28630--5/30/2008--DRS_TECHNOLOGIES

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{regulation, government, change}

{customer, product, revenue}

{cost, contract, operation}

{tax, income, asset}

{acquisition, growth, future}

{product, market, service}

{cost, regulation, environmental}

{operation, international, foreign}

{stock, price, share}

{property, intellectual, protect}

{financial, litigation, operation}

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Our merger agreement with Finmeccanica may be terminated prior to completion of the merger in certain circumstances. Any such termination could have a significant effect on the market price of our stock, including the likelihood that in such event, the price that could be received by our holders of common stock in the open market would be less than the per share cash price to be paid in the merger. Our revenues depend on our ability to maintain our level of government business. The loss of our contracts with domestic and non-U.S. government agencies could adversely affect our revenues. Our revenues will be adversely affected if we fail to receive renewal or follow-on contracts. Our operating results may fluctuate. Failure to anticipate technical problems, estimate costs accurately or control costs during performance of a fixed-price contract may reduce our profit or cause a loss. We may experience production delays if suppliers fail to deliver materials to us. Our backlog is subject to reduction and cancellation, which could negatively impact our revenues and results of operations. Our international operations expose us to risks of losses. We operate in highly competitive markets. We are dependent in part upon our relationships and alliances with industry participants in order to generate revenue. The Company may not be able to obtain patents or other intellectual property protections necessary to secure its proprietary technology. We have entered, and expect to continue to enter, into joint venture, teaming and other arrangements, and these activities involve risks and uncertainties. We are subject to environmental laws and regulations, and our ongoing operations may expose us to environmental liabilities. We are involved in a number of legal proceedings, each of which could have a material adverse affect on our business. We cannot predict the outcome of litigation and other contingencies with certainty. A failure to attract and retain technical and other key personnel could reduce our revenues and our operational effectiveness. As a U.S. government contractor, we are subject to a number of procurement rules, regulations, and procedures, including routine audits. Our operations involve rapidly evolving products and technological change. Business disruptions could seriously affect our future sales and financial condition or increase our costs and expenses. Our level of indebtedness could limit cash flow available for our operations and could adversely affect our ability to service our debt or obtain additional financing, if necessary. We may incur substantial additional indebtedness in the future. Despite current indebtedness levels, we and our subsidiaries still may be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage. Our ability to service our debt and meet our cash requirements depends on many factors, some of which are beyond our control. The covenants in our amended and restated senior secured credit facility and the indentures governing our notes impose restrictions that may limit our ability and the ability of most of our subsidiaries to take certain actions. Some of our debt, including borrowings under our amended and restated senior secured credit facility, is based on variable rates of interest, which could result in higher interest expenses in the event of an increase in interest rates. We may not be successful in implementing our growth strategy if we are unable to identify, acquire and finance suitable acquisition targets. We use estimates in accounting for our pension plan and changes in our estimates could adversely affect our results of operations. Goodwill and other intangible assets represent a significant portion of our assets and any impairment of these assets could negatively impact our results of operations. Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our profitability.

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28630--5/30/2008--DRS_TECHNOLOGIES_INC