spring 2012 aerospace / defense and government services

Spring 2012

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McLean, Virginia 22102 703.442.1400

www.kippsdesanto.com

Aerospace / Defense and Government Services MarketView

(1) Source: Robert Hale’s “Fiscal Year 2013 Budget Request” presentation in February 2012 and KippsDeSanto research

(2) Includes $88 billion in OCO funding in 2013 and an estimated $50 billion in OCO funding in 2014 – 2017. (3) Source: SIPRI and KippsDeSanto Research 1

Aerospace / Defense and Government Services MarketViewSpring 2012

Operational / Funding Environment With the effects of sequestration notably absent from the President’s 2013 Budget request released this February, Defense Secretary Leon Panetta has told lawmakers that the Pentagon will not begin planning for the automatic spending cuts imposed by sequestration until this summer. However, given that sequestration imposes automatic and equally distributed cuts across Department of Defense accounts, Panetta told lawmakers that because of the “meat-axe” approach in which budgets will be cut, “there’s not a hell of a lot of planning [he] can do.” Compared to market sentiment last year, sequestration now appears more likely than ever to actually take place; at least for some period of time. In response, companies and agencies alike are bracing for large budget cuts set to begin in 2013 and preserved by the lack of political will on either side of the aisle, as well as the uncertainty surrounding the election. Contrary to popular belief, however, budget reductions to date, have been historically light. Currently, the Pentagon’s forecasted budget authority is at past “wartime-peaks,” well above the $400 billion dollar “historical-floor” seen following the Korean War, the Vietnam War, and Ronald Reagan’s military build-up. Given this $125 billion annual base budget “windfall,” the key issue facing the defense sector is no longer whether sequestration will occur, but rather, will Congress be able to thoughtfully drive the budget back toward its “historic-floor” before sequestration forces it there.

Within the DoD’s reduced budget, there still remains focused areas where funding continues to be strong. The Pentagon’s 30-year aviation plan, which forecasts spending of $770 billion on aircraft purchases, operations, maintenance, and construction over the next 10 years, highlights five key investment objectives, including increased focus on ISR, specifically in regards to UAVs. Although the total U.S. aircraft fleet will grow by less than 1% over the next ten years, UAVs will continue to play an ever increasing role in the Pentagon’s future “smaller and leaner” military structure. Due to budgetary restrictions, the U.S. is buying less UAVs than originally planned, but the inventory will still increase to 645 aircraft by 2022, up from about 445 aircraft in 2013. Additionally, the Pentagon has released plans to increase its fleet of long-haul surveillance drones by 45% over the next 10 years. With defense funding under so much scrutiny, U.S. defense spending actually fell for the first time in 15 years. Despite this decline, the U.S. was again at the top of the world list of defense spending, at $711 billion, or roughly 5% of GDP, the largest amount of defense expenditures of any country. This compares to Stockholm International Peace Research Institute’s (“SIPRI”) global estimate of military spending of approximately $1.7 trillion, which increased just 0.3% in real terms this year, essentially ending a 13-year streak of continued increases. Similar to the Department of Defense, civilian agencies face a difficult environment with the GFY2013 budget still holding a significant amount of uncertainty. Presidential and Congressional elections this fall may change the political landscape in Washington, additional Continuing Resolutions remain in play as expectations for appropriations to be determined by October are slim, and potential sequestration cuts still loom large. The result is a hindrance on agency planning fueled by desires for quick returns on investments, delays of new projects, and less opportunities for contractors. While IT priorities are likely to resemble the 2012 environment, with an emphasis on retiring legacy systems and maintaining current functions and operations as opposed to development, modernization, and enhancement efforts, near-term plans for reducing the Federal deficit and streamlining operational efficiency may have long-term implications across all agencies.

Defense Budget Authority: Build-Ups and Draw-Downs(1)

($ in 2013 billions, including supplemental and OCO funding)

2011 World Defense Spending(3)

$0

$100

$200

$300

$400

$500

$600

$700

$800

50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 11 12 13 14 15 16 17

KoreaVietnam Reagan

Buildup

DoD Base Budget FY2013 Base Budget Request(2) “Historic-Floor”

Iraq / Afghanistan

BCA “Statutory-Floor”

10.2%

8.6%

4.6%

2.4%

(1.2%)

(1.9%)

(3.3%)

0.3%

EasternEurope

Africa

Middle East

Asia & Oceania

North America

West & Central Europe

Latin America

Entire World

% Change in Military Spending % Share of World Military Spending

5%2%

7%

21%

42%

19%

4%

(1) Capital IQ, company filings, and KippsDeSanto research 2


Capital Markets and Public Market Valuation Trends For the past few months, sector performances seem to have continued with some of the prominent themes from 2011. Defense stocks continue to underperform the broader market as a result of the uncertainty of DoD cost reductions. As the defense revenue environment is challenged by continued declines in war-related spending, combat support contractors have seen market reaction reflected in share price pressures over the last year. In spite of challenges in some adjacent markets, the aerospace sector continues to outperform. While aerospace stocks have recently fallen behind the broader market, solid 1Q2012 results support positive investor perspectives on sector potential. Given certain leading indicators, outlook for aerospace suppliers remains particularly strong. An uptick in Boeing and Airbus production rates, as well as convergence between major supplier deliveries and OEM build rates, are in large part responsible for the projected growth. In addition, strong sector bookings for another consecutive quarter provide certainty that the double digit growth projected by companies like Boeing, B/E Aerospace, and TransDigm Group are achievable. Of note is that the growth in aerospace was almost entirely driven by developments in the commercial sector. According to the FAA Aerospace Forecast released in March, air traffic growth for U.S. carriers–measured by revenue passenger miles–grew roughly 4% in 2011 and is expected to rise by more than 90% in the next 20 years. As global air traffic continues to improve, aftermarket leveraged companies such as TransDigm benefit from strong and consistent free cash flow generation. Albeit a special situation, given the private equity involvement and highly levered balance sheet, recent news surrounding Hawker Beechcraft’s Chapter 11 filing demonstrates the residing effect of company-specific risks. While the business jet market is expected to be an area of strong growth in the near-term, certain companies still face operational challenges.

The month of May saw the Dow Jones Industrial Average reach its highest close since 2007, reportedly led by the fastest growth in U.S. manufacturing in 10 months. While domestic market performance seems to occasionally benefit from sporadic mentions of positive economic news, it is still very much pressured by challenges faced in the global economy. Amidst heightened uncertainty following election results in France and Greece, the European debt outlook has again become an area of focus for investors. Nonetheless, the Federal Reserve Board appears to be optimistic about overall economic growth, recently predicting the economy will grow between 2.4% and 2.9% this year, compared to the 1.7% growth seen last year. Market prices for government services companies continue to trail the overall market, falling 33.1% year-over-year as of May 2012, compared to the 1.7% return of the S&P 500 over the same period. Recent earnings have reflected the continued challenges from limited growth, budgetary uncertainties, and pricing pressures. Dynamics Research Corp. decreased more than 18% after missing earnings estimates, and lowered its growth outlook, citing a general shortage of new business wins over the past year as the primary driver for the negative outlook. ManTech and CACI also delivered disappointing earnings, referencing similar causes, dropping 19% and 20%, respectively, and subsequently lowering guidance. Despite a weaker outlook, government service companies have maintained strong balance sheets and have continued to look for ways to supplement value returned to shareholders. This was demonstrated by SAIC’s recent introduction of a dividend program, recording a preliminary payment of $0.12 per share on April 16, 2012; along with ManTech’s continued dividend payments in excess of 3.0%.

Relative Stock Price Performance(1)

As of May 11, 2012

60

70

80

90

100

110

120

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

Defense Primes Defense Systems Aerospace Government Services S&P 500

75

80

85

90

95

100

105

13-Feb 23-Feb 4-Mar 14-Mar 24-Mar 3-Apr 13-Apr 23-Apr 3-May

Defense Primes Defense Systems Aerospace Government Services S&P 500

(2.9%)

0.1%

(7.8%)

(7.6%)

(19.7%)

(34.1%)

(16.0%)

(6.7%)

2.8%

9.7%

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

(2) Represents 2Q2012 deal activity to date as of May 11, 2011. (3) KippsDeSanto and company acted as the financial advisor to Whitney, Bradley, Brown and 2020 3


M&A Trends and Activity With just 43 aerospace, defense (“A&D”), and government services transactions announced in the first quarter of 2012 and 82 deals year-to-date, M&A volume remains relatively steady as compared to 2011. The slow growth in overall deal volume can be attributed to many factors, including the macroeconomic uncertainty revolving around the debt crises in Europe, the volatility experienced in U.S. stock markets, and the slower than expected economic recovery. However, industry leaders suggest that some of the previously outlined defense market challenges, including the shrinking spending environment implicated by the latest released budget, may augur additional consolidation. In an interview with the Wall Street Journal, incoming Lockheed Martin CEO Christopher Kubasik posits that M&A “would absolutely be a scenario” as a result of the current budget environment.

Large firms are continuing to reposition themselves through divestiture as well as acquisition. Companies like FLIR, Rockwell Collins, ITT, and others are expressing more willingness to move into adjacent non-defense and commercial markets and acquire new capabilities. Opportunities to apply defense technology to commercial markets present themselves in several areas, including commercial aerospace, unmanned vehicles, and surveillance. On April 11th, L-3 Communications announced its acquisition of Thales Training & Simulation, a provider of simulation and training systems for military aircraft to government, defense, aerospace, and air travel industries, for $132 million, or 0.88x 2012E sales. With this acquisition, L-3 plans to integrate the civil aircraft simulation and training business into its link simulation and training organization, within its electronic systems group. While the sale allows Thales to exit a non-strategic part of its business, the acquisition is expected to be immediately accretive for L-3, adding, according to some analyst estimates, up to $0.10 to 2013P EPS. Prior to the Training & Simulation acquisition, L-3 purchased Kollmorgen Electro-Optical from Danaher Corp. for $210 million, or 1.24x LTM sales, as a means of expanding its base in the EO / IR market. In July 2011, L-3 agreed to spin-off Engility Corporation, a non-core program management and systems acquisition support services business. Recently, we have seen examples of Cobham and ITT Exelis continuing with the theme of repositioning. In November 2011, Cobham sold SPARTA, a provider of design, development, testing, fielding, and sustainment services of weapons systems, to The Parsons Corporation for $350 million, or ~11.7x LTM EBITDA. This was followed by the proposed hostile takeover of Thrane & Thrane, a provider of mobile communications solutions by satellite and radio technology, for approximately $479 million. On May 7th, ITT Exelis announced the engagement of an investment bank to advise on the potential sale of its low-margin Mission Systems unit, which provides logistics, security, and other support services for the U.S. military. Second quarter government services M&A activity demonstrates increased acquisition interest amongst private equity groups (“PEG”) and PEG-backed government services companies. Of the 22 acquisitions announced year-to-date (“YTD”), three and nine of these have been by PEGs and PEG-backed companies, respectively. Select 2012 examples include (i) NetStar-1 (Lake Capital) acquiring Whitney, Bradley, Brown, (ii) Salient Federal Solutions (Frontenac) acquiring ATS Corporation, (iii) White Oak Technologies (Arlington Capital) merging with FGM and rebranding as Novetta Solutions, and (iv) Acentia (Snow Phipps Group) acquiring 2020(3). As contractors continue to navigate tightening Federal budgets, and an expectation for the Federal Reserve to maintain the low interest rate environment (affording access to inexpensive debt financing), it is anticipated that PEGs will continue to backfill subdued strategic M&A. 2012 activity also includes fewer cybersecurity and intelligence transactions (and more diversified / civilian services), making up less than 20% of the transactions YTD, as compared to ~35% in 2011.

M&A Transaction Volume(1)

31 38 3924 21 22

9 14 19 23 16 25 20 15 15 16 11 10

32 25 27

2311 16

14 1114 13 22

1814

1324 31

17 19

24 2126

20

920

22 2625 17

31 26

17 2822

22

15 10

87 8492

67

41

58

4551

5853

69 69

5156

6169

43 39

0

20

40

60

80

100

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

Defense / Homeland Security Aerospace Government

2009 195 deals Announced



(2)


(2) Company filings and KippsDeSanto research. (3) DoD and KippsDeSanto research 4


Defense Update

YTD Defense Stock Price Performance(1)

The uncertain future of the DoD funding environment continues to cloud revenue visibility for major defense suppliers. The threat of sequestration, along with the first major impacts from the Budget Control Act in the current FY2013 budget, creates an increasingly challenging environment for defense contractors to plan investments and deploy resources in anticipation of contract awards. This reality, along with the tightening of the DoD procurement system (e.g. more fixed price contracts, tighter cost controls), appears to be largely priced into public valuations, which have not varied a great deal since the start of 2012. Shares of General Dynamics stumbled recently after missing Wall Street EPS estimates by almost 10%. Alliant Techsystems has also traded downward after recently issuing FY2013 guidance below analysts’ estimates.

Major Corporate Headquarters Moves (2)

In response to a turbulent funding environment and competitive landscape for defense products and services, several large contractors have repositioned their main offices to the metropolitan D.C. area in order to remain close to the Pentagon and other DoD customer organizations. These moves will enable contractors to increase engagement opportunities with core customers and expand their relevance at a time when agencies are looking for areas to cut / reallocate spending. Notably, Virginia Gov. Bob McDonnell has maintained a sharp focus on securing grants and implementing incentives to attract large defense suppliers to promote jobs growth and investment. Recent contractors to announce headquarter moves to the Northern Virginia area are Engility (the services-focused spin-off of New York-based L-3) and DRS (formerly in New Jersey).

Base Budget Operations and Maintenance Funding(3)

($ in billions)

DoD budget cuts have largely targeted platform-scale procurements and related investment accounts, while programs to protect short-term readiness and “quality-of-life” have fared relatively better given their importance in the absence of new purchases. Moreover, program accounts for military-related services are increasingly migrating funding for enduring missions from the OCO into the Base DoD budget as OCO spending contracts through 2014. Consequently, Base operations & maintenance (“O&M”) spending is expected to grow ~6% in 2013, with robust growth potential in 2014 as well. As Congress continues to pursue debt reduction / tax-extension compromises, large defense primes will feel the brunt of the budgetary pressures in the near-term as O&M providers will seemingly escape the impending cuts for at least another year.

CONSISTENT UNCERTAINTY AROUND

FUTURE REVENUE ENVIRONMENTStock Price Performance EV / CY 2012E EBITDA Multiple

01/03/12 05/11/12 % Change 01/03/12 05/11/12 ChangeDefense Primes

$4.54 $4.49 (0.9%) 4.1x 4.4x 0.3x

74.70 73.56 (1.5%) 7.4x 7.4x (0.1x)

67.97 66.53 (2.1%) 5.7x 5.6x (0.1x)

82.12 85.21 3.8% 6.0x 6.3x 0.2x

59.42 59.91 0.8% 4.7x 4.8x 0.1x

49.11 52.15 6.2% 5.7x 5.8x 0.2x

Defense Primes Median (0.1%) 5.7x 5.7x 0.1x

Defense Systems

$58.43 $52.34 (10.4%) 4.7x 4.6x (0.1x)

31.61 23.13 (26.8%) 8.5x 5.9x (2.6x)

2.92 3.54 21.4% 6.1x 6.4x 0.3x

44.78 43.31 (3.3%) 6.3x 6.4x 0.1x

25.58 21.39 (16.4%) 8.0x 7.1x (0.9x)

67.62 70.53 4.3% 6.0x 6.2x 0.1x

56.41 51.99 (7.8%) 7.3x 7.1x (0.2x)

56.24 61.06 8.6% 7.6x 8.2x 0.6x

Defense Systems Median (5.6%) 6.8x 6.4x (0.4x)

Overall Median (1.2%) 6.0x 6.2x 0.1x

DEFENSE CONTRACTORS RETRENCH

CLOSE TO CUSTOMERCompany Date Description

April2012

Establishing HQ in Chantilly, VAafter spin-off from

L-3 Communications

April 2012

Moving HQ from New Jersey to Crystal City, VA

September 2011

Moved HQ from Minnesota to Arlington, VA

January 2011

Established capital region HQ in Arlington, VA; corporate HQ

remains in Andover, MA

July 2010

Moved HQ from Los Angeles, CA to Falls Church, VA

September 2009

Moved HQ from San Diego, CA toTysons Corner, VA

SUSTAINED O&M ACTIVITY ALLAYS NEAR-TERM CONCERNS FOR SERVICE PROVIDERS

180

190

200

210

220

230

240

2011 2012 2013 2014 2015 2016 2017

Old 2012 Base O&M Plan (Excludes OCO)

New 2013 Base O&M Plan (Excludes OCO)


(2) Company reports. (3) Company press releases; KippsDeSanto research 5


Aerospace Update

YTD Aerospace Stock Price Performance(1)

The current strength of the commercial aerospace market is underscored by improving air traffic statistics (up 7.6% YoY), higher capacity (up 4.4% YoY), record order flow and revenue visibility, optimized production cycles, and higher airline profitability. Notably, the fleet of commercial jetliners also rose by ~3% in 2011. Looking forward, the market’s current growth pattern is expected to lead to rate increases in the near future, and may also have potential impacts on near-term fuel price appreciation. However, on the business jet side, while utilization rates continue to improve, excess capacity must initially be absorbed before real growth can be realized, signaling a long recovery to the deliveries peak of a few years ago. Shares of BE Aerospace and Triumph Group rose recently after handily topping analyst estimates; Spirit Aerosystems shares continue to gain ground through performance on strong Boeing and Airbus programs.

OEM Deliveries(2)

Robust order flow and rising production rates are chief indicators of the consistently positive outlook for the commercial aerospace industry. At the OEM level, backlogs have swelled to record levels and supply chains are improving to meet market appetite. Market sentiment is highlighted by 1Q delivery results, in which Boeing and Airbus significantly increased deliveries year-over-year. Demand from Asian markets is expected to remain solid in the near- and long-term, with an increasing role anticipated from China. However, skeptics question projected market growth patterns, discounting backlogs given large orders from a number of small, risky customers (e.g. dozens of Airbus orders from financially-distressed India’s Kingfisher Airlines).

Global MRO Forecast(3)

($ in billions)

While surging demand for air travel across the world is driving growth in new aircraft deliveries, a need persists to elongate the useful term of the current global fleet. Specifically, near-term growth is expected to be driven by increased utilization rates from the airline industry, varying traffic patterns, and fleet turnover. Geographically, growth in North American markets is expected to be slower relative to European and Asian markets given lower fleet growth and the prevalence of less maintenance-intensive aircraft. Moreover, an emerging preference for “one-stop,” lower total-cost solution providers has spurred a major supply chain consolidation trend (e.g. Airbus / Satair; Eurocopter / Vector Aerospace; General Dynamics / Jet Aviation) that is expected to continue into the near future.

COMMERCIAL UP-CYCLE HIGHLIGHTED BY

NUMEROUS POSITIVE MARKET INDICATORSStock Price Performance EV / CY 2012E EBITDA Multiple

01/03/12 05/11/12 % Change 01/03/12 05/11/12 Change

Aerospace Systems

$19.72 $14.50 (26.5%) 4.9x 5.3x 0.4x

39.01 44.82 14.9% 8.6x 9.6x 1.0x

123.84 124.87 0.8% 9.9x 9.8x (0.1x)

47.67 39.08 (18.0%) 11.0x 12.0x 1.0x

5.61 6.39 14.1% 7.6x 8.1x 0.5x

98.89 125.74 27.2% 10.3x 11.7x 1.4x

59.83 63.68 6.4% 6.7x 6.7x 0.0x

86.03 102.62 19.3% 7.8x 9.4x 1.6x

Aerospace Systems Median 10.3% 8.2x 9.5x 1.3x

Aerospace Structures

$6.81 $7.78 14.2% 4.3x 4.5x 0.3x

24.87 26.82 7.8% 9.1x 9.5x 0.4x

17.99 18.15 0.9% 4.4x 4.7x 0.4x

167.34 169.48 1.3% 10.7x 11.1x 0.4x

2.71 3.40 25.5% 6.3x 7.8x 1.5x

21.29 23.91 12.3% 5.9x 6.6x 0.7x

Aerospace Structures Median 10.1% 6.1x 7.2x 1.1x

Overall Median 10.1% 7.7x 8.8x 0.4x

INCREASED PRODUCTION RATES UNDERPIN

STRONG MARKET OUTLOOK

104

119

137131

0

20

40

60

80

100

120

140

160

Boeing Airbus

Q1 2011 Q1 2012

NEED TO EXTEND AIRCRAFT LIFECYCLE

DRIVING MRO MARKET GROWTH

20.3 21.4 22.6

16.319.6

22.6

12.9

18.4

23.349.5

59.5

68.4

$0

$10

$20

$30

$40

$50

$60

$70

$80

2012 2017 2022

Americas Europe Asia

(1) Capital IQ, company filings, and KippsDeSanto research. (2) Deltek “Fiscal Year 2013 Federal Budget Assessment”. (3) IDC 6


Government Services Update

Government Services Earnings Update(1)

Volatile earnings continue to negatively impact the government services sector, exemplified by the 19.6% decrease in YTD pricing, as investors reduce exposure. Companies cite uncertainty with respect to the federal funding environment, amount and timing of new opportunities, and overall demand of agencies as macro-drivers for the low earnings. Many firms look to increase shareholder value by focusing on high-priority funding areas, share repurchase or dividend plans, and maintaining leaner operating structures. CACI beat earnings by increasing operational efficiency and focusing on higher margin work, but lowered FY2012 revenue outlook due in part to slower than anticipated procurement actions. ManTech missed earnings, citing a slowdown in demand in support for wartime missions, specifically in-theater ISR and biometrics support.

FY 2013 Discretionary Budget Request(2) (% Change FY 2012 – 2013)

*Funds part of operations thorugh collections from sources other than appropriations

** Major decline reflects a $8.1B transfer from discretionary to mandatory budget

President Obama released the GFY 2013 budget request in February, providing greater insight into the overall direction of the government services industry. Increased competition is anticipated as agencies are expected to “do more with less” and select the best “value” when deploying funding. Agencies will continue to be cost-conscious and selective with respect to funding, as major market-moving events loom in the second half of 2012. Political elections, ensuing tax reform, and an expected health care decision by the Supreme Court carry heavy potential impacts on the industry that are difficult to predict and quantitfy. Veteran’s Affairs discretionary funding increased $2.6B or 4% from FY2012, representing one of the highest increases for any agency.VA’s focus areas include investing $1B for services for homeless and at-risk veterans and $0.8M for new and renovated medical facilities.

Worldwide Big Data Technology and Services(3) ($ in billions)

In late March, the Obama Administration announced the “Big Data Research and Development Initiative,” with a stated goal of improving the insights gained from increasingly large data sets. The initiative includes more than $200 million in R&D investments from six departments and agencies to focus on tools and techniques for organizing and analyzing Big Data. These investments are to be focused in areas such as national security, education, biomedical research, and environmental research, among others, and serve to reiterate the federal government’s awareness of, and appreciation for enhanced Big Data capabilities. This news comes amidst a swell of activity among Big Data companies, including the recent IPO of Splunk and a flurry of M&A and VC transactions targeting high-tech, differentiated solutions.

UNCERTAINTY CONTINUES AS FIRMS

REPORT MIXED EARNINGSEPS (Latest Quarter Releases)

Estimated Actual Earnings Release

$0.39 $0.40 3-Feb-2012

1.43 1.45 2-May-2012

0.17 0.17 - 25-Apr-2012

0.44 0.47 2-May-2012

0.01 0.13 2-May-2012

(0.12) (0.09) 3-May-2012

0.77 0.69 3-May-2012

0.09 0.12 2-May-2012

0.34 (0.49) 20-Mar-2012

AGENCIES LOOK TO STRENGTHEN POSITION

IN CHANGING FUNDING ENVIRONMENTAgriculture -4.0%Commmerce 1.0%Defense -5.0%Education 4.0%Energy 3.0%Enviromental Protection Agency -1.0%General Service Administration 7.0%Health & Human Services -8.0%Homeland Security -3.0%Housing & Urban Hevelopment -8.0%Interior -0.5%Justice** -33.0%Labor -10.0%NASA -0.3%National Science Foundation 5.0%Small Business Administration 22.0%Social Security Administration 4.0%State 5.0%Transportation -11.0%Treasury 1.0%Veterans Affairs 4.0%

BIG DATA GAINING MOMENTUM

IN FEDERAL ARENA

$3.2

$16.9

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

2010 2015

(1) Company filings, Capital IQ, and KippsDeSanto research 7


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 05/11/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

The Boeing Company $73.56 91.8% $55,100.1 $56,357.1 $79,502.8 $7,647.4 9.6% $85,900.7 $8,854.1 10.3% 0.71x 7.4x 0.66x 6.4x

Lockheed Martin Corporation 85.21 92.4% 27,491.9 30,445.9 45,699.9 4,870.0 10.7% 44,998.1 4,941.8 11.0% 0.67x 6.3x 0.68x 6.2x

General Dynamics Corp. 66.53 87.6% 23,991.2 25,267.2 32,611.3 4,478.9 13.7% 32,753.8 4,539.4 13.9% 0.77x 5.6x 0.77x 5.6x

Raytheon Co. 52.15 95.4% 17,383.6 18,611.6 24,551.8 3,191.9 13.0% 24,147.3 3,273.9 13.6% 0.76x 5.8x 0.77x 5.7x

Northrop Grumman Corporation 59.91 84.8% 15,067.6 16,318.6 25,041.5 3,396.3 13.6% 24,438.5 3,230.7 13.2% 0.65x 4.8x 0.67x 5.1x

BAE Systems plc 4.49 80.9% 14,592.7 16,641.2 31,471.6 3,820.8 12.1% 32,104.2 3,869.1 12.1% 0.53x 4.4x 0.52x 4.3x

Median 89.7% $20,687.4 $21,939.4 $32,041.4 $4,149.8 12.6% $32,429.0 $4,204.2 12.6% 0.69x 5.7x 0.67x 5.6x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PDefense Systems 05/11/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Rockwell Collins Inc. $51.99 81.4% $7,540.4 $8,119.4 $4,926.3 $1,136.3 23.1% $5,174.1 $1,201.6 23.2% 1.65x 7.1x 1.57x 6.8x

L-3 Communications Holdings Inc. 70.53 79.6% 6,871.5 10,602.5 14,478.2 1,716.8 11.9% 13,994.3 1,663.6 11.9% 0.73x 6.2x 0.76x 6.4x

Cobham plc 3.54 91.3% 3,822.3 4,204.2 2,769.3 660.7 23.9% 2,815.6 667.1 23.7% 1.52x 6.4x 1.49x 6.3x

FLIR Systems, Inc. 21.39 57.4% 3,298.4 3,098.2 1,556.7 438.5 28.2% 1,673.9 479.6 28.7% 1.99x 7.1x 1.85x 6.5x

Kongsberg Gruppen ASA 17.67 65.7% 2,120.5 1,889.8 2,653.1 378.9 14.3% 2,793.4 390.6 14.0% 0.71x 5.0x 0.68x 4.8x

Exelis, Inc. 11.12 86.3% 2,074.9 2,925.9 5,465.2 705.0 12.9% 5,155.9 700.0 13.6% 0.54x 4.2x 0.57x 4.2x

Huntington Ingalls Industries, Inc. 36.68 88.3% 1,814.1 3,114.1 6,579.3 546.1 8.3% 6,526.0 617.7 9.5% 0.47x 5.7x 0.48x 5.0x

Alliant Techsystems Inc. 52.34 69.7% 1,734.7 2,477.8 4,298.5 534.6 12.4% 4,000.4 504.2 12.6% 0.58x 4.6x 0.62x 4.9x

Cubic Corporation 43.31 80.3% 1,157.9 930.9 1,364.8 145.5 10.7% 1,435.2 160.2 11.2% 0.68x 6.4x 0.65x 5.8x

AeroVironment, Inc. 23.13 63.4% 502.1 347.7 355.1 58.7 16.5% 375.4 62.5 16.6% 0.98x 5.9x 0.93x 5.6x

Median 80.0% $2,097.7 $3,012.1 $3,533.9 $540.4 13.6% $3,408.0 $560.9 13.8% 0.72x 6.0x 0.72x 5.7x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PDefense Electronics / Comm. 05/11/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Harris Corp. $41.23 82.9% $4,691.1 $6,631.0 $5,544.8 $1,216.3 21.9% $5,367.1 $1,180.9 22.0% 1.20x 5.5x 1.24x 5.6x

Teledyne Technologies Inc. 61.06 92.1% 2,244.3 2,565.5 2,021.0 312.0 15.4% 2,124.8 335.1 15.8% 1.27x 8.2x 1.21x 7.7x

ViaSat Inc. 46.23 92.8% 1,980.4 2,383.7 962.8 192.2 20.0% 1,152.2 274.0 23.8% 2.48x 12.4x 2.07x 8.7x

Ultra Electronics Holdings plc 26.54 92.3% 1,829.1 1,897.3 1,316.9 234.5 17.8% 1,361.5 244.6 18.0% 1.44x 8.1x 1.39x 7.8x

Orbital Sciences Corp. 12.07 63.0% 712.0 617.7 1,478.6 137.4 9.3% 1,637.1 150.9 9.2% 0.42x 4.5x 0.38x 4.1x

Comtech Telecommunications Corp. 30.41 85.3% 578.2 378.0 415.5 69.5 16.7% 412.0 79.5 19.3% 0.91x 5.4x 0.92x 4.8x

Mercury Computer Systems, Inc. 12.34 63.6% 382.0 267.2 270.3 42.4 15.7% 358.1 57.3 16.0% 0.99x 6.3x 0.75x 4.7x

Median 85.3% $1,829.1 $1,897.3 $1,316.9 $192.2 16.7% $1,361.5 $244.6 18.0% 1.20x 6.3x 1.21x 5.6x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PHomeland Security 05/11/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Smiths Group plc $16.81 82.3% $6,600.5 $8,114.0 $4,907.2 $1,036.9 21.1% $5,111.9 $1,124.5 22.0% 1.65x 7.8x 1.59x 7.2x

Mine Safety Appliances Co. 42.54 95.9% 1,569.7 1,844.4 1,206.0 190.7 15.8% 1,285.5 209.6 16.3% 1.53x 9.7x 1.43x 8.8x

OSI Systems, Inc. 65.66 96.6% 1,303.7 1,215.7 818.0 97.2 11.9% 894.0 135.7 15.2% 1.49x 12.5x 1.36x 9.0x

Analogic Corporation 67.22 96.4% 824.0 649.7 536.2 76.9 14.3% NA NA NA 1.21x 8.5x NA NA

Ceradyne Inc. 25.23 53.4% 612.6 432.8 544.9 100.5 18.5% 580.0 122.2 21.1% 0.79x 4.3x 0.75x 3.5x

Smith & Wesson Holding Corporation 7.65 88.7% 496.4 527.3 443.4 78.0 17.6% 477.1 NA NA 1.19x 6.8x 1.11x NA

Federal Signal Corp. 5.19 76.4% 322.8 545.0 966.5 75.0 7.8% 1,021.1 91.1 8.9% 0.56x 7.3x 0.53x 6.0x

Median 88.7% $824.0 $649.7 $818.0 $97.2 15.8% $957.6 $135.7 16.3% 1.21x 7.8x 1.23x 7.2x



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 05/11/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Goodrich Corp. $124.87 98.8% $15,723.5 $17,442.1 $8,939.3 $1,784.0 20.0% $9,617.2 $1,957.0 20.3% 1.95x 9.8x 1.81x 8.9x

TransDigm Group Incorporated 125.74 94.8% 6,422.9 9,858.3 1,806.1 843.1 46.7% 2,002.3 944.1 47.2% 5.46x 11.7x 4.92x 10.4x

Zodiac Aerospace SA 102.62 91.8% 5,547.4 6,956.7 4,360.0 740.4 17.0% 4,773.5 828.0 17.3% 1.60x 9.4x 1.46x 8.4x

Meggitt plc 6.39 95.6% 4,996.7 6,230.5 2,641.7 767.5 29.1% 2,809.2 833.5 29.7% 2.36x 8.1x 2.22x 7.5x

BE Aerospace Inc. 44.82 92.5% 4,657.0 5,982.7 3,045.9 621.0 20.4% 3,442.6 721.9 21.0% 1.96x 9.6x 1.74x 8.3x

Triumph Group, Inc. 63.68 95.2% 3,122.6 4,251.8 3,614.5 630.1 17.4% 3,836.4 688.4 17.9% 1.18x 6.7x 1.11x 6.2x

HEICO Corp. 39.08 78.8% 2,057.1 2,385.0 931.3 198.2 21.3% 1,040.5 223.2 21.5% 2.56x 12.0x 2.29x 10.7x

Esterline Technologies Corp. 63.80 77.5% 1,955.6 2,777.4 2,089.0 378.9 18.1% 2,202.7 404.7 18.4% 1.33x 7.3x 1.26x 6.9x

AAR Corp. 14.50 45.8% 560.7 1,279.6 2,184.1 243.5 11.1% 2,312.8 272.9 11.8% 0.59x 5.3x 0.55x 4.7x

Median 92.5% $4,657.0 $5,982.7 $2,641.7 $630.1 20.0% $2,809.2 $721.9 20.3% 1.95x 9.4x 1.74x 8.3x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PAerospace Structures 05/11/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Precision Castparts Corp. $169.48 94.4% $24,602.1 $24,477.1 $8,075.8 $2,206.5 27.3% $9,282.4 $2,611.3 28.1% 3.03x 11.1x 2.64x 9.4x

Spirit AeroSystems Holdings Inc 23.91 92.0% 3,417.1 4,482.6 5,344.0 679.3 12.7% 6,044.8 783.3 13.0% 0.84x 6.6x 0.74x 5.7x

Hexcel Corp. 26.82 95.8% 2,670.6 2,931.2 1,612.2 307.4 19.1% 1,757.1 335.8 19.1% 1.82x 9.5x 1.67x 8.7x

Senior plc 3.40 98.3% 1,376.6 1,521.4 1,186.6 194.6 16.4% 1,269.6 211.4 16.7% 1.28x 7.8x 1.20x 7.2x

LMI Aerospace Inc. 18.15 72.6% 211.8 206.3 286.7 43.7 15.2% 312.6 47.1 15.1% 0.72x 4.7x 0.66x 4.4x

Median 94.4% $2,670.6 $2,931.2 $1,612.2 $307.4 16.4% $1,757.1 $335.8 16.7% 1.28x 7.8x 1.20x 7.2x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PGovernment Services 05/11/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

SAIC, Inc. $11.20 63.7% $3,827.5 $4,087.5 $10,839.4 $937.8 8.7% $10,697.7 $926.7 8.7% 0.38x 4.4x 0.38x 4.4x

Booz Allen Hamilton Inc. 15.10 75.1% 1,997.4 2,565.1 6,017.2 506.7 8.4% 6,062.5 508.8 8.4% 0.43x 5.1x 0.42x 5.0x

QinetiQ Group Plc 2.34 90.9% 1,514.9 1,750.0 2,322.5 291.9 12.6% 2,395.8 294.8 12.3% 0.75x 6.0x 0.73x 5.9x

CACI International Inc. 47.01 70.7% 1,251.9 1,778.4 3,778.3 340.5 9.0% 3,876.4 340.5 8.8% 0.47x 5.2x 0.46x 5.2x

ManTech International Corporation 23.75 51.3% 876.6 957.4 2,923.7 253.1 8.7% 2,872.0 234.3 8.2% 0.33x 3.8x 0.33x 4.1x

ICF International Inc. 22.37 76.6% 445.4 591.9 1,005.1 100.4 10.0% 1,068.7 110.0 10.3% 0.59x 5.9x 0.55x 5.4x

Kratos Defense & Security Solutions, Inc. 4.95 37.1% 259.9 837.4 954.5 122.8 12.9% 984.7 134.5 13.7% 0.88x 6.8x 0.85x 6.2x

The KEYW Holding Corporation 8.91 67.9% 227.6 287.0 232.4 30.4 13.1% 259.3 36.2 13.9% 1.23x 9.4x 1.11x 7.9x

Dynamics Research Corp. 6.24 39.3% 63.9 179.2 331.1 31.4 9.5% 323.2 30.8 9.5% 0.54x 5.7x 0.55x 5.8x

NCI, Inc. 4.35 17.9% 59.1 109.6 357.2 16.4 4.6% 337.4 15.6 4.6% 0.31x 6.7x 0.32x 7.0x

Median 65.8% $661.0 $897.4 $1,663.8 $188.0 9.3% $1,732.2 $184.4 9.2% 0.51x 5.8x 0.51x 5.6x

Stock Price % of 52 Market Enterprise CY 2012E CY 2013P EV / CY 2012E EV / CY 2013PEngineering & Construction 05/11/12 Week High Cap Value Rev. EBITDA Margin Rev. EBITDA Margin Rev. EBITDA Rev. EBITDA

Jacobs Engineering Group Inc. $38.86 80.7% $4,993.3 $4,629.9 $11,477.9 $699.6 6.1% $12,630.6 $776.8 6.2% 0.40x 6.6x 0.37x 6.0x

Babcock International Group plc 12.76 93.2% 4,574.4 5,705.0 5,630.7 631.0 11.2% 5,944.2 673.9 11.3% 1.01x 9.0x 0.96x 8.5x

URS Corporation 39.06 82.8% 2,958.1 3,532.9 10,167.3 765.8 7.5% 11,003.7 816.5 7.4% 0.35x 4.6x 0.32x 4.3x

AECOM Technology Corporation 18.05 62.5% 2,038.0 2,889.8 8,360.4 525.3 6.3% 8,696.0 624.6 7.2% 0.35x 5.5x 0.33x 4.6x

Shaw Group Inc. 29.41 73.7% 1,938.7 1,984.3 5,957.9 317.0 5.3% 6,275.3 362.7 5.8% 0.33x 6.3x 0.32x 5.5x

Tetra Tech Inc. 26.87 96.0% 1,704.3 1,709.1 2,061.5 230.2 11.2% 2,184.9 257.3 11.8% 0.83x 7.4x 0.78x 6.6x

Median 81.7% $2,498.0 $3,211.3 $7,159.1 $578.2 6.9% $7,485.6 $649.2 7.3% 0.38x 6.4x 0.35x 5.7x



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

05/10/12 GTCR, LLC CAMP Systems International, Inc.

Provides web-based aircraft maintenance tracking software in the United States and internationally

$675.0 NA $45.0 NA NA 15.0x

05/08/12 Kratos Defense & Security Solutions, Inc.

Composite Engineering, Inc. Provides product development and manufacturing services for composite products, as well as ruggedized electronics transport cases and air launched liquid rocket propelled vehicles

155.0 $94.0 16.0 17.0% 1.65x 9.7x

05/08/12 General Dynamics C4 Systems, Inc.

IPW Holdings, Inc. Produces wireless-network components, user devices and end-to-end systems that enable first- responders and other mobile users to access lifesaving data and applications

NA NA NA NA NA NA

05/06/12 Precision Castparts Corp.

Centra Industries, Inc. Manufactures aerospace and aircraft parts, specializing in the assembly of mechanical and pneumatic components that include fabricated details and subassemblies

NA NA NA NA NA NA

05/04/12 Blackland Group, LLC Lewis Machine Company Manufactures complex precision-machined components for clients in the commercial and military jet engine, airframe, missile and power plant industries

NA NA NA NA NA NA

05/02/12 Kanders & Company, Inc.

BAE Systems' Safariland, LLC

Manufactures protective equipment for law enforcement agencies, including gloves, holsters, and riot gear, as well as armored combat vehicles, ships, and satellite systems for the military

114.0 206.2 NA NA 0.55x NA

05/01/12 Velcon Filters, LLC. Warner Lewis Gmbh Provides aircraft refueling solutions to customers in Europe, the Middle East, and Africa

NA NA NA NA NA NA

04/30/12 Forjas Taurus S.A. Heritage Manufacturing, Inc. Manufactures revolvers and firearms from its headquarters in Opa Locka, Florida NA NA NA NA NA NA

04/27/12 Amavco, Inc. Field Aviation Company Inc. Engages in the design, engineering, integration, and delivery of aircraft and systems for private and public-sector clients

12.2 NA NA NA NA NA

04/26/12 Merex Incorporated Commerce Overseas Corporation

Manufactures and supplies military aviation spare parts worldwide NA NA NA NA NA NA

04/24/12 Graycliff Partners Skandia, Inc. Provides aircraft interior products and services; offers thermal/acoustic soundproofing materials, foam fabrication programs, flammability testing and certification services, and foam and upholstery supplies

NA NA NA NA NA NA

04/18/12 J.F. Lehman & Company

ACR Electronics, Inc. (Cobham)

Manufactures safety and survival products to aviation, marine, outdoor, and military markets worldwide

NA NA NA NA NA NA

04/18/12 ArmorWorks, Inc. Pacific Safety Products Inc. Produces protective products for law enforcement, security, and defense markets in North America including body armor, ballistic blankets, fragmentation protective clothing and chemical warfare protective coveralls

NA 20.5 NM NM NA NA

04/18/12 Indra Sistemas, S.A. Park Air Systems AS (NGC) Implements air traffic control systems for aviation and transport applications, offers integrated ATC communication solutions, instrument landing systems, and surface movement guidance and control systems

55.5 NA NA NA NA NA

04/16/12 HEICO Corp. Moritz Aerospace Inc., Aerospace Assets

Manufactures wireless cabin control systems, solid state power distribution and management systems, and fuel level sensing systems

NA NA NA NA NA NA

04/15/12 Venture Aircraft, Inc. Swift-Cor Aerospace, Inc. Manufactures precision CNC machined and sheet metal parts and assemblies including complex structures and components

NA NA NA NA NA NA

04/14/12 Waveland Investments LLC

NTE Aviation, Ltd. Supplies parts for commercial, regional and corporate turboprop & turbofan aircraft and engines to independent overhaul shops and operators in the United States

NA NA NA NA NA NA

04/12/12 Cytec UK Holdings Limited

UMECO plc Provides advanced composite materials such as prepregs for components and tooling, as well as adhesive films and pastes

428.7 345.2 33.0 9.6% 1.24x 13.0x

04/12/12 ITT Exelis Applied Kilovolts Ltd. Manufactures high voltage power supplies, including power supplies for mass spectrometers, x-ray tubes and electron guns

NA 13.2 NA NA NA NA

04/11/12 Idex Corporation Precision Photonics Corporation

Manufactures optical components, coatings, and assemblies for the telecommunications, defense, aerospace, biomedical, and semiconductor industries

20.0 NA NA NA NA NA

04/11/12 L-3 Communications Thales Civil Aircraft Simulation & Training Business

Manufactures commercial flight simulation equipment, with an installed base of more than 540 simulators worldwide, and operates an Asian training center

132.0 126.8 NA NA 1.04x NA

04/10/12 Cobham plc Thrane & Thrane A/S Manufactures and sells equipment and systems for mobile communication based on satellite and radio technology worldwide

431.2 190.1 34.1 17.9% 2.27x 12.6x

04/09/12 OAO Transaero Airlines

Air Atlanta Aero Engineering Ltd.

Provides aircraft maintenance and engineering services in Ireland, including MRO services and maintenance and component tracking

NA NA NA NA NA NA

04/07/12 Thunderbird, LLC Excaliber Precision Machining

Develops precision machining and assembly of aerospace parts NA NA NA NA NA NA



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



04/06/12 Trimble Navigation Limited

Gatewing N.V. Manufactures lightweight unmanned aerial vehicles for photogrammetry and rapid terrain mapping applications

NA NA NA NA NA NA

04/05/12 MB Aerospace Holding Ltd.

Thomson Aero Ltd. Manufactures engineering solutions and precision components to aero engines, defense, marine, and oil and gas industries worldwide

NA $7.8 NA NA NA NA

04/05/12 CPR Aerospace Wood Group Turbopower, LLC

Provides overhaul and repair services to military operations, commuter airlines, charter taxi / EMS, business aviation, and utility freight markets in the United States and internationally

$18.7 NA NA NA NA NA

04/04/12 Fabco Automotive, Inc. R. Cushman & Associates, Inc.

Manufactures power transmission and drive train products for on and off-road vehicles, such as military trucks, airport rescue and fire fighting equipment, drilling rigs and maintenance equipment

NA NA NA NA NA NA

04/03/12 Teledyne Technologies, Inc.

Optech Incorporated Manufactures advanced LIDAR and imaging-based survey instruments for mobile surveys, as well as airborne laser terrain mappers for corridor mapping

102.2 NA NA NA NA NA

03/29/12 Gama Group Limited Ronaldson Airmotive Ltd. Provides engine overhauls, repairs, and component support services for aircrafts NA NA NA NA NA NA

03/29/12 Jet Aviation Management AG

Enterprise Jet Center, Inc. Operates as a repair and aviation fuels distribution center providing aircraft cleaning services for tenants and transient aircraft onsite

NA NA NA NA NA NA

03/27/12 Panasonic Avionics Corporation

AeroMobile Limited Provides mobile telecommunication services for passengers in flight including simultaneous voice calls, general packet radio service, and incoming and outgoing caller identification services

NA NA NA NA NA NA

03/27/12 Air Industries Group, Inc.

Nassau Tool Works Inc. Fabricates parts, sub-assemblies, and complete landing gear systems for military fighter aircraft, especially for the U.S. Air Force and U.S. Navy

NA NA NA NA NA NA

03/23/12 API Technologies Corp.

C-MAC Aerospace Limited Provides high-reliability electronic systems, modules, and components to the defense, aerospace, space, industrial, and energy sectors

33.3 35.7 NA NA 0.93x NA

03/22/12 AGC Aerospace & Defense

Hill AeroSystems Inc. Manufactures and supplies parts and assemblies for military and commercial aircrafts

NA NA NA NA NA NA

03/19/12 HEICO Corporation Ramona Research, Inc. Manufactures RF and microwave amplifiers, transmitters and receivers used to support military communications on unmanned aerial systems, other aircraft, helicopters and ground-based data / communications systems

NA NA NA NA NA NA

03/12/12 Flextronics International Ltd.

Stellar Microelectronics, Inc. Provides electronics manufacturing services including, product development, turnkey manufacturing, and service and repair for the medical, military, space, industrial, and RF and wireless markets

NA 100.0 NA NA NA NA

03/12/12 Levine Leichtman Capital

Tronair, Inc. Manufactures aircraft ground support equipment, special items for building aircraft, replacement parts, and technical support services

NA NA NA NA NA NA

03/07/12 Plasan Sasa Ltd. Artis, LLC Specializes in contract R&D and analysis services focused on defining the military utility of future technologies, especially distributed sensor networks and robotics systems

NA NA NA NA NA NA

03/06/12 The Weinberg & Bell Group

AeroRepair, Corp. Specializes in the repair and overhaul of brake assemblies, wheel assemblies and landing gear for regional airlines, corporate airlines and military aircraft

NA NA NA NA NA NA

03/06/12 Engineering LLC Epic AIR, LLC Designs and produces aircrafts including turboprops and light jet planes, as well as providing support services, such as recurrent training, maintenance, annual condition inspection, repair, and upgrade services

NA NA NA NA NA NA

02/28/12 RLJ Equity Partners, LP

LAI International Manufactures precision-engineered finished parts, components, and subassemblies for aerospace, power generation, defense, medical, and other technology industries worldwide

NA NA NA NA NA NA

02/07/12 Plaintree Systems Inc. Summit Tool Corp Manufactures aerospace engine components including, components of turbine shrouds, seal assemblies and pressures seals for helicopter and aircraft engine manufacturers

NA NA NA NA NA NA

02/01/12 Berger Group Holdings, Inc

Ranger International Services Group, Inc.

Provides airfield, aircraft, and base logistics services at military bases, as well as maintenance, modification, reset, and overhaul services for tactical military vehicles, aircraft, and aerospace ground equipment

NA NA NA NA NA NA

01/31/12 Wynnchurch Capital, Ltd.

Burtek, Inc. Manufactures ground-based mobile military equipment including, radar systems, ground vehicles, shelters, and trailers

9.0 NA NA NA NA NA

01/25/12 Novaria Group Fitz Aerospace Manufactures precision aerospace components ranging from machined parts to aerospace hardware needs

NA NA NA NA NA NA

01/20/12 TransDigm Group Incorporated

AmSafe Global Holdings, Inc. Manufactures safety and securement equipment for aerospace, defense, and ground transportation industries including aviation cargo securement products; cargo containments and restraints; and escape slides

750.0 260.0 $60.5 23.3% 2.88x 12.4x

01/17/12 Vishay Intertechnology, Inc.

HiRel Systems, LLC Manufactures custom electronic components and power assemblies used in various applications, including medical, defense, aerospace, commercial, and military

85.0 NA NA NA NA NA



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



05/07/12 UNICOM Systems, Inc. GTSI Corp. Provides IT hardware and solutions to federal, state, and local government customers, as well as to prime contractors in the U.S.

$76.7 $356.7 NA NA 0.21x NA

04/24/12 Six3 Systems / GTCR Ticom Geomatics, Inc. Provides interoperable, mission-ready, precision Geolocation and ISR systems and services

NA NA NA NA NA NA

04/23/12 Veritas Capital Thomson Reuters Corporation, Health Care Business

Provides data, analytics, and other services to improve efficiency to hospitals, government agencies, and healthcare professionals

1,250.0 NA NA NA NA NA

04/17/12 Hitachi Consulting Corporation

PRIZIM Inc. Provides management consulting services dedicated to sustainability audit, consulting, and training and managed service solutions

NA NA NA NA NA NA

04/16/12 XL Associates, Inc. ALON, Inc. Provides program management, strategic acquisition planning, validating IT solutions through enterprise architecture, information security, and financial management services

NA NA NA NA NA NA

04/12/12 Noblis, Inc. ElanTech Systems, Inc. Provides Systems Engineering & Technical Assistance (SETA) and acquisition management support services

NA NA NA NA NA NA

04/12/12 MAXIMUS, Inc. Policy Studies, Inc. Provides and develops solutions for connecting people to public programs in the health and human services industry

67.0 137.0 NA NA 0.49x NA

04/05/12 Dell, Inc. MAKE Technologies, Inc. Provides legacy modernization software and services for companies NA NA NA NA NA NA

04/02/12 Dell, Inc Wyse Technology, Inc. Provides thin, zero, and cloud computing solutions for desktops, laptops, and mobile devices

NA NA NA NA NA NA

04/02/12 Acentia 2020 Company, LLC Provides enterprise technology and performance optimization solutions to government, commercial, and non-profit sectors

NA NA NA NA NA NA

03/23/12 Aveshka, Inc. Civitas Group - Homeland Security and Private Sector Preparedness unit

Provides strategic advisory, investment, and transactional services for the private sector and government clients in the homeland and national security fields in the United States

NA NA NA NA NA NA

03/21/12 Novetta Solutions FGM, Inc. Provides technical solutions to protect, share, and act on data for the Department of Defense, U.S. Government civilian and international agencies, and organizations in the United States and internationally

NA NA NA NA NA NA

02/28/12 The SI Organization, Inc.

PhaseOne Communications, Inc

Provides communication research based consultancy services in the United States and internationally

NA NA NA NA NA NA

02/27/12 ManTech International Corp.

HBGary, Inc. Provides and develops software security technologies to assess information risks in deployed applications

23.8 NA NA NA NA NA

02/21/12 Logistics Management Institute

Belzon, Inc. Provides information technology, project management, and logistics services NA NA NA NA NA NA

02/21/12 Salient Federal Solutions, Inc.

ATS Corporation Provides specialized application development and data integration services that administer decision-ready information to Command and Control ("C2") and Decision Support Systems

73.5 91.4 $11.9 13.0% 0.80x 6.2x

02/21/12 NetStar-1 Whitney, Bradley & Brown, Inc.

Provides premier management consulting and technical services to DoD, federal civilian agencies, and defense-related commercial companies

NA NA NA NA NA NA

02/02/12 KPMG LLP Thomson Reuters Coporation

Provides intelligent information for businesses and professionals in the financial, legal, tax and accounting, intellectual property and science, and media markets worldwide

NA NA NA NA NA NA

01/30/12 ICF International Inc. GHK Holdings Limited Provides consultancy services to public and private sector clients worldwide NA 30.0 NA NA NA NA

01/23/12 CRGT, Inc. CIBER, Inc., Federal Divison Provides mission, business, and IT operations support through a full spectrum of solutions that are fully integrated to work with a customers needs

40.0 NA NA NA NA NA

01/18/12 LLR Partners Inc. Paragon Technology Group Provides an extensive suite of services, including IT systems engineering and application development, governance and PMO implementation and support, business intelligence and data management

NA NA NA NA NA NA

01/09/12 ManTech International Corp.

Evolvent Technologies, Inc. Provides healthcare IT services to the federal government in the U.S. 40.0 NA NA NA NA NA

12/30/11 Electronic Consulting Services, Inc.

Paradigm Technologies, Inc. Provides product oriented management and technical services for federal government customers

NA NA NA NA NA NA

12/29/11 Raytheon Company Henggeler Computer Consultants, Inc.

Provides IT subcontracting services to government clients in the Washington, D.C NA NA NA NA NA NA

12


Select Recent KippsDeSanto & Co. Advised Transactions

December 2010

has been acquired by

December 2010


December 2010


July 2011


BTS, LLC

has been acquired by the management team

of

a subsidiary of

August 2011 February 2011



September 2011


November 2011

Arrow Electronics


The Technology Innovation Team of

August 2011

February 2012

a portfolio company of

has merged with

March 2012


a portfolio company of


November 2011

`

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. We welcome the opportunity to have a more detailed discussion of developments in our focus industries. For more information, please contact us: Robert D. Kipps Managing Director [email protected]

Kevin P. DeSanto Managing Director [email protected]

Marc B. Marlin Director [email protected] Karl M. Schmidt Director [email protected] Suzanne E. Kecmer Vice President [email protected] Jon Yim Vice President [email protected] Laura E. Hockensmith Associate [email protected] Brian T. Tunney Associate [email protected]

Michael J. Misantone Director [email protected] K. Packard Fancher Director [email protected] Aaron M. Sharp Vice President [email protected] Robert G. Dowling Associate [email protected] Eric W. Islinger Associate [email protected]

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The information and opinions in this newsletter were prepared by KippsDeSanto & Co. and the information herein is believed to be reliable and has been obtained from and based upon 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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spring 2012 aerospace / defense and government services

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