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April 2007 (past reports)

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Elbit Systems Proceeds With Tadiran's Takeover

Elbit Systems Ltd. (Nasdaq: ESLT) purchased today over 6.6 million Tadiran Communications Ltd. (TASE: TDCM) shares on the Tel-Aviv Stock Exchange (TASE), paying about $350 million based on previously announced tender offer. Completing the two-phase takeover, Elbit Systems will now integrate Tadiran Communications as a wholly owned private company. President and CEO of Elbit Systems Ltd, Joseph Ackerman noted that the acquisition is in line with the company's long-term strategy of growth through mergers and acquisitions of complementary companies with high synergistic value.

Rockwell Collins Earning Rise 26%

Rockwell Collins, Inc. (NYSE:COL) reported Earnings Per Share (EPS) of 82 cents for the second quarter of 2007 representing a 26% increase over Q2/06 EPS. The most significant growth (22%) is attributed to commercial operations while sales of defense electronics increased only 5%. Yet, high margins for both sections contributed to the increase in earning, leading the company to raise its expectations for increased sales and earning for the entire year.

L-3 Communications' Earning Jump 14.2%

L-3 reported today a 14.2% increase in Earnings per Diluted Share (EPS) for the first quarter of 2007, amounting to $1.29 (compared to $1.13 in Q1/06). Net Sales increased 13.6% to a total of $3.3 Billion; L3 added $3.9 billion in funded new orders to a total funded backlog of $9.3 Billion as of March 31, 2007. The company added two new companies to its portfolio, it announced the planned acquisition of satellite communications provider Global Communications Solutions, Inc. (GCS) and the acquisition of UAV guidance systems specialist Geneva Aerospace, Inc.

BAE Systems Eying Indian Armored Vehicle Opportunities

BAE Systems is positioning itself to win a larger slice of the Indian defense market and, in particular, the production of armored vehicles. The company is seeking to establish joint ventures with local companies. The Indian Ministry of Defence is seeking to procure about 8,000 lightweight (3.5 to 5 tones) armored vehicles, a requirement addressed by the company's RG-32 vehicle.

DRS Subsidiary Grabs US$139 Contract for Night Vision equipment

NVS (Night Vision Devices), a DRS Technologies company was awarded US$139 million, maximum value fixed price contract to supply night vision equipment for US forces over five years. The company was one of five competing bidders for the program. DRS Technologies acquired NVS (then NVEC) in December 2004. The company is based in Allentown, Pennsylvania with Engineering and Manufacturing located in Prescott Valley, Arizona.

Defense Mergers & Acquisitions Tallies $40 Billion in 2006

Worldwide defense and aerospace companies completed mergers and acquisitions (M&A) deals worth more than $40 billion in 2006, reports "Defense Mergers & Acquisitions" in its year-end review. The year saw a total of 370 transactions completed. M&A activity in 2006 was exceptionally broad based. The top five deals accounted for only 32% of the total value for the year. For comparison, in the record year of 1999 the top five deals accounted for 77% of the year's $65 billion in deals.

Canadian CAE Invests US$16 Million To Acquire 3D Specialist

Simulation & flight training specialist CAE (NYSE: CGT; TSX: CAE) is investing US$16 million (C$18 million) in cash to acquire MultiGen Paradigm Inc. a developer of real-time, commercial-off-the-shelf (COTS) visualizing simulation software application. The acquisition is part of CAE's thrust to establish itself as a leading provider of COTS based modeling and simulation development tools.

SAIC Experiences Continued Growth in 2007

April 11, 2007: SAIC, Inc. (NYSE:SAI) reported this week a 10% growth in revenue for FY 2007 (ending January 2007) and 19% increase in operating income, compared to last year. Revenues for the year were $8.3 billion, up 7% from $7.8 billion in fiscal year 2006. The company's backlog of signed business orders at the end of fiscal year 2007 was over $15.1 billion. For FY 2008 the company projects a slight increase to $8.70 - $9.00 billions in revenue, with cash flow from operations maintained at $450 millions.

Its Big Time for armor Producers

Armor specialist Armor Holdings reported last week a major increase in volume and profit, which was partly offset by a generous bonus for its top executives. The acquisition of military truck maker Stewart & Stevenson , last year, contributed for much of the growth this year, but the company expect to benefit from the merging of its armor and truck business, with the implementation of the U.S. Army's Long Term Armor Strategy. Another company to benefit from the surge in demand for armored vehicles is Textron Group, which published its Q1 results last week. Among the contributors for its growth were the Armored Security Vehicle (ASV).

Determined to lead the heavy wheeled armored vehicle market, Force Protection, Inc. (NASDAQ:FRPT) is expanding its production capacity to reap the maximum share of the MRAP program. Force Protection is expected to reach vehicle production levels of more than 400 vehicles per month by the end of 2007, compared to 50 vehicles per month at the end of 2006.

Spartan Chassis, Inc., a subsidiary of Spartan Motors, Inc. (NASDAQ:SPAR), is gearing up to meet the surge in demand for Mine Resistant Ambush Protected (MRAP) vehicles, while maintaining its commercial vehicles production. The company announced the expansion of its chassis production capacity, with the purchasing of two manufacturing facilities near its headquarters in Charlotte, Mich. (More...)

The surge in demand for armored vehicles is driving an expansion and shifting of activities from Europe to the US market, where the defense department is spending endless amounts on new armored systems and the upgrading of existing vehicles.

A newcomer to the US market is the Danish company Compushield, which recently established a foothold in the US Market by the formation of joint venture with steel and titanium producer American Tank & Fabricating Company. the joint venture is called AMTANK Armor, LLC, headed by John Mayles, formerly with Armor Holdings Inc.

The growing demand is also attracting competitors to the market, eroding margins and profits. Canadian based Ceramic Protection Corporation (TSX: CEP), a provider of ceramic armor components is expanding its activity in the US, with plans for of another composite specialist company based in Ohio. Last week CPC published its annual report for 2006, reporting $76.9 million in revenues for 2006, a 40% increase over 2005. Despite the growth in revenue, net income dropped by 10% from $9.9 million in 2005 to $9 million in 2006. In the last quarter of 2006 the company reported a net loss of $1.4 million, due lower gross margins, reflected primarily in the soft armor product line. On April 5th, the company announced a planned acquisition of Composix Co. of Newark, Ohio. Composix and its sister companys Ohio Armor and Force One are providing prototyping and production of metalic and composite based armor components and fuel tanks, Aramid-Shield armor materials for bullet-resistant vests, protective plates and lightweight military vehicle components.

Prosperity in the armored vehicles market is experienced in Europe as well. The German Krauss Maffei Wegmann (KMW) company increased its sales by almost 70% in 2006, reaching turnover of about 1 billion euros. The company closed 2006 with an order backlog of more than 3.4 billion euros. The continued growth opened new jobs for 200 employees. At present more than 20% of KMW workforce are active in research and development. The German based company developed a strong network of across Europe, with subsidiaries in the Netherlands and Greece, as well as in the USA. The company established partnerships related to specific defense programs in Switzerland, Spain, Italy and France..

Another significant deal in Europe is the official formation of a mega merger in the European naval industry, as DCN and Thales (Paris: HO.PA) have finalized with the French Government a merger agreement which leads the way to major consolidation in the European naval defense industry. Under the agreement, Thales transferred its naval operations in France to DCN and has acquired a 25% stake in DCN while the French government will retain a 75 % stake in DCN. This transaction will position Thales as "the industrial shareholding partner" of DCN and the terms of governance will allow Thales to play an active role on the Board of Directors to support the development of DCN. There will also be the possibility for Thales to increase its stake in DCN to 35% over the next two years.

Thales is also expanding its naval systems business to the US. The company established a US based JV with DRS (NYSE: DRS), to penetrate the US Sonar Market. The companies announced the formation of DRS Sonar Systems LLC, a DRS majority-owned joint venture company with Thales North America, Inc. The company will focus on undersea warfare systems (UWS) for defense and homeland security applications. According to Guy Baruchel, president of Thales Underwater Systems, the joint venture will leverage his company's global expertise in sonar systems offering these solutions in the U.S. market.

The Norwegian group Nammo AS announced last week the completion of the acquisition of US based Talley Defense Systems Inc., from Mesa, Arizona, effective March 30, 2007, following the recent receipt of the final U.S. Government approval for the transaction. According to Edgar Fossheim, CEO of Nammo AS "Talley now presents us with a key platform for expanding the sales of our products and technology to the U.S. market, which already accounts for 25% of our total sales."

In the US, Airborne Systems, a leading producer of parachute systems Announces the realignment initiative to streamlining its operation centers reducing from the current five units into two divisions; Airborne Systems North America and Airborne Systems Europe. Elek Puskas, CEO of Airborne Systems expect the realignment of to have a positive impact on the company's performance and service and improve its global competitiveness in the evolving marketplace. The realignment will not have any affect on the number of manufacturing facilities and was implemented to eliminate duplication of activities currently performed at each of the operating sites.

 


 

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