FRANK LANZA, CHAIRMAN AND PRESIDENT, L-3 COMMUNICATIONS CORP.

On the Record With
FRANK LANZA, CHAIRMAN AND PRESIDENT, L-3 COMMUNICATIONS CORP.

Highlights of L-3 Communications' exhibit here at Farnborough (Hall 4, Stand E11) are:

A spectrum of advanced solid state advanced recorders used for preserving crash data from aircraft and trains to massive amounts of intelligence from surveillance and reconnaissance missions such as those that will be flown by the ASTOR aircraft.
A new miniature navigation module costing under $100,000 for missiles, guided munitions and GPS-aided navigation systems. It uses micro-machined silicon technology, highly integrated micro-electronics, and all-solid state gyros and accelerometers.
A range of new liquid crystal display products for Command and Control applications.
The TCAS 2000 traffic collision avoidance system for large and small aircraft. L-3 bought this product line from Honeywell last April and intends to develop it further in partnership with Sextant.
A new line of secured, broadband datalink systems, including one for UAVs and manned non-fighter aircraft that allows bulk encryption and uplink and downlink of data. The interoperable Tactical Common Data Link is a cooperative effort between the U.S. government, L-3 and Rockwell Collins, using commercial off-the-shelf technology.

European cooperation is just beginning for L-3 Communications, and chairman and CEO Frank Lanza views it not only as vital, but as mandatory strategy for growth.

Recent deals with Thomson-CSF's Sextant, and partnerships with EADS which are jointly currently bidding on U.S. acquisitions, were made not for financial but for strategic reasons, he told Show News. The diversified high-tech company (everything from cockpit displays to dipping sonar) is here at Farnborough not only to advertise its wares but also to develop further European ties.

"Sextant has a good brand name in international commercial aviation, and has field and maintenance offices throughout world, so it is an ideal partner for us to take our TCAS 2000 product internationally and support it and provide a comfort level to the overseas marketplace," Lanza said. Sextant has a 30% stake in the TCAS 2000 traffic collision avoidance system L-3 bought from Honeywell last April.

"Same with EADS-it wasn't a financial situation, but a strategic one," Lanza explained. "It gives us visibility into their enormous number of platforms, including Airbus, and our ability to bring into the U.S. their products, from satellites to tactical communications. EADS is the giant gorilla in Europe, at least the equivalent there of Boeing or Lockheed in the U.S."

Business has changed, Lanza said. While European companies have always needed U.S. partners to sell in America, the converse is now true for Europe. No longer is it an open market for American products-it's a market that requires European partners.

L-3 Communications also has a small company in Germany growing an airborne anti-submarine warfare business, and it is opening a communications facility in the UK to test and integrate fixed wireless products and ship them worldwide.

Lanza said that while the term "Fortress Europe" doesn't describe the problem, it is difficult to overcome European countries' desire to grow their own industries. Hence the need for partnerships with European companies. But the U.S. government is far worse.

"We devote a tremendous amount of time trying to get export licenses for technology to sell to our friends in Europe. There are many, many layers of technology to peel off before you reach those that are proprietary or even approach anything to do with vital national interest.

"Things have become much tighter in the U.S. in regard to export licensing since the satellite fiasco, and it is a full time job working the State Department and DoD to release the kinds of things we want to sell. We will have to get to a level where they truly understand what we're selling and that we're not giving away something that's very sensitive or private.

"You can't believe how much energy it takes to deal with the government. But it's worth doing because once you break through then you have opened up a marketplace for yourself," Lanza said.

A case in point is L-3's supplying the Italian navy with ASW equipment, which has taken a great deal of work with both governments to provide the best equipment possible, interoperable with other NATO forces, without compromising any national security interests.

Much of the sensitivity for Lanza stems from the fact that L-3 Communications, formed in April 1997 with the acquisition of business units shed by the merger of Lockheed Martin and Loral Corp., has 70% of its $1.9 billion in sales with the U.S. Department of Defense and 30% with other government agencies and commercial customers. Its largest single contract, amounting to about 7% of its sales, is to upgrade the U-2S reconnaissance aircraft over the next 10 years with more robust, secure datalink equipment allowing it to beam information in near real time and simultaneously to many different warfighters.

L-3 has specialized in acquiring smaller high tech defense companies in secure communications, datalinks, space communications and satellite control, military communications, avionics, microwave and telemetry. Now it offers a broader range than anyone in these areas, and is looking for more acquisitions to fuel future growth.

By John Morris