1039101--2/26/2010--L_3_COMMUNICATIONS

related topics

{regulation, government, change}

{debt, indebtedness, cash}

{financial, litigation, operation}

{personnel, key, retain}

{product, market, service}

{operation, international, foreign}

{condition, economic, financial}

{acquisition, growth, future}

{cost, regulation, environmental}

{competitive, industry, competition}

{cost, contract, operation}

We rely predominantly on sales to U.S. Government entities, and the loss of a significant number of our contracts would have a material adverse effect on our results of operations and cash flows. Our government contracts contain unfavorable termination provisions and are subject to audit and modification. If a termination right is exercised by the government, it could have a material adverse effect on our business, financial condition, results of operations and cash flows. The DoD s recent announcement to in-source contractor support services jobs by fiscal year 2014 could result in a material decrease in our sales, earnings and cash flows. We may not be able to win competitively awarded contracts or receive required licenses to export our products, which would have a material adverse effect on our business, financial condition, results of operations and future prospects. We are subject to government investigations, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects. We are subject to the risks of current and future legal proceedings, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects. If we are unable to keep pace with rapidly evolving products and service offerings and technological change, there could be a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects. Our business acquisition strategy involves risks, and we may not successfully implement our strategy. Our results of operations and cash flows are substantially affected by our mix of fixed-price, cost-plus and time-and-material type contracts. Intense competition in the industries in which our businesses operate could limit our ability to attract and retain customers. Our significant level of debt and our ability to make payments on or service our indebtedness may adversely affect our financial and operating activities or ability to incur additional debt. Our debt agreements restrict our ability to finance our future operations and, if we are unable to meet our financial ratios, could cause our existing debt to be accelerated. If we are unable to attract and retain key management and personnel, we may become unable to operate our business effectively. Environmental laws and regulations may subject us to significant liability. Termination of our backlog of orders could negatively impact our results of operations and cash flows. Our sales to certain foreign customers expose us to risks associated with operating internationally. Continued global economic weakness, diminished credit availability, and increasing U.S. Government budget deficits may materially and adversely affect our results.

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1039101--2/26/2010--L_3_COMMUNICATIONS_CORP