Slide 1: Strategically Positioned for the Future
DRS TECHNOLOGIES, INC. STRATEGICALLY POSITIONED FOR THE FUTURE Richard A. Schneider Executive Vice President, Chief Financial Officer June 9, 2008 1
Slide 2: Safe Harbor
SAFE HARBOR SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This presentation contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that a
Slide 3: DRS Is a Dynamic and Adaptive Company
DRS IS A DYNAMIC AND ADAPTIVE COMPANY ● $3.3 billion defense technology solutions and services leader ● Focused on the growing defense, intelligence and homeland security markets ● Diverse, skilled workforce of 10,000 ● Facilities in 27 U.S. states, Canada, the U.K. and Kuwait support customers and
Slide 4: Positioned to Continue Strong Financial Performance
POSITIONED TO CONTINUE STRONG FINANCIAL PERFORMANCE ● Number 1 or 2 leadership position in our key markets ● One of the highest organic revenue growth rates in the industry ● Strong 10-12% operating margins ● Excellent free cash flow generation ● Among the highest book-to-bill ratios in the industry
Slide 5: Proven Revenue Track Record
PROVEN REVENUE TRACK RECORD Strong Organic Revenue Growth ($ millions) 5-Year Revenue CAGR 37% 16.8% $3,295 13.9% 13.0% $2,821 11.5% 9.0% $1,736 $1,309 $987 FY04 FY05 FY06 FY07 FY08 Total Revenues % Organic Revenues 5
Slide 6: Strong Operating Margins
STRONG OPERATING MARGINS 5-Year EBITA CAGR 42% $390 Operating Income Amortization $302 $205 $150 $109 FY04 FY05 FY06 FY07 FY08 EBITA Margin 11.0% 11.5% 11.8% 10.7% 11.8% 6
Slide 7: Sustained Earnings Performance
SUSTAINED EARNINGS PERFORMANCE 5-Year Diluted EPS CAGR 20% $4.00** $2.67 $2.54* $2.09 $1.76 FY04 FY05 FY06 FY07 FY08 * Includes impact of $0.63 in after-tax charges on the Thermal Weapon Sights II program. ** Includes impact of $0.19 in after-tax curtailment gains from one of the Company’s benefit p
Slide 8: High Quality of Earnings
HIGH QUALITY OF EARNINGS ($ millions) $165.8 $139.3 $140.1 Free Cash Flow* Net Earnings from Continuing Operations $113.9 $101.7 $127.1 $80.3 $81.5 $58.1 $43.5 FY04 FY05 FY06 FY07 FY08 * Net cash provided by operating activities from continuing operations less capital expenditures 8
Slide 9: Solid New Order Flow Drives Future Revenues
SOLID NEW ORDER FLOW DRIVES FUTURE REVENUES ($ millions) 3,862 3,489 3,607 Revenue Net Bookings Backlog 3,295 3,038 2,821 2,396 2,173 1,736 1,433 1,196 1,309 1,315 987 1,053 FY04 FY05 FY06 FY07 FY08 Bookings/Revenue 1.1x 1.1x 1.3x 1.2x 1.2x 9
Slide 10: Customer-Diversified Backlog Provides Stability
CUSTOMER-DIVERSIFIED BACKLOG PROVIDES STABILITY At December 31, 2007 Army Services 3% Army Logistics 3% Army Aviation 6% Government Agencies 8% Army Computers 7% Air Force 6% Army Comms 7% Commercial 2% Army Soldier International Military 6% Systems 9% Navy/Marine Corps 15% Army Ground 28% Backlog:
Slide 11: DRS Is Strategically Positioned for Growth
DRS IS STRATEGICALLY POSITIONED FOR GROWTH ● DRS provides advanced solutions for increasingly complex global threats ● DRS has a proven record of sustained, strong performance ● DRS is highly diversified to minimize risk ● DRS is aligned with customer priorities & initiatives 11
Slide 12: Top Programs Support Strong Future Revenue Growth
TOP 10 PROGRAMS SUPPORT STRONG FUTURE REVENUE GROWTH FY2008 Revenues Driver Vision Enhancer (DVE) 5.5 % Force XXI Battle Command, Brigade and Below (FBCB2) 5.4 Improved Bradley Acquisition Subsystem (IBAS) 4.2 Horizontal Technology Integration (HTI) 3.7 Defense Comms & Army Transmission System (DCAT
Slide 13: U.S. President's Budget Request
U.S. PRESIDENT’S BUDGET REQUEST Provides Continued Strong Defense Spending ($ ($ billions) billions) $750 $711.85 $700 Regular Appropriations Supplementals $668.82 $650 $600 $550 $196.44 $189.31 $500 $450 $515.43 $479.5 $400 $350 FY08-FY09 Increase $300 Supplementals +3.8% $250 Baseline +7.5% $200 T
Slide 14: U.S. Defense Spending as % of GDP
U.S. DEFENSE SPENDING AS % OF GDP WW II 40% 34.5% 30% 20% Korea 11.7% Vietnam 8.9% 10% Gulf War GWOT 4.5% 4.5% 0% 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 14
Slide 15: Future International Business Opportunities
FUTURE INTERNATIONAL BUSINESS OPPORTUNITIES U.K. Ground Vehicle & South Korea Naval Equipment Israel, Egypt, Border Defense U.S. & Canada Jordan, Saudi National Defense Arabia, UAE Eastern Europe National & & Homeland Japan National & Border Border Defense Security India National & Border Defense Na
Slide 16: Large Footprint on Key Platforms Supports Follow-On Contracts
LARGE FOOTPRINT ON KEY PLATFORMS SUPPORTS FOLLOW-ON CONTRACTS Technology Insertion, Maintenance, Replacement Family of Q-70 Consoles, CEDS Displays SPS-67 Radar, MK 15 Phalanx C-Band Active Array Close-in Weapon Radar (CBAAR) System (CIWS) Thermal Imagers Fiber Optic Networks Vertical Launch System
Slide 17: Aligned with Customer Priorities for Shipbuilding
ALIGNED WITH CUSTOMER PRIORITIES FOR SHIPBUILDING New Construction of 47 Ships & Submarines FY09-13 12 12 8 8 7 4 2008* 2009 2010 2011 2012 2013 * President’s FY09 budget request 17
Slide 18: Average Age of Navy Ships Supports Aggressive Shipbuilding Program
AVERAGE AGE OF NAVY SHIPS SUPPORTS AGGRESSIVE SHIPBUILDING PROGRAM Years 50 Ships in 2000 Ships in 2020 Expected Service Life 40 30 20 10 0 AC Surface Attack BM Subs Amphib Combat MW Ships Fleet Aux Com Subs Ships Logs 18
Slide 19: Large Footprint on Key Platforms Supports Follow-On Contracts
LARGE FOOTPRINT ON KEY PLATFORMS SUPPORTS FOLLOW-ON CONTRACTS Technology Insertion, Maintenance, Replacement TOW Visual Modules Horizontal Technology Improved Bradley Acquisition Integration (HTI) Subsystem (IBAS) Driver Vision Enhancers Force XX1 Battle Command, Direct Support Brigade & Below (FBCB
Slide 20: Ground Platforms Today
GROUND PLATFORMS TODAY Support Demand for DRS Products 220,000 220,000 68,000 150,000 2008 ~320,000 Vehicles 100,000 50,000 14,000 ~ ~ 10,000 8,000 4,300 6,000 4,000 2,700 4,000 1,900 0 1,600 1,100 600 752 450 2,000 10 0 600 0 0 FCS M1A1 BFV BFV Stryker M113 M109A6 AAV/ LAV HMMWV JLTV M1A2 A3 CBT AS
Slide 21: Ground Platforms Tomorrow
GROUND PLATFORMS TOMORROW Support Even Greater Demand for DRS Products 124,000 150,000 2020 120,000 60,000 ~400,000 Vehicles 100,000 23,000 40,000 50,000 ~ 12,000 ~ 10,000 8,000 4,500 6,000 2,400 2,400 4,000 2,100 1,980 1,900 1,000 1,000 950 1,500 2,000 900 0 FCS M1A1 BFV BFV Stryker M113 M109A6 AAV
Slide 22: DRS Is a Market Leader in Key Technology Areas
DRS IS A MARKET LEADER IN KEY TECHNOLOGY AREAS TIED TO DEFENSE PRIORITIES ● Infrared technology ● Persistent surveillance ● Battle management ● Power technologies ● Satellite networks and communications infrastructure ● Troop sustainment and support 22
Slide 23: DRS Is a World Leader in Ground, Air & Soldier Sensor Systems
DRS IS A WORLD LEADER IN GROUND, AIR & SOLDIER SENSOR SYSTEMS ● Thermal sighting & targeting systems ● Driver Vision Enhancers ● Portable night vision systems ● FLIR sensors, detectors, gimbals ● Surveillance cameras 23
Slide 24: Persistent Surveillance Capabilities Enhance Intelligence, Responsiveness, Security
PERSISTENT SURVEILLANCE CAPABILITIES ENHANCE INTELLIGENCE, RESPONSIVENESS, SECURITY ● Data collection systems ● SIGINT/COMINT processing ● Data dissemination equipment ● Secure communications on the move ● SATCOM, network services and bandwidth management ● Unmanned vehicles 24
Slide 25: DRS Provides a Diverse Base of Battle Management Systems
DRS PROVIDES A DIVERSE BASE OF BATTLE MANAGEMENT SYSTEMS ● Ruggedized computers and command & control ● Man-portable systems ● Automated test, diagnostics and prognostics systems ● Hybrid vehicle electric drive and power management 25
Slide 26: DRS Has Powered the Navy Since WW II
DRS HAS POWERED THE NAVY SINCE WW II ● Power generation, propulsion, electric drives and motors ● Power conversion, distribution and motor control systems ● Steam and gas turbines ● Switchgear, motor pumps ● Nuclear control panels 26
Slide 27: DRS's Diverse Ship Systems Support Security, Stability & Sea Power
DRS’S DIVERSE SHIP SYSTEMS SUPPORT SECURITY, STABILITY & SEA POWER Sensor Systems ● Radar ● Electro-optical/infrared ● Processing Computing Environment ● Combat displays ● Ship communications ● Ship networks ● Ship-air-shore data links Force Protection ● Harbor and coastal surveillance ● Precision w
Slide 28: DRS Supports Global Vigilance, Reach & Power Projection for the Air Force
DRS SUPPORTS GLOBAL VIGILANCE, REACH & POWER PROJECTION FOR THE AIR FORCE ● Air combat/range training ● Test range instrumentation ● Aircraft cargo loaders ● Deployable power generation systems ● Electronic warfare threat emitters ● Close-formation flight equipment ● Avionics & cargo delivery system
Slide 29: Diverse Spectrum of Services & Support Worldwide
EMBEDDED WITH THE MILITARY, DRS PROVIDES A DIVERSE SPECTRUM OF SERVICES & SUPPORT WORLDWIDE ● Satellite bandwidth & secure wireless networks ● Telecommunications & IT ● Aircraft maintenance ● Life-cycle product support ● Training & electronic technical manuals ● Engineering design, installation, tes
Slide 30: DRS Sustains the Troops in Everything They Do
DRS SUSTAINS THE TROOPS IN EVERYTHING THEY DO ● Heavy equipment transport ● Environmental control units ● Refrigerated containers ● Chemical/biological protected shelters ● Fuel/water logistics, water purification ● Power generators, fuel cells ● Radar systems 30
Slide 31: DRS Bundles Multiple Technologies for Border Protection, Homeland & Global Security
DRS BUNDLES MULTIPLE TECHNOLOGIES FOR BORDER PROTECTION, HOMELAND & GLOBAL SECURITY Sensors Communications Intelligence Situational Awareness Command & Control Infrastructure 31
Slide 32: DRS Has Built a Strong Foundation for Continued Growth
DRS HAS BUILT A STRONG FOUNDATION FOR CONTINUED GROWTH ● Attractive fundamentals ● Long-term contracts in backlog contribute to predictable revenue stream ● Critical scale enables cross-market opportunities ● Growing demand for our products and services ● Alignment with military modernization and fu
Slide 33: Highly Compelling Transaction Between Industry Leaders
HIGHLY COMPELLING TRANSACTION BETWEEN 2 INDUSTRY LEADERS Significant benefits for both DRS and Finmeccanica ● Strategic fit for 2 companies with proven track records in U.S. and international defense markets ● Finmeccanica 9th largest defense contractor ● DRS 21st largest defense contractor ● Combin
Slide 34: Transformational Transaction for DRS
TRANSFORMATIONAL TRANSACTION FOR DRS Significant benefits for DRS ● Dramatically accelerates DRS’ vision of becoming a top- tier defense contractor that competes as a prime for large defense contracts ● Finmeccanica’s depth of resources will give DRS the ability to bid for significant prime defense
Slide 35: A Win/Win Combination
A WIN/WIN COMBINATION ● Accelerates DRS’ vision of becoming a top- tier defense contractor that can compete as a prime for large contracts ● Firmly establishes Finmeccanica’s position as a leading contractor in U.S. defense market 35
Slide 36: Additional Information
ADDITIONAL INFORMATION ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT: DRS Technologies intends to file with the U.S. Securities and Exchange Commission a proxy statement to stockholders of DRS Technologies and other relevant documents in connection with the proposed transaction. INVES
Slide 37: Strategically Positioned for the Future
STRATEGICALLY POSITIONED FOR THE FUTURE 37