EX-99.1

ARGON ST, INC.
12701 Fair Lakes Circle, Fairfax, VA 22033
703.322.0881 Fax 703.322.0885
www.argonst.com

FAIRFAX, VA, August 10, 2006 / Business Wire / — Argon ST, Inc. (NASDAQ: STST), today announced revenues and earnings for its third fiscal quarter and nine months ended July 2, 2006.

Revenues for the three months ended July 2, 2006 were $68,902,000 compared to $75,611,000 for the prior year quarter. This represents a decrease of $6,709,000, down approximately 9%, from the prior year quarter. Revenues for the nine months ended July 2, 2006 increased $4,617,000 to $192,690,000 up approximately 2%, compared to $188,073,000 for the prior year period.

Net income for the three months ended July 2, 2006 was $5,166,000 or $0.23 per diluted share, a decrease of approximately 12% compared to $5,855,000 or $0.28 per diluted share for the prior year quarter. For the nine months ended July 2, 2006 net income was $15,291,000 or $0.69 per diluted share, a decrease of approximately 3% compared to the prior year period of $15,719,000 or $0.76 per diluted share.

The Company began reporting stock-based compensation expense in the first fiscal quarter of 2006 as required by Statement of Financial Accounting Standards No. 123R (FAS 123R). This non-cash expense was $603,000 and $1,489,000 or $489,000 and $1,211,000 after tax for the three and nine months ended July 2, 2006, respectively. This stock-based compensation expense reduced diluted earnings per share by $0.02 and $0.05 for the three and nine months ended July 2, 2006, respectively.

Terry Collins, CEO of Argon ST had the following comment: “Our third quarter performance was somewhat better than the revised mid year plan in terms of sales and earnings, but there was a reduction from last year’s results. Additionally, although contract awards are taking longer than planned, we are seeing both increasing opportunities and high success rates on those programs that we choose to pursue. We believe that with our new technology developments, acquisitions, and key contract awards we are laying the foundation for resumption of our targeted growth plans.”

Argon ST, Inc. designs, develops, and produces systems and sensors for the Command and Control Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) markets including SIGINT (Signals Intelligence), ESM (Electronic Support Measures), EW (Electronic Warfare), imaging, and acoustic systems serving domestic and worldwide markets.

Statements in this press release which are not historical facts are forward-looking statements under the provision of the Private Securities Litigation Reform Act of 1955. Forward-looking statements are not guarantees of future performance and are based upon numerous assumptions about future conditions that could prove not to be accurate. Forward looking statements are subject to numerous risks and uncertainties, and our actual results could differ materially as a result of such risks and other factors. In addition to those risks specifically mentioned in the reports filed by the Company with the Securities and Exchange Commission (including the Company’s Form 10-K for the fiscal year ended September 30, 2005), such risks and uncertainties include, but are not limited to: the availability of U.S. and international government funding for the Company’s products and services; changes in the U.S. federal government procurement laws, regulations, policies and budgets (including changes to respond to budgetary constraints and cost-cutting initiatives); the number and type of contracts and task orders awarded to the Company; the exercise by the U.S. government of options to extend the Company’s contracts; the Company’s ability to retain contracts during any rebidding process; the timing of Congressional funding on the Company’s contracts; any government delay or termination of the Company’s contracts and programs; difficulties in developing and producing operationally advanced technology systems; the timing and customer acceptance of contract deliverables; the Company’s ability to attract and retain qualified personnel, including technical personnel and personnel with required security clearances; charges from any future impairment reviews; the future impact of any acquisitions or divestitures the Company may make; the competitive environment for defense and intelligence information technology products and services; general economic, business and political conditions domestically and internationally; and other factors affecting the Company’s business that are beyond its control. All of the forward-looking statements should be considered in light of these factors. Investors should not put undue reliance on any forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect new information, future events or otherwise, except as provided by law.


	July 2, 2006			September 30, 2005
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	66,514,000		$	4,064,000
Accounts receivable, net		86,202,000			103,577,000
Inventory		1,779,000			1,166,000
Income taxes receivable		537,000			2,464,000
Deferred income tax asset		2,271,000			1,742,000
Prepaids and other		1,303,000			888,000

TOTAL CURRENT ASSETS		158,606,000			113,901,000
Property, equipment and software, net		15,756,000			14,896,000
Advances and cash held in escrow		—			10,900,000
Goodwill		115,135,000			107,956,000
Intangibles, net		1,851,000			1,219,000
Other assets		665,000			962,000

TOTAL ASSETS	$	292,013,000		$	249,834,000

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Line of Credit	$	—		$	11,000,000
Accounts payable and accrued expenses		13,327,000			26,857,000
Accrued salaries and related expenses		12,364,000			8,848,000
Deferred revenue		3,928,000			7,139,000
Notes payable — current portion		—			56,000
Capital lease obligations — current		20,000			19,000
Deferred rent		360,000			61,000

TOTAL CURRENT LIABILITIES		29,999,000			53,980,000
Deferred income tax liability, long term		303,000			1,979,000
Deferred rent		1,614,000			1,799,000
Capital lease obligations — net of current		48,000			63,000
Commitments and contingencies		—			—
STOCKHOLDERS’ EQUITY

Common stock:
$.01 Par Value, 100,000,000 shares authorized, 22,260,512 and 20,153,878 shares issued at July 2, 2006 and September 30, 2005		223,000			202,000
Additional paid in capital		211,067,000			158,458,000
Treasury stock at cost, 126,245 shares		(534,000	)		(534,000	)
Retained earnings		49,293,000			34,002,000
Accumulated other comprehensive loss		—			(115,000	)

TOTAL STOCKHOLDERS’ EQUITY	$	260,049,000		$	192,013,000

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	292,013,000		$	249,834,000

ARGON ST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)


	Third Quarter Ended								Nine Months Ended
	July 2, 2006				July 3, 2005				July 2, 2006				July 3, 2005
CONTRACT REVENUES		$	68,902,000			$	75,611,000			$	192,690,000			$	188,073,000
COST OF REVENUES			56,206,000				62,555,000				153,068,000				151,534,000
GENERAL AND ADMINISTRATIVE
EXPENSES			4,837,000				3,474,000				15,617,000				11,305,000

INCOME FROM OPERATIONS			7,859,000				9,582,000				24,005,000				25,234,000
OTHER INCOME (EXPENSE)
Interest income			548,000				193,000				1,064,000				538,000
Interest expense			(4,000	)			(1,000	)			(165,000	)			(10,000	)

			544,000				192,000				899,000				528,000

INCOME BEFORE INCOME TAXES			8,403,000				9,774,000				24,904,000				25,762,000
PROVISION FOR INCOME TAXES			3,237,000				3,919,000				9,613,000				10,043,000

NET INCOME		$	5,166,000			$	5,855,000			$	15,291,000			$	15,719,000

														$
EARNINGS PER SHARE (Basic)		$	0.23			$	0.30			$	0.71				0.80

														$
EARNINGS PER SHARE (Diluted)		$	0.23			$	0.28			$	0.69				0.76

WEIGHTED-AVERAGE SHARES
OUTSTANDING
Basic			22,120,000				19,830,000				21,495,000				19,665,000

Diluted			22,717,000				20,694,000				22,127,000				20,563,000

Victor F. Sellier, Chief Financial Officer
vic.sellier@argonst.com
URL: www.argonst.com