Acquisition of the Electronic Products Division of Kratos Defense & Security Solutions, Inc. 1 June 2015

Acquisition of the Electronic Products Division of Kratos Defense & Security Solutions, Inc.

1 June 2015

SLIDE 2

© 2015 Ultra Electronics: Proprietary Data

Overview• Ultra Electronics to acquire the Electronics Product Division (“EPD”) of Kratos Defense &

Security, Inc. (“Kratos”) for a cash consideration of up to US$265m

• EPD (formerly Herley Industries, Inc.) is a leading designer and producer of RF and microwave integrated systems and subsystems for use in electronic warfare (EW), radar, communication, missile, flight test and simulation applications

• Sole-source provider of proprietary technology on existing and future strategic platforms

• Long-standing relationships and proven performance on mission critical national security programmes

• Well-positioned for opportunities on F-35 JSF and other strategic national defence and security programmesNew England (HQ)

• Integrated MW assemblies

• MW switches and components

• High power coaxial and waveguide components

• Receiver protectors• Hybrids

• Massachusetts, US

CTI

• Signal generation• Up/down conversion• Synthesizers• Oscillators• Radar target

generators• Digital RF memories

• New Jersey, US

Lancaster

• Flight instrumentation

• RF/MW assemblies• Telemetry• Automatic carrier

landing systems &data acquisitions

• IFF systems

• Pennsylvania, US

• Systems for electronic countermeasures

• Radar target & radar threat simulation equipment for operator training

• System test & evaluation

EWST

• Hampshire, UK

Note: Ultra is acquiring Kratos’ Electronic Product Division (EPD). EPD has separate Israeli businesses named Kratos-General Microwave Israel and Kratos GMI-Eyal, which are not part of this acquisition

SLIDE 3


EPD current platforms and customers

Select critical platforms

P-8A Poseidon

Trident II D5 Missile

F-16 Fighting Falcon

EA-18G Growler

SEWIP

Eurofighter Typhoon

Top customers

Government Defence primes

2014A revenues by customer type

Major US primes & defence

contractors66%

International military

26%

US government

6%

Commercial2%

SLIDE 4


Strategic rationale

• Establishes a major presence in the growing market of electronic warfare (EW)

• Provides market and customer synergies with Ultra’s C2ISR market segment

• Well-established supplier to the attractive US EW market, which is growing at over 3% CAGR

• Long-term contracts strengthen Ultra’s order book visibility

• The combined technologies under Ultra’s ownership will provide opportunity to gain market share

One of the few providers of specialist RF/ Microwave applications for

electronic warfare & electronic attack in the market space, with decades

of proven performance and strong pipeline of future opportunities

SLIDE 5


Transaction highlights

Consideration

• Total enterprise value of US$260m paid in cash at closing

• Up to additional US$5m in cash in consideration of utilising tax assets and is expected to be paid within the next 12 months

Financial

data

Approvals, terms and

timing

• EPD 2014: EBITDA - US$22m; PBT US$11m; gross assets US$217m

• Annual capex and depreciation – c. US$4m

• Subject inter alia to US regulatory approvals

• Transaction expected to close in Q3 2015

SLIDE 6


Financial impact

Synergies

• Recurring pre-tax cost synergies of approximately US$8.0m per annum to be delivered in full by the end of 2019

‐ Production efficiencies

‐ Site rationalisation

‐ Elimination of duplicated overheads

• Section 338(h)(10) election tax shield results in tax savings of c.$5m pa for 15 years

• No revenue synergies have been assumed

Funding• Mix of Ultra’s existing facilities and a new 4 year US dollar term Loan

• Key terms and covenants match those of existing facilities

Financial

• Transaction will be earnings accretive from the first full year

• 2016E Net Debt/EBITDA expected to be comfortably below 2x

• Purchase price represents 7.7x LTM EBITDA taking into account tax benefits and run-rate cost synergies to be realised

Documents

Acquisition of the Electronic Products Division of Kratos Defense & Security Solutions, Inc. 1 June 2015