L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS  — (continued)

(Dollars in thousands, except per share data)

ment contracts are subject to extensive legal and regulatory requirements, and, from time to time, agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. Under U.S. Government procurement regulations, an indictment of the Company by a federal grand jury could result in the Company being suspended for a period of time from eligibility for awards of new government contracts. A conviction could result in debarment from contracting with the federal government for a specified term. Additionally, in the event that U.S. Government expenditures for products and services of the type manufactured and provided by the Company are reduced, and not offset by greater commercial sales or other new programs or products, or acquisitions, there may be a reduction in the volume of contracts or subcontracts awarded to the Company. In addition, all of the Company's U.S. Government contracts are subject to audit and various pricing and cost controls, and include standard provisions for termination for the convenience of the U.S. Government. Multi-year U.S. Government contracts and related orders are subject to cancellation if funds for contracts become unavailable. Foreign government contracts generally include comparable provisions relating to termination for the convenience of the relevant foreign government.

Additionally, the Company has been periodically subject to litigation, claims or assessments and various contingent liabilities incidental to its businesses. Management continually assesses the Company's obligations with respect to applicable environmental protection laws. While it is difficult to determine the timing and ultimate cost to be incurred by the Company in order to comply with these laws, based upon available internal and external assessments, with respect to those environmental loss contingencies of which management is aware, the Company believes that even without considering potential insurance recoveries, if any, there are no environmental loss contingencies that, individually or in the aggregate, would be material to the Company's consolidated results of operations. The Company accrues for these contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

On August 6, 2002, Aviation Communications & Surveillance Systems, LLC (ACSS), a subsidiary of L-3 Communications Corporation, was sued by Honeywell International Inc. and Honeywell Intellectual Properties, Inc. (collectively, "Honeywell") for alleged infringement of patents that relate to terrain awareness avionics. The lawsuit was filed in the United States District Court for the District of Delaware. In December of 2002, Honeywell withdrew without prejudice the lawsuit against ACSS and agreed to proceed with non-binding arbitration. The Company had previously investigated the Honeywell patents and believes that ACSS has valid defenses against Honeywell's patent infringement suit. In addition, ACSS has been indemnified to a certain extent by Thales Avionics, which provided ACSS with the alleged infringing technology. Thales Avionics owns 30% of ACSS. In the opinion of management, the ultimate disposition of Honeywell's pending claim will not result in a material liability to the Company.

L-3 Integrated Systems and its predecessors have been involved in a litigation with Kalitta Air arising from a contract to convert Boeing 747 aircraft from passenger configuration to cargo freighters. The lawsuit was brought in the northern district of California on January 31, 1997. The aircraft were modified using Supplemental Type Certificates (STCs) issued in 1988 by the Federal Aviation Administration (FAA) to Hayes International, Inc. (Hayes/Pemco) as a subcontractor to GATX/Airlog Company (GATX). Between 1988 and 1990, Hayes/Pemco modified five aircraft as a subcontractor to GATX using the STCs. Between 1990 and 1994, Chrysler Technologies Airborne Systems, Inc. (CTAS), a predecessor to L-3 Integrated Systems, performed as a subcontractor to GATX and modified an additional five aircraft using the STCs. Two of the aircraft modified by CTAS were owned by American International Airways, the predecessor to Kalitta Air. In 1996, the FAA determined that the engineering data provided by Hayes/Pemco supporting the STCs was inadequate and issued an Airworthiness Directive that effectively grounded the ten modified aircraft. The Kalitta Air aircraft have not been in revenue service since that

16

L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS  — (continued)

(Dollars in thousands, except per share data)

date. The matter was tried in January 2001 against GATX and CTAS with the jury finding fault on the part of GATX, but rendering a unanimous defense verdict in favor of CTAS. Certain co-defendants had settled prior to trial. The U.S. Ninth Circuit Court of Appeals has reversed and remanded the trial court's summary judgment rulings in favor of CTAS regarding a negligence claim by Kalitta Air, which asserts that CTAS as an expert in aircraft modification should have known that the STCs were deficient, and excluding certain evidence at trial. Based on this ruling, a retrial has been scheduled for September 2004. In preparation of such retrial, Kalitta Air has submitted to us an expert report on damages that calculated Kalitta Air's damages at either $232,000 or $602,000, depending on different factual assumptions. The Company has retained experts whose reports indicate that, even in the event of an adverse jury finding on the liability issues at trial, Kalitta Air has already recovered amounts from the other parties to the initial suit that more than fully compensated Kalitta Air for any damages it incurred. CTAS' insurance carrier has accepted defense of the matter with a reservation of its right to dispute its obligations under the applicable insurance policy in the event of an adverse jury finding. The Company believes that it has meritorious defenses and intends to continue to vigorously defend this matter. However, litigation is inherently uncertain and it is possible that an adverse decision could be rendered, which could have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

The Company and L-3 Communications Security and Detection Systems (L-3 SDS) had been named, along with many other defendants, including other security screening systems manufacturers, as defendants in a number of lawsuits brought in the Southern District of New York by or on behalf of the victims of the terrorist attacks on September 11, 2001. The Court ordered that the plaintiffs file amended master complaints on March 31, 2004. These complaints did not name the Company or L-3 SDS as defendants. The Company has been advised that the plaintiffs' executive committee recommended that all plaintiffs drop their claims against the Company, L-3 SDS, and various other security systems manufacturers, and that all of the plaintiffs with active pending cases have agreed to do so. Actual notices of dismissal have been obtained in 92 cases and are being sought in the remaining cases, however it appears that the filing of the amended master complaints without listing the Company or its subsidiaries has effectively terminated the litigation against us. The Company therefore anticipates that it will have no liability in these cases.

On November 18, 2002, the Company initiated a proceeding against OSI Systems, Inc. (OSI) in the United States District Court sitting in the Southern District of New York seeking, among other things, a declaratory judgment that the Company had fulfilled all of its obligations under a letter of intent with OSI (the "OSI Letter of Intent"). Under the OSI Letter of Intent, the Company was to negotiate definitive agreements with OSI for the sale of certain businesses the Company acquired from PerkinElmer, Inc. on June 14, 2002. On February 7, 2003, OSI filed an answer and counterclaims alleging, among other things, that the Company defrauded OSI, breached obligations of fiduciary duty to OSI and breached its obligations under the OSI Letter of Intent. OSI seeks damages in excess of $100,000 not including punitive damages. Under the OSI Letter of Intent, the Company proposed selling to OSI the conventional detection business and the ARGUS business that the Company acquired from PerkinElmer, Inc. Negotiations with OSI lasted for almost one year and ultimately broke down over issues regarding, among other things, intellectual property, product-line definitions, allocation of employees and due diligence. Discovery on the matter is essentially complete. The Company believes that the claims asserted by OSI in its suit are without merit and intends to defend against the OSI claims vigorously.

L-3 Communications Vertex Aerospace LLC (formerly known as Vertex Aerospace LLC and acquired by the Company on December 1, 2003) (L-3 Vertex) is named as a defendant in six wrongful death lawsuits in the District Court, 17th Judicial District, Tarrant County, Texas; in the Circuit Court of

17

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L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS  — (continued)

(Dollars in thousands, except per share data)

the 17th Judicial Circuit, Broward County, Florida; and in the United States District Court, Western District of North Carolina arising from the crash of Air Midwest Flight 5481 at Charlotte-Douglas International Airport in Charlotte, North Carolina on January 8, 2003. The crash resulted in the deaths of nineteen passengers and two crewmembers. Each of the lawsuits alleges contributing factors including that the accident was caused by the improper maintenance of the aircraft by L-3 Vertex, and seeks to recover compensatory and punitive damages. No discovery has taken place in the lawsuits at this time. Fourteen claims resulting from this incident have previously settled and one settlement is pending. The National Transportation Safety Board (NTSB) investigated the cause of the crash and has concluded that the crash was caused by the incorrect rigging of the elevator control system compounded by the airplane's center of gravity, which was substantially aft of the certified limit, with several other contributing factors. L-3 Vertex believes that it has meritorious defenses to the pending lawsuits, and intends to defend the cases vigorously. The actions have been tendered to L-3 Vertex's insurance carrier, who has accepted the defense of each action served upon L-3 Vertex to date. L-3 Vertex was also indemnified by Air Midwest for losses L-3 Vertex incurred arising out of its provision of maintenance services to Air Midwest. Based on the availability of insurance and the indemnification from Air Midwest, the Company does not believe it will have a material liability in this matter.

With respect to those investigative actions, items of litigation, claims or assessments of which it is aware, management of the Company believes that, after taking into account certain provisions that have been made with respect to these matters, the ultimate resolution of any such investigative actions, items of litigation, claims or assessments will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company. However, as discussed above, the Company is a party to a number of material litigations, for which an adverse determination could have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

13.    Pension and Other Employee Benefits

The following table summarizes the components of net periodic benefit cost for the Company's pension and postretirement benefit plans for the three months ended March 31, 2004 and 2003.

				Pension Plans								Postretirement Benefit Plans
				2004				2003				2004				2003
Components of net periodic benefit cost:
Service cost				$	14,616			$	11,078			$	1,248			$	1,212
Interest cost					14,132				11,977				2,168				2,147
Amortization of prior service cost					255				98				(581	)			(425	)
Expected return on plan assets					(13,086	)			(9,475	)			(269	)			—
Recognized actuarial (gain) loss					3,373				3,084				189				(79	)
Net periodic benefit cost				$	19,290			$	16,762			$	2,755			$	2,855

In April of 2004, the U.S. Congress extended the interest rate reduction for calculating minimum pension plan contributions through 2005. As such, the Company expects to contribute approximately $55,000 to its pension plans in 2004.

18

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L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS  — (continued)

(Dollars in thousands, except per share data)

14.    Supplemental Cash Flow Information

				Three Months Ended March 31,
				2004				2003
Interest paid				$	29,079			$	17,567
Income tax payments					4,679				3,628
Income tax refunds					1,640				2,793
Noncash transactions:
Company's employer contribution to savings plans paid in common stock					11,659				9,018
Conversion of 5¼% convertible senior subordinated notes to equity					298,183				—

15.    Segment Information

The Company has four reportable segments: (1) Secure Communications & ISR, (2) Training, Simulation & Support Services, (3) Aviation Products & Aircraft Modernization and (4) Specialized Products, which are described in Note 1. The Company evaluates the performance of its operating segments and reportable segments based on their sales and operating income.

19

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L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS  — (continued)

(Dollars in thousands, except per share data)

The tables below present sales, operating income, depreciation and amortization and total assets by reportable segment.

				Three Months Ended March 31,
				2004				2003
Sales:
Secure Communications & ISR				$	385,425			$	327,867	(1)
Training, Simulation & Support Services					273,332				251,585	(2)
Aviation Products & Aircraft Modernization					522,883				153,241	(1)
Specialized Products					356,060				373,553	(2)
Elimination of intersegment sales					(16,056	)			(17,199	)
Consolidated total				$	1,521,644			$	1,089,047
Operating Income:
Secure Communications & ISR				$	46,126			$	32,432	(1)
Training, Simulation & Support Services					31,932				29,893	(2)
Aviation Products & Aircraft Modernization					49,785				20,756	(1)
Specialized Products					23,759				25,756	(2)
Consolidated total				$	151,602			$	108,837
Depreciation and Amortization:
Secure Communications & ISR				$	8,341			$	7,117
Training, Simulation & Support Services					1,802				2,014
Aviation Products & Aircraft Modernization					8,204				3,916
Specialized Products					11,344				9,732
Consolidated total				$	29,691			$	22,779

				March 31, 2004				December 31, 2003
Total Assets:
Secure Communications & ISR				$	1,254,452			$	1,201,187
Training, Simulation & Support Services					805,469				781,186
Aviation Products & Aircraft Modernization					2,090,892				2,043,677
Specialized Products					1,988,781				1,961,754
Corporate					517,211				505,086
Consolidated total				$	6,656,805			$	6,492,890

(1)

Reflects reclassifications from amounts reported in the prior year to conform to the current presentation of $6,479 of 2003 first quarter sales and $869 of 2003 first quarter operating loss for the Integrated Systems' Sea Sentinal contract from Aviation Products & Aircraft Modernization to Secure Communications & ISR. This change was effective in the 2003 second quarter presentation.

(2)	In 2004, we consolidated the IMC business into Government Services, Inc. As a result of this realignment, $10,016 of 2003 first quarter sales and $1,395 of 2003 first quarter operating income was reclassified from Specialized Products to Training, Simulation & Support Services.

20

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L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS  — (continued)

(Dollars in thousands, except per share data)

16.    Recently Issued Accounting Standards

In December of 2003, the FASB revised its FASB Interpretation No. 46, Consolidation of Variable Interest   Entities (FIN 46R). FIN 46R clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements. FIN 46R requires that a business enterprise review all of its legal structures used to conduct its business activities, including those to hold assets, and its majority-owned subsidiaries, to determine whether those legal structures are variable interest entities (VIEs) required to be consolidated for financial reporting purposes by the business enterprise. A VIE is a legal structure for which the holders of a majority voting interest may not have a controlling financial interest in the legal structure. FIN 46R provides guidance for identifying those legal structures and provides guidance for determining whether a business enterprise shall consolidate a VIE. FIN 46R requires that a business enterprise that holds a significant variable interest in a VIE make new disclosures in their financial statements. The Company is required to adopt the provisions of FIN 46R for its interim period ended March 31, 2004. The Company does not hold any significant interests in VIEs that require consolidation or additional disclosures.

On December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (DIMA). This Act introduces a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In January of 2004, the FASB issued FASB Staff Position 106-1, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP 106-1). In accordance with FSP 106-1, the Company is electing to defer recognition of any potential savings on the measure of the accumulated postretirement benefit or net periodic benefit cost as a result of DIMA until specific authoritative guidance on the accounting of the federal subsidy is issued. Therefore, the consolidated financial statements and accompanying notes do not reflect the effects of the Act on the Company's postretirement medical plans.

17.    Unaudited Financial Information of L-3 Communications and its Subsidiaries

L-3 Communications is a wholly-owned subsidiary of L-3 Holdings. The debt of L-3 Communications, including the Senior Subordinated Notes and borrowings under amounts drawn against the senior credit facilities are guaranteed, on a joint and several, full and unconditional basis, by certain of its wholly-owned domestic subsidiaries (the "Guarantor Subsidiaries"). The foreign subsidiaries and certain domestic subsidiaries of L-3 Communications (the "Non-Guarantor Subsidiaries") do not guarantee the debt of L-3 Communications. None of the debt of L-3 Communications has been issued by its subsidiaries. There are no restrictions on the payment of dividends from the Guarantor Subsidiaries to L-3 Communications.

The following unaudited condensed combining financial information present the results of operations, financial position and cash flows of (i) L-3 Holdings, excluding L-3 Communications, (ii) L-3 Communications, excluding its consolidated subsidiaries (the "Parent"), (iii) the Guarantor Subsidiaries, (iv) the Non-Guarantor Subsidiaries and (v) the eliminations to arrive at the information for L-3 Communications on a consolidated basis.

21

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L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS  — (continued)

(Dollars in thousands, except per share data)

				L-3 Holdings				L-3 Communications (Parent)				Guarantor Subsidiaries				Non- Guarantor Subsidiaries				Eliminations				Consolidated L-3 Communications
Condensed Combining Balance Sheets:
At March 31, 2004:
Current assets:
Cash and cash equivalents				$	—			$	199,899			$	(23,849	)		$	29,422			$	—			$	205,472
Contracts in process					—				561,205				908,264				268,642				—				1,738,111
Other current assets					—				154,511				26,602				5,072				—				186,185
Total current assets					—				915,615				911,017				303,136				—				2,129,768
Goodwill					—				804,005				2,432,993				421,333				—				3,658,331
Other assets					—				326,942				436,013				105,751				—				868,706
Investment in and amounts due from consolidated subsidiaries					3,375,180				3,767,907				728,214				23,745				(7,895,046	)			—
Total assets				$	3,375,180			$	5,814,469			$	4,508,237			$	853,965			$	(7,895,046	)		$	6,656,805
Current liabilities				$	—			$	418,145			$	411,549			$	164,947			$	—			$	994,641
Other long-term liabilities					—				282,068				167,738				23,325				—				473,131
Long-term debt					418,071				2,157,147				—				—				(418,071	)			2,157,147
Minority interests					—				—				—				74,777				—				74,777
Shareholders' equity					2,957,109				2,957,109				3,928,950				590,916				(7,476,975	)			2,957,109
Total liabilities and shareholders' equity				$	3,375,180			$	5,814,469			$	4,508,237			$	853,965			$	(7,895,046	)		$	6,656,805
At December 31, 2003:
Current assets:
Cash and cash equivalents				$	—			$	155,375			$	(41,291	)		$	20,792			$	—			$	134,876
Contracts in process					—				528,056				817,547				269,745				—				1,615,348
Other current assets					—				159,194				21,928				6,356				—				187,478
Total current assets					—				842,625				798,184				296,893				—				1,937,702
Goodwill					—				805,388				2,425,591				421,457				—				3,652,436
Other assets					—				343,914				446,403				112,435				—				902,752
Investment in and amounts due from consolidated subsidiaries					3,290,873				3,708,989				596,696				21,052				(7,617,610	)			—
Total assets				$	3,290,873			$	5,700,916			$	4,266,874			$	851,837			$	(7,617,610	)		$	6,492,890
Current liabilities				$	—			$	396,868			$	370,468			$	156,876			$	—			$	924,212
Other long-term liabilities					—				272,252				167,275				21,144				—				460,671
Long-term debt					716,377				2,457,300				—				—				(716,377	)			2,457,300
Minority interests					—				—				—				76,211				—				76,211
Shareholders' equity					2,574,496				2,574,496				3,729,131				597,606				(6,901,233	)			2,574,496
Total liabilities and shareholders' equity				$	3,290,873			$	5,700,916			$	4,266,874			$	851,837			$	(7,617,610	)		$	6,492,890

22

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L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS  — (continued)

(Dollars in thousands, except per share data)

				L-3 Holdings				L-3 Communications (Parent)				Guarantor Subsidiaries				Non- Guarantor Subsidiaries				Eliminations				Consolidated L-3 Communications
Condensed Combining Statements of Operations:
For the three months ended March 31, 2004:
Sales				$	—			$	438,349			$	906,449			$	182,470			$	(5,624	)		$	1,521,644
Costs and expenses					—				382,821				824,844				168,001				(5,624	)			1,370,042
Operating income					—				55,528				81,605				14,469				—				151,602
Interest and other income (expense)					—				5,072				41				(3,192	)			(2,974	)			(1,053	)
Interest expense					4,520				36,430				105				2,974				(7,494	)			36,535
Minority interests in net income of consolidated subsidiaries					—				—				—				615				—				615
Provision (benefit) for income taxes					(1,650	)			8,823				29,762				2,806				1,650				41,391
Equity in net income of consolidated subsidiaries					74,878				56,661				—				—				(131,539	)			—
Net income				$	72,008			$	72,008			$	51,779			$	4,882			$	(128,669	)		$	72,008
For the three months ended March 31, 2003:
Sales				$	—			$	456,436			$	548,596			$	92,054			$	(8,039	)		$	1,089,047
Costs and expenses					—				404,907				497,403				85,939				(8,039	)			980,210
Operating income					—				51,529				51,193				6,115				—				108,837
Interest and other income (expense)									3,424				(70	)			(223	)			(1,754	)			1,377
Interest expense					8,488				31,835				223				1,912				(10,242	)			32,216
Minority interest in net income of consolidated subsidiary					—				—				—				284				—				284
Provision (benefit) for income taxes					(3,056	)			8,322				18,324				1,331				3,056				27,977
Equity in net income of consolidated subsidiaries					55,169				34,941				—				—				(90,110	)			—
Net income				$	49,737			$	49,737			$	32,576			$	2,365			$	(84,678	)		$	49,737

23

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L-3 COMMUNICATIONS HOLDINGS, INC.
AND L-3 COMMUNICATIONS CORPORATION

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS  — (continued)

(Dollars in thousands, except per share data)

				L-3 Holdings				L-3 Communications (Parent)				Guarantor Subsidiaries				Non- Guarantor Subsidiaries				Eliminations				Consolidated L-3 Communications
Condensed Combining Statements of Cash Flows:
For the three months ended March 31, 2004:
Operating activities:
Net cash from operating activities				$	—			$	18,108			$	77,201			$	9,496			$	—			$	104,805
Investing activities:
Acquisition of businesses, net of cash acquired					—				(21,405	)			(2,806	)			—				—				(24,211	)
Other investing activities					(33,149	)			(8,686	)			(8,022	)			(90	)			35,955				(13,992	)
Net cash used in investing activities					(33,149	)			(30,091	)			(10,828	)			(90	)			35,955				(38,203	)
Financing activities:
Net cash from (used in) financing activities					33,149				56,507				(48,931	)			(776	)			(35,955	)			3,994
Net increase in cash					—				44,524				17,442				8,630				—				70,596
Cash and cash equivalents, beginning of period					—				155,375				(41,291	)			20,792				—				134,876
Cash and cash equivalents, end of period				$	—			$	199,899			$	(23,849	)		$	29,422			$	—			$	205,472
For the three months ended March 31, 2003:
Operating activities:
Net cash from (used in) operating activities				$	—			$	45,333			$	66,271			$	(5,478	)		$	—			$	106,126
Investing activities:
Acquisition of businesses, net of cash acquired					—				(1,836	)			(193,711	)			(1,874	)			—				(197,421	)
Other investing activities					(20,561	)			(203,365	)			(6,911	)			(1,312	)			216,146				(16,003	)
Net cash used in investing activities					(20,561	)			(205,201	)			(200,622	)			(3,186	)			216,146				(213,424	)
Financing activities:
Net cash from financing activities					20,561				66,597				124,811				11,011				(216,146	)			6,834
Net increase (decrease) in cash					—				(93,271	)			(9,540	)			2,347				—				(100,464	)
Cash and cash equivalents, beginning of period					—				126,421				(7,248	)			15,683				—				134,856
Cash and cash equivalents, end of
period				$	—			$	33,150			$	(16,788	)		$	18,030			$	—			$	34,392

24

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ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Overview

We are a leading supplier of a broad range of products used in a substantial number of aerospace and defense platforms. We also are a major supplier of subsystems on many platforms, including those for secure communication networks, mobile satellite communications, information security systems, shipboard communications, naval power systems, fuzes and safety and arming devices for missiles and munitions, microwave assemblies for radars and missiles, telemetry and instrumentation, and airport security systems. We also are a prime system contractor for aircraft modernization and maintenance, Intelligence, Surveillance and Reconnaissance (ISR) collection platforms, simulation and training, and government systems support services. The substantial majority of our sales are generated using written contractual revenue arrangements. Most of these contracts require us to design, develop, manufacture, modify, upgrade, test and integrate complex aerospace and electronic equipment, and to provide related engineering and technical services according to the buyer's specifications. Our primary customer is the U.S. Department of Defense (DoD). Our other customers include certain U.S. Government intelligence agencies, major aerospace and defense contractors, foreign governments, commercial customers and certain other U.S. federal, state and local government agencies.

We have four reportable segments: (1) Secure Communications & ISR; (2) Training, Simulation & Support Services; (3) Aviation Products & Aircraft Modernization; and (4) Specialized Products.

Our Secure Communications & ISR segment provides products and services for the global ISR market as well as secure, high data rate communications systems and equipment primarily for military and other U.S. Government reconnaissance and surveillance applications. We believe our systems and products are critical elements for a substantial number of major communication, command and control, intelligence gathering and space systems. Our systems and products are used to connect a variety of airborne, space, ground and sea-based communication systems and are used in the transmission, processing, recording, monitoring and dissemination functions of these communication systems. Our Training, Simulation & Support Services segment produces training systems and related support services, and provides a wide range of engineering development services and integration support, and a full range of teaching, training, logistics and communication software support services. Our Aviation Products & Aircraft Modernization segment provides our TCAS products, cockpit voice, flight data and cruise ship hardened voyage recorders, advanced cockpit avionics products, ruggedized custom displays and specialized aircraft modernization, upgrade and maintenance services. Our Specialized Products segment provides naval warfare products, telemetry, instrumentation, space and navigation products, premium fuzing products, security and surveillance systems, training devices and motion simulators, ruggedized commercial off-the-shelf technology and microwave components.

All of our U.S. Government contracts are subject to audit and various pricing and cost controls, and include standard provisions for termination for the convenience of the U.S. Government. Multi-year U.S. Government contracts and related orders are subject to cancellation if funds for contracts become unavailable. Foreign government contracts generally include comparable provisions relating to termination for the convenience of the relevant foreign government.

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Acquisitions

The table below summarizes all of the acquisitions that we have completed during the year ended December 31, 2003. There were no acquisitions completed during the three months ended March 31, 2004.

Acquired Business				Date Acquired				Purchase Price(1)
								(in millions)
Avionics Systems business of Goodrich Corporation(2)				March 28, 2003				$	188.7
Aeromet, Inc.				May 30, 2003				$	17.5	(3)
Flight Systems Engineering.				June 30, 2003				$	0.5
Klein Associates Inc.				September 30, 2003				$	30.0	(3)
Military Aviation Services business of Bombardier, Inc. (MAS)				October 31, 2003				$	87.4	(3)
Vertex Aerospace LLC (Vertex)				December 1, 2003				$	650.0	(3)(4)
Certain defense and aerospace assets of IPICOM, Inc.				December 10, 2003				$	27.5	(3)

(1)	The purchase price represents the contractual consideration for the acquired business, excluding adjustments for net cash acquired and acquisition costs.

(2)	Following the acquisition, we changed the name of Avionics Systems to L-3 Communications Avionics Systems, Inc.

(3)	The purchase price is subject to adjustment based on actual closing date net assets or net working capital of the acquired business.

(4)	Excludes a $3.3 million purchase price adjustment paid on the closing date.

All of our acquisitions have been accounted for as purchase business combinations and are included in our consolidated results of operations from their respective effective dates. We regularly evaluate potential acquisitions and joint venture transactions, but we have not entered into any other agreements with respect to any material transactions at this time.

Results of Operations

The following information should be read in conjunction with our unaudited condensed consolidated financial statements. Our results of operations for the periods presented are impacted significantly by our acquisitions. See Note 3 to the consolidated financial statements for the year ended December 31, 2003 included in our Annual Report on Form 10-K for a discussion of our acquisitions.

Presentation of Sales and Costs and Expenses.    L-3 presents its sales and costs and expenses in two categories on the statements of operations, "Contracts, primarily U.S. Government" and "Commercial, primarily products." Sales and costs and expenses for L-3's businesses that are primarily U.S. Government contractors are presented as "Contracts, primarily U.S. Government." The sales for L-3's U.S. Government contractor businesses are primarily transacted using written contractual revenue arrangements, most of which require us to design, develop, manufacture, modify, upgrade, test and integrate complex aerospace and electronic equipment, and to provide related engineering and technical services according to the buyer's specifications. Such buyers are predominantly U.S. Government, foreign government and defense prime contractor customers. Most of these contracts are covered by the American Institute of Certified Public Accountants Statement of Position 81-1,   Accounting for Performance of Construction-Type and Certain Production-Type Contracts (SOP 81-1), Accounting Research Bulletin No. 43, Chapter 11, Section A, Government Contracts, Cost-Plus Fixed-Fee Contracts (ARB 43) and Accounting Research Bulletin No. 45, Long-Term Construction Type Contracts (ARB 45). Sales reported under "Contracts, primarily U.S. Government" also include certain sales by L-3's U.S. Government contractor businesses transacted using contractual revenue arrangements for domestic and foreign commercial customers, which also are covered by SOP 81-1 and ARB 45. Sales and costs and expenses for L-3's businesses whose customers are primarily commercial business enterprises are presented as "Commercial, primarily products." These sales are recognized in accordance with the SEC's SAB No. 104, Revenue Recognition, and are not covered by SOP 81-1, ARB 43 or ARB 45. L-3's commercial businesses are substantially comprised of Aviation Communication & Surveillance Systems (ACSS), Aviation Recorders, Avionics Systems, Microwave Components and Security and Detection Systems.

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Three Months Ended March 31, 2004 Compared with Three Months Ended March 31, 2003

The tables below provide two presentations of selected statement of operations data for L-3 for the three months ended March 31, 2004 (2004 First Quarter) and March 31, 2003 (2003 First Quarter). The first table presents the selected data segregated between L-3's U.S. Government contractor businesses and L-3's commercial businesses. See Note 2 to the unaudited condensed consolidated financial statements. The second table presents the selected data by reportable segment. See Note 15 to the unaudited condensed consolidated financial statements.

				Three Months Ended March 31,
				2004				2003
				(in millions)
U.S. Government Contractors and Commercial Businesses Presentation
Sales:
Contracts, primarily U.S. Government				$	1,374.1			$	946.8	(1)
Commercial, primarily products					147.5				142.2	(1)
Consolidated				$	1,521.6			$	1,089.0
Operating income:
Contracts, primarily U.S. Government				$	142.0			$	104.0	(1)
Commercial, primarily products					9.6				4.8	(1)
Consolidated				$	151.6			$	108.8
Operating margin(2):
Contracts, primarily U.S. Government					10.3	%			11.0	%
Commercial, primarily products					6.5	%			3.4	%
Consolidated					10.0	%			10.0	%
Reportable Segment Presentation
Sales(3):
Secure Communications & ISR				$	384.3			$	327.7	(4)
Training, Simulation & Support Services					268.5				241.4	(5)
Aviation Products & Aircraft Modernization					522.6				152.5	(4)
Specialized Products					346.2				367.4	(5)
Consolidated				$	1,521.6			$	1,089.0
Operating income:
Secure Communications & ISR				$	46.1			$	32.4	(4)
Training, Simulation & Support Services					31.9				29.9	(5)
Aviation Products & Aircraft Modernization					49.8				20.7	(4)
Specialized Products					23.8				25.8	(5)
Consolidated				$	151.6			$	108.8
Operating margin(2):
Secure Communications & ISR					12.0	%			9.9	%
Training, Simulation & Support Services					11.9	%			12.4	%
Aviation Products & Aircraft Modernization					9.5	%			13.6	%
Specialized Products					6.9	%			7.0	%
Consolidated					10.0	%			10.0	%

(1)

In 2004, we consolidated the explosives detection systems (EDS) business into L-3 Security and Detection Systems, the IMC business into L-3 Government Services, Inc., the EMP business into our ESSCO business and the Apcom business into our Communication Systems-East business. As a result of these business realignments, certain reclassifications have been made to the prior period sales and operating income amounts to conform them to the current presentation. Specifically, $29.5 million of 2003 First Quarter sales and $2.4 million of 2003 First Quarter operating income was reclassified from "Contracts, primarily U.S. Government" to "Commercial, primarily products" primarily for the EDS business, and $11.6 million of 2003 First

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Quarter sales and $0.3 million of 2003 First Quarter operating income was reclassified from "Commercial, primarily products" to "Contracts, primarily U.S. Government," primarily for the IMC business.

(2)	Operating margin is equal to operating income as a percentage of sales.

(3)	Sales are after intersegment eliminations. See Note 15 to the unaudited condensed consolidated financial statements.

(4)

Reflects reclassifications from amounts reported in the prior year to conform to the current presentation of $6.5 million of 2003 First Quarter sales and $0.9 million of 2003 First Quarter operating loss for the Integrated Systems' Sea Sentinal contract from Aviation Products & Aircraft Modernization to Secure Communications & ISR. This change was effective in the 2003 second quarter presentation.

(5)

Reflects reclassifications from amounts reported in the prior year to conform to the current presentation of $10.0 million of 2003 First Quarter sales and $1.4 million of 2003 First Quarter operating income from Specialized Products to Training, Simulation & Support Services for the IMC realignment noted above.

Consolidated sales increased by $432.6 million, or 39.7%, to $1,521.6 million for the 2004 First Quarter from $1,089.0 million for the 2003 First Quarter. Organic sales growth for our defense businesses was 18.1%, or $170.9 million, driven by continued strong DoD demand, including demand for support activities related to the U.S. Military operations in Iraq and Afghanistan, for L-3's secure communications and ISR systems and products, aircraft modernization, simulation and training, communication software and engineering support and displays. Organic sales for our commercial and other non-military businesses declined by 15.5%, or $22.0 million, primarily due to lower sales for explosives detection systems (EDS). The increase in consolidated sales from acquisitions was $283.7 million, or 26.1%. We define "organic sales growth," as the increase or decrease in sales for the current period compared to the prior period, excluding the increase in sales attributable to acquired businesses to the extent the acquired businesses were not included in L-3's results of operations for the entire current period and prior period. Our increases to sales from acquired businesses include all of L-3's acquired businesses regardless of their size. Our "defense businesses" are comprised of our U.S. Government contractor businesses, all of which are presented under "Contracts, primarily U.S. Government."

Sales from "Contracts, primarily U.S. Government" increased by $427.3 million, or 45.1%, to $1,374.1 million for the 2004 First Quarter from $946.8 million for the 2003 First Quarter. The increase in sales from acquired businesses was $256.4 million, or 27.1%. The acquired businesses include Aeromet, Klein, MAS, Vertex (including the sales from the recently awarded U.S. Army Aviation and Missile Command (AMCOM) contract for maintenance and logistics support for rotary-wing aircraft at Fort Rucker, Alabama attributable to Vertex's ownership interest prior to the date of acquisition by L-3) and certain defense and aerospace assets of IPICOM, Inc., all of which were acquired in 2003. Organic sales growth was $170.9 million, or 18.1%, primarily because of higher sales volume for our secure communications and ISR systems and products, aircraft modernization and maintenance and training services and support activities.

Sales from "Commercial, primarily products" increased by $5.3 million, or 3.7%, to $147.5 million for the 2004 First Quarter from $142.2 million for the 2003 First Quarter. The increase in sales from the Avionics Systems and Flight Systems Engineering acquired businesses, both acquired in 2003, was $27.3 million. Organic sales declined by 15.5%, or $22.0 million, primarily due to the decrease in volume of $19.0 million for EDS.

Consolidated costs and expenses increased by $389.8 million, or 39.8%, to $1,370.0 million for the 2004 First Quarter from $980.2 million for the 2003 First Quarter, primarily as a result of the increase in sales.

Costs and expenses for "Contracts, primarily U.S. Government" increased by $389.3 million, or 46.2%, to $1,232.1 million for the 2004 First Quarter from $842.8 million for the 2003 First Quarter. The increase in costs and expenses from acquired businesses was $239.3 million. The remaining increase is primarily attributed to organic sales growth for defense businesses.

Costs and expenses on our contracts with the U.S. Government include selling, general and administrative (SG&A), independent research and development (IRAD) and bid and proposal (B&P) costs. These SG&A, IRAD and B&P costs are allowable indirect contract costs that are allocated to our U.S. Government contracts in accordance with U.S. Government regulations. We report SG&A, IRAD and B&P costs allocated to U.S. Government contracts as costs and expenses when the related contract

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sales are recognized as revenue. SG&A, IRAD and B&P costs included in costs and expenses for "Contracts, primarily U.S. Government" were $134.7 million for the 2004 First Quarter and $114.5 million for the 2003 First Quarter (see Note 5 to our unaudited condensed consolidated financial statements).

Costs and expenses for "Commercial, primarily products" increased by $0.5 million, or 0.4%, to $137.9 million for the 2004 First Quarter from $137.4 million for the 2003 First Quarter. Cost of sales decreased by $6.7 million to $88.2 million for the 2004 First Quarter from $94.9 million for the 2003 First Quarter. The decrease in cost of sales was primarily due to lower sales volume for our security products (including EDS) partially offset by increased costs attributable to the Avionics Systems acquired business. SG&A expenses increased by $1.6 million to $34.3 million for the 2004 First Quarter from $32.7 million for the 2003 First Quarter. The increase was due to expenses incurred by our Avionics Systems acquired business, which were partially offset by lower SG&A expenses at PrimeWave and our commercial technical support services business due, in each case, to cost and expense reductions. Research and development (R&D) expenses increased by $5.6 million to $15.4 million for the 2004 First Quarter from $9.8 million for the 2003 First Quarter. The increase was primarily due to the Avionics Systems acquired business and its development expenditures for Smartdeck^TM.

Consolidated operating income increased by $42.8 million, or 39.3%, to $151.6 million for the 2004 First Quarter from $108.8 million for the 2003 First Quarter. The increase was primarily due to higher sales from our Secure Communications & ISR, Training, Simulation & Support Services and Aviation Products & Aircraft Modernization segments. Consolidated operating margin was unchanged at 10.0% for the 2004 First Quarter compared to the 2003 First Quarter. The changes in the operating margins for our segments are discussed below.

Operating income for "Contracts, primarily U.S. Government" increased by $38.0 million, or 36.5%, to $142.0 million for the 2004 First Quarter from $104.0 million for the 2003 First Quarter. Operating margin decreased by 0.7 percentage points to 10.3% for the 2004 First Quarter from 11.0% for the 2003 First Quarter. Operating margin decreased primarily because of lower operating margins, which we expected, from the Vertex Aerospace acquired business and the AMCOM contract which have lower margins than our other U.S. Government contractor businesses.

Operating income for "Commercial, primarily products" increased by $4.8 million, or 100%, to $9.6 million for the 2004 First Quarter from $4.8 million for the 2003 First Quarter. Operating margin increased by 3.1 percentage points to 6.5% for the 2004 First Quarter from 3.4% for the 2003 First Quarter primarily because of higher margins from the Avionics Systems acquired business and lower losses for PrimeWave Communications.

Interest expense increased by $4.3 million to $36.5 million for the 2004 First Quarter from $32.2 million for the 2003 First Quarter because of higher levels of outstanding debt during the 2004 First Quarter compared to the levels of debt during the 2003 First Quarter.

Interest and other income (expense) changed by $2.5 million to $1.1 million of expense for the 2004 First Quarter compared to $1.4 million of income for the 2003 First Quarter. The change was primarily due to an increase in the liability that represents the fair value assigned to the embedded derivatives related to the CODES, and higher losses during the 2004 First Quarter for investments accounted for using the equity method as compared to the 2003 First Quarter.

The income tax provision for the 2004 First Quarter is based on the estimated effective income tax rate for 2004 of 36.5%, compared with the effective income tax rate of 36.0% for the 2003 First Quarter. The 2004 effective income tax rate does not assume the possible extension of the current federal research and experimentation tax credit that is scheduled to expire on June 30, 2004.

Basic earnings per share (EPS) increased by $0.17 to $0.69 for the 2004 First Quarter from $0.52 for the 2003 First Quarter. Diluted EPS increased by $0.17 to $0.67 for the 2004 First Quarter from $0.50 for the 2003 First Quarter.

The diluted EPS computation for the 2004 and 2003 First Quarters did not include the effect of the 7.8 million shares of L-3 Holdings common stock that are issuable upon conversion of the $420.0 million of 4% Senior Subordinated Convertible Contingent Debt Securities (CODES) because the conditions

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required for them to become convertible were not satisfied. However, if the CODES had been convertible, diluted EPS would have been $0.02 lower than reported for the 2004 First Quarter and $0.01 lower than reported for the 2003 First Quarter.

Secure Communications & ISR

Sales within our Secure Communications & ISR segment increased by $56.6 million, or 17.3%, to $384.3 million for the 2004 First Quarter from $327.7 million for the 2003 First Quarter. Organic sales growth was $48.4 million, or 14.8%, reflecting continued strong demand from the DoD and other U.S. Government agencies for our secure communications and ISR systems and products. The increase in sales from acquired businesses was $8.2 million, or 2.5%. The acquired businesses include Aeromet and certain defense and aerospace assets of IPICOM, Inc., which were acquired in 2003.

Operating income increased by $13.7 million to $46.1 million for the 2004 First Quarter from $32.4 million for the 2003 First Quarter because of higher sales volume and operating margin. Operating margin increased by 2.1 percentage points to 12.0% for the 2004 First Quarter from 9.9% for the 2003 First Quarter, primarily because of organic sales growth and incremental contribution margin improvements. These improvements to operating margin were partially offset by a loss related to the design, development and testing activities on a production contract for transportable tactical satellite communications terminals, which reduced operating margin by 1.6 percentage points.

Training, Simulation & Support Services

Sales within our Training, Simulation & Support Services segment increased by $27.1 million, or 11.2%, to $268.5 million for the 2004 First Quarter from $241.4 million for the 2003 First Quarter. The increase was driven by increased sales of training, simulation and communications software and engineering support services. There were no acquisitions that affected the results of this segment.

Operating income increased by $2.0 million to $31.9 million for the 2004 First Quarter from $29.9 million for the 2003 First Quarter because of higher sales volume, partially offset by lower operating margin. Operating margin decreased by 0.5 percentage points to 11.9% for the 2004 First Quarter from 12.4% for the 2003 First Quarter. The decrease was primarily due to higher sales from cost-reimbursable type and time-and-material type contracts, which generally are less profitable than fixed-priced type contracts.

Aviation Products & Aircraft Modernization

Sales within our Aviation Products & Aircraft Modernization segment increased by $370.1 million, or 242.7%, to $522.6 million for the 2004 First Quarter from $152.5 million for the 2003 First Quarter. Organic sales growth was $98.1 million, or 64.3%. The increase in organic sales was due to $65.2 million primarily for aircraft modernization and displays due to strong DoD demand, and $32.9 million primarily from the recently awarded AMCOM contract (excluding the contract's sales attributable to Vertex's ownership interest in the AMCOM contract prior to the date of acquisition by L-3). The increase in sales from acquired businesses was $272.0 million, or 178.4%. The acquired businesses include Avionics Systems, Vertex Aerospace (including sales from the AMCOM contract attributable to Vertex's ownership interest prior to the date of acquisition by L-3), Military Aviation Services and Flight Systems Engineering, which were all acquired during 2003.

Operating income increased by $29.1 million to $49.8 million for the 2004 First Quarter from $20.7 million for the 2003 First Quarter because of higher sales volume partially offset by lower operating margin. Operating margin declined by 4.1 percentage points to 9.5% for the 2004 First Quarter from 13.6% for the 2003 First Quarter. Margins from acquired businesses, primarily Vertex, decreased operating margin by 2.0 percentage points. The recently awarded AMCOM contract decreased operating margin by 1.3 percentage points. The remaining decrease is primarily due to higher volume growth for aircraft modernization contracts, which have lower margins than those for aviation products.

Specialized Products

Sales within our Specialized Products segment declined by $21.2 million, or 5.8%, to $346.2 million for the 2004 First Quarter from $367.4 million for the 2003 First Quarter. The Klein Associates acquired

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business increased sales by $3.5 million. Organic sales declined by $24.7 million, or 6.7%, primarily because of lower EDS volume of $19.0 million. Volume declined by $13.0 million for ruggedized military computers, displays and communication terminals and shipboard electronic racks due to contractual timing of shipments, which are expected to increase during the remainder of the year. Volume declined by $8.3 million for naval warfare products due to contracts nearing completion. These sales decreases were partially offset by volume increases of $15.6 million primarily for fuzing products and training devices due to higher demand from the DoD and for naval power equipment due to higher shipments on contracts in backlog.

Operating income decreased by $2.0 million to $23.8 million for the 2004 First Quarter from $25.8 million for the 2003 First Quarter because of lower sales volume. Operating margin declined slightly by 0.1 percentage points to 6.9% for the 2004 First Quarter from 7.0% for the 2003 First Quarter. Operating margin declined by 1.4 percentage points due to lower EDS volume and by 0.9 percentage points because of a loss for the estimated costs to remedy product reliability problems on a contract to supply undersea dipping sonars. These decreases were partially offset by an increase of 2.2 percentage points primarily for naval power equipment due to higher volume.

Liquidity and Capital Resources

Balance Sheet

Contracts in process increased by $122.8 million to $1,738.1 million at March 31, 2004 from $1,615.3 million at December 31, 2003. The increase was principally comprised of:

•

increases of $76.5 million in unbilled contract receivables, net of unliquidated progress payments, due to sales exceeding deliveries and billings for secure communications and ISR systems and products, aircraft modernization, communications software and engineering support services and fuzing products. These increases were partially offset by a decrease in unbilled contract receivables for displays systems due to deliveries and billings exceeding sales;

•	increases of $27.7 million in billed receivables because of deliveries and billings for aircraft modernization and secure communications systems and products and delays in collection for certain secure communication contracts due to timing. These increases were partially offset by a reduction in billed receivables for EDS due to lower sales volumes;

•	increases of $12.2 million in inventoried contract costs, primarily for naval warfare products, secure communications systems and products, aircraft modernization and ruggedized military displays and shipboard electronic racks that are expected to be delivered in 2004. These increases were partially offset by a decrease for ISR systems and products due to deliveries during the period; and

•	increases of $6.4 million in inventories at lower of cost or market due to increases for security products and satellite communications products ordered by the DoD, that are expected to be delivered in 2004.

L-3's days receivable outstanding (DRO) was 74.0 at March 31, 2004 compared to 70.3 at December 31, 2003. We calculate our DRO by dividing (i) our aggregate end of period billed receivables and net unbilled contract receivables, by (ii) our sales for the last twelve-month period adjusted on a pro forma basis to include sales from acquisitions that we completed as of the end of the period (which amounted to $6,035.2 million for the twelve-month period ended March 31, 2004), multiplied by 365.

L-3's days inventory held (DIH) was 36.4 at March 31, 2004, compared with 36.3 at December 31, 2003. We calculate DIH by dividing (i) our aggregate end of period net inventoried contract costs and inventories at lower of cost or market, by (ii) our cost of sales for the last twelve-month period adjusted on a pro forma basis to include cost of sales from acquisitions that we completed as of the end of the period, multiplied by 365.

Included in contracts in process at March 31, 2004 are net billed receivables of $5.8 million and net inventories of $12.6 million related to our PrimeWave Communications business. At December 31, 2003, we had $6.7 million of net billed receivables and $11.4 million of net inventories related to our PrimeWave Communications business.

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The decrease in property, plant and equipment (PP&E) during the 2004 First Quarter was principally related to depreciation expense and disposals, partially offset by capital expenditures. The percentage of depreciation expense to average gross PP&E increased to 3.2% for the 2004 First Quarter from 2.9% for the 2003 First Quarter. The increase was attributable to the impact of business acquisitions completed during 2003, for which the statement of operations included depreciation expense for the entire 2004 First Quarter. We did not change any of the depreciation methods or estimated useful lives for assets that L-3 uses to calculate its depreciation expense.

Goodwill increased by $5.9 million to $3,658.3 million at March 31, 2004 from $3,652.4 million at December 31, 2003. The increase was comprised of (i) $2.9 million for increases to purchase prices for certain acquisitions completed prior to January 1, 2004, related to final closing date net assets of the acquired businesses and contingent purchase price adjustments or earnouts, which were resolved during the period, and (ii) $3.0 million primarily related to final estimates of fair value for acquired assets and liabilities assumed on acquisitions completed prior to January 1, 2004.

The increase in accounts payable was due to increased purchases from third-party vendors and subcontactors due to higher volumes for contracts-in-process and the timing of payments for such purchases. The increase in accrued employment costs was due to the timing of payments of salaries and wages to employees. The increase in accrued interest was due to the timing of interest payments. The decrease in other current liabilities was primarily due to the payment of the remaining purchase price for the acquisition of certain aerospace and defense assets of IPICOM, Inc., and the payment upon settlement of a foreign currency hedging forward contract. The increase in pension and postretirement benefit liabilities was due to expenses exceeding related cash contributions.

Statement of Cash Flows

Three Months Ended March 31, 2004 Compared with Three Months Ended March 31, 2003

Cash increased to $205.5 million at March 31, 2004 from $134.9 million at December 31, 2003. The table below provides a summary of our cash flows for the periods indicated.

				Three Months Ended March 31,
				2004				2003
				(in millions)
Net cash from operating activities				$	104.8			$	106.1
Net cash used in investing activities					(38.2	)			(213.4	)
Net cash from financing activities					4.0				6.8
Net increase (decrease) in cash				$	70.6			$	(100.5	)

Operating Activities

We generated $104.8 million of cash from operating activities during the 2004 First Quarter, a decrease of $1.3 million from the $106.1 million generated during the 2003 First Quarter. Net income adjusted for non-cash expenses and deferred income taxes increased by $42.8 million to $142.8 million for the 2004 First Quarter from $100.0 million for the 2003 First Quarter. Deferred income taxes increased primarily because of larger estimated tax deductions arising from our recent acquisitions. Non-cash expenses consist primarily of contributions of L-3 Holdings' common stock to employee savings plans of $11.7 million and depreciation and amortization of $29.7 million. During the 2004 First Quarter, the use of cash from the change in operating assets and liabilities was $38.0 million, compared to a $6.1 million source of cash for the 2003 First Quarter. The use of cash for contracts in process was driven by increases in billed receivables, unbilled contract receivables and inventoried contract costs primarily for our defense businesses, as discussed above under "Liquidity and Capital Resources — Balance Sheet". The use of cash for other current assets was primarily due to higher insurance premiums paid during the 2004 First Quarter for businesses acquired in 2003. These prepaid insurance premiums will be expensed over the next 12 months. The source of cash for accounts payable was due to increased purchases of materials, components and services and the timing of payments for such purchases. The timing of payments to

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employees for salaries and wages was a source of cash because costs and expenses for salaries and wages exceeded cash payments for them. The use of cash for other current liabilities was primarily due to the payment upon settlement of a foreign currency hedging forward contract and costs incurred in excess of billings during the 2004 First Quarter for certain training contracts. The source of cash from the change in pension and postretirement benefit liabilities was due to expenses exceeding related cash contributions.

We expect to generate net cash from operating activities in excess of $525 million for the full year 2004, including a deferred income tax provision of approximately $100 million, and a use of cash of approximately $110 million for changes in operating assets and liabilities, including working capital. Additionally, we expect the quarterly cash used for contracts in process to decline substantially during the remainder of 2004, as compared to the amount of cash used in the 2004 First Quarter.

Our cash interest payments, which are based on the fixed rate coupons and the interest payment dates of our debt were approximately $29 million for the first quarter of 2004. These cash interest payments, before any potential savings from our interest rate swap agreements, are expected to be approximately $30 million for the second quarter of 2004, approximately $44 million for the third quarter of 2004 and approximately $30 million for the fourth quarter of 2004. The interest payments for the third quarter of 2004 are expected to exceed those for each of the other three quarters of 2004 because of the timing of the interest coupon payments on the $400 million of 6 1/8% Senior Subordinated Notes we sold in December 2003, which are paid in January and July, commencing July 2004.

We expect to generate a deferred income tax provision of approximately $100 million for the full year 2004. This estimate of deferred income taxes for 2004 will probably increase, if we acquire businesses during 2004. L-3 receives substantial income tax deductions from its acquisitions of businesses that are structured as asset purchases for income tax purposes. The effect of these income tax deductions is that our cash payments for income taxes are less than our provision for income taxes reported on the statement of operations. This difference is presented in the deferred income tax provision on our statement of cash flows. The deferred income tax provision primarily results from deducting amortization of tax intangibles, including goodwill, from the acquisitions structured as asset purchases on L-3's income tax returns over 15 years, in accordance with income tax rules and regulations, while no goodwill amortization is recorded for financial reporting purposes, in accordance with SFAS No. 142. We expect that the acquisitions L-3 has completed through March 31, 2004 will continue to generate substantial annual deferred tax benefits through 2017. While these income tax deductions are reported as changes to deferred income tax liabilities and assets, they are not differences that are scheduled to reverse in future periods from normal operations. Rather, they will only reverse if L-3 sells its acquired businesses or incurs a goodwill impairment loss for them because in either case, L-3's financial reporting amounts for goodwill would be greater than the income taxes basis for goodwill.

Investing Activities

During the 2004 First Quarter, we paid $24.2 million, primarily for the remaining purchase price for certain aerospace and defense assets of IPICOM, Inc., acquired in 2003 and for earnouts, which were accrued as other current liabilities at December 31, 2003. During the 2003 First Quarter, we used $197.4 million of cash to acquire businesses, primarily for our acquisition of Avionics Systems.

We make capital expenditures for the improvement of manufacturing facilities and equipment. We expect to use approximately $100 million of cash for capital expenditures, net of cash proceeds from dispositions of property, plant and equipment, for the full year of 2004.

Financing Activities

Debt

Senior Credit Facilities.    At March 31, 2004, available borrowings under our senior credit facilities were $678.5 million, after reductions for outstanding letters of credit of $71.5 million. There were no outstanding borrowings under our senior credit facilities at March 31, 2004.

Redemptions.    On December 22, 2003, L-3 Holdings announced a full redemption of $300.0 million of its 5.25% Convertible Senior Subordinated Notes due 2009 (Convertible Notes), which expired on

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January 9, 2004. At December 31, 2003, holders of approximately $1.6 million of the Convertible Notes had exercised their conversion rights and converted such notes into 40,000 shares of L-3 Holdings common stock. On January 9, 2004, holders of $298.2 million of the Convertible Notes exercised their conversion rights and converted such notes into 7,317,327 shares of L-3 Holdings common stock. The remaining $0.2 million of Convertible Notes were redeemed for cash on January 12, 2004.

Interest Rate Swap Agreements.    Depending on interest rate levels, we may enter into interest rate swap agreements to convert certain of our fixed interest rate debt obligations to variable interest rates, or terminate any existing interest rate swap agreements. The variable interest rate that we pay under the swap agreements is equal to (i) the variable rate basis, plus (ii) the variable rate spread. The table below presents our interest rate swap agreements that are currently outstanding.

Inception Date

Fixed Rate Debt Obligation

Notional Amount

Variable Rate Basis

Average Variable Rate Spread

Interest Settlement Dates

(in millions)

March 2004

$400.0 million of 6 1/8% Senior Subordinated Notes due 2014

$200.0

Six-Month USD LIBOR(1)

1.6%

January 15 and July 15

April 2004

$400.0 million of 6 1/8% Senior Subordinated Notes due 2014

$100.0

Six-Month USD LIBOR(1)

0.8%

January 15 and July 15

(1)	The six-month USD LIBOR interest rate was 1.16% on March 31, 2004.

Outstanding interest rate swap agreements reduced interest expense by $0.3 million during the 2004 First Quarter, compared to $1.5 million during the 2003 First Quarter. Interest expense was reduced by $1.1 million for the 2004 First Quarter and $0.5 million for the 2003 First Quarter for amortization of deferred gains on terminated interest rate swap agreements.

Debt Covenants.    The senior credit facilities, senior subordinated notes and CODES agreements contain financial covenants and other restrictive covenants, which remain in effect so long as we owe any amount or any commitment to lend exists thereunder. We are in compliance with those covenants in all material respects. The borrowings under the senior credit facilities are guaranteed by L-3 Holdings and by substantially all of the material domestic subsidiaries of L-3 Communications on a senior basis. The payments of principal and premium, if any, and interest on the senior subordinated notes are unconditionally guaranteed, on an unsecured senior subordinated basis, jointly and severally, by substantially all of L-3 Communications' restricted subsidiaries other than its foreign subsidiaries. The guarantees of the senior subordinated notes are junior to the guarantees of the senior credit facilities and rank pari passu with each other and the guarantees of the CODES. The CODES are unconditionally guaranteed, on an unsecured senior subordinated basis, jointly and severally, by L-3 Communications and substantially all of its restricted subsidiaries other than its foreign subsidiaries. These guarantees rank junior to the guarantees of the senior credit facilities and rank pari passu with each other and the guarantees of the senior subordinated notes. See Note 8 to our consolidated financial statements for the fiscal year ended December 31, 2003, included in our Annual Report on Form 10-K filed on March 4, 2004, for a description of our debt and related financial covenants at December 31, 2003.

Equity

In January of 2004, we announced that our Board of Directors declared our first quarterly cash dividend of $0.10 per share. On March 15, 2004, we paid cash dividends of $10.5 million to shareholders of record at the close of business on February 17, 2004.

On April 27, 2004, we announced that our Board of Directors declared a regular quarterly dividend of $0.10 per share, payable June 15, 2004 to shareholders of record at the close of business on May 17, 2004.

Based upon our current level of operations, we believe that our cash from operating activities, together with available borrowings under the senior credit facilities, will be adequate to meet our anticipated requirements for working capital, capital expenditures, commitments, research and development expenditures, contingent purchase prices, program and other discretionary investments, and interest

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payments for the foreseeable future. There can be no assurance, however, that our business will continue to generate cash flow at current levels, or that currently anticipated improvements will be achieved. If we are unable to generate sufficient cash flow from operations to service our debt, we may be required to sell assets, reduce capital expenditures, refinance all or a portion of our existing debt or obtain additional financing. Our ability to make scheduled principal payments or to pay interest on or to refinance our indebtedness depends on our future performance and financial results, which, to a certain extent, are subject to general conditions in or affecting the defense industry and to general economic, political, financial, competitive, legislative and regulatory factors beyond our control. There can be no assurance that sufficient funds will be available to enable us to service our indebtedness, or make necessary capital expenditures and to make discretionary investments.

Contingencies

See Note 12 to the Unaudited Condensed Consolidated Financial Statements.

Recently Issued Accounting Standards

In December of 2003, the Financial Accounting Standards Board (FASB) revised its FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46R). FIN 46R clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements. FIN 46R requires that a business enterprise review all of its legal structures used to conduct its business activities, including those to hold assets, and its majority-owned subsidiaries, to determine whether those legal structures are variable interest entities (VIEs) required to be consolidated for financial reporting purposes by the business enterprise. A VIE is a legal structure for which the holders of a majority voting interest may not have a controlling financial interest in the legal structure. FIN 46R provides guidance for identifying those legal structures and provides guidance for determining whether a business enterprise shall consolidate a VIE. FIN 46R requires that a business enterprise that holds a significant variable interest in a VIE make new disclosures in their financial statements. We are required to adopt the provisions of FIN 46R for our interim period ended March 31, 2004. We do not hold any significant interests in VIEs that would require consolidation or additional disclosures.

On December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (DIMA). This Act introduces a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In January of 2004, the FASB issued FASB Staff Position 106-1, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP 106-1). In accordance with FSP 106-1, we are electing to defer recognition of any potential savings on the measure of the accumulated postretirement benefit or net periodic benefit cost as a result of DIMA until specific authoritative guidance on the accounting of the federal subsidy is issued. Therefore, the consolidated financial statements and accompanying notes do not reflect the effects of the Act on our postretirement medical plans.

Forward-Looking Statements

Certain of the matters discussed concerning our operations, cash flows, financial position, economic performance, and financial condition, including in particular, the likelihood of our success in developing and expanding our business and the realization of sales from backlog, include forward-looking statements within the meaning of section 27A of the Securities Act and Section 21E of the Exchange Act.

Statements that are predictive in nature, that depend upon or refer to events or conditions or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates" and similar expressions are forward-looking statements. Although we believe that these statements are based upon reasonable assumptions, including projections of orders, sales, operating margins, earnings, cash flow, research and development costs, working capital, capital expenditures and other projections, they are subject to several risks and uncertainties, and therefore, we can give no assurance that these statements will be achieved. Such statements will also be influenced by factors such as:

•	our dependence on the defense industry and the business risks peculiar to that industry, including changing priorities or reductions in the U.S. Government defense budget;

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•	our reliance on contracts with a limited number of agencies of, or contractors to, the U.S. Government and the possibility of termination of government contracts by unilateral government action or for failure to perform;

•	our ability to obtain future government contracts on a timely basis;

•	the availability of government funding and changes in customer requirements for our products and services;

•	our significant amount of debt and the restrictions contained in our debt agreements;

•	our ability to continue to retain and train our existing employees and to recruit and hire new qualified and skilled employees;

•	our collective bargaining agreements and our ability to favorably resolve labor disputes should they arise;

•	the business and economic conditions in the markets in which we operate, including those for the commercial aviation and communications markets;

•	economic conditions, competitive environment, international business and political conditions and timing of international awards and contracts;

•	our extensive use of fixed-price type contracts as compared to cost-reimbursable type and time-and-material type contracts;

•	our ability to identify future acquisition candidates or to integrate acquired operations;

•	the rapid change of technology and high level of competition in the communication equipment industry;

•	our introduction of new products into commercial markets or our investments in commercial products or companies;

•	pension, environmental or legal matters or proceedings and various other market, competition and industry factors, many of which are beyond our control; and

•	the fair values of our assets including identifiable intangible assets and the estimated fair value of the goodwill balances for our reporting units which can be impaired or reduced by the other factors discussed above.

Readers of this document are cautioned that our forward-looking statements are not guarantees of future performance and our actual results or developments may differ materially from the expectations expressed in the forward-looking statements.

As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainties of estimates, forecasts and projections and may be better or worse than projected and such differences could be material. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this filing to reflect events or changes or circumstances or changes in expectations or the occurrence of anticipated events.

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ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Part II, Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition — Liquidity and Capital Resources — Derivative Financial Instruments," of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 for a discussion of the Company's exposure to market risks. The only substantial change in those risks during the three months ended March 31, 2004 is discussed below.

Derivative Financial Instruments

Interest Rate Risk.    Our financial instruments that are sensitive to changes in interest rates include borrowings under the senior credit facilities and interest rate swap agreements, all of which are denominated in U.S. dollars. The interest rates on the senior subordinated notes and CODES are fixed-rate and are not affected by changes in interest rates.

In March and April of 2004, we entered into new interest rate swap agreements on $300.0 million aggregate principal amount of our $400.0 million of 6 1/8% senior subordinated notes due 2014, to convert their fixed interest rates to variable rates. These new swap agreements are discussed above under "Management's Discussion and Analysis of Results of Operations and Financial Condition — Statement of Cash Flows — Financing Activities," of this report.

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ITEM 4.

CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chairman and Chief Executive Officer and our President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chairman and Chief Executive Officer and our President and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2004. Based upon that evaluation and subject to the foregoing, our Chairman and Chief Executive Officer and our President and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures provided reasonable assurance that the disclosure controls and procedures are effective to accomplish their objectives.

In addition, there was no change in our internal control over financial reporting that occurred during the quarter ended March 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

From time to time we are involved in legal proceedings arising in the ordinary course of our business. We believe that we are adequately reserved for these liabilities and that there is no litigation that will have a material adverse effect on our consolidated results of operations, financial condition or cash flows. However, as discussed below, we are a party to a number of material litigations, for which an adverse determination could have a material adverse effect on our consolidated financial position, results of operations or cash flows.

On August 6, 2002, Aviation Communications & Surveillance Systems, LLC (ACSS), a subsidiary of L-3 Communications Corporation, was sued by Honeywell International Inc. and Honeywell Intellectual Properties, Inc. (collectively, "Honeywell") for alleged infringement of patents that relate to terrain awareness avionics. The lawsuit was filed in the United States District Court for the District of Delaware. In December of 2002, Honeywell withdrew without prejudice the lawsuit against ACSS and agreed to proceed with non-binding arbitration. We had previously investigated the Honeywell patents and believe that ACSS has valid defenses against Honeywell's patent infringement suit. In addition, ACSS has been indemnified to a certain extent by Thales Avionics, which provided ACSS with the alleged infringing technology. Thales Avionics owns 30% of ACSS. In the opinion of management, the ultimate disposition of Honeywell's pending claim will not result in a material liability to us.

L-3 Integrated Systems and its predecessors have been involved in a litigation with Kalitta Air arising from a contract to convert Boeing 747 aircraft from passenger configuration to cargo freighters. The lawsuit was brought in the northern district of California on January 31, 1997. The aircraft were modified using Supplemental Type Certificates (STCs) issued in 1988 by the Federal Aviation Administration (FAA) to Hayes International, Inc. (Hayes/Pemco) as a subcontractor to GATX/Airlog Company (GATX). Between 1988 and 1990, Hayes/Pemco modified five aircraft as a subcontractor to GATX using the STCs. Between 1990 and 1994, Chrysler Technologies Airborne Systems, Inc. (CTAS), a predecessor to L-3 Integrated Systems, performed as a subcontractor to GATX and modified an additional five aircraft using the STCs. Two of the aircraft modified by CTAS were owned by American International Airways, the predecessor to Kalitta Air. In 1996, the FAA determined that the engineering data provided by Hayes/Pemco supporting the STCs was inadequate and issued an Airworthiness Directive that effectively grounded the ten modified aircraft. The Kalitta Air aircraft have not been in revenue service since that date. The matter was tried in January 2001 against GATX and CTAS with the jury finding fault on the part of GATX but rendering a unanimous defense verdict in favor of CTAS. Certain co-defendants had settled prior to trial. The U.S. Ninth Circuit Court of Appeals has reversed and remanded the trial court's summary judgment rulings in favor of CTAS regarding a negligence claim by Kalitta Air, which asserts that CTAS as an expert in aircraft modification should have known that the STCs were deficient, and excluding certain evidence at trial. Based on this ruling, a retrial has been scheduled for September 2004. In preparation of such retrial, Kalitta Air has submitted to us an expert report on damages that calculated Kalitta Air's damages at either $232,000 or $602,000, depending on different factual assumptions. We have retained experts whose reports indicate that, even in the event of an adverse jury finding on the liability issues at trial, Kalitta Air has already recovered amounts from the other parties to the initial suit that more than fully compensated Kalitta Air for any damages it incurred. CTAS' insurance carrier has accepted defense of the matter with a reservation of its right to dispute its obligations under the applicable insurance policy in the event of an adverse jury finding. We believe that we have meritorious defenses and intend to continue to vigorously defend this matter. However, litigation is inherently uncertain and it is possible that an adverse decision could be rendered, which could have a material adverse effect on our consolidated financial position, results of operations or cash flows.

L-3 Communications Corporation and L-3 Communications Security and Detection Systems (L-3 SDS) had been named, along with many other defendants, including other security screening systems manufacturers, as defendants in a number of lawsuits brought in the Southern District of New York by

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or on behalf of the victims of the terrorist attacks on September 11, 2001. The Court ordered that the plaintiffs file amended master complaints on March 31, 2004. These complaints did not name L-3 Communications Corporation or L-3 SDS as defendants. We have been advised that the plaintiffs' executive committee recommended that all plaintiffs drop their claims against L-3 Communications Corporation, L-3 SDS, and various other security systems manufacturers, and that all of the plaintiffs with active pending cases have agreed to do so. Actual notices of dismissal have been obtained in 92 cases and are being sought in the remaining cases, however it appears that the filing of the amended master complaints without listing L-3 Communications Corporation or its subsidiaries has effectively terminated the litigation against us. We therefore anticipate that we will have no liability in these cases.

On November 18, 2002, we initiated a proceeding against OSI Systems, Inc. (OSI) in the United States District Court sitting in the Southern District of New York seeking, among other things, a declaratory judgment that we had fulfilled all of our obligations under a letter of intent with OSI (the "OSI Letter of Intent"). Under the OSI Letter of Intent, we were to negotiate definitive agreements with OSI for the sale of certain businesses we acquired from PerkinElmer, Inc. on June 14, 2002. On February 7, 2003, OSI filed an answer and counterclaims alleging, among other things, that we defrauded OSI, breached obligations of fiduciary duty to OSI and breached our obligations under the OSI Letter of Intent. OSI seeks damages in excess of $100 million, not including punitive damages. Under the OSI Letter of Intent, we proposed selling to OSI the conventional detection business and the ARGUS business that we acquired from PerkinElmer, Inc. Negotiations with OSI lasted for almost one year and ultimately broke down over issues regarding, among other things, intellectual property, product-line definitions, allocation of employees and due diligence. Discovery on the matter is essentially complete. We believe that the claims asserted by OSI in its suit are without merit and intend to defend against the OSI claims vigorously.

L-3 Communications Vertex Aerospace LLC (formerly known as Vertex Aerospace LLC and acquired by L-3 Communications Corporation on December 1, 2003) (L-3 Vertex) is named as a defendant in six wrongful death lawsuits in the District Court, 17th Judicial District, Tarrant County, Texas; in the Circuit Court of the 17th Judicial Circuit, Broward County, Florida; and in the United States District Court, Western District of North Carolina arising from the crash of Air Midwest Flight 5481 at Charlotte-Douglas International Airport in Charlotte, North Carolina on January 8, 2003. The crash resulted in the deaths of nineteen passengers and two crewmembers. Each of the lawsuits alleges contributing factors including that the accident was caused by the improper maintenance of the aircraft by L-3 Vertex, and seeks to recover compensatory and punitive damages. No discovery has taken place in the lawsuits at this time. Fourteen claims resulting from this incident have previously settled and one settlement is pending. The National Transportation Safety Board (NTSB) investigated the cause of the crash and has concluded that the crash was caused by the incorrect rigging of the elevator control system compounded by the airplane's center of gravity, which was substantially aft of the certified limit, with several other contributing factors. L-3 Vertex believes that it has meritorious defenses to the pending lawsuits, and intends to defend the cases vigorously. The actions have been tendered to L-3 Vertex's insurance carrier, who has accepted the defense of each action served upon L-3 Vertex to date. L-3 Vertex was also indemnified by Air Midwest for losses L-3 Vertex incurred arising out of its provision of maintenance services to Air Midwest. Based on the availability of insurance and the indemnification from Air Midwest, we do not believe we will have a material liability in this matter.

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ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit Number				Description of Exhibit
	3.1			Certificate of Incorporation of L-3 Communications Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrants' Quarterly Report on Form 10-Q for the period ended June 30, 2002).
	3.2			By laws of L-3 Communications Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (File No. 333-46975)).
	3.3			Certificate of Incorporation of L-3 Communications Corporation (incorporated by reference to Exhibit 3.1 to L-3 Communications Corporation's Registration Statement on Form S-4 (File No. 333-31649)).
	3.4			Bylaws of L-3 Communications Corporation (incorporated by reference to Exhibit 3.2 to L-3 Communications Corporation's Registration Statement on Form S-4 (File No. 333-31649)).
		*11		L-3 Communications Holdings, Inc. Computation of Basic Earnings Per Share and Diluted Earnings Per Share.
		**12.1		Ratio of Earnings to Fixed Charges.
		**31.1		Certification of Chief Executive Officer pursuant to Rule 13a - 14(a) and Rule 15d - 14(a) of the Securities Exchange Act, as amended.
		**31.2		Certification of Chief Financial Officer pursuant to Rule 13a - 14(a) and Rule 15d - 14(a) of the Securities Exchange Act, as amended.
		**32		Section 1350 Certifications.

*	The information required in this exhibit is presented in Note 10 to the Unaudited Condensed Consolidated Financial Statements as of March 31, 2004 in accordance with the provisions of SFAS No. 128, Earnings Per Share.

**	Filed herewith

(b)    Reports on Form 8-K

	None.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

L-3 Communications Holdings, Inc. and L-3 Communications Corporation Registrants

Date: May 10, 2004

/s/ Robert V. LaPenta                    

Name: Robert V. LaPenta Title: President and Chief Financial Officer (Principal Financial Officer)

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EXHIBIT INDEX

Exhibit Number				Description of Exhibit
3.1				Certificate of Incorporation of L-3 Communications Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrants' Quarterly Report on Form 10-Q for the period ended June 30, 2002).
3.2				By laws of L-3 Communications Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (File No. 333-46975)).
3.3				Certificate of Incorporation of L-3 Communications Corporation (incorporated by reference to Exhibit 3.1 to L-3 Communications Corporation's Registration Statement on Form S-4 (File No. 333-31649)).
3.4				Bylaws of L-3 Communications Corporation (incorporated by reference to Exhibit 3.2 to L-3 Communications Corporation's Registration Statement on Form S-4 (File No. 333-31649)).
*11				L-3 Communications Holdings, Inc. Computation of Basic Earnings Per Share and Diluted Earnings Per Share.
**12.1				Ratio of Earnings to Fixed Charges.
**31.1				Certification of Chief Executive Officer pursuant to Rule 13a - 14(a) and Rule 15d - 14(a) of the Securities Exchange Act, as amended.
**31.2				Certification of Chief Financial Officer pursuant to Rule 13a - 14(a) and Rule 15d - 14(a) of the Securities Exchange Act, as amended.
**32				Section 1350 Certifications.

*	The information required in this exhibit is presented in Note 10 to the Unaudited Condensed Consolidated Financial Statements as of March 31, 2004 in accordance with the provisions of SFAS No. 128, Earnings Per Share.

**	Filed herewith

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