Washington, DC -- EADS North America announced that it has acquired Racal Instruments Group, a company involved in the development, production, and integration of systems and instruments to test electronics, aerospace, and defense systems. Racal Instruments will be operated through EADS North America Defense Company.

"The acquisition of Racal Instruments is part of the long-term growth strategy of EADS in North America," stated Ralph D. Crosby, Jr., chairman and CEO, EADS North America and a member of the EADS Executive Committee. "With this acquisition, we obtain a market leader in the integrated test business in the U.S., build upon our other U.S. test businesses, and add materially to our critical mass as a leading global test and services company. EADS will provide Racal Instruments with an enhanced technology base, improved financial stability, and thus better position it to develop new capabilities. This will facilitate the production of a more extensive range of products and services."

Gordon Taylor, CEO of Racal Instruments, commented: "Racal Instruments has a long and successful history as an innovator in the test systems product market. Now, as part of the EADS Group, our military and commercial customers will enjoy improved security of guaranteed long-term support. Our new company can better support the move toward common Automated Test Equipment (ATE) systems and applied solutions, across a broader base of programs and test sets. The inclusion of Racal Instruments´ U.S. business in the new EADS North America Defense Company will also make us better able to serve military customers who require classified instrumentation and test equipment."

Racal Instruments was acquired from an entity controlled on behalf of the Thomas Weisel Capital Partners funds and J.F. Lehman and Company. The price of the acquisition is $105 million, plus or minus net cash at the date of closing, and the sellers have agreed to an earn-out formula whereby EADS pays up to an additional $25 million for guaranteed future bookings until mid 2005. Racal Instruments employs more than 320 professionals in the U.S. (Irvine, CA, and San Antonio, TX), the United Kingdom, Europe and Asia and supports both commercial and military customers worldwide. Revenue for the year in progress is expected to be $84 million, reflecting strong year-to-year growth. Upon completion of the transaction, Racal Instruments, Inc. (Irvine, CA and San Antonio, TX) will transfer to EADS North America Defense Company and Racal Instruments UK, Europe and Asia will be transferred to EADS Test and Services in the Defense and Security Systems Division of EADS.

"Beyond the U.S. market, Racal Instruments UK and EADS Test & Services will form the European leader in Aerospace and Defense Testing," Tom Enders, member of the EADS Executive Committee and head of the EADS Defense and Security Systems Division, said. "The new company will be a strong global competitor in the test and services industry, with world-class software and engineering capabilities, uniquely capable of offering customers a global full-service support network."

EADS Test & Services is a specialist in Automatic Testing and offers a line of test systems and services for the integration, production, and maintenance testing of electronic, opto-electronic, and radar equipment installed in airliners, military aircraft, helicopters, tanks, missiles, and weapon systems. More than 800 test stations and 4,000 test programs have been delivered throughout the world to more than 160 airlines, maintenance organizations, equipment manufacturers and armed forces. Building on its test expertise, the ISO 9001-certified company increasingly supplies test engineering and obsolescence management services to the industry.