On CourseOn Coursesummary Annual Report 2003

TransformationalISR

Training Our Troops

What’s New in Avionics

High-Performance Products

DefendingOur Shores

Military Transformation and Homeland Security –

How L-3 is Positioning Itself for the Future

L-3 Communications

FFIINNAANNCCIIAALL HHIIGGHHLLIIGGHHTTSS

For the years ended December 31, 2003 2002 2001 2000 1999

(In thousands, except per share amounts)

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . $5,061,594 $4,011,229 $2,347,422 $1,910,061 $1,405,462

Operating income(a) . . . . . . . . . . . . . . . . . 581,021 453,979 275,330 222,718 150,486

Income before cumulative effect of a change

in accounting principle(a) . . . . . . . . . . . . . 277,640(d) 202,467(d) (e) 115,458 82,727 58,689

Diluted earnings per share before

cumulative effect of a change

in accounting principle(a) (b) . . . . . . . . . . . . 2.71(d) 2.18(d) (e) 1.47 1.18 0.88

Cash flow from operating activities . . . . . . . 456,063 318,460 172,968 113,805 99,018

Capital expenditures, net of disposition

of property, plant and equipment . . . . . . . . 79,020 58,510 46,884 15,520 16,743

Free cash flow(c) . . . . . . . . . . . . . . . . . . . 377,043 259,950 126,084 98,285 82,275

Shareholders’ equity . . . . . . . . . . . . . . . . 2,574,496 2,202,202 1,213,892 692,569 583,175

(a) The statement of operations data for 2001, 2000 and 1999 includes goodwill amortization expense.

(b) Diluted earnings per share for all periods reflects our two-for-one stock split that became effective May 20, 2002.

(c) We define free cash flow as net cash from operating activities, less net capital expenditures (capital expenditures less cash proceeds from disposition of property,

plant and equipment).

(d) Includes debt retirement charge of $7.2 million after taxes, or $0.06 per diluted share in 2003 and $9.9 million after taxes, or $0.11 per diluted share in 2002.

(e) The year ended December 31, 2002 excludes the cumulative effect of a change in accounting principle for a goodwill impairment of $24.4 million or $0.25 per diluted share.

$6,000

4,800

3,600

2,400

1,200

Sales in millions

$600

480

360

240

120

Operating Income in millions

$400

320

240

160

80

Free Cash Flow in millions

October 2003L-3 successfully completed the acquisitionof the Military Aviation Services (MAS)business of Bombardier Inc. MAS is aleader in systems engineering support andaircraft modernization, providing a fullrange of technical services in the areas ofaircraft maintenance, repair and upgradefor military aircraft and regional jets andselected commercial aircraft.

September 2003L-3 acquired Klein Associates, Inc., a busi-ness unit of OYO Corporation of Japan.Klein is a pioneer in the development ofside-scan sonars, sub-bottom profilers andrelated instruments and accessories forundersea search and survey.

May 2003L-3 sold $400.0 million of 6 1/8% SeniorSubordinated Notes. The company used aportion of the proceeds to redeem its$180.0 million of 8 1/2% SeniorSubordinated Notes.

May 2003L-3 completed its acquisition of Aeromet,Inc., a leader in electro-optical andinfrared (EO/IR) programs supportingIntelligence, Surveillance andReconnaissance (ISR) missions and spe-cialized meteorological applications.

March 2003L-3 acquired the Avionics Systems businessfrom Goodrich Corporation. AvionicsSystems is a leading designer and manu-facturer of advanced cockpit equipment,innovative avionics solutions and safetysystems.

MILESTONES

99 00 01 02 03 99 00 01 02 03 99 00 01 02 03

CAGR 37.8

%

CAGR 40.2

%

CAGR 46.4

%

December 2003L-3 successfully completed its acquisitionof Vertex Aerospace LLC. Vertex is a lead-ing provider of aerospace and other tech-nical services to the Department ofDefense (DoD) and other governmentagencies, including the US Air Force, USNavy, US Army, US Marine Corps,Department of Homeland Security (DHS),Drug Enforcement Administration (DEA)and NASA.

December 2003L-3 sold $400.0 million of 6 1/8% SeniorSubordinated Notes. The company initiat-ed the redemption of $300.0 million of5 1/4% Convertible Senior Subordinated

Notes, which resulted in the conversion ofsubstantially all the 5 1/4% Notes into L-3common stock in January, 2004.

December 2003L-3 acquired certain defense and aero-space assets of IPICOM, Inc. This busi-ness is a leading manufacturer of broad-band communications products and sys-tems, including advanced performanceanalog, digital and fiber-optic transmissionsystems widely used in broadband, cableTV, security and surveillance applications.

January 2004L-3’s Board of Directors declared the com-pany’s first quarterly cash dividend of$0.10 per share, payable March 15, 2004,to shareholders of record at the close ofbusiness on February 17, 2004.

Letter to Shareholders2003 shaped up to be an excellent year for L-3.Contributors: Frank C. Lanza and Robert V. LaPenta.

Secure Communications & ISRISR is at the forefront of military transformation.Contributors include: Communication Systems-East, Communication Systems-West, Integrated Systems, Aeromet & ComCept.

Training, Simulation & SupportReadiness and cost-effectiveness are driving a push for more training, simulation and support services.Contributors include: Link Simulation and Training, GSI, MPRI, MPRI-Ship Analytics, SYColeman & ILEX.

Aviation Products & Aircraft ModernizationKey products and strategic acquisitions make L-3 a world player in this arena.Contributors include: Aviation Recorders, Avionics Systems, ACSS, Display Systems, Electrodynamics, Integrated Systems, Vertex Aerospace, MAS & Spar Aerospace.

Specialized ProductsWith the broadest base of products in defense, L-3 added key products to its arsenal in 2003.Contributors include: IEC, KDI, BT Fuze Products, Space and Navigation, SPD Technologies, Ocean Systems, ESSCO, Narda Microwave-East, Narda Microwave-West, Narda Satellite Networks, Security and Detection Systems, Telemetry-East, Telemetry-West, Storm Control Systems, Ruggedized Command and Control Solutions, Randtron, WESCAM, Electron Devices & Wolf Coach.

Homeland SecurityThe threat of terrorism has not abated and the US government is working on protecting the nation’s citizens and infrastructure.Contributors include: Security and Detection Systems, Communication Systems-East, Communication Systems-West, Aviation Recorders, GSI, MPRI, MPRI-Ship Analytics & Wolf Coach.

Shareholder Information

Condensed Consolidated Financial Data and Management Team

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6

10

14

18

22

26

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L-3 Communications 2003 Summary Annual Report

Contents

The Frank C. LanzaChairman and Chief Executive Officer

Robert V. LaPentaPresident and Chief Financial Officer

Future for L-3

Dear Shareholders:

In 2003, our military forces wereengaged in a fierce conflict in Iraq,

while in the US, federal, state and localauthorities were continuing their workto secure the nation against terroristthreats. L-3 Communications – itsemployees, products and services –played a major role in sustaining andequipping our troops, as well as helpingdomestic agencies and local govern-ments meet the difficult challenges theyfaced after September 11, 2001.

L-3 is proud of its support of thesuccessful missions of the SpecialOperations Forces (SOF), whose rolehas been greatly expanded in both Iraqand Afghanistan. One of the key advan-tages the US military had in detectingand eliminating the enemy was its Intelligence, Surveillance andReconnaissance (ISR) capability, aswell as secure data links and systemsprovided by L-3 for all importantmanned intelligence aircraft andUnmanned Aerial Vehicles (UAV).

The challenging demands ofongoing operations increased the needfor highly trained military personnel,and L-3’s training, simulation and sup-port services dramatically helped toimprove combat skills and readiness forour forces. These demands also calledfor increased aircraft maintenance, sys-tems integration and system upgradesby L-3 to ensure that the military’s exist-ing assets performed at their best.

L-3’s work in ISR and securecommunications, as well as precisionweaponry products, global positioningequipment and safety and armingdevices, enabled precise targeting ofenemy assets with minimal collateraldamage. There were thousands of L-3personnel assisting our military forcesand hundreds of L-3 products in use,including displays, antennas, satellite

3

Link Simulation and Training’sfounder, Ed Link, developer of the firstpilot training device in 1929, wasinducted into the National InventorsHall of Fame (NIHF) in Akron, Ohio.

Link received the 2003 Market Leader-ship Award in Military Flight Simula-tion from Frost & Sullivan, a globalconsulting and market research organi-zation.

ComCept received the OutstandingAchievement award from the DefenseIndustry in network-centric warfarefrom the Institute for Defense andGovernment Advancement (IDGA).ComCept was selected by a distin-guished panel of experts over a field ofstrong competitors for its work on theNetwork-Centric CollaborativeTargeting (NCCT) program with theUS Air Force's Big Safari ProgramOffice.

ComCept was awarded a James S.Cogswell Outstanding IndustrialSecurity Achievement Award for 2003.The Defense Security Service estab-lished this award in 1996 as a way torecognize a few of the cleared contrac-tor facilities for outstanding perform-ance in the field of security.

Communication Systems-East’sImproved Remotely MonitoredBattlefield Sensor System (IREM-BASS) has been awarded GovernmentExecutive Magazine's 2002 GraceHopper Government TechnologyLeadership Award in the category of"Contributing to Advances inHomeland Security and the War onTerrorism."

L-3 closed the year 2003 with astrong balance sheet. The company’sdebt to book capitalization was at 48.1%at December 31, 2003 (42.3% afteradjusting for the conversion of $300.0million of 5 1/4% Convertible Notes intocommon stock in January 2004), com-pared to 44.8% at December 31, 2002.

Acquisitions

During 2003, L-3 made a number ofkey acquisitions with an aggregate

purchase price of $1.0 billion. Thesecompanies complemented L-3’s existingoperations in three of its four businesssegments and allowed L-3 to take advan-tage of synergies and offer more prod-ucts, services and added value to cus-tomers.

In Secure Communications andISR, L-3 added two important compa-nies. Aeromet offers a broad array ofservices, including electro-optical andinfrared (EO/IR) programs for ISR andspecialized meteorological applicationsfor key mission areas. The defense andaerospace assets purchased from IPICOM have leadership positions insecure optical data link systems fordefense and aerospace applications for avariety of classified and unclassifiedcustomers.

L-3 significantly expanded itsposition in its Aviation Products andAircraft Modernization segment withkey acquisitions. In commercial avia-tion products, L-3 acquired GoodrichAvionics Systems (renamed L-3Avionics Systems), which supplies avariety of safety-related avionics prod-ucts, including the new SmartDeck®

integrated flight control and display sys-tem for the general aviation market.Avionics Systems also offers productsfor military platforms, such as the JointPrimary Aircraft Training System(JPATS). Despite the slowdown in theoverall commercial aviation sector,

communications terminals, commandand control systems, microwave subsys-tems for radars, precision weapons andguidance systems, telemetry productsand electronic wide-area remote securi-ty sensors.

In the area of homeland security,L-3’s eXaminer® 3DX 6000s are hard atwork at American airports inspectingchecked baggage; the company’s cargoinspection systems are also in operationaround the world protecting ports andfacilities. L-3’s intrusion detection sys-tems are guarding US borders and USmilitary bases around the world. L-3’scrisis management systems are helpingNew York City’s anti-terrorism unit, aswell as other state and local authorities,defend against threats.

In many ways, L-3 has become amajor partner in US efforts to protectand equip its military and its homelandsecurity authorities. This partnershiphas grown substantially from the compa-ny’s beginnings.

In 1997, L-3 had revenues of$705.4 million and was a product sup-plier of secure communications, avion-ics, telemetry and instrumentation andmicrowave products. Through internalgrowth and acquisition, L-3 is now aFortune 500 company, with over $5 bil-lion in revenues in 2003. The companyhas evolved into a prime systems con-tractor for secure communications andISR, training and simulation, govern-ment services and aircraft moderniza-tion and has become the largest andbroadest supplier of products for themerchant market in the defense industry.

Strong Results

In 2003, L-3 again demonstrated itscommitment to high-performance

standards, setting financial records andestablishing new milestones. Salesincreased to $5,061.6 million from

$4,011.2 million in 2002, a 26.2%increase, including 15.4% organicgrowth for L-3's defense business (5.4%for all of L-3 including the declines inL-3's explosives detection systems andcommercial businesses).

For 2003, operating income rose28.0% to $581.0 million, increasingfrom $454.0 million in 2002. Dilutedearnings per share for 2003 rose 24.3%to $2.71, from $2.18 (before cumulativeeffect of a change in accounting princi-ple) in 2002.

In May 2003, L-3 completed anoffering of $400.0 million principalamount of 6 1/8% Senior SubordinatedNotes and redeemed all outstanding$180.0 million aggregate principalamount of 8 1/2% Senior SubordinatedNotes. Later that year, L-3 raised $400.0million in funds through a private place-ment of Senior Subordinated Notes andcalled for redemption of all its outstand-ing $300.0 million aggregate principalamount of 5 1/4% Convertible SeniorSubordinated Notes due 2009, substan-tially all of which were converted intoL-3 common stock in January 2004.The net proceeds were used to repayindebtedness outstanding under our sen-ior credit facilities and for general cor-porate purposes, including acquisitions.

L-3 generated $377.0 million infree cash flow, compared to $260.0 mil-lion in 2002, an increase of 45.0%. L-3ended the year with $134.9 million cashon hand and $665.9 million of availableborrowings under the company’s bankcredit facilities. These funds are avail-able for investments in strategic acquisi-tions and other business opportunities.

It was a banner year for orders atL-3. The company recorded $5,477.4million in funded orders from all of L-3’s major business areas. Backlogwas $3,893.3 million at December 31,2003.

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L-3 Accolades

Display Systems was selected in 2003as Boeing’s 2002 Supplier of the Yearfor Aerospace Support.

Display Systems also received the dis-tinguished Preferred SupplierCertification Award from The BoeingCompany in recognition of its com-mitment and dedication to continuousbusiness process improvements, on-time delivery, achievements inadvanced quality systems, customersatisfaction and affordability.

Security and Detection Systemsreceived an award in the category ofInnovative Security Technology for itsVCT30 explosives detection system(EDS). Awarded in Rome, Italy atAVSEC World 2002 – a cooperativeforum comprised of governmentorganizations, airlines and airports inthe global air transport industry – theVCT30 is the only Federal AviationAdministration (FAA) ARGUS systemto receive such an award.

BT Fuze Products was awarded the"We Make a Difference Award" for its Integrated Product Team (IPT)efforts on the M762A1/M767A1 FuzeProgram from the US Army'sArmament Research, Engineering and Development Center.

Electrodynamics received certificationin the Process Validation Program(PVP) from Lockheed MartinAeronautics Company and retained itscertification as a Silver Supplier withThe Boeing Company.

ESSCO was honored with a GoldSupplier award from NorthropGrumman Space Technology as aresult of the company’s performanceon a contract to supply a 100-foot-diameter metal space frame radome.

Space and Navigation has received theLarge Business of the Year awardfrom United Space Alliance (USA).This honor is in recognition of theoutstanding performance demonstrat-ed on the Space Shuttle program.

airport, port and maritime security,intrusion detection, crisis managementand vehicles for communications,bioterrorism and command and control.

The opportunities for internalgrowth are significant in the yearsahead, as is the pipeline for acquisitions.Throughout its history, L-3 has beenvery selective in choosing companieswith products and systems in high-growth areas of defense spending. In2004 and beyond, this combination offocused internal growth and opportunis-tic acquisitions will help to deliver dou-ble-digit growth rates and enable L-3 tobecome even more critical to the USmilitary, as well as federal, state andlocal homeland security initiatives.

None of this growth would be pos-sible without the effort, dedication andskill of our L-3 workforce. Year afteryear, they have delivered on their prom-ise to provide excellent value to our cus-tomers and growth to our shareholdersand they will continue that commitmentin 2004.

Reflecting our confidence in L-3'sfuture growth, the L-3 Board ofDirectors declared L-3’s first quarterlycash dividend to the company's commonstock holders payable on March 15,2004. This year’s annual report willexamine how the company is on coursefor the future with promising technolo-gies, new programs and future growthopportunities.

Frank C. LanzaChairman and ChiefExecutive Officer

Robert V. LaPentaPresident and Chief Financial Officer

Avionics Systems, with its balancedbusiness mix of military, business andgeneral aviation and air transport prod-ucts, continues to demonstrate solidgrowth.

With joint-venture partner VertexAerospace, L-3 won a major ten-yearcontract to provide logistics support forUS Army aircraft training at FortRucker, Alabama. This successful part-nership led L-3 to its largest acquisitionof 2003 – Vertex Aerospace, a leadingprovider of logistics support, modern-ization, maintenance, supply chain man-agement and depot services with aworldwide presence.

L-3 further solidified its positionas a leader in aircraft modernizationwith the acquisition of Bombardier’sMilitary Aviation Services (MAS). Thisoperation adds to L-3’s other Canadianaircraft modernization company – SparAerospace – and provides systems engi-neering support, aircraft modernizationand a full range of technical services.With L-3’s Integrated Systems opera-tions and its new subsidiary Vertex,along with Spar and MAS, L-3 is nowone of the largest aircraft modernizationcompanies in the world.

In the Specialized Products seg-ment, L-3 added Klein Associates, aleading sensor technology company,which provides high-resolution sonarsystems, marine navigation systems andintrusion detection systems. Klein mar-kets to US and international governmentand military organizations and offshoreoil companies, among others. Klein’sproducts were utilized as the principalsonar sensors in the search for theTitanic, Space Shuttle Challenger,Space Shuttle Columbia and TWAFlight 800.

Prospects for 2004 and Beyond

We at L-3 expect that 2004 will beanother solid year for the com-

pany. With the post-Cold War transfor-

mation of the military, the US defensebudget will continue to be strong wellinto the future. In an election year andwith troops overseas, we believeCongress and the American people willcontinue to support the DoD's require-ments, as well as future transformation.

In 2006, the president will havethe opportunity to reexamine DoDrequirements, make decisions on themodernization of existing platforms anddetermine the survival of new plat-forms. Readiness will continue to be amandatory funding commitment as wellas spiral modernization of currentweapons and platforms, regardless ofstrategic direction.

L-3 is in a position of strength ineither a growing or flat defense budgetenvironment. We are teamed on majornew start programs in a growth marketand we are strongly positioned on legacyprograms in a flat market. L-3’s productsand services are in the higher growthareas of procurement – ISR, UAVs, pre-cision weapons, training and simulationsystems and networked secure communi-cations.

In addition, L-3’s sizeable pres-ence in aircraft modernization willenable the company to take advantage ofgrowth in the Operations andMaintenance segment of the defensebudget. Upgrading legacy platforms isone of the DoD’s priorities, not only toensure military readiness, but to providean affordable alternative to purchasinglarger quantities of expensive new plat-forms.

The Department of HomelandSecurity (DHS) budget in 2004 will beover $36 billion, 7% more than 2003levels. The focus of its spending will beon securing borders, air transportationand ports, as well as responding tonational emergencies. L-3 has thebroadest array of key products to protectUS citizens and the national infrastruc-ture, including products and systems for

secure communications, providingsecure data links, secure telephone andnetwork communications infrastructureequipment and encryption managementand communication systems for tactical,unmanned and reconnaissance aircraft,surface and undersea vessels andmanned space flights and satellites.

The US Air Force selected L-3Communication Systems-West to designand develop the Multi-PlatformCommon Data Link (MP-CDL), sup-porting the transmission and receipt ofdata between ground facilities and mul-tiple simultaneous air vehicle platforms.L-3 is also developing the third-genera-tion Tactical Common Data Link(TCDL) system, called the Multi-RoleTCDL (MR-TCDL). This Joint TacticalRadio System (JTRS)-compliant systemprovides wideband backbone and net-working services and operates in numer-ous CDL, MP-CDL and satellite com-munications modes. Both MP-CDL andMR-TCDL are cornerstones for futurenetwork-centric communications – pro-viding the wideband communication

The war in Iraq had manytransformational elements,including joint operations,the effective use of SpecialOperations Forces (SOF) and

speedy movement of troops and sup-plies. But perhaps two of the most effec-tive advantages were the superiority ofUS technology – data links, satellites andairborne sensors – that detect the enemythrough challenging weather conditions;and the coordination among ground, airand space assets to deliver precision-guided weaponry and eliminate threats.

These technological achievementsare the continuation of US efforts to fullyrealize the promise of network-centricwarfare – providing real-time, executable

battlefield information from multipleplatforms and sources to the warfight-ers. A leader in secure communicationsand ISR, L-3 is also continuing its vitalrole in assisting the US military in real-izing that vision. There were severalkey developments in 2003 that will con-tinue into the future.

The future of NCCT and ISRL-3 serves as a prime contractor

for ISR by supplying signals intelli-gence (SIGINT) and communicationsintelligence (COMINT) systems, whichwhen combined with human intelli-gence (HUMINT), provide real-time sit-uational awareness for the respondingwarfighter. L-3 is also a leader in

L-3’s systems provide the command,control and communications needed fornetwork-centric interoperability.

6

SECURE COMMUNICATIONS AND INTELLIGENCE,SURVEILLANCE ANDRECONNAISSANCE(ISR)

portive role for the Predator and GlobalHawk UAV platforms and for the U-2reconnaissance aircraft.

L-3 IS had record bookings for itstactical reconnaissance programs, whichresulted in important new capabilitydevelopment efforts for the RC-135

architecture that connects critical infor-mation flow within the ISR community.

In addition, L-3 ComCept is theprime contractor for Joint and CoalitionForces – Network-Centric CollaborativeTargeting (NCCT), which is transform-ing network-centric warfare technology.L-3’s Network Enabled Technologies(NET) allow forces to use their plat-forms, sensors and weapons more effi-ciently by managing all of their net-worked resources as a single high-per-formance system. NCCT is beinginstalled on the core ISR-enabled fleetsfor the US and UK and is on track for asuccessful demonstration in 2004.NCCT participants include the AirborneWarning and Control System (AWACS),Distributed Common Ground Systems(DCGS), Joint Surveillance TargetAttack Radar System (JSTARS),Nimrod, Rivet Joint, Guardrail and theCombined Air Operations Center. Alsoin 2003, L-3 Integrated Systems (IS)demonstrated its Lightweight SIGINT(LITES) technology, which dramaticallyincreases SIGINT capability via multi-ple-platform collaboration. This keyenabler for the NCCT system exempli-

fies transformational ISR.

ReconnaissanceL-3 Communication Systems-

West is also a major supplier to specialintelligence military programs and air-craft. In 2003, L-3 continued its sup-

7

NCCT uses a collaborative

machine-to-machine interface to

integrate air, space and surface

ISR assets.

(left)

Outfitting Special Operations SoldiersThe Joint Operations Group of L-3 Integrated Systemsprovides worldwide logistics support to the US SpecialOperations Command (USSOCOM) as part of the $1.5billion Special Operations Forces Support Activity con-tract, one of the largest contracts in L-3’s history. L-3’sintegrated logistics support includes a full range ofSpecial Operations Aviation systems integration andmaintenance, unique wheeled vehicle engineering anddesign, integrated logistics support, gunsmithing, water-craft refurbishment and communications-electronics andnight vision device repair and return.

www.L-3com.com L-3 Communications Summary Annual Report

Secure Communications and ISR

(right)The High AltitudeObservatory (HALO-II), a modifiedGulfstream businessjet, carries the L-3Aeromet-developedHeimdall-IR™ surveil-lance system, whichuses precision EO/IRradiometric and track-ing data to support keytest and measurementobjectives during mis-sile defense develop-ment. Aeromet wasacquired by L-3 in May 2003 and is nowpart of L-3 IS.

(left)L-3 IS continues to mod-ernize and support theUS Air Force’s RC-135Rivet Joint fleet by per-forming airframe andmission systems modifi-cations. The on-boardsensor suite allows themission crew to detect,identify and geolocate sig-nals throughout the elec-tromagnetic spectrum.

Rivet Joint. In addition, L-3 IS receivedincreased funding for ongoing and con-tinuous support of the Big SafariLogistics program. L-3 also wonexpanded work to provide special mis-sion self-protection and communica-tions systems installation for a variety ofaircraft platforms.

The 14-aircraft EH-130H Com-pass Call fleet performs tactical com-mand, control and communicationscountermeasures and recently complet-ed missions in support of OperationIraqi Freedom. In addition to its supportof the Compass Call program, L-3 ISwill now supply periodic depot mainte-nance, modifications and contractorsupport services for the EH-130H.

L-3 Communication Systems-East's state-of-the-art S/TAR™ DigitalSolid State Recorder was selected forthe US Air Force’s F-16 TheaterAirborne Reconnaissance System(TARS) Electro-Optical Pre-PlannedProduct Improvement (P3I) program.Along with an L-3 CommunicationSystems-West data link, the new subsys-

tems will allow the TARS pod to providethe warfighter with real-time ImageIntelligence (IMINT) for Bomb DamageAssessment (BDA) that is superior to their current reconnaissance pod.

A key tactical communicationsproject for the US Army is the Phoenixprogram. L-3 Communication Systems-West will design, integrate and test theTri-Band Satellite CommunicationSystem to be mounted on High MobilityMultipurpose Wheeled Vehicles(HMMWV). The Phoenix system willreplace the Army’s aging fleet of morethan 150 Ground Mobile Forces (GMF)Tactical Satellite CommunicationSystems for higher bandwidth satellitecommunications.

EXPanded Capability – EO/IRL-3 expanded its electro-optical

and infrared (EO/IR) services capabilitywith the acquisition of Aeromet. In2003, the business received an optionfrom the Missile Defense Agency(MDA) for the extension of the AirborneInfrared Surveillance (AIRS) concept

8

development program. The proposedAIRS system consists of a high-per-formance, infrared telescope and datacollection system capable of being inte-grated on either manned or unmannedair vehicles to detect, track and discrim-inate ballistic missiles in all phases offlight. The system is also capable ofproviding infrared detection anddetailed imaging of ground targets.

L-3 is also playing a critical role inthe MDA’s development of the Ground-based Midcourse Defense Segment(GMDS). Communication Systems-East is under contract to provide SolidState Power Amplifier Assemblies(PAA) for the GMD Extremely HighFrequency (EHF) communications sub-system. The PAA, developed, manufac-tured and tested by L-3, resides on theGround-Based Interceptor (GBI) boost-er and is part of the communicationssystem between the kill vehicle and the ground-based command and controlsystem. It collects and processes targetacquisition information and provides in-flight updates that enable the kill vehicleto acquire, intercept and destroy the tar-get.

Secure ProductsL-3 Communication Systems-East

has recently received National SecurityAgency (NSA) certification for theRedEagle™ KG-240, a 100 Mbps net-work encryptor. The RedEagle KG-240is the first product ever to both receiveNSA certification and meet the US gov-ernment's stringent High AssuranceInternet Protocol InteroperabilitySpecification (HAIPIS). L-3's Red-Eagle family of products is expected toplay a key role in establishing a secureinfrastructure in support of the DoD'stransformational communication net-working initiatives.

L-3 Communication Systems-Eastreached a major program milestone in2003 with the delivery of its 100,000thSecure Terminal Equipment (STE) unitsince procurement began in 1998. In2003, there were also orders for L-3’sSecure Voice Conference Services(SVCS) from the DHS and for STE-R asthe next member of the STE family ofproducts. ◊

On the battlefield, there are no runners up.

There's a reason why L-3 is an incumbent on major C4ISR programs. L-3's secure communications and ISRproducts prove themselves successfully every day in every theater – on the ground, in the air and at sea.

At the heart of the DoD's network-centric warfare systems are L-3's SATCOM terminals, secure communications products, data links and sensors.

Helping Build the Internet in the Sky

The superior performance ofUS troops in bothAfghanistan and Iraq was dueto many factors, including thepersonal courage and skill of

our forces, their sharing of intelligenceand information, the precision andlethality of their weapons – and the qual-ity of their training.

By using state-of-the-art trainingand simulation systems that replicate thechallenges, terrain and weather condi-tions of specific combat zones, militarypersonnel can achieve the readinessneeded to embark on missions. A highdegree of realism in a training environ-ment facilitates a better response in actu-al action and provides a key psychologi-cal advantage in the field.

Training will continue to be a highpriority for the DoD for many reasons.Ongoing operations and a shift towardjoint coalition forces are creating anincreased need for simulated training, ascost factors, complex environments anddeployment schedules decrease livetraining opportunities. New trainingtechnologies, which provide realistic,immersive experiences, will be used tomaintain optimum readiness and L-3Link Simulation and Training is at theforefront of this initiative with advancedsimulation products and training services.

AVCATT-AIn 2003, Link delivered four of its

unique Aviation Combined Arms TacticalTrainer-Aviation Reconfigurable MannedSimulator (AVCATT-A) suites to theArmy and Army National Guard.AVCATT-A suites replicate five separatehelicopter platforms to support a highlyrealistic combat environment. This envi-

10

(clockwise from top left)

In 2004, Link will deliver an F-16C Block 52+ Aircrew Training Device tothe Hellenic Air Force.

Link continues to deliver F/A-18E/F Tactical Operational Flight Trainers(TOFT) to the US Navy to support pilot and weapon systems officer train-ing. These F/A-18E/F TOFTs are the first simulators to incorporate thecompany’s SimuSphere™ dodecahedron visual system display.

E-3 Airborne Warning and Control System flight crews now use modernsimulators to practice challenging air refueling operations.

The F/A-22 Weapons Tactics Trainer enables Raptor pilots to gain extensiveprocedural training and build competence in both individual and teamweapon systems employment.

Training,Simulationand Support

ronment enables aircrews to fly in allcombat modes, day and night, against anenemy force in networked exercises.Each suite consists of two mobile 53-foottrailers that house six reconfigurable sim-ulators, a Battle Master Control Roomand an After Action Review Theater thatcan be transported wherever necessary.L-3 will deliver three more suites andexpects to receive additional productioncontracts during 2004.

One of the most innovative tech-nologies associated with AVCATT-A isits helmet-mounted display, which sets anew standard in visual simulation dis-play capability. Each of the suite’s 12

Flight School xxiIn early 2004, Link won a contract

to provide simulators and contractorlogistics support for the Army’s FlightSchool XXI, a major program designedto increase aviators’ aircraft experienceprior to their first combat unit assign-ment. Under this program, Link willdevelop, test, install, operate and main-tain all of Flight School XXI’s AdvancedAircraft Virtual Simulators andReconfigurable Training Devices.These training devices will incorporatethe latest virtual simulation technologiesdeveloped at Link and will contribute tothe Army’s goal of increasing pilot pro-ficiency and better supporting units’efforts to sustain combat readiness.Link will also provide extended logisticssupport for these products for the life ofthe program.

There were many key awards dur-ing 2003, including funding fromBoeing to build additional F/A-22 pilottraining devices and a delivery orderaward for concurrency upgrades on air-crew and maintenance training systemsfor the US Air Force B-2A Spirit train-ing program. There was also a strategicwin to provide contractor aircrew train-ing services for the US Air Force’s E-8CJSTARS Flight Crew Training program.

Link trainers already account forover 90% of the fielded flight simulatorsfor F/A-18 training. In 2003, Linkreceived a contract to build and upgradeF/A-18E/F flight simulators and a Linkand L-3 Government Services, Inc.(GSI) team was awarded a contractoption to develop a second F/A-18CDistributed Mission Training suite.

On the international front, theCommonwealth of Australia announcedit has entered into a Deed of Agreementwith Link and Raytheon Australia toprovide the Royal Australian Air Force(RAAF) with a modern F/A-18 HornetAircrew Training System.

Also in conjunction with Link,GSI was selected to bid on the USNavy’s $3 billion Training SystemsContract II from the Naval Air SystemsCommand (NAVAIR) Training SystemsDivision. Through 2011, Link and GSIwill have the opportunity to bid ondelivery orders for training design,development, production, modification,evaluation, delivery, product support

pilots use helmets that provide a 360-degree field-of-regard. L-3 is continu-ing to make investments in this technol-ogy and is working on a new, light-weight system, which will attach to apilot’s actual helmet, enabling on-demand training anytime and anywhere.

In addition to AVCATT-A, L-3provides howitzer crew gunnery simula-tors and training simulators for suchmajor air platforms as the F/A-18, F/A-22, F-117, F-16 and the B-2. L-3also supplies computer-based trainingand simulators for the E-3 AWACS andthe P-3 maritime surveillance aircraft.

11www.L-3com.com L-3 Communications Summary Annual Report

and system test and evaluation. The market for government out-

sourcing services also continues to be agrowth area, as it accommodatesexpanding requirements cost-effectively.L-3 divisions are equipped to respond togovernmental agency requests for expe-rienced support personnel in nationalsecurity and organizational managementprograms, emergency management sys-tems and leadership training and educa-tional development areas.

Greater Demand for ServicesIn 2003, L-3 consolidated four

companies, creating GSI from itsAnalytics, EER Systems, IMC and TMAbusinesses. GSI serves a customer basethat includes the DoD, DHS, state andlocal governments and selected US gov-ernment intelligence agencies.

In 2003, GSI was awarded a taskorder under a USSOCOM 5-yearIndefinite Delivery/Indefinite Quantity(ID/IQ) contract to provide intelligenceand security support to the Joint SpecialOperations Command (JSOC). Underthis order, L-3 will provide analyticalsupport for intelligence services, includ-ing exploitation and analysis operations,operational and exercise planning,imagery system exploitation and securi-ty management support.

The L-3 GSI team has alsoreceived awards under a major intelli-gence community client blanket pur-chase agreement to provide informationtechnology services, such as systemsand enterprise engineering, communi-cations, information technology infra-structure operations and life-cycle sup-port to members of the intelligencecommunity.

During 2003, L-3 MPRI contin-ued to provide its expertise in the USand around the world with programsthat support the US DoD, non-DoDagencies and companies in the corpo-rate sector. MPRI provided a widerange of services to foreign govern-ments, including organizing democracytransition efforts and strategic planning.

MPRI supports the ProgramExecutive Off ice (PEO) Soldier program, which distributes equipmentto those US Army units deploying toAfghanistan and Iraq. In addition, L-3 ILEX Systems Field SoftwareEngineers were deployed at the onsetof Operation Enduring Freedom inAfghanistan. In Iraq, engineers areproviding direct systems support to morethan 400 All Source Analysis Systems,Integrated Meteorological Systems,Digital Topographic Support Systems

12

MPRI is recognized worldwide as a leaderin providing services related to militaryleadership and organizational development,strategic analysis, studies and assessments,homeland security, anti-terrorism andemergency management. MPRI currentlydistributes equipment to those US Armyunits deploying to Afghanistan and Iraq andprovides training programs for the AfghanNational Army.

and Common Ground StationSystems.

In addition, L-3 provides adminis-trative support to the Defense IntelligenceAgency, performing document searchesand providing linguists in the MiddleEast. In Iraq, MPRI is working closelywith the New Iraqi Army TrainingProgram, augmenting the DefenseIntelligence Agency, as well as providingstaff instruction to the Iraqi Ministry ofDefense. MPRI also provides staffinstruction to the Afghanistan Ministry ofDefense and training programs for theAfghan National Army. In Kuwait, MPRIhas been working with the KuwaitiNational Guard to enhance its profession-al development program and is also pro-viding Observer/Controller assistance toits units.

L-3 is also a leading provider ofintelligence technology service and sup-port to several US space and missiledefense organizations and is a supplierof engineering and scientific servicesand information technology services tothe government sector. In 2003, L-3received awards for NUMAS (NORADand US Space Command MissionArchitecture Support) supportingNORTHCOM in areas such as cruisemissile defense and strategic intelli-gence for special operations units devel-oping critical communications linksaround the world. ◊

Training, Simulation and Support

Pho

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of D

efen

se

Preparing for battle. Anytime. Anywhere.

For the first time…a mobile, reconfigurable training system, enabling teamsto operate the US Army's full complement of tactical helicopters andcollectively train as they will fight…before they ever leave the ground.

The Aviation Combined Arms Tactical Trainer-Aviation Reconfigurable MannedSimulator (AVCATT–A) - developed exclusively by Link Simulation and Training.

Training as Real as the Battlefield

Aviation Products and Aircraft Modernization

The Aviation Products andAircraft Modernizationsegment expanded sig-nificantly in 2003, takingadvantage of growth in

the military aircraft modernization por-tion of the DoD budget and providingadditional capabilities to key interna-tional allies and customers. Supportingcurrent operations in Afghanistan andIraq necessitates modernization andmaintenance services to keep the fleet ingood working order.

At the same time, the balancebetween new platforms and fleetupgrades is another important develop-ment that will impact DoD spendingover the next several years. Althoughthe DoD anticipates the production ofnew and expensive platforms for thearmed services, there is a limit to itsspending. DoD officials are alreadydecreasing the quantities they order ofeach new platform and are looking toupgrade and maintain existing platformsto ensure readiness and keep withinspending limits. They are citing thesuperior performance of upgraded USplatforms in Afghanistan and Iraq asevidence that the US can be effective byusing existing aircraft in transformation-al ways.

L-3 adds Vertex and MASIn military aircraft modernization,

L-3 added two synergistic companies toits L-3 IS and Spar Aerospace opera-tions, making it one of the largest

providers in this market niche. L-3made the second-largest acquisition inits history with the addition of a formerjoint-venture partner, Vertex AerospaceLLC, a leader in logistics support, mod-ernization, maintenance, supply chainmanagement and depot services. Nowan L-3 IS subsidiary, Vertex brings sup-port for 2,800 active fixed- and rotary-wing aircraft, as well as over 85 vehicleplatforms and operations in 306 militarysites and other US government sitesworldwide to L-3.

Prior to its acquisition of VertexAerospace, L-3 had partnered with thecompany, as well as Paragon Systemsand U.S. Helicopter, to win a competi-tively bid, 10-year, $2.7 billion contractto provide contractor logistics support atFort Rucker, Alabama. The partnershipwill provide personnel, management,material parts, supplies, transportationand equipment to perform aviation unitmaintenance, aviation unit intermediatemaintenance and approved depot main-tenance in support of flight training ofall assigned rotary-wing aircraft at FortRucker.

L-3 also acquired the US andCanada-based Military AviationServices (MAS) from Bombardier Inc.L-3 MAS is a leader in systems engi-neering support and aircraft moderniza-tion and offers a full range of technicalservices in maintenance, repair andupgrade for military aircraft and region-al jets. This acquisition significantlyenhances L-3’s Canadian operations

14

(WESCAM and Spar Aerospace) andfavorably positions other divisions with-in L-3 for future in-country opportuni-ties.

In 2003, L-3 Spar completed thedesign, development and prototyping ofa number of structural life extension andsystems reliability improvements for theLockheed Martin C-130 transport air-craft. In addition, Spar was awarded theproduction phase of the CanadianDepartment of National Defence (DND)C-130 structural refurbishment andwiring upgrade program. Spar intendsto combine its C-130 depot-level main-tenance, structural modification andavionics upgrade capabilities and pro-gram experience to offer comprehensivefleet support to respond to the upcoming

optimized C-130 weapon systems man-agement requirements of the DND.

In addition, L-3 MAS is instru-mental in the Canadian CF-18 modern-ization program, retrofitting the firstCF-18 with an upgraded avionics suitein 2003. MAS is developing a CenterBarrel Replacement prototype, a criticalmilestone for the CF-18 mid-life struc-tural program. L-3 MAS is also work-ing with Sikorsky Aircraft Corporationand General Dynamics Canada to offerin-service support of the H-92 helicop-ter for the Maritime Helicopter Program– the Canadian government’s largestmilitary capital program for the foresee-able future.

Integrated systems Contract WinsL-3 IS has maintained a long

and successful relationship with the USSOCOM and in 2003 was awarded a10-year, $1.5 billion ID/IQ award.Under this contract, L-3 will providelogistics support to the USSOCOM, itscomponent commands, selected DoDcustomers and designated governmentagencies. The program is known asSpecial Operations Forces SupportActivity (SOFSA).

L-3 IS was also awarded an initialcontract for the Multimission Commandand Control Aircraft (MC2A) for designof important radar-related aircraft sys-tems as part of the MC2A WeaponSystems Integration effort. L-3 alsocompleted the upgrade of the US Navy’sE-6 fleet to an E-6B configuration,which now performs the missions of theE-6A Take Charge and Move Out(TACAMO) and the US Air Force EC-135 Airborne Command Post fleets.In 2003, L-3 IS extended its record of consecutive on-time US Navy deliveriesto 158, which includes E-6B and P-3 air-craft.

In the international arena, L-3 IScontinued its work on designing andmodifying the prototype aircraft for theCanadian CP-140 Aurora IncrementalModernization Program. L-3 will alsocontinue delivering upgraded AP-3Cs tothe RAAF as part of the Sea Sentinelprogram. The AP-3Cs have alreadybeen successful in service in the MiddleEast and in winning the prestigiousFincastle trophy, an international anti-submarine warfare competition.

15

(below)An L-3 joint-venture team won the contractto provide maintenance and logistics sup-port for rotary-wing aircraft at FortRucker, Alabama, which represents thelargest aircraft maintenance contract in theDoD. Aviation operations at Fort Ruckeraccount for approximately 40% of the USArmy's total flying program. Supportedaircraft types include AH-64A, AH-64D,CH-47D, EH-60A, OH-58A/C, OH-58D,TH-67, UH-1 and UH-60A.

www.L-3com.com L-3 Communications Summary Annual Report

Aviation Products and Aircraft Modernization

16

The RAAF has also certified L-3 MASas an Authorized Engineering Organ-ization (AEO) to perform work on itsF/A-18 aircraft.

Aviation ProductsIn aviation products, L-3 received

a host of key contracts in 2003, includ-ing Communication ManagementSystems for B737 aircraft to support theSpecial Air Mission of the US Air Force,as well as displays for the C-130J andKC-130J and the F-15K Eagle fighteraircraft. There was also an award for theArmy Airspace Command and Control(A2C2) program, a tactical operationscommand post hosted on a UH-60 BlackHawk helicopter. L-3 Display Systemsalso won awards for the AH-64 Apache,C-130H Hercules, CH-46 Sea Knight,C-27J Spartan, C-17 Globemaster, T-38C Talon, A/MH-6 SOF helicoptersand JAS-39 Gripen.

In 2003, Display Systemsreceived Federal Aviation Adminis-

tration (FAA) Technical Standard Order(TSO) certification approval of its firstproduct specifically developed for thecommercial avionics marketplace – thePVI-600™ Series commercial Multi-Function Display (MFD). This activematrix liquid crystal display (AMLCD)replaces existing radar indicators withan instrument capable of displayingradar, Traffic Alert and CollisionAvoidance System (TCAS) and TerrainAwareness and Warning System(TAWS) data. L-3 also delivered theDisplay & Control Subsystem (DCS) forthe Virtual Imaging System forApproach and Landing (VISUAL) ini-tiative. This system provides vital situa-tional awareness information to theLanding Signal Officer during aircraftrecovery operations on conventional air-craft carriers.

L-3’s Military AirborneSurveillance System (MASS™), anenhanced TCAS for military formationand rendezvous operations, made itsfirst flight in August of 2003. Producedby L-3’s Aviation Communication &Surveillance Systems (ACSS), MASShas been selected for the Boeing 767Global Tanker Transport Aircraft. Inaddition, L-3 Electrodynamics receiveda follow-on contract from LockheedMartin for Crash Survivable MemoryUnits (CSMU) for the F-22 Raptor, aswell as a contract from Boeing for theinitial production of ten AdvancedSignal Data Computers (ASDC) for theT-45 Goshawk trainer. Additionally, L-3Targa Systems has developed anEthernet Data Transfer System for theX-45 Unmanned Combat Aerial Vehicle(UCAV) development program.

L-3 has the distinction of beinginvolved in the creation of the world’slargest airborne observatory for NASAand the German space agency DLR. A2.5-meter telescope assembly fromGermany was installed by L-3 IS aboardthe 747 aircraft that will serve as theStratospheric Observatory for InfraredAstronomy (SOFIA).

Growing General Aviation MarketsIn addition to providing compre-

hensive military aviation products andservices, L-3 offers the marketplace abroad range of products for commercialand general aviation. These includecockpit displays, collision avoidanceand proximity warning systems, flightmanagement systems and solid stateflight data and cockpit voice recordersand data transfer units.

In 2003, commercial air travelcontinued to be weak due to a combina-tion of economic recession, the presenceof SARS in Asia and lingering air travelsafety concerns. However, during thefourth quarter, there was an increase intravel and many analysts believe thatthere will be a recovery in this industrybeginning in 2004.

Despite this environment, L-3ACSS achieved some key milestones in2003. Its next-generation TCAS wasselected by Dassault to be a standardinstallation on the new Falcon 7X busi-ness jet. T2CAS™, a combined TCAS

(above left to right)Display Systems will be providing mission computer Display Units (DU) for the C-17Globemaster III airlifter. These 4-inch by 3-inch active matrix liquid crystal displays featurehigh-resolution, high-brightness performance and night vision goggle compatibility.

SkyWatch is the leading general aviation collision avoidance system, providing pilots with up to the second traffic information anywhere in the world. Its active technology operates independently of ground-based radar and easily integrates with most MFDs, Electronic FlightInstrument Systems (EFIS) and radar indicators.

(below left to right)Display Systems was awarded a multi-year contract to provide cockpit displays for C-130J aircraft for the US Air Force and KC-130J aircraft for the US Marines.

The ACSS FAA-certified T2CAS is a unique safety avionics product that combines a TerrainAwareness and Warning System (TAWS) with the industry's leading Traffic Alert and CollisionAvoidance System, the TCAS 2000. T2CAS can be applied to any air transport, regional,business or military aircraft and provides unique predictive warnings and cockpit displays.

17

and TAWS, earned FAA approval and itsfirst supplemental type certification(STC) and has been selected by morethan 25 commercial and military opera-tors. Airbus has begun to offer L-3’sT2CAS as a supplier-furnished equip-ment option for its current productionlong-range aircraft.

One bright spot in the air travelmarket is general aviation. In 2003, L-3acquired Avionics Systems, a growingcommercial and military avionics busi-ness from the Goodrich Corporation. L-3 Avionics Systems has been a pio-neer in general aviation systems with itspopular Stormscope® lightning detec-tion instrument, SkyWatch® collisionavoidance product and its newLandMark™ TAWS. In addition, thedivision has developed SmartDeck®, arevolutionary integrated avionics suitecombining navigation, attitude andheading reference system (AHRS) andsituational awareness technologies,while also integrating communications,engine and aircraft systems monitoringand autopilot capabilities.

Avionics Systems continues to seekout niche opportunities that expand itsbusiness mix. The division’s Electronic

Recorders the standard supplier for theentire fleet of Airbus aircraft. L-3 wasalso selected by Alitalia Express to bethe supplier of the Combined Voice andData Recorder for its new 170/190 air-craft. In addition, Aviation Recordershas introduced the Micro Quick AccessRecorder (mQAR). The mQAR, lessthan four cubic inches in size, plugs intoan existing cockpit connector and canrecord over one thousand hours of flightdata parameters onto fixed or removableCompact Flash media.

Aviation Recorders' HardenedVoyage Recorder (HVR) product main-tained its market position by securingmultiple million-dollar bookings withindustry-leading companies, such asJapan Radio Corporation, KongsbergMaritime Ship Systems, ConsiliumNavigation, Rutter Technologies andSamsung Heavy Industries. The HVRhas become recognized in the industryas the standard for maritime black boxtechnology. ◊

Standby Instrument System (ESIS) willbe standard equipment aboard Cessnabusiness jets, its ESIS model GH-3001will be part of the US Army ApacheHelicopter program in Europe and theGH-3100 was also selected by Raytheonfor all Beechcraft King Air 200 and 350models.

Boeing also selected AvionicsSystems to install Tactical Air Navi-gation (TACAN) systems in more than400 T-38C aircraft for the T-38C TalonAvionics Upgrade Program. As part ofthe Air Education and TrainingCommand program, the T-38C Talon is aprimary trainer for the US Air Force.Equipped with the L-3 TACAN system,the aircraft will have the capability totrack up to four ground stations simulta-neously in range and two in bearing. Thesystem’s navigation information will dis-play directly onto the Talon’s Multi-Function Displays and can be used forair-to-air or air-to-ground operations.

L-3 Aviation Recorders wasselected as the exclusive supplier of theCockpit Voice Recorder and Flight DataRecorder for Airbus’ new A380 double-deck jetliner scheduled to enter servicein 2006. This selection makes Aviation

www.L-3com.com L-3 Communications Summary Annual Report

L-3’s expansive aircraft modernization operations maintain and modify hundreds of fixed- and rotary-wing aircraft for commercial and military customers throughout the US and around the world.

When L-3 was formed in1997, one of its pri-mary goals was tobecome a leading mer-chant supplier of high-

technology products to the DoD andprime contractors. Since that time, L-3has become the largest merchant suppli-er in the defense industry by developingnew products and selecting acquisitionswith key products in DoD priority areas,including precision guidance and muni-tions, telemetry, microwave and sensors,naval warfare and security.

In the conflicts in Afghanistan andIraq, precision weaponry became criticalin eliminating enemy targets and mini-mizing civilian casualties. L-3’s teleme-try, fuzing, electronic and electro-mechanical safety and arming devices(ESAD) and GPS-based guidance andsatellite navigation products were resi-dent on many of the nation’s keyweapons. L-3 KDI has developed prod-ucts for several advanced precisionweapon systems, including the JointStandoff Weapon System (JSOW), AIM-9X Sidewinder Air-to-Air MissileSystem, Guided Multiple LaunchRocket System (GMLRS), ExtendedRange Guided Munition (ERGM) andthe Evolved Sea Sparrow Missile.

The Proving Ground of Precision Weapons

In 2003, the US Navy selectedKDI to produce over 70,000 FMU-139bomb fuzes, which are used on the JointDirect Attack Munition (JDAM), as wellas laser-guided bombs that were usedextensively in Operation Iraqi Freedom.Additionally, L-3 Telemetry-West pro-vides Compact Telemetry Kits (CTM),which will provide telemetry duringflight tests of the JDAM program. EachCTM includes a PCM300 telemetryencoder, CTS-905 synthesized 5-watt S-band transmitter and electrical har-nessing, configured as an integraltelemetry subsystem.

In 2003, L-3 fuze businesses KDIand BT Fuze Products won several keyawards, including one from the US Army's Tank-automotive andArmaments Command-Armament Re-search Development and EngineeringCenter (TACOM-ARDEC) Commandfor its M762A1/M767A1 Electronic

Time Artillery fuzes. L-3 receivedorders for M234 electronic Self-Destruct Fuzes used in Dual PurposeImproved Conventional Munitions(DPICM) grenades and delivered wall-breaching tank ammunition for the newStryker Brigade Combat Team.

In addition, there were awards todevelop, produce and qualify animproved Tactical Munitions Dispenser(TMD) fuze for the US Air Force’sSensor Fuzed Weapon. KDI andTelemetry-West were also selected tosupply the fuze and telemetry hardwarefor the Small Diameter Bomb, the next-generation precision weapon beingdeveloped by Boeing and the Air Force.In addition, BT Fuze was selected toprovide a safety and arming device forthe US Army’s Precision-Guided MortarMunitions.

KDI is designing a safety andarming device for the US Navy for usein its new Long Range Land AttackProjectile. KDI has also received a con-tract for a jam-resistant Height of BurstSensor for Raytheon, which will beincorporated in the UK's Paveway IVprecision-guided munition.

L-3 Space and Navigation wasselected by the Army and Marine CorpsSurveyors to receive a competitivelyawarded contract for the provision of theImproved Position and AzimuthDetermining System (IPADS). Spaceand Navigation’s Compact TacticalSurveyor (CATS) will provide the Army

and Marine Corps Surveyors with thecapability to seamlessly adopt techno-logical improvements that enhance relia-bility, which increases crew readiness toaccomplish missions.

Developing new products is cen-tral to the growth of merchant supplierssuch as L-3. The DoD and prime con-tractors looking to acquire products andsubsystems for new platforms or forupgrading existing assets need to reviewthem well in advance to ensure theymeet requirements. L-3 BT Fuze andKDI are the only two US firms undercontract with the US Army to developSelf-Destruct Fuzing, a programrequired to eliminate unexploded ord-nance in the battlefield. BT Fuze isemploying a pyrotechnic technologysolution, while KDI is employing elec-tronic technology to adapt to numerousammunition products.

L-3 Interstate ElectronicsCorporation (IEC) was awarded a pro-gram research and development contractby the Space and Missile SystemsCenter at Los Angeles Air Force Base toreduce risk and advance the technologyrequired for the future development ofModernized Military Global PositioningSystem User Equipment (MUE).

The results of L-3’s work will pro-vide a better understanding of the tech-nical specifications and the risks regard-ing the implementation, certification,integration and operation of the MUEsecurity architecture.

18

SPECIALIZEDPRODUCTS

L-3 offers the broadest range of advanced electronics, ocean, telemetry and precisionguidance, navigation and munition products forair, sea, ground and space applications in thedefense industry.

Embedded National Tactical Receiver),and successfully tested it in 2003. Thisminiaturized receiver packs the powerof a rack-mounted system into a small,lightweight module that deliversunprecedented tactical intelligence tothe warfighter. Across the corporation,L-3 continues to improve its ISRrecorders, unattended sensor suites,command and control terminals andintelligence processors.

Because of the demands of cur-rent US military operations, the need forsmall, portable and mobile satellitecommunications terminals has beenvery strong in 2003. L-3 Narda SatelliteNetworks received an order from the US Navy’s Space & Naval WarfareSystems Command for Fly-Away Tri-Band Satellite Terminals (FTSAT)and the new Defense SatelliteCommunications System (DSCS)-certi-fied mobile HumVee-mounted Quad-

Products for the Digital BattlefieldL-3 Ruggedized Command and

Control Solutions (RCCS) is a leadingsupplier of ruggedized, state-of-the-artmilitary displays and computersdesigned for demanding operationalenvironments. RCCS portable comput-ers meet the military's digital battlefieldrequirements and are versatile, upgrade-able solutions for situational awareness,command and control and weapons tar-geting applications. RCCS is currentlydeveloping military displays with theadded capability of compatibility withnight vision goggles, which will alsohave homeland security applications. Inaddition, RCCS provides the ruggedizedCOTS hardware for the UPX-24, a prod-uct that operates as part of a shipboardIdentification Friend or Foe (IFF) sys-tem.

L-3 Telemetry-West developedbreakthrough technology, ENTR (the

19

ENTR is a tactical receiver that packs

the power of a formerly rack-mounted

receiver into a small, lightweight

model suitable for use in portable

configurations in the field.

www.L-3com.com L-3 Communications Summary Annual Report

20

surveillance radar systems. ThePerimeter Acquisition Radar AttackCharacterization System (PARCS) andthe Cobra Dane Radar System provideearly warning and attack assessment for missiles that would impact the continental United States. L-3 is also aleader in high-performance antennas forsurveillance and display units for the USmilitary.

In 2003, L-3 Randtron won amajor award to provide the next-genera-tion Airborne Early Warning (AEW)radar antenna for the US Navy’s E-2CHawkeye surveillance aircraft. Slated asthe single most important developmentfor the E-2C Hawkeye, the radar andantenna system will provide the opera-tional community with significantlyadvanced Navy AEW and Theater Airand Missile Defense (TAMD) capabili-ties. In addition, L-3 ESSCO recentlyreplaced a 68-foot-diameter space frameradome as part of the Millimeter WaveRadar Replacement Radome Programfor Kwajalein Range Services.

L-3 WESCAM is a world leader inthe design and manufacture of wirelessvisual information systems. Its capabil-ities include the capture of highly stableimages from aerial platforms for surveil-lance and targeting or the real-timetransmission of the imagery to tacticalcommand sites for interpretation or totelevision production facilities for livebroadcast. WESCAM’s primary prod-ucts are the MX Series stabilized EO/IR turrets for image capture and SkyPOD and WISARD™ Aztrack forair-to-ground image transmission andreception.

(above)

Randtron is supplying the next-generation

Airborne Early Warning (AEW) radar antenna

for the Navy’s E-2C Hawkeye surveillance aircraft.

The new antenna and rotary coupler will be devel-

oped as part of the System Development and

Demonstration (SD&D) of the Advanced Hawkeye

(AHE) program and will replace the TRAC-A

antenna and rotary coupler currently in

production.

(below)

Designed under the Army's Force XXI Battle

Command, Brigade and Below (FBCB2) program,

the Appliqué+ V4 computer offers rugged technol-

ogy and an impressive array of features that deliv-

er the performance needed for the digital battle-

field. This system has Pentium performance and a

remote color display and keyboard that facilitate

installation in vehicles and modular designs.

Band Dual Hub Terminals (QDHT). In addition, the US Army’s Commu-nications Electronics Command placedan order for FTSATs, allowing its usersquick deployment of high-speed satel-lite applications for use around theworld. Most recently, the FTSAT wasselected as part of the Kuwait Iraq C4Commercialization (KICC) program.

L-3 Electron Devices’ advancedline of vacuum electron devices aregaining new customers and marketshare and the company’s microwavepower modules for UAV data links andradar systems are also being utilized byUS military forces. The division wasawarded a contract from RaytheonMissile Systems to supply all TravelingWave Tubes (TWT) used in the AIM-120 Advanced Medium RangeAir-to-Air Missile (AMRAAM).Electron Devices was also awarded acontract from the US Air Force to supply TWTs for two high-power

Specialized Products

L-3 WESCAM supplied its MX-15s to the UK Ministry of Defence(MoD), which were operationallydeployed during Operation Telic by theRoyal Air Force (RAF), providing animproved EO/IR capability for theNimrod aircraft. L-3 is supplying MX-20 sensor systems for the CanadianDND's CP-140 Aurora IncrementalModernization Program. The MX-20,one of the highest performing stabilizedmulti-sensor systems in the world, pro-vides superior video reconnaissancecapabilities from a broad array ofrotary- and fixed-wing aircraft and isuniquely suited for surveillance andintelligence applications over land orsea.

In addition, WESCAM is con-tracted to deliver state-of-the-art digitalvideo EO/IR countermine step-staresensor systems for the US Army'sAirborne Standoff Minefield DetectionSystem.

L-3 Telemetry-West announcedthe initial sales of its latest high-per-formance real-time I/O computing plat-form – Avalon™. Based on the widelysuccessful heritage System 550 productfamily, Avalon offers telemetry process-ing, satellite commanding, avionicsacquisition, simulation and processingin a completely modular system. Inaddition, Telemetry-West received ini-tial orders for the new TCM-930 high-capacity portable microwave radio sys-tem. The TCM-930's portability andtunability allow it to be used in bothhomeland security and military applica-tions.

L-3 Storm signed a contract withEADS Astrium to supply its InControl-NextGeneration™ (InControl-NG) satel-lite command and control software foruse in the UK MoD’s Skynet 4 andSkynet 5 Satellite Control Centres(SCC). In addition, Storm introducedits Automated Remote Tracking Station(ARTS) Interface Module II™ (AIM II),which provides flexible VME-basedconnectivity between spacecraft com-mand and control systems and the USAir Force’s worldwide Satellite ControlNetwork (AFSCN). In addition, L-3Telemetry-East signed a licensingagreement with Boeing for the rights tomake aerospace products based on

21

(left)WESCAM’s MX Series is a family of airborne multi-spectral imaging turrets that are sealed andruggedized for high performance in extreme environments.

(right)The WISARD™ digital microwave system provides a clean and secure downlink from airborneturrets to ground receiver sites.

Boeing’s patented IntelliBus NetworkSystems technology.

Smart Ships and New TechnologyIn its ocean products businesses,

L-3 supplies a broad range of equipmentto the DoD and key international cus-tomers. From power conversion, powerswitching and protection devices tocommunications devices and anti-mineweapons and systems, L-3 products areresident on dozens of littoral platforms,including the Astute class of submarinesand AEGIS cruisers and destroyers. Asa leader in advanced underwater sonarsand towed array products, L-3 OceanSystems was selected by the EgyptianNavy to provide Low Frequency ActiveTowed Sonars (LFATS) with Anti-Submarine Warfare (ASW) capabilityfor use in littoral waters. In addition, theItalian Navy accepted the first of its EH-101 helicopters equipped with L-3’s Helicopter Long Range ActiveSonar (HELRAS).

In keeping with the US Navy’s“Smart Ship” and “New Technology”initiatives, Northrop Grumman ShipSystems selected L-3 Henschel to sup-ply the Automated Bridge System(ABS) for the USS Makin Island (LHD-8) amphibious assault ship.Internationally, Henschel has achievedStrategic Supplier status with BAEMarine Systems based on contractawards for the Computerized Infor-

mation System and the IntegratedCommunication System, which are bothused on the UK Royal Navy’s Astuteclass submarine.

L-3 SPD Technologies has sup-plied, and is currently under contract for,high-quality, shock-hardened, reliableelectrical distribution and protectionequipment for combatant US Navy ship-building programs, such as the Nimitzclass aircraft carriers, Virginia class sub-marines and Arleigh Burke classdestroyers.

In 2003, Northrop Grummanselected SPD to design and produce sev-eral key components for the newIntegrated Power System that provideselectric drive propulsion to the Navy’sDDX program. L-3 Power Magneticsdeveloped a pioneering modified-drytransformer, while L-3 Westwood and L-3 SPD Electrical Systems are devel-oping a new generation of medium volt-age switchgear. L-3 Westwood receivedorders from existing option contracts forpower distribution on the DDG-51Arleigh Burke class destroyers, theLPD-17 San Antonio class transportdock ships, the LPD-4 Austin classupgrade and the littoral upgrade of theOhio class nuclear submarines. L-3 PacOrd technicians provided emer-gent support services, installing newsystems and upgrades and repairingequipment in preparation for the USNavy's Surface Fleet deployment to thePersian Gulf in support of the Iraqi War. ◊

www.L-3com.com L-3 Communications Summary Annual Report

HomelandSecurity

After the horrific actions of terror-ists on September 11, 2001, the US hashad no shortage of threats leveledagainst its interests. Catastrophe cancome in limitless forms – a biochemicalattack, weapons of mass destruction or athreat to the nation’s airlines, bridges,tunnels and economic infrastructure. Asa result, the war on terrorism has causedthe US government to reassess securityvulnerabilities, consolidate its agenciesand personnel for greater focus on thechallenges and prioritize spending toshore up the nation’s defenses.

In 2003, the DHS took steps toreinforce national security, including

22

L-3 is a major player in a number of keyhomeland security markets, including air-port security, cargo inspection, port andmaritime security, mobile command andcontrol systems, sensors, intrusion detec-tion, border patrol and crisis management.

Photo: Courtesy of Northrop Grumman/Ron Elias

(left)

Under the Integrated Deep-

water System program, L-3

provided systems architec-

ture and preliminary design

of completely integrated

external and internal com-

munications systems for the

Coast Guard’s surface assets

and selected regionally dis-

persed shore site facilities.

allocating resources for the US CoastGuard Integrated Deepwater Systemprogram, for first responders toenhance, prevent, respond and recoverfrom possible terrorist acts and for theconsolidation of customs and borderpatrol agencies.

However, the “Code Orange”alerts issued by the DHS in December2003 are evidence that the nation is stillvery vulnerable to attack and that morework needs to be done. As Secretary ofHomeland Security Tom Ridge said inremarks to the American EnterpriseInstitute, “… no single technology, nosingle group of people and no single lineof defense … can protect us. Homelandsecurity, instead, requires a combinationof those factors ….”

In 2003, L-3 made important con-tributions in assisting US efforts to pro-tect its citizens and infrastructure. Withdecades of experience in providing mil-itary forces with security and intelli-gence products and services, L-3’s busi-nesses are leaders in the homeland secu-rity market with one of the broadestarrays of products in the industry. Keyareas of L-3 expertise include airportsecurity and cargo inspection systems,port, maritime and military base securi-ty, border surveillance, mobile com-mand, control and communications andcrisis management.

DeepwaterThe Deepwater program is a

multi-year effort to modernize andreplace the Coast Guard’s antiquatedships and aircraft, and command andcontrol and logistics systems. It was

awarded to the Integrated Coast GuardSystems joint venture led by LockheedMartin and Northrop Grumman. L-3serves as Deepwater’s communicationssystem integrator and in 2003 providedCommand, Control, Communicationsand Computers, ISR (C4ISR) systemsarchitecture and preliminary design ofcompletely integrated external and inter-nal communications systems for surfaceassets and selected regionally dispersedshore site facilities.

Also in 2003, L-3 CommunicationSystems-East shipped five MarComIntegrated Voice CommunicationSystems (IVCS) to 123-foot legacy cut-ters. L-3’s MarCom IVCS was devel-oped to replace multiple stand-alonecommunications systems aboard shipsand tactical operations centers on shore,allowing flexible, tailored, multi-levelsecure voice communications toincrease both operational awareness andpersonnel efficiency. In addition, BellHelicopter selected CommunicationSystems-West to provide the widebandISR data links for its Eagle Eye VerticalTakeoff and Landing UAV (VUAV) as apart of the Deepwater program.

L-3 GSI was awarded three home-land security contracts by the Air ForceResearch Laboratory in Rome, NewYork. In addition, as part of the TMASCjoint-venture team, L-3 GSI was award-

ed an order to provide technical, logis-tics, acquisition, training and informa-tion technology support to the NavalSpecial Warfare counternarcotics andforeign military sales boat and craft pro-grams.

Guarding our BordersL-3 is also a leader in surveillance

and intrusion sensors, command andcontrol, access control, underwater andradar surveillance and crisis manage-ment products. L-3 GSI is the primecontractor on the US Border PatrolRemote Video Surveillance system andalso supplies the integration for the USNavy's Waterside Security System. L-3is assisting the Bureau of Customs andBorder Protection in its efforts to moni-tor US northern and southern borderswith a turnkey package of long-rangethermal imaging and low-light cameras,video stabilization and motion detection,transmission equipment and a fully out-fitted control room. The WatchTower™

is the remote video surveillance systemthat is currently installed at several hun-dred sites on US and international borders.

GSI was also one of four contrac-tors awarded an important ID/IQ con-tract to provide Integrated Base DefenseSecurity Systems (IBDSS) to the US AirForce’s Force Protection Command and

23www.L-3com.com L-3 Communications Summary Annual Report

(left)With dual-energy X-ray technology, a CX-450pallet system delivers the industry’s most precisematerial discrimination capability and exception-al image resolution for scanning a variety ofmaterials and uniquely shaped items.

(right) The advanced networking capability of the in-lineeXaminer 3DX 6000 systems deployed at JohnWayne International Airport in Orange County,California results in faster threat resolution andimproved utilization of staffing.

Control Program Office for the next fiveyears. GSI provides vital security forcritical fixed, temporary or mobileassets throughout the world by integrat-ing electronic detection, alarm assess-ment, access control, communications,command and control and display capa-bilities to allow for effective response.

Air Travel and CargoAirport security remains a global

concern to governments and authoritiesare becoming increasingly aware of thevulnerability of cargo to tampering byterrorists. L-3 is one of the largest X-raysecurity screening solutions providers,serving airports and seaports throughoutthe world.

In 2003, the TransportationSecurity Administration (TSA) ordered63 eXaminer® 3DX 6000 explosivesdetection systems from L-3 Security andDetection Systems (S&DS) to monitorchecked baggage. This order was inaddition to its 2002 order of 425 systemsfor airports in the United States. TheTSA also certified the eXaminer® 3DX1000 to detect small amounts of explo-sives in checked bags.

The first eXaminers incorporatingNetworked Explosives DetectionSystems (NEDS) were successfully

deployed in 2003 at John WayneInternational Airport in Orange County,California. Networking gives the air-port the ability to share data betweensystems quickly and effectively and is astandard feature on all new deliveries,providing operational savings to theTSA.

S&DS also received approval fornew orders in 2003 from the TSA for itsnext-generation hand baggage X-rayscreening system, which incorporatesThreat Image Projection (TIP). Thisnew TIP Ready X-ray (TRX) systembegan initial deployments in airports in2003.

Additionally, L-3 has installed astate-of-the-art, fully integrated andnetworked baggage screening systemutilizing three turnkey checked baggageproducts – VIS, MVT and eXaminer –into Singapore’s Changi airport.

Further, S&DS received approvalfrom the Department for Transport(DfT) in the UK for its Multi-ViewTomography (MVT) system. L-3 beganworldwide deployment of the MVT in2003 in response to the increasingdemands by international airports forcost-effective, high-throughput, in-lineHold Baggage Screening (HBS) inspec-tion solutions. S&DS continues to

expand its international dominance inthe HBS market by capturing neworders for its VIS line of automated X-ray systems. L-3 also won an awardfor the first ever HBS for Poland’sWarsaw Frederick Chopin airport withthe VIS 108 system.

L-3 S&DS also received ordersfor five X-ray imaging cargo systemsfrom the Kingdom of Saudi Arabia.These high-energy 9 MeV imaging sub-systems will be incorporated into afixed-site, high-throughput cargoinspection facility designed for 100%cargo inspection. Each L-3 X-rayimaging system was developed toinspect shipping containers at a rate of50 units per hour, making these systemsthe fastest in the world today. In addi-tion, S&DS received orders for twohigh-energy 2.5 MeV cargo screeningmobile units for border control inEurope.

With increased emphasis oncockpit security, L-3 Aviation Recor-ders introduced a family of CabinSurveillance System (CSS) products.The FAA-approved CSS allows pilots inthe cockpit to monitor various areas ofthe cabin, especially in and around thecockpit door. The system supports upto 16 video cameras placed in the cabin

(right)

The L-3 ProTec Automatic Identification System (AIS) is a radio trans-

mitter and receiver that is part of the navigation system of ocean-going

and inland waterway ships. Broadcasting data containing the number

of passengers on a ship, its cargo and position, the AIS also serves as a

collision avoidance tool. In combination with a port’s radar data, it can

also be used to identify homeland security risks.

24

(left)

L-3’s Cabin Surveillance System (CSS) allows a flight crew to visually

monitor cabin activity without having to leave the flight deck or open the

door. The cabin-mounted cameras and flight deck display combine to

provide vital information for flight crew decisions in response to possible

threats to the aircraft, cabin crew or passengers, medical emergencies

and unexpected turbulence.

Homeland Security

bors, ports and anchored vessels world-wide.

By integrating an L-3 data han-dling backbone with vessel traffic andidentification systems, surveillance sen-sors and communications capabilities,L-3 can offer a comprehensive, integrat-ed port security solution – SecureNet. L-3 is currently demonstrating this inte-grated system and is marketing it tocommercial ports around the nation andinternationally.

Mobile Command and ControlL-3 also is a leader in mobile com-

munications vehicles for homelandsecurity, military and law enforcementuses, broadcast newsgathering andtelecommunications. In 2003, L-3 WolfCoach received an award from the USArmy’s Aberdeen Proving Ground formobile substance analysis lab vehicles.These vehicles, which will be used bythe Civil Support Teams of the NationalGuard, are equipped with the mostadvanced biological testing capabilitiesavailable and will be used for mobiletesting and analysis of chemical or bio-logical agents in the event of a terroristattack. ◊

with two LCD video displays mountedin the cockpit. A wireless signalingcapability allows the cabin crew to alertthe pilots to any cabin activity requiringcockpit attention.

Securing Our ShoresWith over 300 ports and 3,700

maritime terminals around the nation,port security represents a growing mar-ket for L-3, as a single instance of ter-rorism at a US port could have a devas-tating impact on the nation. In 2003, L-3 began to integrate capabilities andproducts from many divisions towarddeveloping a comprehensive solution forsecuring America’s ports. In 2003, L-3GSI won a key contract from theVirginia Port Authority to provide secu-rity improvements for the NorfolkInternational Terminal, PortsmouthMarine Terminal and the Newport NewsMarine Terminal. L-3 will serve as thelead contractor and systems integratorfor a closed circuit TV (CCTV) systemand its supporting communicationsinfrastructure.

L-3 Aviation Recorders completeddevelopment and industry certification(including US Coast Guard and FederalCommunications Commission approval)of the ProTec Automatic IdentificationSystem (AIS) product. The AIS radiotransponder autonomously transmits aship’s identification, position, heading,speed and other relevant information toall similarly equipped vessels withinradio range. This equipment is nowrequired for all large ships on interna-tional voyages as a means of avoidingcollisions and increasing the overallsafety of navigation. Aviation Recordershas entered into two key internationaldistribution agreements for its AIS –with Hellenic Radio Services of Piraeus,Greece to deliver the AIS to Greece andareas throughout the Mediterranean andwith Polaris Electronics A/S of Aalborg,Denmark to supply Denmark, Sweden,Iceland and other key areas of NorthernEurope.

To add to its capabilities, L-3acquired Klein Associates, which sup-plies Integrated Intrusion DetectionSystems. These systems include sonar,radar and other specialized sensors. TheKlein high-performance intrusion detec-tion systems provide protection for har-

25

(clockwise from top left)

1. The perimeter assessment thermalimager, one of many available IBDSScomponents, provides day or nightvision range up to a few kilometers,motion detection and pan, tilt andzoom capability to view intrudingobjects.

2. Wolf Coach is providing mobilesubstance analysis lab vehicles for theCivil Support Teams of the USNational Guard. The Analytical LabSystem-System EnhancementProgram (ALS-SEP) vehicles areequipped with advanced biologicaltesting capabilities and will be usedfor mobile testing and analysis ofchemical or biological agents in theevent of a terrorist attack.

3. In October 2003, CommunicationSystems-East was commended by theUS Army Program Executive Officefor Intelligence, Electronic Warfare &Sensors (PEO IEW&S) for an out-standing and patriotic effort in sup-port of Operation Iraqi Freedom. TheRemotely Monitored BattlefieldSensor System Version II (REMBASS-II) was instrumentalthroughout the campaign, providingcommanders with timely and criticalintelligence and effective force protection.

www.L-3com.com L-3 Communications Summary Annual Report

1 2

2

3

Board of Directors

1. Frank C. Lanza

Chairman and Chief Executive Officer

2. Robert V. LaPenta

President and Chief Financial Officer

3. General (Ret.) John M. Shalikashvili

4. Alan H. Washkowitz

5. Claude R. Canizares

6. Thomas A. Corcoran

7. Arthur L. Simon

8. Robert B. Millard

26

12

3

4

5

6

7

8

Corporate HeadquartersYou can contact the corporate headquarters by writing to: L-3 Communications,

600 Third Avenue, New York, NY 10016, or by calling 212-697-1111. To send a fax,

dial 212-867-5249.

Corporate InformationNews media, analysts, shareholders and others seeking corporate information about L-3

Communications should contact Cynthia Swain, vice president of corporate communications

at 212-697-1111.

Printed MaterialsPrinted financial materials, including the 2003 Annual Report, may be obtained without charge

by calling (866) INFO-LLL (866-463-6555).

InternetYou can access quarterly and annual financial information, news releases and an overview of the

company’s products and services through the L-3 web site at http://www.L-3com.com on the Internet.

Shareholder AssistanceIf you have questions concerning your shareholder account, please contact the stock transfer agent,

EquiServe Trust Company N.A., P.O. Box 219045, Kansas City, Missouri 64121-9045,

or call 877-282-1168. For the hearing impaired, the phone number is TDD: 781-575-2692.

You can also contact the stock transfer agent at their web site at http://www.equiserve.com

on the Internet.

Stock Exchange ListingThe common stock of L-3 Communications is traded on the New York Stock Exchange

under the symbol LLL.

Annual MeetingThe annual meeting of shareholders will be held at 2:30 p.m. on Tuesday, April 27, 2004 at

the Rihga Royal New York Hotel, 151 West 54th Street, New York, NY.

Equal Opportunity EmployerL-3 Communications Corporation is an equal opportunity employer. All matters regarding recruiting,

hiring, training, compensation, benefits, promotions, transfers and all other personnel policies

will continue to be free from discriminatory practices.

Shareholder Information

Condensed Consolidated Financial DataThe accompanying L-3 condensed consolidated financial data was derived from L-3’s consolidated financial statements includedin the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, and is not a complete financial statementpresentation in accordance with generally accepted accounting principles, because it does not include the notes to the financialstatements. The condensed consolidated financial data should be read with L-3’s audited consolidated financial statementsincluded in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. The comparability of L-3’scondensed consolidated financial data is impacted significantly by the Company’s business acquisitions.

CCOONNDDEENNSSEEDD CCOONNSSOOLLIIDDAATTEEDD BBAALLAANNCCEE SSHHEEEETT DDAATTAADECEMBER 31,

(in thousands, except share data) 2003 2002

ASSETSCurrent assets:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 134,876 $ 134,856Contracts in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,615,348 1,317,993Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,785 143,634Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,693 42,891

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,937,702 1,639,374

Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519,749 458,639Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,652,436 2,794,548Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,156 90,147Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,482 147,190Deferred debt issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,572 48,839Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,793 63,571

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,492,890 $5,242,308

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:

Accounts payable, trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 195,548 $ 167,240Accrued employment costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239,690 187,754Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,880 56,763Customer advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,078 62,645Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,898 18,395Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,159 33,729Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261,959 183,416

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 924,212 709,942

Pension and postretirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359,020 343,527Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,651 65,644Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,457,300 1,847,752

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,842,183 2,966,865

Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,211 73,241

Shareholders’ equity:Common stock; $.01 par value; authorized 300,000,000 shares,

issued and outstanding 97,077,495 and 94,577,331 shares . . . . . . . . . . 1,893,488 1,794,976Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757,467 479,827Unearned compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,622) (3,302)Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . (72,837) (69,299)

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,574,496 2,202,202

Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . $6,492,890 $5,242,308

28

CCOONNDDEENNSSEEDD CCOONNSSOOLLIIDDAATTEEDD SSTTAATTEEMMEENNTT OOFF OOPPEERRAATTIIOONNSS DDAATTAA

YEAR ENDED DECEMBER 31,(in thousands, except per share data) 2003 2002 2001

Sales:Contracts, primarily U.S. Government . . . . . . . . . . $4,467,554 $3,581,102 $1,932,205Commercial, primarily products . . . . . . . . . . . . . 594,040 430,127 415,217

Total sales . . . . . . . . . . . . . . . . . . . . . . 5,061,594 4,011,229 2,347,422

Costs and expenses:Contracts, primarily U.S. Government . . . . . . . . 3,905,449 3,137,561 1,699,617Commercial, primarily products:

Cost of sales . . . . . . . . . . . . . . . . . . . . . . 384,727 270,800 252,790Selling, general and administrative expenses . . 137,626 114,052 93,238Research and development expenses . . . . . . . 52,771 34,837 26,447

Total costs and expenses . . . . . . . . . . . . . 4,480,573 3,557,250 2,072,092

Operating income . . . . . . . . . . . . . . . . . . . . . . . 581,021 453,979 275,330 (1)

Interest and other income . . . . . . . . . . . . . . . . . . 215 4,921 1,739Interest expense . . . . . . . . . . . . . . . . . . . . . . . . 132,683 122,492 86,390Minority interest . . . . . . . . . . . . . . . . . . . . . . . 3,515 6,198 4,457Loss on retirement of debt . . . . . . . . . . . . . . . . . 11,225 16,187 —

Income before income taxes and cumulative effect of achange in accounting principle . . . . . . . . . . . . 433,813 314,023 186,222

Provision for income taxes . . . . . . . . . . . . . . . . . 156,173 111,556 70,764

Income before cumulative effect of a change inaccounting principle . . . . . . . . . . . . . . . . . . 277,640 202,467 115,458

Cumulative effect of a change in accounting principle,net of income tax benefit of $6,428 . . . . . . . . . — (24,370) —

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 277,640 $ 178,097 $ 115,458(2)

Earnings per common share:Basic:

Income before cumulative effect of a change inaccounting principle . . . . . . . . . . . . . . $ 2.89 $ 2.33 $ 1.54(3)

Cumulative effect of a change in accountingprinciple . . . . . . . . . . . . . . . . . . . . . — (0.28) —

Net income . . . . . . . . . . . . . . . . . . . . . $ 2.89 $ 2.05 $ 1.54(3)

Diluted:Income before cumulative effect of a change in

accounting principle . . . . . . . . . . . . . . $ 2.71 $ 2.18 $ 1.47(3)

Cumulative effect of a change in accountingprinciple . . . . . . . . . . . . . . . . . . . . . — (0.25) —

Net income . . . . . . . . . . . . . . . . . . . . . $ 2.71 $ 1.93 $ 1.47(3)

Weighted average common shares outstanding:Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,022 86,943 74,880

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . 106,068 97,413 85,438

(1) Effective January 1, 2002, L-3 ceased amortizing goodwill. Goodwill amortization expense recorded in 2001 was $42.4 million.

(2) Net income, as adjusted to exclude goodwill amortization expense, net of income tax benefit, was $149.4 million in 2001.

(3) Basic earnings per share, as adjusted to exclude goodwill amortization expense, was $1.99 in 2001. Diluted earnings per share, as adjusted, was $1.87 in 2001.

29www.L-3com.com L-3 Communications Summary Annual Report

CCOONNDDEENNSSEEDD CCOONNSSOOLLIIDDAATTEEDD SSTTAATTEEMMEENNTT OOFF SSHHAARREEHHOOLLDDEERRSS’’ EEQQUUIITTYY DDAATTAA

Accumulated

Additional Other

For the Years Ended December 31, 2003, 2002 and 2001 Shares Par Paid-in Retained Unearned Comprehensive

(in thousands) Issued Value Capital Earnings Compensation Income (Loss) Total

Balance December 31, 2000 . . . . . . . . . . . . . . . . . . . . . 67,213 $672 $ 515,254 $186,272 $(2,457) $ (7,172) $ 692,569Comprehensive income:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,458 115,458Minimum pension liability, net of $11,955 tax benefit . . . (19,519) (19,519)Foreign currency translation adjustment, net of $164 tax

benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (268) (268)Unrealized loss on securities, net of $111 tax benefit . . . . (180) (180)Unrealized loss on securities reclassified to net income from

other comprehensive loss, net of $2,274 tax expense . . 3,632 3,632Unrealized losses on hedging instruments, net of $100 tax

benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (163) (163)98,960

Shares issued:Sale of common stock . . . . . . . . . . . . . . . . . . . . . . . 9,150 92 353,530 353,622Employee savings plans . . . . . . . . . . . . . . . . . . . . . . 418 4 16,864 16,868Acquisition consideration . . . . . . . . . . . . . . . . . . . . . 588 6 17,351 17,357Exercise of stock options . . . . . . . . . . . . . . . . . . . . . 1,128 11 28,253 28,264

Employee stock purchase plan . . . . . . . . . . . . . . . . . . . 4,861 4,861Grant of restricted stock . . . . . . . . . . . . . . . . . . . . . . . 2,118 (2,118) —Amortization of unearned compensation. . . . . . . . . . . . . . 1,370 1,370Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 21Balance December 31, 2001 . . . . . . . . . . . . . . . . . . . . . 78,497 785 938,252 301,730 (3,205) (23,670) 1,213,892Comprehensive income:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,097 178,097Minimum pension liability, net of $29,859 tax benefit . . . (45,580) (45,580)Foreign currency translation adjustment, net of $1,626 tax

benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 65Unrealized losses on hedging instruments reclassified to net

income from other comprehensive loss, net of $198 taxexpense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323 323

Unrealized losses on hedging instruments, net of $275 taxbenefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (437) (437)

132,468Shares issued:

Sale of common stock . . . . . . . . . . . . . . . . . . . . . . . 14,000 140 766,640 766,780Employee savings plans . . . . . . . . . . . . . . . . . . . . . . 529 5 28,133 28,138Acquisition consideration . . . . . . . . . . . . . . . . . . . . . 229 2 10,605 10,607Exercise of stock options . . . . . . . . . . . . . . . . . . . . . 970 10 30,665 30,675Employee stock purchase plan . . . . . . . . . . . . . . . . . . 352 4 17,474 17,478

Grant of restricted stock . . . . . . . . . . . . . . . . . . . . . . . 2,231 (2,231) —Amortization of unearned compensation. . . . . . . . . . . . . . 2,134 2,134Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 30Balance December 31, 2002 . . . . . . . . . . . . . . . . . . . . . 94,577 946 1,794,030 479,827 (3,302) (69,299) 2,202,202Comprehensive income:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277,640 277,640Minimum pension liability, net of $2,313

tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,189) (4,189)Foreign currency translation adjustment, net of

$141 tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . (245) (245)Unrealized gains on hedging instruments, net of

$571 tax expense . . . . . . . . . . . . . . . . . . . . . . . . 896 896274,102

Shares issued:Employee savings plans . . . . . . . . . . . . . . . . . . . . . . 912 9 39,485 39,494Acquisition consideration . . . . . . . . . . . . . . . . . . . . . 110 1 4,968 4,969Exercise of stock options . . . . . . . . . . . . . . . . . . . . . 835 8 22,722 22,730Employee stock purchase plan . . . . . . . . . . . . . . . . . . 603 6 26,378 26,384Conversion of 5 1/4 % Convertible Senior Subordinated

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 1 1,629 1,630Grant of restricted stock . . . . . . . . . . . . . . . . . . . . . . . 3,295 (3,295) —Amortization of unearned compensation. . . . . . . . . . . . . . 2,975 2,975Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 10

Balance December 31, 2003 . . . . . . . . . . . . . . . . . . . . 97,077 $971 $1,892,517 $757,467 $(3,622) $(72,837) $2,574,496

30

CCOONNDDEENNSSEEDD CCOONNSSOOLLIIDDAATTEEDD SSTTAATTEEMMEENNTT OOFF CCAASSHH FFLLOOWWSS DDAATTAA

YEAR ENDED DECEMBER 31,(in thousands) 2003 2002 2001

Operating activities:Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 277,640 $ 178,097 $ 115,458Cumulative effect of a change in accounting principle . . . . — 24,370 —Loss on retirement of debt . . . . . . . . . . . . . . . . . . . 11,225 16,187 —Goodwill amortization . . . . . . . . . . . . . . . . . . . . . — — 42,356Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,340 66,230 40,362Amortization of intangibles and other assets . . . . . . . . . 18,083 9,630 4,233Amortization of deferred debt issue costs

(included in interest expense) . . . . . . . . . . . . . . . 7,977 7,392 6,388Deferred income tax provision . . . . . . . . . . . . . . . . . 94,747 79,092 52,638Minority interest . . . . . . . . . . . . . . . . . . . . . . . . 3,515 6,198 4,457Other non-cash items, principally contributions to

employee savings plans in common stock . . . . . . . . 39,773 28,653 17,576Subtotal . . . . . . . . . . . . . . . . . . . . . . . . 530,300 415,849 283,468

Changes in operating assets and liabilities, excluding acquired amounts:

Contracts in process . . . . . . . . . . . . . . . . . (120,397) (75,031) (40,652)Other current assets . . . . . . . . . . . . . . . . . (1,731) (15,257) 1,643Other assets . . . . . . . . . . . . . . . . . . . . . (15,861) (16,641) (12,033)Accounts payable . . . . . . . . . . . . . . . . . . (19,503) (21,904) (43,165)Accrued employment costs . . . . . . . . . . . . . 20,558 30,100 11,931Accrued expenses . . . . . . . . . . . . . . . . . . 5,646 (2,581) (20,300)Customer advances . . . . . . . . . . . . . . . . . (4,773) (11,272) 12,627Accrued interest . . . . . . . . . . . . . . . . . . . 7,503 7,199 (3,047)Income taxes . . . . . . . . . . . . . . . . . . . . . 44,081 30,852 14,431Other current liabilities . . . . . . . . . . . . . . . (25,384) (41,206) (37,555)Pension and postretirement benefits . . . . . . . . 5,088 (1,670) 4,550Other liabilities . . . . . . . . . . . . . . . . . . . . 19,008 20,517 1,423All other operating activities, principally

foreign currency translation . . . . . . . . . . . . 11,528 (495) (353)Subtotal . . . . . . . . . . . . . . . . . . . . . . (74,237) (97,389) (110,500)

Net cash from operating activities . . . . . . . . . . . . . . . 456,063 318,460 172,968

Investing activities:Acquisition of businesses, net of cash acquired . . . . . . . . (1,014,439) (1,742,133) (446,911)Proceeds from sale of businesses . . . . . . . . . . . . . . . . 8,795 — 75,206Capital expenditures. . . . . . . . . . . . . . . . . . . . . . . (82,874) (62,058) (48,121)Disposition of property, plant and equipment . . . . . . . . . 3,854 3,548 1,237Other investing activities . . . . . . . . . . . . . . . . . . . . (3,393) (9,885) (6,301)Net cash used in investing activities . . . . . . . . . . . . . . (1,088,057) (1,810,528) (424,890)

Financing activities:Borrowings under revolving credit facilities . . . . . . . . . 295,000 566,000 316,400Repayment of borrowings under revolving credit facilities. . (295,000) (566,000) (506,400)Borrowings under bridge loan facility . . . . . . . . . . . . . — 500,000 —Repayment of borrowings under bridge loan facility . . . . . — (500,000) —Proceeds from sale of senior subordinated notes . . . . . . . 790,788 750,000 420,000Redemption of senior subordinated notes . . . . . . . . . . . (187,650) (237,468) —Proceeds from sale of common stock, net . . . . . . . . . . . — 766,780 353,622Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . (9,591) (19,759) (16,671)Proceeds from exercise of stock options . . . . . . . . . . . . 14,273 17,372 16,325Proceeds from employee stock purchase plan . . . . . . . . . 26,384 17,478 4,861Distributions paid to minority interest . . . . . . . . . . . . . (1,975) (2,854) (2,530)Other financing activities . . . . . . . . . . . . . . . . . . . . (215) (25,647) (5,343)

Net cash from financing activities . . . . . . . . . . . . . . . 632,014 1,265,902 580,264

Net increase (decrease) in cash . . . . . . . . . . . . . . . . . 20 (226,166) 328,342Cash and cash equivalents, beginning of the period . . . . . 134,856 361,022 32,680Cash and cash equivalents, end of the period . . . . . . . . . $ 134,876 $ 134,856 $ 361,022

31www.L-3com.com L-3 Communications Summary Annual Report

Michael T. StrianeseSenior Vice Presidentof Finance and CorporateEthics Officer

Christopher C. CambriaSenior Vice President,Secretary and GeneralCounsel

David T. Butler IIIVice President of Planning

Ralph G. D’AmbrosioVice President and Controller

David M. ReillyVice President, Assistant General Counseland Assistant Secretary

Sheila M. SheridanDirector of Administration

Kenneth R. GoldsteinVice President of Taxes

Ronald G. SabbaghVice President of SoftwareDevelopment and SpecialProjects

Curtis BrunsonCorporate Vice Presidentand President ofCommunication Systems-West Division

James W. DunnSenior Vice President andPresident of Sensors andSimulation Group

Anthony CaputoCorporate Vice Presidentand President of L-3Communications Canada

Robert W. DrewesCorporate Vice Presidentand President of L-3Integrated Systems

Robert W. RisCassiVice President

A. Michael Andrews II, Ph.D.Chief Technology Officer

Jimmie V. AdamsVice President ofWashington Operations

Larry L. HenryVice President ofAir Force Programs

Lawrence H. SchwartzVice President ofHomeland Security

Dr. Jai N. GuptaPresident of L-3 Government Services, Inc.

Daniel A. GraftonPresident of L-3 CommunicationsVertex Aerospace LLC

Charles J. SchaferSenior Vice President of Business Operations and President of Products Group

L-3 Communications management team

32

Richard A. NordstromVice President ofOperations Review

Stephen M. SouzaVice President andTreasurer

Cynthia SwainVice President ofCorporate Communications

Kenneth W. ManneVice President of Human Resources

Vincent T. TaylorVice President and ChiefInformation Officer

Gregory B. RobertsCorporate Vice Presidentand President ofCommunication Systems-East Division

Carl E. VuonoPresident of MPRI

Dennis A. JonesVice President of Maritime Programs

Jill J. Wittels, Ph.D.Vice President ofBusiness Development

Ted McFarlandVice President- International

Joseph LopezPresident of L-3 ILEX Systems Group

Fred WahlVice President ofGovernment Affairs

Steve KantorCorporate Vice Presidentand President of SPDTechnologies Group

John S. MegaCorporate Vice President andPresident of MicrowaveGroup

Joseph S. ParesiVice President of ProductDevelopment and Presidentof L-3 Security andDetection Systems Division

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