TERMA UPDATE. JUNE/JULY Contents. Mission Customized / 4. Extensive Surveillance Capability to the U.S. Coast Guard / 5

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1 TERMA UPDATE. JUNE/JULY 2005 update North American Business Expansion Initiative In this Update issue In mid-2003, Terma A/S launched a new business expansion program in the United States to provide increased customer service, support, and market presence. For many years, Terma has worked closely with customers in North America, and these markets provide a significant portion of the company s total sales. In 2004, Terma established a wholly owned U.S. subsidiary, Terma North America Inc. with offices in Washington, DC and Warner Robins, Georgia. Contents Naval Decoy System for the Lockheed Martin Littoral Combat Ship / 2 Terma's North American Business Expansion Initiative / 3 Mission Customized / 4 Extensive Surveillance Capability to the U.S. Coast Guard / 5 Electronics Manufacturing and Service / 6 Mission Critical Space Electronics / 7

2 SOFT KILL WEAPON SYSTEM Naval Decoy System for the Lockheed Martin Littoral Combat Ship Terma recently signed a delivery contract with Lockheed Martin to provide the Terma Soft Kill Weapon System (SKWS) naval decoy system to the first U.S. Navy Littoral Combat Ship (LCS). Soft Kill Weapon System was originally developed with the Royal Danish Navy for their corvette/frigate size ships and is an excellent fit for modern war ships. SKWS will provide the Littoral Combat Ships with passive defense against airborne threats. The Terma SKWS DL-12T lightweight launchers have eight different firing directions. This feature provides full 360-degree defense coverage for effective placement of the full range of existing Infra Red (IR) and Radio Frequency (RF) decoys, a solution superior to standard 130 mm outfits. The system may employ any form of standard decoy and can be installed on all types of ships, as it is extremely light and robust. The system is open and flexible and has been designed for easy integration into the ship s command and control systems for combat management and electronic warfare. Terma has developed a unique automatic ammunition identification system, which shortens the loading cycle and prevents the potential devastating effect of using the wrong decoy. LCS will provide the U.S. Navy with transformational capabilities in the littorals with an agile, highlymaneuverable monohull design. Ensuring littoral battlespace access and dominance, the ship s first missions will include mine warfare, anti-submarine warfare, and surface warfare. Construction on the first LCS began in early February and the Lockheed Martin team will deliver the first ship to the U.S. Navy in late With this LCS delivery contract, Terma has again proved to be a wellestablished world-wide supplier of decoy systems for naval ships. Terma has installed solutions in a variety of ships, from fast-attack craft to frigates in Australia, Norway, Romania, The Netherlands, and Denmark. This contract also marks the second partnership between Lockheed Martin and Terma for the SKWS, as the Norwegian F-310 frigates will also be outfitted with this system. 12 tubes SKWS Decoy Launcher with the royal ship, the Dannebrog in the background 2 TERMA UPDATE. JUNE/ JULY 2005

3 BUSINESS STRATEGY Terma s North American Business Expansion Initiative In mid-2003, Terma A/S launched a new business expansion program in the United States. This long term corporate initiative consists in part of a business strategy to provide increased customer service, support, and market presence to better serve the needs of the U.S. Department of Defense and its prime contractors. It includes the hiring and long term placement of U.S. nationals and experienced Danish Terma personnel in the United States. For many years, Terma has worked closely with customers in North America, and North American markets provide a significant portion of the company s total sales. Through these relationships, Terma has gained in-depth knowledge and insight into our customers work environment and an equally deep understanding of their situations and needs. We are now making further investments in the North American markets and we will be getting ever closer to our customers, our end users, and other U.S. DOD integrating contractors with whom we often partner and/or supply sub-systems. The initial business focus will be to build on our existing business and customer base. Since 1997, Terma has been under contract to deliver the AN/ALQ-213(V) Counter Measures Set Processors for the F-16 and A-10 Aircraft. The ALQ- 213, an advanced electronic warfare (EW) control system, controls and integrates all on-board aircraft selfprotection systems such as radar and missile warning systems, chaff and flare dispensing systems, jammers and towed decoys. The ALQ-213 also controls the tactical reconnaissance system on F-16 aircraft. The system is currently installed on more than 1,600 aircraft worldwide. Late in 2003, the U.S. Air Force s Maintenance Directorate at Warner Robins Air Logistics Center and Terma entered into a precedent setting Public Private Partnership Agreement. This Partnership Agreement, the first ever awarded to a non-u.s. company, expands Terma s contracted work on electronic warfare systems which are supplied to the U.S. Air Force and to other friendly countries governments. The Partnering Agreement also includes provisions for the supply of Terma EW systems to other Department of Defense (DOD) users, as well as to other friendly countries. Utilizing this Partnership Agreement as a beachhead to further expand our U.S. business base, Terma established in 2004 a wholly owned U.S. subsidiary, Terma North America Inc. with offices in Washington, DC and Warner Robins, Georgia. The partnership was triggered, in part, by a requirement to upgrade ALQ- 213 circuit cards in about 900 U.S. Air Force F-16 and A-10 aircraft. To implement these upgrades and to establish an on-site field service capability, the Warner Robins office staff includes an Integrated Product Team, IPT, with members from both WR-ALC and Terma. Through this U.S.-based subsidiary, Terma is able to provide increased local support, service and marketing functions related to Terma s existing and future U.S.-based business and customers. A key Terma business strategy is therefore closely linked to the world s largest market in which lie some of the most promising opportunities. Terma s opportunities in the U.S. have been further strengthened this year with the signing of the bilateral Declaration of Principles between Denmark and the USA. With this inter-governmental agreement, Danish companies can participate in the U.S. market on the same terms as other foreign companies with which we are typically competing. TERMA UPDATE. JUNE/ JULY

4 AIRCRAFT SURVIVABILITY EQUIPMENT AMASE (Apache Modular Aircraft Survivability Equipment) is an advanced Electronic Warfare self-protection solution against Infra-Red (IR) missile threats The majority of Terma s business is related to aircraft, being it selfprotection systems, reconnaissance systems, advanced aerostructures, or manufacturing services. Terma has provided more than 1,200 self-protection systems for use on US aircraft based on our AN/ALQ-213(V) Electronic Warfare Management System (EWMS). We cooperate with aircraft operators to understand their missions and to quickly develop cost-effective solutions which meet their needs. High emphasis is placed on providing pilots with the best possible situational awareness, to automatically initiate countermeasures and hereby establish an efficient self-protection. Our customers benefit from our extensive experience in significant areas: Free choice of EW sub-systems optimized selection to satisfy requirements. The AN/ALQ-213(V) is the only generic EW management system where customers can choose the EW sub-systems according to their needs. Minimum modifications to aircraft resulting in cost-effective solutions. We seek to identify solutions that require a minimum impact on the production, and installation, it took fleet. Expensive aircraft installations only four months. This was primarily and/or recertifications can often be possible due to commonality with either avoided or minimized. Our the already delivered Chinook selfprotection system. The Apaches were solutions are primarily based on Non-Developmental Items (NDI). deployed to (Iraq) in June Commonality across platforms AMASE (Apache Modular Aircraft reducing total cost of ownership. Survivability Equipment) is an advanced The same EW sub-system may Electronic Warfare self-protection be installed on different aircraft solution against Infra-Red (IR) missile platforms. This results in major threats. The Stub Wing Pods, placed logistics cost savings. on the tips of the Apache stub wings on each side of the helicopter, contain The AMASE project exemplifies the Missile Warning and Flare Terma s ability to provide mission Dispensing systems. This position customized solutions. of pods has two major advantages: it is an ideal location for missile AMASE warning sensors as there is very little In February 2004, Terma signed a shadowing from the aircraft structure quick reaction contract with the Royal and there is no operational restrictions Netherlands Air Force (RNLAF) to on weapons deployment. In addition, supply self-protection equipment for the pods may be shared between Apache AH-64D helicopters. From helicopters, thus lowering overall costs. contract signing to development, AN/ALQ-213(V) EWMS The system was originally developed for the Danish Air Force F-16 aircraft in 1992/93. In a number of updated versions, the system was later certified and selected by the USA, Norway, The Netherlands, Belgium, Portugal, Australia, Germany, as well as other countries. It has been deployed on fighters, transport aircraft, and helicopters. 4 TERMA UPDATE. JUNE/ JULY 2005

5 35 RADAR SYSTEMS TO THE U.S. Terma radar installation at Port of Hamburg Extensive Surveillance Capability to the U.S. Coast Guard During the last two years, Terma has been awarded contracts for more than 35 radar systems to the U.S. Coast Guard s Ports and Waterways Safety Systems (PAWSS) program. As a subsupplier to Lockheed Martin, Syracuse, Terma has supplied new radar sensor systems to be installed in several U.S. ports, including Houston, New York, and Seattle. In the New York area, the Vessel Traffic Service system consists of a vessel traffic center as well as radars, situated along the East and Hudson Rivers up to the George Washington Bridge, on waterways connecting to Ports Elizabeth and Newark, N.J., and at the approaches to New York harbor from Sandy Hook, N.J. to the Verrazano Bridge. The high-resolution SCANTER 2001 radar sensor systems provide an extensive surveillance capability to the Coast Guard. Thus, enhancing overall system safety and security. The U.S. Coast Guard s decision to base their safety, security, and surveillance concept on the SCANTER 2001 radar is indeed a very positive outcome of the engineering efforts. As new technologies become available, the operation of as well as requirements to VTS and Coastal Surveillance systems are changing rapidly. Yet, the radar remains the primary sensor for both cooperative and non-cooperative targets. Especially in congested waterways, successful implementation of AIS makes heavy demands on radar performance to ensure a consistent correlation between the two sources of information. TERMA UPDATE. JUNE/ JULY

6 SPECIAL PROGRAMS Electronics Manufacturing and Service Terma has a wide range of integrated testing facilities, closely monitoring each step of the production line Terma s electronics manufacturing and service capabilities are perfectly geared to match customers demanding needs for specialized production of high quality, mix, and complexity series in small or medium volumes. Terma s state-of-the-art manufacturing facilities are backed by comprehensive test capabilities and modern facilities for maintenance and servicing of electronics systems, including certified Clean Room facilities. Manufacturing services include full program management support. Terma s long-time involvement in international military programs has generated extensive and invaluable expertise within project management, configuration management, and quality assurance. This has enabled Terma to produce directly from customer documentation. Terma s manufacturing facilities are located at the headquarters facility in Denmark covering approx. 25,000 m 2 with 200 employees. Manufacturing Strategy Terma provides manufacturing services for space, military, aerospace, and commercial applications. Terma also offers turnkey manufacturing services, including management support, material procurement, quality assurance, test engineering, and service and maintenance. In order to maintain competitiveness, Terma s aim is that a considerable amount of the production capacity is utilized for external customers. By doing this, Terma can continuously measure international competitiveness in terms of quality, delivery punctuality, and prices. Terma s core capabilities lie in R&D, supply management, engineering, assembly, testing and installation. Terma offers customers a one-stopshop opportunity. 6 TERMA UPDATE. JUNE/ JULY 2005

7 MAJOR SPACE ACHIEVEMENTS Mission Critical Space Electronics Terma provided vital electronics for the Huygens probe which this year made a successful landing on Saturn s moon, Titan. Terma also successfully delivered critical electro-optical equipment for the U.S. Air Force Road Runner mission. January 2005 marked an important event for Terma: the Huygens probe made a successful landing on Saturn s moon, Titan. Precise wakening of the dormant spacecraft for its descent through the foreign atmosphere was the small but indispensable task of Terma s Mission Timer Unit. In February, Terma delivered and smoothly integrated a high performance star tracker into the spacecraft for the Road Runner mission under the responsibility of the Kirtland Air Force Base in Albuquerque, New Mexico. This line of optoelectronic products from Terma has successfully passed the evaluation under the Foreign Comparative Testing (FCT) program and has been selected for other U.S. missions sponsored by the U.S. Air Force and the Naval Research Laboratory. Other significant achievements in the past year have been the commissioning of a complete power management system on board the Mars Express orbiter and on the Rosetta deep space comet chaser. Developed specifically for solar system exploration, Terma s Maximum Power Point Tracking facility adapts autonomously to the changing environment of the spacecraft and optimizes the supply of power to the many subsystems on board. The same equipment will fly on Venus Express, to be launched later this year. A unique feature of Terma s technology is the high power output to mass ratio that is provided which makes it attractive for other missions as well. NASA has asked Terma to provide trade-offs to more specifically describe how this power management concept may have merit also for NASA s planned exploration of the solar system. In January 2005, the Huygens probe made a successful landing on Saturn s moon, Titan Copyright: ESA D. Ducros TERMA UPDATE. JUNE/ JULY

8 TERMA IN BRIEF Financial Highlights USD million 2004/ / / / /01 Sales Sales share abroad Profit for the year before tax Equity Capital, year-end Assets, total Order intake Order book, year-end Number of full-time employees Average for the year 1,034 1, We Provide Mission Customized Solutions Terma develops and markets high-tech solutions, systems, and products for civilian and military applications. Terma A/S headquarters is located at Lystrup near Århus, Denmark. Terma is a 100 % Danish owned company. Terma s high-tech solutions and products are developed and designed for use in extreme mission critical environments and situations, where human lives and valuable material assets are at stake. Terma s business areas cover: Aerostructures for aircraft Airborne Systems, incuding Self-protection systems for aircraft Audio systems solutions Reconnaissance systems for fighter aircraft Electronics manufacturing Integrated Systems, including Self-protection systems for ships Command and control systems for navy, army, and air force applications Radar surveillance systems Solutions, services, and products for space applications Air traffic management systems IT services. Domestic Terma facilities are located at Lystrup, Grenaa, and Herlev. Abroad, Terma locations include Leiden, The Netherlands; Besozzo, Italy; Darmstadt near Frankfurt, Germany; Washington, DC and Warner Robins, GA, USA. Terma A/S was established in For many years, Terma has worked closely with defense forces, public authorities, and international organizations around the world. Through these relationships, Terma has gained in-depth knowledge of and insight into our customers working environment and an equally deep understanding of their situations and needs. Terma is ultimately owned by the Thomas B. Thrige Foundation. TERMA UPDATE. JUNE/JULY 2005 Editor Kasper Rasmussen, kar@terma.com Terma North America Inc Whitehaven Street, N.W. Washington, DC USA T +1 (202) F +1 (202) Terma North America Inc. 151 Osigian Blvd, Suite 154 Warner Robins, GA USA T +1 (478) F +1 (478) Terma A/S Hovmarken Lystrup Denmark T F idworks.dk 2028/06.05