same period, Boeing expects 34,000 new airplane deliveries valued at $4.5 trillion. Both companies indicated that roughly 40% of new deliveries will replace older, less efficient airplanes and about 60% of new deliveries reflect growth in emerging markets. Furthermore, both noted that slower growth rates compared to previous forecasts were mainly due to regional political turmoil, energy price volatility, and debt crises dampening global economic growth. Despite a sub-par economic outlook, long-term air traffic demand is expected to grow due to an expanding middle class, increasing urbanization, and economic growth in emerging regions.

Relative Commercial Aero Supplier Rev. Growth*

For Quarters Ended 1Q09 – 2Q12

* Commercial Aerospace Supplier Index: AIR, ATRO, BEAV, ESL, HEI, HXL, LMIA, LSE:

MGGT, LSE: SNR, SPR, TDG, TGI

Despite some recent macro uncertainty which has impacted aftermarket demand, commercial aerospace suppliers have experienced growth over the past few years. As the chart to the left demonstrates, total revenue for an index of commercial aerospace suppliers has grown relative to 1Q09. Backlog of orders for commercial planes is at an all-time high and airlines are replacing older planes for new, energy-efficient models. Moreover, Boeing noted its current backlog represents the most diverse customer set in its history while deferrals and cancellations this year remain at or below historical lows. With production rates expected to remain high for the foreseeable future, notwithstanding headwinds on aftermarket demand, aerospace suppliers should expect relatively clear skies ahead.

EPS (Latest Quarter Releases)Aerospace Estimated Actual Earnings Release

$0.70 $0.74 23-Oct-2012

1.12 1.35 24-Oct-2012

0.36 0.39 22-Oct-2012

1.11 1.32 26-Oct-2012

0.52 0.48 17-Oct-2012

1.17 1.37 23-Oct-2012

STRONG 3Q12 AEROSPACE EARNINGS, BUT MIXED FULL-YEAR OUTLOOKS

BOEING AND AIRBUS RELEASE GLOBAL MARKET FORECASTS

(2)

COMMERCIAL AEROSPACE SUPPLIERS: HEALTHY TAILWINDS

(3)

15,556

5,204

10,352

16,995

32,551

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Beginning 2012 2031

Retained Fleet Replacement Growth

27,347New Aircraft

19,890

5,780

14,110

19,890

39,780

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2011 2031

34,000New Aircraft

60

80

100

120

140

160

180

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12


(2) Committee for a Responsible Federal Budget and Congressional Budget Office

(3) Per the January 2012 survey by the 1105 Government Informational Group 7


Fall 2012

Government Services Update

YTD Government Services Earnings Update(1)

Slight increases followed most earnings announcements, as companies met Wall Streets’ muted expectations. Overall, contractors continue to navigate budget uncertainty and organic growth challenges through portfolio pruning, focused acquisitions and / or diversification into commercial markets. CACI met expectations largely due to its recent Delta Solutions acquisition, easing the Company’s third straight quarter of year-over-year organic revenue decline. Similarly, ICF offset organic 3Q12 revenue decline of 1.7% with a substantial increase in non-government business, as well as acquisitions. In contrast, DRC and NCI announced 3Q12 EPS of $0.27 and $0.14, respectively, beating estimates of $0.14 and $0.07. However, both companies excluded large goodwill impairment charges deemed necessary following significant share price decline.

Fiscal Impact of Expired and Activated Tax Policies(2)

Major policy changes, known as the fiscal cliff, are set to take effect at the end of the calendar year. Beyond the Bush-era Tax Cuts, major components include expiration of Alternative Minimum Tax patches and Federal spending reductions, most notably sequestration. While the Fiscal Cliff may significantly decrease the Federal deficit, according to conventional economic theory, these tax policies may also threaten economic recovery, estimated by some to cause a 3.9% reduction in GDP next year. Policy changes may even extend their reach into M&A, as contactors face even slower growth and higher taxes that limit available capital for reinvestment and innovation. Hopefully, Congress will quickly decide which elements will expire and which will be saved, introducing some stability to an otherwise fragile market environment.

Actual vs. Anticipated Cloud Savings(3)

As part of the 25 Point Federal IT Reform Plan, the General Services Administration (“GSA”) recently announced the transition of its email system to cloud services, a move that is anticipated to save $15 million over the next five years. However, according to the GSA Office of Inspector General, some of the anticipated savings cannot be verified. While the transition has decreased infrastructure costs, spending related to government staffing and contractor support still remains uncertain. The inability to accurately anticipate or account for the costs of migration to the cloud is becoming a common issue for government agencies, and some have realized fewer synergies than initially expected. Recent reports estimate the Federal Government will save $12 to $16 billion annually by shifting services to the cloud, but to realize these savings, the government has a major task ahead to better understand, track, and quantify the benefits.

EPS (Latest Quarter Releases)

Gov't Services Estimated Actual Earning Release

$0.38 $0.39 31-Oct-2012

1.49 1.49 - 31-Oct-2012

0.14 0.27 31-Oct-2012

0.47 0.48 2-Nov-2012

0.01 0.01 - 31-Oct-2012

0.68 0.66 1-Nov-2012

0.07 0.14 7-Nov-2012

0.33 0.32 30-Aug-2012

10

30

115

65

125

110

20

30

35

95

100

230

$30

$60

$150

$160

$225

$340

$0 $50 $100 $150 $200 $250 $300 $350

Doc Fixes

"Tax Extenders"

Jobs Measures

The BCA Sequester

AMT Patches

2001 / 2003 / 2010 Tax Cuts

Cost of Renewal

FY2013 FY2014

2001 / 2003 / 2010 Tax Cuts

AMT Patches

The BCA Sequester

Jobs Measures

“Tax Extenders”

Doc Fixes

.

Saved Less51%

As Expected

34%

Saved More 15%

0%

20%

40%

60%

80%

100%

Agencies anticipating cost savings

CONTRACTORS CONTINUE TO FACE REDUCED

ORGANIC GROWTH AND BUDGETARY HEADWINDS

ON THE EDGE OF THE FISCAL CLIFF: WILL CONGRESS STEP-UP?

QUANTIFYING THE SAVINGS OF CLOUD COMPUTING

(1) Company filings, Capital IQ, and KippsDeSanto research 8


Fall 2012

Public Company Trading Analysis(1) ($ in millions, except per share amounts)

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PDefense Primes 11/07/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

The Boeing Company $70.11 90.1% $52,868.3 $53,032.3 $80,601.5 $7,683.1 9.5% $87,225.3 $8,672.1 9.9% 0.66x 6.9x 0.61x 6.1x

Lockheed Martin Corporation 91.15 95.0% 29,312.7 31,184.7 45,675.2 5,023.4 11.0% 45,110.1 5,045.2 11.2% 0.68x 6.2x 0.69x 6.2x

General Dynamics Corp. 66.59 89.3% 23,510.9 24,561.9 32,315.9 4,427.3 13.7% 32,333.5 4,460.2 13.8% 0.76x 5.5x 0.76x 5.5x

Raytheon Co. 55.47 94.5% 18,297.7 19,423.7 24,544.9 3,253.6 13.3% 24,216.4 3,264.6 13.5% 0.79x 6.0x 0.80x 5.9x

BAE Systems plc 5.05 85.9% 16,385.7 17,701.6 30,644.7 3,742.7 12.2% 31,222.4 3,744.5 12.0% 0.58x 4.7x 0.57x 4.7x

Northrop Grumman Corporation 66.70 93.6% 16,371.1 16,777.1 25,186.0 3,472.8 13.8% 24,598.4 3,281.5 13.3% 0.67x 4.8x 0.68x 5.1x

Median 91.8% $20,904.3 $21,992.8 $31,480.3 $4,085.0 12.7% $31,778.0 $4,102.3 12.7% 0.67x 5.8x 0.69x 5.7x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PDefense Systems 11/07/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Rockwell Collins Inc. $53.86 87.6% $7,656.3 $8,100.3 $4,799.9 $1,112.7 23.2% $4,766.6 $1,100.9 23.1% 1.69x 7.3x 1.70x 7.4x

L-3 Communications Holdings Inc. 74.40 95.8% 6,998.0 10,438.0 13,042.6 1,587.4 12.2% 12,744.7 1,572.6 12.3% 0.80x 6.6x 0.82x 6.6x

Cobham plc 3.45 89.0% 3,722.5 4,563.4 2,813.8 646.8 23.0% 2,895.9 664.2 22.9% 1.62x 7.1x 1.58x 6.9x

FLIR Systems, Inc. 19.39 71.5% 2,909.0 2,732.7 1,443.5 379.7 26.3% 1,479.9 402.5 27.2% 1.89x 7.2x 1.85x 6.8x

Kongsberg Gruppen ASA 20.22 90.6% 2,411.8 2,315.5 2,746.8 394.0 14.3% 2,984.0 417.5 14.0% 0.84x 5.9x 0.78x 5.5x

Huntington Ingalls Industries, Inc. 43.46 88.8% 2,151.7 3,326.7 6,633.4 566.1 8.5% 6,576.4 615.9 9.4% 0.50x 5.9x 0.51x 5.4x

Exelis, Inc. 10.44 81.1% 1,958.5 2,547.5 5,502.1 705.2 12.8% 5,224.9 660.0 12.6% 0.46x 3.6x 0.49x 3.9x

Alliant Techsystems Inc. 58.28 92.6% 1,903.8 2,772.0 4,381.2 572.3 13.1% 4,046.7 497.4 12.3% 0.63x 4.8x 0.69x 5.6x

Cubic Corporation 47.98 91.3% 1,282.8 1,055.7 1,334.7 141.0 10.6% 1,375.2 140.0 10.2% 0.79x 7.5x 0.77x 7.5x

AeroVironment, Inc. 21.80 65.6% 477.8 355.1 344.5 56.1 16.3% 364.8 59.6 16.3% 1.03x 6.3x 0.97x 6.0x

Median 88.9% $2,281.8 $2,752.4 $3,597.5 $569.2 13.7% $3,515.3 $556.7 13.3% 0.82x 6.5x 0.80x 6.3x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PDefense Electronics / Comm. 11/07/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Harris Corporation $48.25 92.4% $5,479.3 $7,133.4 $5,515.3 $1,218.3 22.1% $5,390.4 $1,141.3 21.2% 1.29x 5.9x 1.32x 6.3x

Teledyne Technologies Inc. 63.32 94.5% 2,336.3 2,959.8 2,094.1 313.1 15.0% 2,266.7 349.3 15.4% 1.41x 9.5x 1.31x 8.5x

Ultra Electronics Holdings plc 27.29 95.5% 1,883.5 1,990.5 1,285.1 224.3 17.5% 1,326.3 234.8 17.7% 1.55x 8.9x 1.50x 8.5x

ViaSat Inc. 37.95 76.2% 1,651.8 2,075.7 993.5 151.7 15.3% 1,181.4 256.3 21.7% 2.09x 13.7x 1.76x 8.1x

Orbital Sciences Corp. 13.15 83.9% 782.4 690.5 1,455.3 138.9 9.5% 1,624.8 158.9 9.8% 0.47x 5.0x 0.43x 4.3x

Comtech Telecommunications Corp. 25.35 71.1% 440.3 272.4 398.1 70.6 17.7% 389.8 75.2 19.3% 0.68x 3.9x 0.70x 3.6x

Mercury Computer Systems, Inc. 8.05 52.8% 259.5 229.0 242.7 29.6 12.2% 292.3 49.5 16.9% 0.94x 7.7x 0.78x 4.6x

Median 83.9% $1,651.8 $1,990.5 $1,285.1 $151.7 15.3% $1,326.3 $234.8 17.7% 1.29x 7.7x 1.31x 6.3x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PHomeland Security 11/07/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Smiths Group plc $17.11 95.7% $6,733.5 $7,987.2 $4,927.0 $1,028.8 20.9% $5,111.6 $1,112.6 21.8% 1.62x 7.8x 1.56x 7.2x

OSI Systems, Inc. 78.56 96.7% 1,570.5 1,510.6 837.3 95.1 11.4% 934.0 151.4 16.2% 1.80x 15.9x 1.62x 10.0x

Mine Safety Appliances Co. 37.64 84.9% 1,391.3 1,631.8 1,178.0 179.6 15.2% 1,248.3 197.2 15.8% 1.39x 9.1x 1.31x 8.3x

Analogic Corporation 72.56 85.7% 896.1 709.1 541.1 84.1 15.5% 592.6 95.9 16.2% 1.31x 8.4x 1.20x 7.4x

Ceradyne Inc. 34.94 99.3% 840.2 663.4 479.4 81.3 17.0% 506.2 91.2 18.0% 1.38x 8.2x 1.31x 7.3x

Smith & Wesson Holding Corporation 10.37 92.3% 679.2 670.0 525.2 117.6 22.4% 549.9 128.8 23.4% 1.28x 5.7x 1.22x 5.2x

Federal Signal Corp. 5.50 82.2% 342.9 569.3 855.0 58.0 6.8% 863.0 69.0 8.0% 0.67x 9.8x 0.66x 8.3x

Median 92.3% $896.1 $709.1 $837.3 $95.1 15.5% $863.0 $128.8 16.2% 1.38x 8.4x 1.31x 7.4x



Fall 2012

Public Company Trading Analysis, cont.(1) ($ in millions, except per share amounts)

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PAerospace Systems 11/07/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

TransDigm Group Incorporated $138.00 90.4% $7,101.2 $10,431.7 $1,780.9 $841.9 47.3% $1,964.9 $940.1 47.8% 5.86x 12.4x 5.31x 11.1x

Zodiac Aerospace SA 102.19 92.7% 5,524.1 6,933.4 4,583.5 758.7 16.6% 4,997.5 851.0 17.0% 1.51x 9.1x 1.39x 8.1x

Meggitt PLC 6.05 90.8% 4,745.5 5,989.1 2,629.9 744.0 28.3% 2,793.4 807.6 28.9% 2.28x 8.1x 2.14x 7.4x

B/E Aerospace Inc. 44.29 91.4% 4,603.6 6,169.2 3,050.0 619.5 20.3% 3,387.0 706.8 20.9% 2.02x 10.0x 1.82x 8.7x

Triumph Group, Inc. 65.14 96.7% 3,257.2 4,319.2 3,620.4 647.6 17.9% 3,825.2 707.5 18.5% 1.19x 6.7x 1.13x 6.1x

Esterline Technologies Corp. 57.89 75.3% 1,786.4 2,515.4 2,012.4 357.1 17.7% 2,110.5 372.0 17.6% 1.25x 7.0x 1.19x 6.8x

HEICO Corp. 39.00 78.7% 1,782.1 2,080.3 912.5 197.0 21.6% 992.1 220.3 22.2% 2.28x 10.6x 2.10x 9.4x

AAR Corp. 14.42 60.9% 558.0 1,224.4 2,190.1 231.7 10.6% 2,247.6 230.9 10.3% 0.56x 5.3x 0.54x 5.3x

Astronics Corporation 22.13 58.2% 285.0 310.8 268.0 42.0 15.7% 295.0 50.8 17.2% 1.16x 7.4x 1.05x 6.1x

Median 90.4% $3,257.2 $4,319.2 $2,190.1 $619.5 17.9% $2,247.6 $706.8 18.5% 1.51x 8.1x 1.39x 7.4x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PAerospace Structures 11/07/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Precision Castparts Corp. $173.37 96.6% $25,199.0 $25,246.0 $8,099.7 $2,286.1 28.2% $9,328.0 $2,637.1 28.3% 3.12x 11.0x 2.71x 9.6x

Hexcel Corp. 24.52 87.5% 2,445.6 2,698.8 1,589.1 310.9 19.6% 1,737.0 341.1 19.6% 1.70x 8.7x 1.55x 7.9x

Spirit AeroSystems Holdings, Inc. 15.19 58.4% 2,182.5 3,140.4 5,366.0 667.8 12.4% 6,087.0 782.7 12.9% 0.59x 4.7x 0.52x 4.0x

Senior plc 3.19 91.9% 1,292.3 1,409.7 1,192.2 193.4 16.2% 1,270.3 209.3 16.5% 1.18x 7.3x 1.11x 6.7x

LMI Aerospace Inc. 19.94 93.1% 233.3 227.7 290.3 44.0 15.1% 328.9 49.8 15.1% 0.78x 5.2x 0.69x 4.6x

Median 91.9% $2,182.5 $2,698.8 $1,589.1 $310.9 16.2% $1,737.0 $341.1 16.5% 1.18x 7.3x 1.11x 6.7x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PGovernment Services 11/07/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

SAIC, Inc. $11.08 78.0% $3,787.5 $4,331.5 $11,137.5 $932.5 8.4% $10,914.5 $937.3 8.6% 0.39x 4.6x 0.40x 4.6x

QinetiQ Group Plc 3.22 96.8% 2,085.8 2,294.5 2,286.5 305.1 13.3% 2,285.6 287.1 12.6% 1.00x 7.5x 1.00x 8.0x

Booz Allen Hamilton 13.65 71.0% 1,853.2 3,101.9 5,781.1 514.7 8.9% 5,590.5 512.1 9.2% 0.54x 6.0x 0.55x 6.1x

CACI International Inc. 51.93 82.3% 1,185.4 1,818.3 3,761.3 345.0 9.2% 3,790.4 346.7 9.1% 0.48x 5.3x 0.48x 5.2x

ManTech International Corporation 24.88 67.0% 920.6 911.7 2,661.5 239.2 9.0% 2,581.0 218.7 8.5% 0.34x 3.8x 0.35x 4.2x

The KEYW Holding Corporation 12.55 87.3% 438.9 386.7 245.0 31.5 12.9% 354.3 48.3 13.6% 1.58x 12.3x 1.09x 8.0x

ICF International Inc. 21.15 72.4% 413.1 522.0 941.1 92.9 9.9% 976.0 99.0 10.1% 0.55x 5.6x 0.53x 5.3x

Engility Holdings, Inc. 18.81 90.7% 306.7 653.9 1,600.0 112.2 7.0% 1,433.7 125.0 8.7% 0.41x 5.8x 0.46x 5.2x

Kratos Defense & Security Solutions 5.32 68.3% 300.7 806.0 961.5 117.0 12.2% 1,038.4 138.0 13.3% 0.84x 6.9x 0.78x 5.8x

NCI, Inc. 5.42 40.8% 73.7 91.6 359.5 16.7 4.6% 338.5 15.8 4.7% 0.25x 5.5x 0.27x 5.8x

Dynamics Research Corporation 5.93 49.6% 61.2 157.8 321.7 31.0 9.6% 311.7 30.0 9.6% 0.49x 5.1x 0.51x 5.3x

Median 72.4% $438.9 $806.0 $1,600.0 $117.0 9.2% $1,433.7 $138.0 9.2% 0.49x 5.6x 0.51x 5.3x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PEngineering & Construction 11/07/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Babcock International Group plc $15.26 95.8% $5,491.0 $6,491.4 $5,157.8 $642.6 12.5% $5,511.9 $648.8 11.8% 1.26x 10.1x 1.18x 10.0x

Jacobs Engineering Group Inc. 39.69 82.4% 5,149.4 4,805.5 11,262.3 707.2 6.3% 12,449.8 769.1 6.2% 0.43x 6.8x 0.39x 6.2x

URS Corporation 36.07 76.5% 2,771.9 4,768.9 11,018.2 871.3 7.9% 12,399.4 962.8 7.8% 0.43x 5.5x 0.38x 5.0x

AECOM Technology Corporation 22.11 91.1% 2,500.1 3,228.1 8,370.1 506.0 6.0% 8,307.7 564.3 6.8% 0.39x 6.4x 0.39x 5.7x

Tetra Tech Inc. 25.80 92.1% 1,642.2 1,645.1 2,061.0 230.8 11.2% 2,193.0 257.0 11.7% 0.80x 7.1x 0.75x 6.4x

Median 91.1% $2,771.9 $4,768.9 $8,370.1 $642.6 7.9% $8,307.7 $648.8 7.8% 0.43x 6.8x 0.39x 6.2x



Fall 2012

Select Recent Aerospace / Defense M&A(1) ($ in millions)

Announce EBITDA EV / LTM

Date Buyer / Investor Target Target Description EV Revenue EBITDA Margin Revenue EBITDA

11/05/12 Thales S.A. Gentex Corporation

Visionix Business

Segment

Develops proprietary helmet mounted display systems for aerospace

and defense customers and provides "InterSense" inertial tracking and

sensor fusion technology

NA NA NA NA NA NA

10/31/12 Rheinmetall AG Sydac Pty Ltd. Defense

Operations Business

Models dynamic systems that have a process, kinematic, or motion

components, such as vehicles, mechatronic devices, defense

capabilities, and industrial production processes

NA $6.3 NA NA NA NA

10/26/12 Saab AB MEDAV GmbH Develops and embeds digital signal processing systems such as radio

measurement techniques in the field of radio monitoring and COMINT

$44.0 28.3 NA NA 1.55x NA

10/25/12 TransDigm Group

Incorporated

Goodrich Pump &

Engine Control

Systems, Inc.

Designs, develops, manufactures, and sells fuel pumps and controls to

the commercial and military helicopter OEM engine manufacturers

236.0 195.0 NA NA 1.21x NA

10/16/12 Safran SA Goodrich Electric Power

Systems

Provides aerospace electrical power systems including generators,

distribution systems, motors, and drive systems

400.0 200.0 NA NA 2.00x NA

10/09/12 HEICO Corp. Action Research

Corporation

Provides aerospace and industrial repair, assembly, and engineering

services, and provides new product design/redesign and reverse

engineering services

NA NA NA NA NA NA

10/04/12 Mitsubishi UFJ

Lease & Finance

Jackson Square

Aviation, LLC

Provides Pre-Delivery Payment (PDP) financing, portfolio servicing,

asset management, and sale and leaseback services for air lines

1,275.0 NA NA NA NA NA

10/03/12 BCF Solutions, Inc. RedBlack

Communications, Inc.

Offers communication switches, power systems, transceiver cases, and

radio cases for military communications

2.5 NA NA NA NA NA

10/01/12 3M Co. Ceradyne, Inc. Manufactures technical ceramic products, ceramic powders, and

components, including ceramic armor, combat helmets, and other

military and non-military applications

673.4 513.5 $120.9 23.6% 1.31x 5.6x

09/26/12 Npk

Uralvagonzavod

Oao

Motovilikha Plants JSC Manufactures metallurgical and military equipment including towed

guns, howitzers, gun and multiple-launch rocket systems, self-propelled

mortars, carrier mortars, towed howitzers, tank guns, and artillery

armaments

NA NA NA NA NA NA

09/21/12 Eurocopter SAS Heuliez Aéronatique Manufactures and designs swing and sliding doors, canopies, and air

frames for the rotorcraft industry, with capabilities including prototyping,

painting, and assembly

NA NA NA NA NA NA

09/21/12 LaSalle Capital

Group, L.P.

Savi Technology, Inc. Provides RFID tags and readers to the DoD to track objects and provide

logistics information

NA NA NA NA NA NA

09/20/12 Oklahoma Financial

Capital Corporation

Quality Aircraft

Accessories, Inc

Provides repairs, overhauls, and exchanges for general aviation aircraft

engine accessories and aircraft components

NA NA NA NA NA NA

09/17/12 TransDigm Group

Incorporated

Aero-Instruments

Company

Offers electrically heated pitot probes, pitot-static probes, static

pressure ports, angle of attack sensors, temperature sensors, and flight

test equipment for the aerospace and defense industries

35.0 NA NA NA NA NA

09/14/12 The Carlyle Group Landmark Aviation Operates a network of fixed base operations and provides MRO,

avionics installation and modification, and parts replacement services

NA NA NA NA NA NA

09/13/12 CoorsTek. Inc. Advance Manufacturing

Technologies, Inc.

Provides custom fabrication, welding, and machining services, including

to the defense and locomotive components

NA NA NA NA NA NA

09/03/12 Rheinmetall

Defense

EMDigital, stabilized

weapon platform

activities

Develops and produces intelligent, remote controlled naval weapon

stations, platforms, and operational consoles

NA NA NA NA NA NA

09/03/12 Graphic Plc Printca Denmark A/S Designs, develops, produces, and sells printed circuit boards primarily

for space, aerospace, and defense industries

NA NA NA NA NA NA

08/31/12 Magellan

Aerospace Corp

John Huddleston

Engineering

Supplies precision machined aerospace components to the aerospace

and defense industries

NA 25.0 NA NA NA NA

08/27/12 Arlington Capital

Partners

Aero-Metric, Inc. Provides photogrammetric and geospatial services, including aerial

photography, digital elevation models, enterprise geographic information

systems and solutions, topographic mapping, and satellite imagery

services

NA NA NA NA NA NA

08/27/12 General Dynamics Gayston Corp. Manufactures and supplies precision metal and aluminum products,

including shell casings, ammunition components, and assemblies for the

U.S. military

NA NA NA NA NA NA

08/22/12 Moog Inc. Tritech International Ltd. Produces acoustic sensors, video cameras, and mechanical tooling

equipment for professional underwater markets

33.2 19.0 NA NA 1.75x NA

08/20/12 Lord Coporation MicroStrain, Inc. Manufactures micro-displacement sensors, wireless network sensors,

energy harvesting sensors, inertial sensors, and signal conditioners

NA 13.5 NA NA NA NA

08/16/12 Wencor, LLC AmSafe Aftermarket

Spares & Services

Distributes filters, lighting, battery products, nets, communications and

safety equipment, and additional FAA Parts Manufacturer Approval

(PMA) consumable parts

NA NA NA NA NA NA



Fall 2012

Select Recent Aerospace / Defense M&A, cont.(1) ($ in millions)



08/10/12 Cornerstone

Capital Holdings,

LLC and Merit

Capital

RSA Engineered

Products, LLC (Meggitt

Simi Valley)

Provides engineered components for military and commercial aircraft

OEMs, systems integrators, and various government entities

NA NA NA NA NA NA

08/08/12 LMI Aerospace Inc. TASS, Inc. Provides engineering solutions to aircraft manufacturers, airlines, MRO

services companies, and leasing companies worldwide

NA $17.0 NA NA NA NA

08/04/12 Global Invacom

Group Limited

The Waveguide Solution

Limited

Manufactures waveguide solutions for ship, aircraft, satellite, medical,

radar, and communication systems

$8.1 6.4 NA NA 1.26x NA

08/02/12 HEICO Aerospace

Holdings Corp.

CSI Aerospace, Inc. Provides maintenance, repair and overhaul services of pitot tubes, pitot-

static tubes and total air temperature sensors

NA NA NA NA NA NA

07/31/12 Astronics

Corporation

Max-Viz, Inc. Designs, develops, and manufactures enhanced vision systems for the

civilian and military aviation industry

10.0 5.4 NA NA 1.85x NA

07/30/12 GE Aviation Austin Digital Supplies flight operations data analysis with event measurement

systems and data collection hardware

NA NA NA NA NA NA

07/26/12 Renault Trucks

Defense

Panhard Général

Défense SA

Manufactures a full range of armored vehicles for military support,

safety, and contact combat

NA 99.3 NA NA NA NA

07/24/12 Polaris Industries,

Inc.

Resilient Technologies,

LLC

Provides high-performance non-pneumatic tires to allow continuous

mobility for the U.S. military

NA NA NA NA NA NA

07/23/12 DigitalGlobe, Inc. GeoEye, Inc. Provides geospatial information and insight for decision makers and

analysts worldwide

900.0 360.3 $175.1 48.6% 2.50x 5.1x

07/23/12 GenCorp Inc. Pratt & Whitney

Rocketdyne, Inc.

Offers propulsion products, including launch vehicles, missile defense,

and hypersonic propulsion

550.0 792.0 149.0 18.8% 0.69x 3.7x

07/20/12 AeroTech

Corporation

Tactical Air Defense

Services, Inc.

Offers tactical flight training, aircraft maintenance, refueling, and

disaster relief services

NA NA NA NA NA NA

07/17/12 Precision Castparts

Corp.

Heroux-Devtek

Aerostructure and

Industrial Products

Manufactures a wide variety of components and assemblies, including

aerostructures operations specializing in turning, milling, and drilling

295.3 124.8 26.8 21.5% 2.37x 11.0x

07/16/12 Francisco Partners

Management LLC

Cross Match

Technologies, Inc.

Manufactures multimodal biometric identity management systems to

capture and process the physiological characteristics of individuals

NA NA NA NA NA NA

07/13/12 EADS Deutschland

GmbH

Carl Zeiss Optronics

GmbH

Develops, manufactures, and distributes optical and optronic products,

subsystems, and systems for army, navy, and air force environments

NA 200.0 NA NA NA NA

07/13/12 Equistone Partners

Europe

Euroavionics

Navigationssystems

GmbH & Co. KG

Designs, develops, and manufactures task management and navigation

systems for helicopters

NA NA NA NA NA NA

07/05/12 GKN plc Volvo Aero AB Develops and produces components for aircraft, rocket, and gas

turbine engines

981.1 981.1 135.1 13.8% 1.00x 7.3x

07/02/12 ITT Exelis

Geospatial Systems

Space Computer

Corporation

Produces real time signal processing systems, software and algorithms

for the full exploitation of hyperspectral sensor data

NA 14.1 NA NA NA NA

07/01/12 Precision Castparts

Corp.

Klune Industries, Inc. Manufactures doors, nacelles, and aerostructures for commercial

aerospace, as well as fuel tanks, air frames, armament systems, and

rotors for military platforms

NA NA NA NA NA NA

06/28/12 General Dynamics Ship Repair & Coatings

Division of Earl

Industries, LLC

Provides ship maintenance, modernization and repair to frigates and

other classes of naval ships

NA NA NA NA NA NA

06/26/12 Macdonald

Dettwiler &

Associates Ltd.

Space Systems / Loral,

Inc.

Focuses on the design, manufacture, and integration of satellites and

satellite systems for commercial and government customers worldwide

875.0 1,100.0 153.0 13.9% 0.80x 5.7x

06/25/12 BE Aerospace Inc. Interturbine

Technologies and

Interturbine Logistics

Solutions and

Supplies consumable materials (chemicals), composites, raw and semi-

finished materials to the aerospace and high-tech industry

249.9 NA NA NA NA NA

06/14/12 Wynnchurch

Capital, Ltd.

Northstar Aerospace

Inc.

Manufactures flight-critical parts for military and commercial aircraft

applications, and non-flight-critical parts for commercial aircraft

primarily in the U.S., Canada, and Europe

70.0 213.4 26.1 12.2% 0.33x 2.7x

06/13/12 Safran SA Optovac Mecanica e

Optoeletronica

Manufactures optronic and night vision equipment NA NA NA NA NA NA

06/12/12 Saab AB Taby Displayteknik AB Develops simulator solutions such as the Joint Fires Synthetic Training

for virtual joint exercises with the various weapons systems used by air,

naval, and ground forces

NA NA NA NA NA NA



Fall 2012

Select Recent Government Services M&A(1) ($ in millions)



10/25/12 The Boeing

Company

Miro Technologies, Inc. Provides enterprise software solutions to manage maintenance, supply,

repair, and performance based logistics for assets operating in air,

space, sea, and ground environments

NA NA NA NA NA NA

10/22/12 Raytheon Co. Teligy Inc. Provides custom software and hardware design, development, and

testing services for both commercial and defense hardware systems

focused on communications and networking

NA NA NA NA NA NA

10/19/12 Fulcrum IT

Services Company,

LLC

Corbin Company Provides management consulting services in the areas of IT, financial

services, and human resources to clients in the public and private

sectors

NA NA NA NA NA NA

10/16/12 Booz Allen Hamilton

Holding

Corporation

ARINC Defense

Systems Engineering &

Support Division

Provides aviation and maritime engineering, weapons modernization

and sustainment, systems engineering and integration, and cyberspace

solutions to military and homeland security clients

$154.0 NA NA NA NA NA

10/03/12 Computer Sciences

Corporation

42Six Solutions, LLC Provides cloud processing and data analytics to consolidate structured,

semi-structured, and unstructured data onto a single shared platform

NA NA NA NA NA NA

09/21/12 LaSalle Capital

Group, L.P.

Savi Technology, Inc. Provides asset management solutions and services for public sector

and commercial supply chain customers in the U.S. and internationally

NA NA NA NA NA NA

09/20/12 Novetta Solutions,

LLC

International Biometric

Group, LLC

Provides biometrics and identity intelligence services and solutions for

government and commercial organizations worldwide

NA NA NA NA NA NA

09/13/12 KEYW Holding

Corporation

Sensage, Inc. Provides security information and event management solutions to

identify new threats, improve cyber-security defenses, and achieve

industry and regulatory compliance

24.0 NA NA NA NA NA

09/11/12 Dominion Business

Solutions, Inc.

Eigen X, LLC Provides CRM, Workflow, Analytical, and Data Management solutions to

grow clients' Big Data ecostructure

NA NA NA NA NA NA

09/10/12 KEYW Holding

Corporation

Poole & Associates, Inc. Provides mission-centric systems and software engineering services to

the U.S. Intelligence Community

126.0 $59.8 NA NA 2.11x NA

09/06/12 AMERICAN

SYSTEMS

Corporation

SAIC Test and

Evaluation Business

Provides highly technical solutions that enable flexible, rapid, and

relevant responses to a multitude of national security and warfighter-

focused test and evaluation requirements

NA NA NA NA NA NA

09/04/12 Vision

Technologies Inc.

Government

Telecommunications,

Inc.

Provides telecommunication infrastructure services that include the

design, provisioning, installation, and maintenance of networks

NA NA NA NA NA NA

08/31/12 Electronic

Consulting

Services, Inc.

iLuMinA Solutions, Inc. Provides Federal program management, IT infrastructure design and

development, ERP software implementations, and supply chain

management, mainly with Department of Defense clientele

NA NA NA NA NA NA

08/30/12 Commonwealth

Technology, Inc.

Black Oak Technology

Group

Provides technology vulnerability, computer network defense, and

software reverse-engineering skills to meet client cybersecurity needs

NA NA NA NA NA NA

08/27/12 Novetta Solutions,

LLC

White Cliffs Consulting,

LLC

Provides discovery analysis and engineering advisory services for

SIGINT and cyber mission-execution within the U.S. Intelligence

Community

NA NA NA NA NA NA

08/20/12 GD Advanced

Information

Systems, Inc.

Fidelis Security

Systems, Inc.

Provides data leakage prevention and cyber attack prevention solutions

for government, military, and commercial enterprise customers

NA NA NA NA NA NA

13


Fall 2012

Select Recent KippsDeSanto & Co. Advised Transactions

has been acquired by

February 2011


BTS, LLC


the management team

of

a subsidiary of

July 2011


Technology

Innovation Unit

August 2011


August 2011


August 2011


November 2011

November 2011

a portfolio company of

has merged with

February 2012


a portfolio company of

March 2012


November 2012


July 2012


July 2012

Arrow Electronics

`

About KippsDeSanto & Co.

KippsDeSanto is an investment banking firm focused on delivering M&A and financing expertise. Our solutions are focused on the technology sectors we know – Aerospace / Defense and Government Services. We are recognized for our depth of industry experience, knowledge of sector-specific transaction drivers, and long-standing relationships with industry participants.

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Eric W. Islinger Associate [email protected]

Brian T. Tunney Associate [email protected]

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Jon Yim Director [email protected]

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public sources believed to be reliable. KippsDeSanto & Co. makes no representation as to the accuracy or completeness of such information. Opinions, estimates, and analyses in this newsletter constitute the current judgment of the author as of the date of this newsletter.

They do not necessarily reflect the opinions of KippsDeSanto & Co. and are subject to change without notice. This newsletter is meant to impart general knowledge about a sector or industry and is not expected to provide reasonably sufficient information upon which to

make any investment decisions. KippsDeSanto & Co. is not affiliated with any of the companies identified in this newsletter.

Unless otherwise described, the companies identified are also not affiliated with one

another.

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aerospace and defense quarterly update - kippsdesanto

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