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L3 Communications

July 27, 2007: L-3 Communications (NYSE: LLL) today reported second quarter 2007 net income of $188 million and diluted earnings per share (EPS) of $1.49, compared to $50 million, or $0.40 in the 2006 second quarter. Net sales increased 10.5% to $3.4 billion, and the funded backlog is now at a $9.4 billion record level. Consolidated net sales have increased by $324 million reaching $3.4 billion up from $3.1 billion for the 2006 second quarter.

 

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Most of the units reported improved performance. The C3ISR net sales for the 2007 increased by 3.4%; sales of secure communications products were unchanged. Yet, on a half-year basis, the C3ISR unit's operating income decreased by 2.7% compared to the 2006 first half, primarily because of lower operating margin, partially offset by higher sales volume. The Government Services net sales increased by 11.9%, primarily from volume on existing contracts and, in several cases, recent new business awards for linguist, intelligence, training and law enforcement services to support the U.S. military operations in Iraq and Afghanistan as well as the broader global war on terrorism. The linguist services contract was extended until September 2007. For the 2007 first half, Government Services net sales increased by 13.1% with operating income increased by 15.6%

April 23, 2007: The first quarter of 2007 “was a very good start to the year,” said Michael T. Strianese, President and Chief Executive Officer of L-3 Communications. Since December 2004 the company has invested about $200 million in stock repurchase, and in February 2007, announced a 33% increase in the quarterly cash dividend by 33%. "Our anticipated share repurchases for 2007 together with our increased dividend will result in at least a three-fold increase in cash returned to our shareholders, compared to 2006.” Strianese Said. The company announced the planned acquisition of satellite communications provider Global Communications Solutions, Inc. (GCS) and the acquisition of UAV guidance systems specialist Geneva Aerospace, Inc.

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 concluded the quarter with net income of $162 million from net sales of 3.3 billion (up 9.1% from Q1/06), leaving $224 Million in net cash from Operating Activities (an increases of 19.4%).

The sales growth was driven primarily by strong demand for government services, aircraft modernization, base support operations, intelligence, surveillance and reconnaissance (ISR) systems, secure networked communications products and several specialized products, including power and control systems, propulsion systems, electro-optic/infrared (EO/IR) and precision engagement products. About half of this growth is attributed to acquired businesses.

The total operating margin remained at 9.9%. Three business segments contributed to higher margins: government services, aircraft modernization and special products. In contrast, margins of L3's C4ISR and defense electronics were lower, due to lower sales volumes of secure terminals and higher development cost of new products.
In general, C3ISR net sales for the 2007 first quarter increased by 18.7% compared to the 2006 first quarter. Organic sales growth was 12.6%, reflecting strong demand from the U.S. Department of Defense (DoD) for secure networked communications products and ISR systems. These increases were partially offset by lower sales of STE, a product with declining demand as it continues to approach full deployment in the marketplace. The increase in net sales from acquired businesses was 6.1%, primarily due to the acquisition of TRL Electronics plc (TRL) on July 12, 2006. TRL is specializing in defense electronics, and is offering portable and mobile jamming systems designed to disrupt remotely controlled IEDs.

Among the most significant operations in the past quarter L3 mentioned two contracts awarded related to UK programs, including Nimrod Electronic Support aircraft (Project HELIX), and the planned delivery of electro-optical payloads for the UK Future Lynx Program. Construction of four networked F/A-18C Tactical Operational Flight Trainers as part of the Swiss Air Force's F/A-18 Flight Simulator Upgrade Program and delivery of three F/A-18 Tactical Readiness Trainers for the Royal Australian Air Force. The company will also supply the US Army additional five Aviation Combined Arms Tactical Trainer (AVCATT) suites.

L3 is also under contract to supply of several thousand AN/PSS-14 advanced mine detection systems to the US Army. The U.S. Navy selected L-3 to serve as the prime contractor for its C-9 Contractor Logistics Support Program. A major win was the contract awarded L3 by the Joint Warfare Support Division (JWSD), Space and Naval Warfare Systems Center to support the division and Joint Warfighting Community. L3 will also support the US Army Space and Missile Defense Command with software solutions for integration of space technologies and applications.

 


 

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