Boeing Announces Agreement to Acquire Argon ST

ST. LOUIS, June 30, 2010 — The Boeing Company [NYSE: BA] and Argon ST [NASDAQ: STST] today announced that they have entered into an agreement for Boeing’s acquisition of Argon ST in an all cash tender offer and merger for $34.50 per share, or approximately $775 million, net of cash acquired.

The agreement to acquire Argon ST, a leading developer of command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) and combat systems, advances Boeing’s growth strategy and expands the company’s capabilities to address the C4ISR, cyber and intelligence markets.

“Combining the strength of Boeing with the experience of Argon ST will significantly accelerate our capabilities in sensors, communications technologies and information management,” said Dennis Muilenburg, president and CEO of Boeing Defense, Space & Security. “Today’s announcement follows two years of partnering with Argon ST’s talented employees who, like Boeing employees, take pride in developing and deploying world-class engineering solutions for our customers.”

Founded in 1997 and headquartered in Fairfax, Va., Argon ST develops sensors and networks designed to exploit, analyze and deliver information for real-time situational awareness. In fiscal 2009, the company generated $366 million in revenues. Argon ST has operating locations in Virginia, California, Michigan, Pennsylvania, Florida, Maryland and Texas, and has approximately 1,000 employees.

“We’re very pleased to join The Boeing Company,” said Terry Collins, chairman and chief executive officer of Argon ST. “Our employee teams know each other well, and we are excited to now continue our combined support to warfighters and first responders as one company.”

Once acquired, Argon ST will be a stand-alone subsidiary of Boeing and a new division of Boeing Network & Space Systems, a business within the Boeing Defense, Space & Security operating unit. Argon ST will continue to be led by Collins and his management team, which will help ensure a seamless transition for employees and customers.

“As part of Boeing, Argon ST will continue to provide leading-edge network-based communications solutions for domestic and international customers including the U.S. Navy, the U.S. Air Force and the Department of Homeland Security so they can continue to execute their critical missions,” said Roger Krone, president of Boeing Network & Space Systems. “We’re confident that this combined team will be able to achieve great things together in the future.”

The transaction is expected to close by the end of the third quarter 2010. The completion of the transaction is subject to a majority of the outstanding Argon ST shares being tendered, as well as satisfactory completion of other customary closing conditions, including U.S. regulatory approval.

The definitive agreement was unanimously approved by Argon ST’s board of directors, and Argon ST’s board intends to recommend that the company’s stockholders tender their shares in the offer.

Boeing plans to fund the transaction with existing cash. The acquisition is expected to have an immaterial impact on Boeing’s earnings.

A unit of The Boeing Company, Boeing Defense, Space & Security is one of the world’s largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world’s largest and most versatile manufacturer of military aircraft. Headquartered in St. Louis, Boeing Defense, Space & Security is a $34 billion business with 68,000 employees worldwide.

Boeing Calls WTO Ruling a Landmark Decision and Sweeping Legal Victory

CHICAGO, June 30 — Boeing (NYSE: BA) today praised the World Trade Organization’s final ruling that billions of dollars in European launch aid subsidies used by Airbus to develop its commercial airplanes are illegal and must end. The decision, which the WTO made public earlier today, also declares that a broad array of government funding for Airbus research and infrastructure development violated international trade agreements.

“This is a landmark decision and sweeping legal victory over the launch aid subsidies that fueled the rise of Airbus and that continue to provide its products a major cost advantage,” said Boeing Chairman, President and Chief Executive Officer Jim McNerney. “The Office of the U.S. Trade Representative deserves tremendous credit for today’s decision. We now join the U.S. government in urging full compliance with the ruling and a permanent restoration of fair competition within our industry,” McNerney said.

Boeing Executive Vice President and General Counsel J. Michael Luttig explained the details and implications of the ruling. “Each and every instance of launch aid that the U.S. challenged was held to be illegal,” said Luttig. “The panel said that without the illegal subsidies it received, Airbus would not have the aerospace market share it now enjoys. This ruling will alter the competitive landscape in the aerospace industry forever, forcing Airbus to compete in the marketplace on the same terms as Boeing.”

Luttig noted that European-provided launch aid for the A380 was found to include prohibited export-contingent subsidies, which WTO rules require be withdrawn “without delay.”

“Under today’s decision, Airbus must repay the $4 billion in illegal launch aid it received for the A380 or restructure the A380’s financing to proven commercial terms. Likewise, Airbus must abandon its plans to finance the A350 through the use of illegal subsidies,” he said.

Luttig added that “the WTO rejected all excuses for continuing launch aid, the most pernicious form of subsidy Airbus receives, as well as all other forms of subsidies Airbus and parent EADS use for unfair advantage in the commercial airplane market and in defense markets for military-derivative aircraft. Airbus must now compete on its own, without the assistance of European taxpayers – assistance the U.S. estimates has exceeded $200 billion in value to Airbus.”

Airbus has used government-provided launch aid to fund the development of all its commercial airplanes since the entity was formed in 1970. It now commands more than half the commercial airplane market. Launch aid typically comes in the form of no- or low-interest loans with repayment terms so generous that no repayment need occur during the several years it takes to develop a commercial airplane, and not at all in the event a program fails. Launch aid is a unique benefit to Airbus, as the U.S. government does not fund development of commercial products.

“The World Trade Organization has now unequivocally declared that government subsidies to Airbus violate WTO rules, are market-distorting, and have caused significant harm to America’s aerospace industry and its workers,” Luttig said. “Compliance with the WTO’s ruling is essential to establishing a fair and level playing field between Boeing and Airbus. It also is essential to preserving the integrity of the WTO process and, by extension, the integrity of the rules-based trading system that has been a key driver of global economic growth.”

Luttig said the WTO’s ruling not only makes clear that there can be no new government-subsidized financing for Airbus’ future A350 model, but also clarifies rules for other new market participants. “The ruling establishes an overarching principle governing all those entering aerospace markets: Anyone that wants to use government funding arrangements to develop new, competing products must demonstrate that monies are provided on proven commercial terms,” he said.

The WTO is an independent, unbiased arbiter of global trade disputes. Today’s ruling results from the U.S. government’s 2004 decision to file a case with the WTO to end European subsidies to Airbus. While the WTO process allows the European Communities to appeal the ruling, Boeing expects the appeals process to conclude before the end of 2010.

“A successful conclusion to this longstanding dispute is now in sight. Within a year, the U.S. government will have authority to act decisively to ensure compliance if Airbus has not entirely restructured the A380 program so that it is financed and funded on objectively verifiable commercial terms,” Luttig said.

“America thrives on competition,” said McNerney. “American workers have shown repeatedly they can compete successfully in the global market. But they understandably insist that competition occur on a level playing field, with competitors playing by the agreed-upon rules.”

The trade case against launch aid subsidies has enjoyed strong bi-partisan support from the U.S. Congress and multiple presidential administrations.

Next International Space Station Residents Hold News Conference

HOUSTON — The next trio of International Space Station residents will hold a news conference at 1 p.m. CDT on Tuesday, July 13, at NASA’s Johnson Space Center in Houston. The news conference will be broadcast live on NASA Television and the agency’s website. Questions will be taken from participating NASA centers.

NASA astronaut Scott Kelly and his crewmates, Russian cosmonauts Alexander Kaleri and Oleg Skripochka, will participate in individual round-robin interviews, in person or by phone, following the news conference. The Expedition 25 crew also will participate in a photo opportunity for reporters at Johnson.

U.S. and foreign media representatives planning to attend the briefing must contact the Johnson newsroom at 281-483-5111 by 4 p.m. on July 6. To participate in the round-robin interviews, reporters should contact the Johnson newsroom by 4 p.m. on July 9.

Kelly, Kaleri and Skripochka are scheduled to launch to the station aboard a Russian Soyuz spacecraft from the Baikonur Cosmodrome in Kazakhstan Oct. 7 (Oct. 8 at the launch site) and arrive on the complex two days later. They will join NASA astronauts Doug Wheelock and Shannon Walker and Russian cosmonaut Fyodor Yurchikhin, who have been aboard the orbiting laboratory since June 18.

NASA’S External Tank For Final Shuttle Flight Gets New Orleans Send-Off

NEW ORLEANS — NASA and Lockheed Martin Space Systems Company will hold a ceremony at 9 a.m. CDT on Thursday, July 8, at the agency’s Michoud Assembly Facility in New Orleans. The event will commemorate 37 years of successful tank deliveries and the final external tank’s rollout for the last space shuttle flight.

NASA Television and the agency’s website will broadcast the ceremony live. Coverage begins at 8:45 a.m. NASA and Lockheed Martin senior managers will participate in the ceremony. Reporters interested in covering the event or interviewing workers and managers must contact Harry Wadsworth at 504-257-0094 by Tuesday, July 6.

Journalists should report to the Michoud Main Gate, 13800 Old Gentilly Road, by 8:30 a.m. Vehicles are subject to a security search at the gate. Photo identification and proof of car insurance is required.

The last external tank scheduled to fly on a shuttle mission was completed on June 25 by Lockheed Martin workers at Michoud. The tank, designated ET-138, will travel on a wheeled transporter one mile to the Michoud barge dock. It will be accompanied by the Storyville Stompers, a traditional area brass band, and hundreds of handkerchief-waving employees in typical New Orleans fashion and spirit.

The tank will travel on a 900-mile sea journey to NASA’s Kennedy Space Center in Florida, where it will support shuttle Endeavour’s STS-134 launch.

Boeing Statement on Pentagon Acquisition and Procurement Initiative

WASHINGTON, June 29, 2010 — Ashton Carter, U.S. Undersecretary of Defense for Acquisition, Technology and Logistics, announced June 28 that the Department of Defense is launching an initiative to reduce overhead costs by approximately $100 billion over the next five years, and transfer the savings to modernization programs and to ensure the readiness of the current force. The Boeing Company today issued the following statement:

“Boeing supports the Department of Defense in its initiative to maximize affordability and improve productivity in defense spending. We appreciate the invitation to industry to participate in this important dialogue and the emphasis on open lines of communication between all stakeholders in this critical endeavor. As Undersecretary Carter noted, a healthy, vibrant and financially viable defense industrial base is in the nation’s best interest and critical to the military’s ability to meet its mission requirements.

“We fully understand the need to ensure taxpayer dollars are spent wisely, especially during these times of economic challenge and defense budgets that have been stretched by the needs of a nation at war. At Boeing, we always look for opportunities to reduce costs while delivering the highest quality products to this nation’s warfighters. We will continue to implement productivity improvements and reduce costs on all of our programs, similar to the savings we have achieved for U.S. taxpayers on programs such as the F/A-18E/F Super Hornet. Model programs like this serve as a daily benchmark for all the men and women of Boeing to deliver the best value to the warfighter and the taxpayer. We look forward to meeting with our military customers and others in the industry to share ways we can work together to meet this ambitious goal.”

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