FOR IMMEDIATE RELEASE FRIDAY, MARCH 27, 1998

AT

L-3 COMMUNICATIONS IS CLEARED TO PURCHASE ALLIEDSIGNAL'S

OCEAN SYSTEMS AFTER IT REACHED A SETTLEMENT WITH DOJ

WASHINGTON, D.C. -- The Department of Justice today cleared L-3 Communications Corporation's proposed $75 million acquisition of AlliedSignal's Ocean Systems Business and AlliedSignal ELAC Nautik GmbH, after it agreed to put in place procedures to ensure Ocean Systems' independence as a competitor for future submarine detector contracts. Ocean Systems and Lockheed Martin are the two leading providers of submarine detectors used on Navy combat vessels and submarines, known as towed sonar arrays. Lockheed Martin owns 34 percent of the common stock of L-3 Communications and controls three of ten seats on the L-3 Communications Board of Directors. The settlement would preserve the independence of L-3 and Lockheed Martin as competitors on future towed array contracts. "This is the rare occasion where it is not necessary to require a divestiture of assets in order to preserve a competitive environment," said Joel I. Klein, Assistant Attorney General in charge of the Department's Antitrust Division. "Under the unique facts of this case, the ability to exercise control was declining and will eventually be nonexistent. As a result, we were able to fashion a remedy for this transaction that allows the deal to proceed, while recognizing the key role competition plays in our national security interests." The proposed settlement, filed in U.S. District Court in Washington, D.C., requires L-3 Communications to establish a "firewall" that will prohibit employees of L-3 Communications and Lockheed Martin from disclosing information to each other on the development and production of towed arrays. L-3 Communications has also agreed that it will not join together with Lockheed Martin as one team when bidding on future towed array contracts. According to the complaint, because of the ownership interest Lockheed Martin has in L-3 Communications and seats it has on the Board of Directors, the acquisition would have enabled competitors to share competitively sensitive information about the design, production and bids for future towed array contracts. The complaint alleges that access to such information could decrease the companies' incentive to lower costs or to be innovative in order to win DoD contracts. The settlement requires L-3 Communications to keep Ocean Systems' business totally independent of Lockheed Martin. The settlement also ensures that DoD will have both competitors for its future programs by preventing them from teaming on upcoming bids for towed array contracts. L-3 Communications is a Delaware corporation headquartered in New York, New York, with 1997 sales of approximately $700 million. L-3 Communications produces communication

systems and products such as microwave components and avionics. AlliedSignal is a Delaware corporation headquartered in Morristown, NJ, with total sales in 1996 of $14 billion. Its Ocean Systems Business is located in Sylmar, CA, and its ELAC Nautik GmbH operation is located in Germany. They produce a variety of warfare sonars. In 1997, Ocean Systems and ELAC had combined revenues of approximately $100 million. As required by the Tunney Act, the proposed consent decree will be published in the Federal Register, along with the Department's competitive impact statement. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to J. Robert Kramer II, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 1401 H St., N.W., Suite 3000, Washington, D.C. 20530 (202-307-0924). At the conclusion of the 60-day comment period, the U.S. District Court in Washington, D.C. may enter the settlement upon a finding that it serves the public interest.

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