Aerospace and Defense Update

Deloitte Corporate Finance LLC

Investment Banking Advisory Services

• Sale and Divestiture
• Acquisition, Joint Venture and Alliance
• Capital Advisory
• Corporate Development Advisory
• Fairness Opinion
www.investmentbanking.deloitte.com

Fourth quarter 2010

Transaction highlight
Deloitte Corporate Finance LLC (DCF) is pleased to announce its role as
the exclusive financial advisor to FM Industries, Inc. (FMI), a subsidiary of
NGK Insulators, LTD (NGK) regarding its acquisition of LJ Engineering &
Manufacturing, Inc. (LJ). FMI acquired substantially all of the assets of the
business in a cash transaction. DCF also advised NGK on its North
American platform acquisition of FMI in 2002.
FM Industries, Inc.
DCF was engaged to assist with the development of the target approach
strategy, financial modeling, and transaction negotiation support. DCF
a subsidiary of assembled a cross-functional Deloitte team which included corporate
finance, M&A transaction services, and merger integration support. This
transaction further highlights DCF’s experience in helping execute complex
cross-border transactions.
NGK Insulators, LTD.
FM Industries, Inc.
FM Industries, Inc. engages in designing, testing, and manufacturing
has acquired substantially all components and systems used in critical applications for the
the assets of semiconductor medical, aerospace, and government markets. The
company offers print, precision, machined components, and electro-
mechanical assemblies. FM Industries, Inc. is a subsidiary of NGK
Insulators, Ltd.
NGK Insulators, LTD.
NGK Insulators, LTD. engages in the manufacture and sale of electric
LJ Engineering & Manufacturing, Inc. insulators, industrial ceramic products, and beryllium copper products
primarily in Japan, North America, and Europe. NGK is headquartered in
Nagoya, Japan.
The undersigned acted as exclusive financial advisor to LJ Engineering & Manufacturing, Inc.
FM Industries, Inc. LJ Engineering & Manufacturing, Inc. is a full service machine shop
specializing in precision products to the semiconductor, medical, and
aerospace industries. The company engages in prototype development
and p
production. LJ Engineering
g g & Manufacturing,
g, Inc. was founded in 1971
and is based in Santa Clara, California.
As used in this document, “Deloitte” means Deloitte Corporate Finance LLC a registered broker dealer
Deloitte Corporate Finance LLC which provides investment banking services; and Deloitte & Touche LLP and Deloitte Tax LLP, which
provides M&A Transaction Services; and Deloitte Consulting which provides merger integration services.
These entities are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a
detailed description of the legal structure of Deloitte LLP and its subsidiaries.

Additional recent transactions

MeadWestvaco Corporation

has sold its

Envelope Products Group to

Owens-Illinois, Inc.
Owens-Illinois, Inc.
has acquired
has acquired
all the outstanding shares of
the majority shareholdings of
the glass container business of
Zhaoqing Jiaxin Glass Co., Ltd.
Cenveo, Inc. Hebei Rixin Glass Group Co., Ltd.
肇庆嘉信玻璃有限公司
河北日新玻璃集团有限公司

The undersigned acted as exclusive financial The undersigned acted as financial advisor to The undersigned acted as financial advisor to
advisor to MeadWestvaco Corporation Owens-Illinois, Inc. Owens-Illinois, Inc.

Deloitte Corporate Finance LLC Deloitte Corporate Finance LLC

Deloitte Corporate Finance LLC
德勤财务咨询 德勤财务咨询

DCF Aerospace and Defense Update/Q4 10 2

Industry trends
Aerospace and Defense industry trends Aerospace & Defense Industry vs.
Dow Jones Industrial Average
Indexed Price
With 2010 now behind us and having witnessed a noteworthy M&A recovery in the
160
A&D industry over 2009 (total deal value increasing 192%), we believe a number of
factors will be impacting the industry transaction environment in 2011, including:
140

• Continuing industry consolidation to bring scale economies and cost efficiencies,

120
particularly in the defense sector amidst likely budget cuts and cost reduction
initiatives.
100
• Business repositioning as large defense contractors re-allocate resources from
low-growth, non-core assets to high-growth segments such as those “new reality”
80
technologies including cyber security, C4ISR and remotely piloted vehicles.
• Capital structures of public buyers in position for acquisitions after many potential 60
strategic buyers accumulated cash and reduced debt during the economic Dec-09 Mar-10 Jun-10 Sep-10 Dec-10

downturn (we highlight a recent cash balance of $71.8 billion and an average net Dow Jones Industrial Average Aerospace
debt to EBITDA ratio of 1.5x for the public A&D companies we track in our indices Defense Defense IT
Maintenance, Repair and Overhaul
on page 5). Source: Capital IQ Note: Indices are market cap weighted.
• Increased transaction valuations may lead potential sellers to be more proactive
in engaging M&A activity.
• A revival of private equity firms which are again aggressively bidding for assets $ per Barrel
U.S. Crude Oil Spot Prices
Weighted by Estimated Import Volume
thanks to increasing availability of credit in the marketplace, with average middle 160
market LBO values across all industries increasing to 8.3x in 2010 from 6.6x in 140
2009
2009.
120
• Foreign buyers such as China becoming active participants in global M&A in the
100
A&D sector.
80
Our views are based in part on analysis we performed in aggregating public
60
conference call transcripts of select industry participants, both from recent periods
40
and during the downturn. This Industry Trends discussion is an excerpt of a broader
report covering DCF’s 2011 outlook for M&A in the A&D industry, available soon at 20

www.investmentbanking.deloitte.com. 0
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
General economic trends
Source: Energy Information Administration (WTI - Cushing, OK)
Following modest domestic economic growth throughout the first three quarters of
2010, the year concluded with a strong performance in Q4 2010, suggesting that the Number of
Aircraft Commerical Jet and General Aviation
economic recovery may accelerate in 2011. Aircraft Deliveries and Orders
3,000

• Consumer’s welcomed the holiday season as November retail sales, excluding

2,500
motor vehicles and gasoline, exceeded economists’ forecasts and increased 7.8%,
compared to November 2009, representing the largest year-over-year increase 2,000

since August 2005. 1,500

• Manufacturing activity continued to expand in December for the 17th consecutive
monthth with
ith a PMI off 57% and d strong
t growth
th in
i the
th metal t l fabrication
f b i ti and
d 1 000
1,000

automotive industries. 500

• The financial sector saw its first improvement in two years, albeit slight, with
increased lending to refinancing activity, residential real estate, and consumers. 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
• Government intervention, such as the Federal Reserve announcement in October YTD*

to buy $600 billion of U.S. government bonds over the next eight months and the Commercial Jet Deliveries Commercial Jet Orders
General Aviation Deliveries
2010 Tax Relief Act, was instituted to assist with the economic recovery and
Source: Company reports, SpeedNews
stimulate growth through 2011. Commercial jets include Airbus and Boeing models. General aviation includes Cessna, Dassault,
Gulfstream, Bombardier and Hawker Beechcraft models.
Amid continued signs of recovery, the 2010 global M&A marketplace experienced *Represents data available as of the date of this report, which is full year data for commercial orders
and
a d de
deliveries
e es aand
d nine
e months
o t soof data for
o ge
general
ea a aviation
at o de
deliveries.
e es
growth not seen since 2007,
2007 suggesting a strong global M&A appetite for 2011.
2011
• Global M&A deal value in 2010 was 25.2% higher than in 2009, driven by Department of Defense Military Budget Authority
increased deal volume and record activity in emerging markets led by China, $ Billions

Mexico and Russia. $800

$697 $712
$700 $675 $667 $671
• Distressed transactions increased 13.4%* as buyers sought to benefit from $602
$620 $636 $652
$600
discounted prices. $533
$500 $471 $484
• With $208.7 billion in announced global private equity deal value, financial buyers $438
$400
saw an 80.9% increase in activity and retain an estimated $400 billion in
$300
uninvested capital.
$200
* Excludes Chrysler and General Motors transactions of $57.8bn in from global distressed deal value in 2009 $100

$0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Other RDT&E Procurement O&M Personnel

Sources: Budget of the United States Government for FY 2011, including supplementals through 2011.

DCF Aerospace and Defense Update/Q4 10 3

Highlighted transactions
Deals announced U.S. Middle Market M&A Announced Deals

• October 44, 2010 — BE Aerospace IncInc. agreed to acquire TSI Group

Group, Inc
Inc. for No. of Deals
Average EV
($mm)
approximately $310 million. TSI Group designs, manufactures and implements 12,000 $120
electronic, thermal management, interconnect, and mechanical assemblies and 6,790
7,348

components for the aerospace and defense markets. 6,479

9,000 $90
5,500
• October 5, 2010 — Kratos Defense & Security Solutions, Inc. agreed to acquire $70 5,305
$66 $70
Henry Bros Electronics for approximately $49 million. Henry Bros Electronics, Inc.
$56
provides technology-based integrated electronic security systems, services and 6,000 $60
$43
emergency preparedness consultation to government agencies.
• October 12, 2010 — Kaiser Aluminum Corporation agreed to acquire ALEXCO, 3,000
3,670
$30
3,037
LLC for approximately $90 million.
million ALEXCO manufactures hard alloy aluminum 3,605 2,669
2 480
2,480
extrusions and airframes for the aerospace industry. 0 $0
2006 2007 2008 2009 2010
• October 13, 2010 — Veritas Capital agreed to acquire Lockheed Martin
Disclosed Deals Undisclosed Deals Average Size
Corporation’s Enterprise Integration Group for approximately $815 million. The Source: Thomson Financial
Enterprise Integration Group provides system engineering, modeling and simulation,
and architecture definition services for the aerospace and defense markets. U.S. Middle Market M&A Announced Deals

• November 4, 2010 — Raytheon Co. agreed to acquire Trusted Computer EV/EBITDA No. of Deals
Solutions, Inc. for an undisclosed amount. Trusted Computer Solutions develops 12.0x 300
270
and delivers cyber security solutions for government and commercial organizations. 10.9x
10.4x
99
9.9x
• November 11, 2010 — Kaman Aerospace Corp. agreed to acquire Global 211 9.5x

Aerosystems, LLC for an undisclosed amount. Global Aerosystems provides 9.0x 8.5x 200

aerospace engineering and analysis services, such as development of installation,

structure modification and passenger to freight modification.
139
130
• November 15, 2010 — Cubic Corporation agreed to acquire Abraxas Corporation 6.0x
108
100

for approximately $124 million. Abraxas designs and develops risk mitigation
technology solutions for the public and private sectors.
3.0x 0
• November 16, 2010 — Allegheny Technologies Inc. agreed to acquire Ladish Co. 2006 2007 2008 2009 2010
Inc. for approximately $833 million. Ladish manufactures jet engine parts, missile Average EV/EBITDA Deals with Multiples
components, landing gears, helicopter rotors and other aerospace products. Source: Thomson Financial

• November 22, 2010 — ManTech International Corporation agreed to acquire

MTCSC, Inc. for approximately $75 million. MTCSC provides engineering and Aerospace & Defense U.S. M&A Activity
systems integration services for national defense and homeland security clients. Announced Deals
Average Deal
No. of Deals Value ($mm)
• November 22, 2010 — Boeing Co. agreed to acquire Summit Aeronautics Group 180 $1,200

LLC for an undisclosed amount. Summit Aeronautics manufactures titanium and 160
86 89
$1,000
75
other hard metal structures for commercial and military aircraft. 140

120 73 $800
• November 24, 2010 — Veritas Capital agreed to acquire CPI International, Inc. for 100 52
$600
approximately $570 million.
million CPI International provides microwave
microwave, radio frequency
frequency, 80
power and control products for critical defense, communications and other 60
$250
$400
$214
applications. 40 $190 $142
$98 $200
20
80
• November 28, 2010 — Transdigm Group Incorporated agreed to acquire Telair 0
59 83 58 78
$0
International Inc.’s Acutation Business for approximately $94 million. The 2006 2007 2008 2009 2010

Acutation Business manufactures electromechanical products and other Undisclosed Deals Disclosed Deals Average Size
components for commercial and military aircraft. Source: Capital IQ with information compiled by Deloitte Corporate Finance LLC
(www.investmentbanking.deloitte.com).

• December 11, 2010 — AVIC International Holding Corporation agreed to acquire

Teledyne Continental Motors, Inc. for approximately $186 million. Teledyne Aerospace & Defense U.S. M&A Activity
Continental Motors designs and manufactures aircraft piston engines and related A
AnnounceddDDeals
l
products.
EV/EBITDA No. of Deals
• December 15, 2010 — Elbit Systems Ltd. agreed to acquire M7 Aerospace L.P. 16.0x 18

for approximately $85 million. M7 Aerospace provides aircraft parts and product 14
16 14.4x
support, government logistics support, aero structures manufacturing, maintenance, 12.2x
13.5x
12.0x 12
repair, and overhaul, and engineering services. 12
12.0x

9.1x
• December 18, 2010 — Raytheon Co. agreed to acquire Applied Signal 9
8.0x 6
Technology, Inc. for approximately $512 million. Applied Signal Technology
6
provides intelligence, surveillance, and reconnaissance solutions for the defense,
intelligence and homeland security markets
intelligence, markets.
4.0x 0
2006 2007 2008 2009 2010
• December 21, 2010 — Rockwell Collins Inc. agreed to acquire Blue Ridge
Simulation, Inc. for an undisclosed amount. Blue Ridge Simulation develops and Average EV/EBITDA Deals with Multiples
supplies radar simulators for department of defense, commercial, and international Source: Capital IQ with information compiled by Deloitte Corporate Finance LLC
(www.investmentbanking.deloitte.com).
training applications.
Source: Capital IQ

DCF Aerospace and Defense Update/Q4 10 4

Market snapshot
$U.S. in millions Reported Market Enterprise Enterprise Value to: EBITDA Reported Stock Performance
Date Cap Value (EV) LTM Sales LTM EBITDA Margin P/LTM E Quarter LTM
Aerospace Aerospace Trading Multiples
Astronics Corp. 10/02/10 $230 $247 1.3x 8.9x 14.7% N.M. 17.9% 145.6% Average Enterprise Value/EBITDA
BE Aerospace Inc. 09/30/10 $3,787 $4,542 2.4x 12.7x 18.5% 25.3x 21.2% 57.6%
Boeing Co. 09/30/10 $47,873 $50,383 0.8x 7.1x 10.7% 14.0x (2.3%) 20.6%
10.0x
Bombardier, Inc. 10/31/10 $8,690 $11,002 0.6x 7.6x 8.2% 14.7x 3.1% 9.9%
CAE Inc. 09/30/10 $2,971 $3,241 2.2x 9.7x 22.6% 19.4x 12.0% 38.2%
Curtiss-Wright Corp. 09/30/10 $1,531 $1,973 1.1x 7.4x 14.3% 14.5x 9.7% 6.0%
Dassault Aviation SA 06/30/10 $8,160 $9,265 1.9x 11.8x 15.9% 24.3x (2.4%) 7.1%
Ducommun Inc. 10/02/10 $229 $248 0.6x 5.8x 10.4% 18.3x (1.2%) 16.4%
8.0x
EMBRAER 09/30/10 $5,319 $5,194 1.0x 11.8x 8.5% 17.6x 3.6% 33.0%
Esterline Technologies Corp. 10/29/10 $2,081 $2,272 1.5x 8.8x 17.0% 15.8x 19.3% 68.2%
European Aeronautic Defence and Space Co. 09/30/10 $18,954 $11,577 0.2x 10.6x 1.8% N.M. (6.0%) 15.9%
Goodrich Corp. 09/30/10 $11,042 $12,318 1.8x 9.9x 18.2% 20.9x 18.7% 37.1% 9.9x
Hampson Industries plc 09/30/10 $136 $276 1.0x 7.0x 13.8% 9.7x (5.1%) (55.3%) 9.0x 8.7x
HEICO Corp. 10/31/10 $1,692 $1,700 2.8x 13.3x 20.8% 30.6x 10.5% 43.9%
8.5x
6.0x 8.1x
Heroux-Devtek Inc. 09/30/10 $179 $250 0.8x 5.6x 14.1% 13.6x (0.8%) 24.9%
Hexcel Corp. 09/30/10 $1,759 $2,012 1.8x 11.8x 15.1% 29.3x 0.6% 39.4% 6.8x
Honeywell International Inc. 09/30/10 $41,474 $45,531 1.4x 11.0x 12.8% 19.9x 20.4% 35.6% 6.0x
Innovative Solutions & Support Inc. 09/30/10 $95 $54 2.1x N.M. N.M. N.M. 23.0% 23.5%
5.2x
Jamco Corp. 09/30/10 $178 $361 0.7x 11.8x 6.3% N.M. (18.2%) 22.2%
Kaman Corporation 10/01/10 $755 $850 0.7x 12.3x 5.7% 23.6x 12.5% 25.9% 4.0x
Ladish Co. Inc. 09/30/10 $764 $821 2.2x 15.0x 14.3% 30.0x 52.9% 223.1% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
LMI Aerospace Inc. 09/30/10 $188 $188 0.8x 6.8x 12.4% 17.0x (0.4%) 20.2%
Meggitt plc 06/30/10 $4,009 $5,289 3.2x 12.6x 25.2% 22.8x 22.9% 37.6% Source: Capital IQ with information compiled by Deloitte Corporate Finance LLC
Moog Inc. 10/02/10 $1,823 $2,476 1.2x 8.6x 13.6% 16.7x 12.4% 36.2% (www.investmentbanking.deloitte.com).
MTU Aero Engines Holding AG 09/30/10 $3,309 $3,399 0.9x 7.0x 13.4% 16.6x 18.2% 24.0%
Precision Castparts Corp. 09/26/10 $19,854 $19,681 3.4x 12.3x 27.8% 20.9x 8.1% 26.2%
Rolls Royce Group plc 06/30/10 $18,208 $16,166 1.0x 8.3x 12.2% N.M. 3.2% 24.5%
Safran SA 06/30/10 $14,198 $15,651 1.2x 9.4x 12.6% N.M. 27.8% 81.1%
Senior plc 06/30/10 $941 $1,072 1.3x 8.6x 15.1% 13.7x 8.2% 94.2% Defense Trading Multiples
SIFCO Industries Inc. 09/30/10 $86 $64 0.8x 6.6x 11.7% 16.1x 33.7% 13.3%
Average Enterprise Value/EBITDA
Spirit AeroSystems Holdings Inc 09/30/10 $2,966 $3,935 0.9x 8.7x 10.8% 14.0x 4.2% 4.8%
Teledyne Technologies Inc. 10/03/10 $1,596 $1,838 1.0x 8.2x 12.7% 13.7x 9.5% 14.6%
10.0x
Textron Inc. 10/02/10 $6,499 $12,073 1.2x 13.5x 8.8% N.M. 13.9% 25.7%
TransDigm Group Incorporated 09/30/10 $3,561 $5,102 6.2x 12.7x 48.4% 28.6x 16.2% 51.6%
Triumph Group, Inc. 09/30/10 $2,164 $3,404 1.8x 11.8x 15.7% 17.3x 18.3% 85.3%
Ultra Electronics Holdings plc 07/02/10 $1,815 $1,842 1.8x 10.9x 16.4% 20.4x (2.6%) 19.2%
UMECO plc 09/30/10 $335 $436 0.6x 7.5x 8.6% 14.3x 1.0% 51.8%
Zodiac Aerospace SA 08/31/10 $4,023 $4,677 1.7x 12.4x 13.8% 21.2x 20.0% 80.5% 8.0x

Average Aerospace 1.5x 9.9x 14.7% 19.2x 10.6% 40.3%

Median Aerospace 1.2x 9.7x 13.8% 17.6x 10.1% 26.0%

Defense 8.4x 8.5x

AeroVironment, Inc. 10/30/10 $586 $428 1.6x 12.1x 13.5% 30.5x 18.8% (7.7%) 6.0x 7.8x 8.0x
7.5x 7.4x
Alliant Techsystems Inc. 10/03/10 $2,479 $3,704 0.8x 5.7x 13.6% 8.0x 0.9% (15.7%) 7.1x
6.8x
Applied Signal Technology, Inc. 07/30/10 $531 $501 2.2x 15.4x 14.4% 36.5x 51.0% 96.5%
Babcock International Group plc 09/30/10 $3,196 $4,446 1.3x 14.2x 9.1% 17.1x (2.8%) (7.4%)
BAE Systems plc 06/30/10 $17,565 $18,692 0.6x 3.9x 14.8% 21.2x (5.1%) (11.3%)
Breeze-Eastern Corporation 09/30/10 $67 $78 1.1x N.M. (5.3%) N.M. 3.6% 18.3% 4.0x
Ceradyne Inc. 09/30/10 $785 $612 1.5x 9.6x 16.0% 26.5x 36.2% 64.0% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
Chemring Group plc 04/30/10 $1,601 $2,000 2.5x 9.6x 25.9% 15.6x (4.5%) (4.4%)
Cobham plc 06/30/10 $3,668 $4,227 1.5x 7.0x 21.2% 15.7x (11.7%) (21.8%)
CPI Aerostructures Inc. 09/30/10 $94 $95 1.9x 11.7x 16.5% 17.5x 42.9% 134.3% Source: Capital IQ with information compiled by Deloitte Corporate Finance LLC
Cubic Corporation 09/30/10 $1,261 $902 0.8x 7.5x 10.0% 17.8x 14.2% 26.4% (www.investmentbanking.deloitte.com).
Elbit Systems Ltd. 06/30/10 $2,283 $2,409 0.9x 6.9x 13.6% 11.0x 0.1% (17.6%)
Finmeccanica SpA 09/30/10 $6,581 $14,124 0.6x 5.6x 10.0% 7.9x (4.4%) (28.9%)
FLIR Systems, Inc. 09/30/10 $4,718 $4,338 3.4x 10.6x 32.4% 19.3x 15.6% (9.1%)
GenCorp Inc. 08/31/10 $305 $500 0.6x 5.8x 9.9% 10.8x (4.3%) (26.1%)
G
General Dynamics Corp.
C 10/03/10
/ / $
$26,805 $
$28,166 0.9x 6.4x 13.8%
% 10.8x 13.6%
% 4.1%
% Defense IT Trading Multiples
Global Defense Technology & Systems, Inc. 09/30/10 $154 $146 0.7x 11.4x 6.2% 40.3x 24.1% 2.4% Average Enterprise Value/EBITDA
Harris Corp. 10/01/10 $5,811 $6,918 1.3x 5.8x 22.1% 9.4x 1.3% (4.7%)
Herley Industries Inc. 10/31/10 $243 $237 1.3x 7.6x 16.5% 34.4x 4.9% 24.7% 10.0x
ITT Corporation 09/30/10 $9,567 $10,298 0.9x 6.5x 14.4% 16.4x 10.8% 4.8%
Kratos Defense & Security Solutions, Inc. 09/26/10 $244 $418 1.2x 13.5x 8.5% 14.5x 24.2% 24.8%
L-3 Communications Holdings Inc. 09/24/10 $7,978 $11,470 0.7x 5.9x 12.5% 9.0x (1.7%) (18.9%)
Lockheed Martin Corporation 09/26/10 $25,177 $26,773 0.6x 5.0x 11.4% 9.7x 0.4% (7.2%)
Northrop Grumman Corporation 09/30/10 $18,915 $20,535 0.6x 5.6x 10.4% 9.6x 7.4% 16.0%
QinetiQ Group Plc 09/30/10 $1,329 $1,853 0.7x 7.1x 9.9% N.M. 18.8% (22.6%) 8.0x
Raytheon Co. 09/26/10 $16,893 $17,070 0.7x 5.8x 11.8% 9.8x 3.9% (10.1%)
Rockwell Collins Inc. 09/30/10 $9,035 $9,149 2.0x 9.5x 20.7% 16.3x (0.4%) 5.2%
Singapore Technologies Engineering Ltd. 09/30/10 $8,112 $7,886 1.8x 13.4x 13.3% 22.3x 3.0% 15.4%
Thales 06/30/10 $6,859 $7,780 0.5x 9.9x 4.9% N.M. (3.7%) (31.8%)
6.0x 7.8x
Average Defense 1.2x 8.5x 13.5% 17.6x 8.9% 6.6% 7.4x 7.4x 7.4x
Median Defense 0.9x 7.3x 13.5% 16.0x 3.6% (4.7%) 6.7x 6.8x 6.8x
6.1x
Defense IT
CACI IInternational
t ti l IInc. 09/30/10 $1,619
$1 619 $1,914
$1 914 06
0.6x 75
7.5x 7 8%
7.8% 14 5
14.5x 16 9%
16.9% 9 3%
9.3%
Dynamics Research Corp. 09/30/10 $135 $137 0.5x 5.1x 9.9% 11.2x 31.0% 26.3% 4.0x
The KEYW Holding Corporation 09/30/10 $370 $399 4.4x N.M. 6.1% 19.8x 28.9% N.M Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
ManTech International Corporation 09/30/10 $1,503 $1,551 0.6x 6.8x 9.4% 12.4x 4.4% (14.5%)
Mercury Computer Systems, Inc. 09/30/10 $448 $366 1.8x 14.9x 12.0% 15.3x 48.6% 66.9% Source: Capital IQ with information compiled by Deloitte Corporate Finance LLC
SAIC, Inc. 10/31/10 $5,897 $6,357 0.6x 6.0x 9.5% 10.8x (1.1%) (16.3%) (www.investmentbanking.deloitte.com).
SRA International Inc. 09/30/10 $1,168 $1,067 0.6x 7.1x 9.0% N.M. 3.0% 7.1%
VSE Corp. 09/30/10 $171 $207 0.2x 4.3x 5.3% 7.1x (6.9%) (26.8%)

Average Defense IT 1.2x 7.4x 8.6% 13.0x 15.6% 7.4%

Median Defense IT 0.6x 6.8x 9.2% 12.4x 10.7% 7.1% Maintenance, Repair and Overhaul Trading Multiples
Average Enterprise Value/EBITDA
Maintenance, Repair and Overhaul
AAR Corp. 11/30/10 $1,090 $1,458 0.9x 9.1x 10.4% 20.4x 46.5% 19.5%
Hong Kong Aircraft Engineering Co. Ltd. 06/30/10 $2,780 $2,844 5.6x 22.8x 24.7% 36.3x (8.7%) 28.6% 14.0x
SIA Engineering Co. Ltd. 09/30/10 $3,597 $3,289 4.0x 14.0x 28.7% 17.6x (4.6%) 38.8%
Vector Aerospace Corporation 09/30/10 $437 $459 0.9x 7.5x 11.7% 13.3x 38.3% 62.5%
12.0x
Average Maintenance, Repair and Overhaul 2.9x 13.3x 18.9% 21.9x 17.9% 37.4%
M di
Median Maintenance,
M i t Repair
R i andd Overhaul
O h l 25
2.5x 11 5
11.5x 18 2%
18.2% 19 0
19.0x 16 8%
16.8% 33 7%
33.7%
Source: Capital IQ 10.0x

13.3x
8.0x
10.5x 11.0x
9.8x
6.0x 7.9x
7.3x
5.7x 5.5x
4.0x
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Source: Capital IQ with information compiled by Deloitte Corporate Finance LLC

(www.investmentbanking.deloitte.com).

DCF Aerospace and Defense Update/Q4 10 5

Learn more

Looming debt maturities

Despite recent robust syndicated loan and high yield bond
Corporate Loan Maturity Schedule markets which have allowed for a reduction in the
$250B bottleneck of loan maturities over the next three to four
years, significant maturities remain and may lead to a
$200B crowded refinancing marketplace. Lower rated, unrated and
middle-market companies that lack direct access to the
$150B capital markets may have a difficult time sourcing capital
and should begin their refinancing processes early.
$100B

$50B

$0B
2010 2011 2012 2013 2014 2015 2016 2017
As of: Dec. 31, 2008 Dec. 31, 2009 Dec. 17, 2010
Source: Standard & Poor’s LCD

Capital Advisory Services — Deloitte Corporate Finance LLC

Deloitte’s Capital Advisory group is a dedicated team of credit-focused corporate finance professionals devoted to helping its clients
navigate the ever changing capital markets. The team has significant experience in a broad spectrum of the capital markets including senior
debt, second lien debt, mezzanine and all forms or equity. Transactional experience ranges from the provision of strategic advice on
optimizing capital structure, analysis of capital market alternatives and available sources of finance, to assisting with the execution of multi-
faceted balance sheet restructurings and financing plans.

Related content
In addition to information regarding the packaging industry being provided by Deloitte Corporate Finance LLC (“DCF”), you may be
interested in additional events and informational sources available through DCF and the subsidiaries of Deloitte LLP.
Middle market M&A news
2010: Year in review
Over the course of the past twelve months, middle market M&A has established its position on the road to recovery. In conjunction with the
broader economic rebound, middle market M&A forged ahead in 2010 with the announcement of more than 7,100 deals worth
approximately $175 billion. While the total number of announced transactions remained relatively unchanged from the prior year, the total
announced deal value represents a 50% increase over 2009.
Learn more by downloading Middle Market M&A News — 2010: Year in Review
Divestiture survey report
Carve-out trends and leading practices
With rising expectations of the economy to improve in 2011, should we expect an increasing number of divestitures? What are the drivers
behind companies’ decisions to divest? How successful are they in meeting expectations?
To better understand these issues, Deloitte surveyed more than 300 professionals who have been involved in divestiture or carve-outs. The
results shed new light on leading practices that may be useful in capitalizing on the anticipated changes in the M&A environment.
Learn more by downloading Divestiture Survey Report — Carve-out trends and leading practices

DCF Aerospace and Defense Update/Q4 10 6

Deloitte Corporate Finance LLC
DCF provides deal execution and lead financial advisory services to large corporate, middle market, private equity and venture capital firms. DCF
and its affiliates maintain a presence in key U.S. financial centers.
For additional information or to find out more about how DCF can assist the deal initiation and execution process, please contact one of our DCF
Managing Directors:

Hector Calzada Kevan Flanigan Constantine Korologos Jonathan Ohm

Managing Director National Managing Director Managing Director Managing Director
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Phone: +1 404 631 3015 Phone: +1 213 688 6560 Phone: +1 212 436 4620 Phone: +1 212 436 2287

Ellen Clark Will Frame Michael McArthur Justin Silber

Managing
g g Director Managing
g g Director Managing
g g Director Managing
g g Director
Email: elclark@deloitte.com Email: wframe@deloitte.com Email: mimcarthur@deloitte.com Email: jsilber@deloitte.com
Phone: +1 313 396 2682 Phone: +1 312 486 4458 Phone: +1 213 688 3257 Phone: +1 404 942 6960

Bob Coury Simon Gisby Kevin McFarlane Irene Walsh

Managing Director Managing Director Managing Director Managing Director
Email: rcoury@deloitte.com Email: sgisby@deloitte.com Email: kemcfarlane@deloitte.com Email: iwalsh@deloitte.com
Phone: +1 313 396 3811 Phone: +1 212 436 2495 Phone: +1 213 553 1423 Phone: +1 212 436 4620

For additional information on members of the aerospace and defense team of Deloitte Consulting LLP and it affiliates, please contact:

Tom Captain
National Managing Director
Aerospace & Defense
Deloitte Consulting LLP
Email: tcaptain@deloitte.com
Phone: +1 206 716 6452

Corporate
p Finance Practices of DTTL Member Firms and Affiliates
DCF and the corporate finance practices of the member firms of Deloitte Touche Tohmatsu Limited (DTTL) or their affiliates are able to work together
to provide industry-specific experience and execution capabilities to assist in the completion of M&A advisory assignments around the globe.

Europe
ƒ Austria ƒ Luxembourg
ƒ Belgium ƒ Netherlands
ƒ Central Europe ƒ Norway
ƒ Denmark ƒ Portugal
ƒ France ƒ Spain
ƒ Finland ƒ Switzerland
ƒ Germany ƒ Russia
ƒ Greece ƒ Turkey
ƒ Ireland ƒ United Kingdom
ƒ Italy

Asia Pacific
North America ƒ Australia
ƒ Canada ƒ China
ƒ Mexico ƒ India
ƒ United States ƒ Indonesia
- Chicago ƒ Japan
- Dallas ƒ Malaysia
- Detroit ƒ New Zealand
- Los Angeles ƒ Philippines
- New York Middle East ƒ Singapore
ƒ South Korea
ƒ United Arab Emirates
ƒ Taiwan
ƒ Saudi Arabia
Africa ƒ Thailand
ƒ Kuwait
ƒSouth Africa ƒ Qatar
ƒNigeria

South America
ƒArgentina
ƒBrazil
ƒChile

* In all office locations outside the United States listed above, corporate finance services are offered by the DTTL member firm of the applicable country or an affiliate
thereof. Each of the DTTL member firms is a separate and independent legal entity.

DCF Aerospace and Defense Update/Q4 10 7

This newsletter is a periodic compilation of certain completed and announced merger and acquisition activity. Information contained in this newsletter should not be
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