L3harris Technologies, Inc. · NYSE:LHX
L3harris Technologies — Harris — Investor Day (March 2011)
199 slides from L3harris Technologies's investor day presentation, Mar 17, 2011
Slide 1: Assured Communications Anytime. Anywhere. 2011 Analyst Meeting
Assured Communications’ Anytime. Anywhere. \ 204 Analyst Meeting! ‘
Slide 2: Forward-looking statements
Forward-looking statements These presentations include forward-looking statements that reflect management's current expectations, assumptions, and estimates of future performance and economic conditions. Such statements are made in reliance upon the safe harbor provisions of Section 27A of the Secur
Slide 3: Assured Communications Anytime. Anywhere.
Assured Communications® Anytime. Anywhere. \ 2011 Analyst Meeting
Slide 4: Pathway to Continued Growth
Pathway to Continued Growth Howard L. Lance Chairman, President & chief executive officer
Slide 5: Executive summary
Executive summary Harris has predominantly been viewed as an aerospace and defense company with discriminating communications technologies Harris has emerged as a technology company with differentiated solutions serving both government and high-growth commercial markets We are successfully leveragin
Slide 6: Executive summary
Executive summary We have created a larger portfolio of capabilities serving a more diversified set of vertical markets Lessens our dependency on the U.S. Department of Defense for growth and income Allows exploitation of our commercial skills and business models We have positioned the company for c
Slide 7: Solid track record of performance
Based on fiscal 2011 guidance provided March 17, 2011. Reference non-GAAP reconciliation on the Harris investor relations website. (CHART) (CHART) 14% CAGR 22% CAGR ($ in billions) Revenue Earnings per share $2.7 $3.1 $3.33 $2.15 $2.71 $4.43 $3.7 $4.6 $5.0 $5.2 $3.85 $1.50 ~$6.0 $4.80 - 4.90 Solid t
Slide 8: Positioned for growth
Positioned for growth (CHART) Government Communications Systems Technology and systems integration for Defense, National Intelligence and Federal/Civil markets RF Communications Tactical and land mobile radios, systems and networking apps for global Defense, Security and Public Safety markets Integr
Slide 9: RF Communications
RF Communications Tactical radio products and integrated systems JTRS-approved; delivering the JTRS promise today Leading the transformation from narrowband to wideband networking Tactical ISR products and applications Communications Security products Full range of Land Mobile Radio products Integra
Slide 10: Government Communications Systems
Government Communications Systems Defense Programs National Intelligence Programs Civil Programs Communications and information processing technologies that enable high-reliability networks Satellite ground and weather processing Customers include FAA, NOAA and Census Bureau SATCOM systems, advanced
Slide 11: Integrated Network Solutions
Integrated Network Solutions Broadcast and New Media Solutions Broadcast transmission systems, infrastructure and networking solutions, and media and server systems Harris IT Services Design, deployment, support, and network operations End-to-end solutions in IT transformation, managed services and
Slide 12: Senior executives presenting at the meeting
Senior executives presenting at the meeting
Slide 13: Macro markets perspective
Macro markets perspective Headwinds from U.S. Government, State & Local Government budget pressures and economic uncertainties Winding down of MRAP programs U.S. Department of Defense focus on procurement efficiency; embracing the "enterprise business model" vs. POR Expanded international defense an
Slide 14: Corporate growth strategy
Corporate growth strategy Corporate growth strategy
Slide 15: U.S. Department of Defense and International
U.S. Department of Defense Falcon III has changed the way we fight; addresses the full range of mission requirements today and enables future applications Harris "Enterprise Business Model" delivers solutions now that solve real problems surpassing JTRS Programs-of-Record capabilities Demand for sec
Slide 16: Strong foundation of franchise programs
Strong foundation of franchise programs in critical mission areas Geostationary Operational Environmental Satellite (GOES-R) ground segment and antenna system FAA Telecommunications Infrastructure (FTI) Space Network Ground Systems Sustainment (SGSS) Modernization of Enterprise Terminals (MET) F-35
Slide 17: Growth and execution in core - International
Growth and execution in core - International Increasing contributions from global markets
Slide 18: Government funded R&D enables rapid technology insertion
Government funded R&D enables rapid technology insertion into commercial markets (CHART) Government funded $721 Internally funded $326 Signal Processing Microelectronics Antennas Electro-optics Image Processing Cyber Systems Integrated Information Systems Mechatronics $1.0 billion in fiscal 2010
Slide 19: Diversification and expansion
Diversification and expansion 5 years ago Today MARKETS CAPABILITIES
Slide 20: Key acquisitions have built scale and reach
Key acquisitions have built scale and reach into attractive new markets reach into attractive new markets reach into attractive new markets
Slide 21: Diversified vertical markets
Diversified vertical markets
Slide 22: Diversified vertical markets
Diversified vertical markets
Slide 23: Capturing vertical market synergies
Capturing vertical market synergies Participates Today Opportunity
Slide 24: Energy market synergies
Energy market synergies Satellite Communications Cyber Security, Trusted Cloud Hosting Subsea Video Streaming Solutions Critical Infrastructure Protection, Surveillance, and Real-time Monitoring Mobile Communications on Rigs and in Oil Fields IT Outsourcing, Fully Managed Communications Solutions Te
Slide 25: Healthcare market synergies
Healthcare market synergies Trusted Cloud Hosting Digital Signage Enterprise Communications Infrastructure/ Network Operations Interoperability & Workflow Management Imaging Solutions Informatics IT Services
Slide 26: International Government market synergies
International Government market synergies IT Outsourcing, End-to-End Communications Geospatial Products Border Security Tactical ISR Integrated Vehicle Systems Modular Soldier Systems Tactical Radios and Networks
Slide 27: New Media market synergies
New Media market synergies IT Systems Integration and Implementation Network Operations Center / Video Control Room Digital Signage Transaction Solutions Advanced Advertising Media Software Solutions Complete Managed Services
Slide 28: Segment growth aspirations
Segment growth aspirations 3-Year RevenueCAGR Fiscal 2014Operating Margins RF Communications 6% - 8% 30% - 31% Government Communications Systems 3% - 4% ~12.5% Integrated Network Solutions 11% - 14% 11% - 12% Based on current expectations and subject to change without notice.
Slide 29: 3-year consolidated growth aspirations
3-year consolidated growth aspirations 3-Year CAGR Revenue 8% - 9% Operating income 8% - 10% Earnings per share 10% - 13% $ 7.00 EPS by Fiscal 2014 Based on current expectations and subject to change without notice.
Slide 30: Summary
Summary Significant revenue and earnings growth potential Solid positioning in core markets International reach into fast-growth regions New commercial markets and business models Attractive high-growth businesses serving Healthcare, Cyber, Energy, New Media and Public Safety vertical markets Techno
Slide 31: FY12 Outlook
FY12 Outlook Howard L. Lance Chairman, President & chief executive officer
Slide 32: Fiscal 2011 segment revenue outlook
Fiscal 2011 segment revenue outlook Based on fiscal 2011 guidance provided March 17, 2011. Reference non-GAAP reconciliation on the Harris investor relations website. ($ in millions)
Slide 33: Fiscal 2011 segment operating margin outlook
Fiscal 2011 segment operating margin outlook Based on fiscal 2011 guidance provided March 17, 2011. Reference non-GAAP reconciliation on the Harris investor relations website. ($ in millions except for per share amounts)
Slide 34: Fiscal 2012 outlook
Fiscal 2012 outlook Based on the midpoint of fiscal 2011 guidance provided March 8, 2011 and fiscal 2012 guidance provided March 17, 2011. Reference non-GAAP reconciliation on the Harris investor relations website. ($ in millions)
Slide 35: Expected RF segment revenue
Expected RF segment revenue (CHART)
Slide 36: Financial Summary
Financial Summary Gary L. McArthur Senior Vice President & chief financial officer
Slide 37: Creating greater shareholder value
Creating greater shareholder value Maintaining a capital structure that provides a strong financial foundation from which the Company has the flexibility to achieve its strategic and financial objectives Maintaining our Baa1/BBB+ credit ratings Funding internal investments to drive growth and genera
Slide 38: Making good progress
Making good progress Operating income as a percent of revenue and corresponding return metrics (ROA, ROE and ROIC) have improved substantially since FY 2006 All key working capital management metrics are better Operating cash flow and free cash flow as a percent of net income have improved Leverage
Slide 39: Strong cash flow
(CHART) (CHART) (CHART) Operating cash flow Free cash flow Free cash flow/net income (CHART) Based on the midpoint of fiscal 2011 guidance provided March 17, 2011. Reference non-GAAP reconciliation on the Harris investor relations website. ($ in millions) Strong cash flow
Slide 40: Solid at our current credit ratings
Solid at our current credit ratings BBB+/Stable/A-2 Recently reconfirmed ratings Baa1/Stable/P-2 Recently reconfirmed ratings Reference non-GAAP reconciliation on the Harris investor relations website.
Slide 41: Compare favorably to defense peers
Compare favorably to defense peers(1) Note: (1) Prepared by Morgan Stanley using LTM information as of Sep 30, 2010. (2) Values exclude Boeing Capital Corporation debt. (3) Reference non-GAAP reconciliation on the Harris investor relations website. (3)
Slide 42: Access to debt markets
cess to debt markets Summary terms of recent debt offerings Issuer: Harris Corporation Ratings: Baa‘ / BBB+ (Stable / Stable) Format: SEC registered Security: 10 year fixed 30 year fixed Maturity: 12/15/2020 12/15/2040 Tranche size: $400,000,000 $300,000,000 Spread to benchmark: 165 bps 205 bps Coup
Slide 43: Excellent liquidity
Excellent liquidity (CHART) $741 million in cash and cash equivalents $300 million 364-day revolving credit facility available $720 million available under $750 million credit facility in place through 2013 No long-term debt maturities before October 2015 As of the quarter ended December 31, 2010.
Slide 44: Continued internal investment
Based on the midpoint of fiscal 2011 guidance provided March 17, 2011. Continued internal investment Internally funded R&D Capital expenditures ($ in millions) (CHART) (CHART)
Slide 45: Attractive dividend
(1) Reference non-GAAP reconciliation on the Harris investor relations website. (CHART) Attractive dividend (CHART) Cash paid (CHART) Yield (CHART) Percent increase Payout ratio(1) ($ in millions)
Slide 46: Supporting growth
Supporting growth ($ in millions) Significant acquisitions Fiscal 2007 - Multimax ($400M) Fiscal 2009 - Tyco Wireless Communications "M/A Com"($675M) Fiscal 2011E - CapRock Communications ($525M), Schlumberger GCS ($398M), CAREfx ($155M) Total acquisitions funded (CHART)
Slide 47: Declining shares outstanding
Declining shares outstanding (CHART) Shares repurchased (in thousands) (CHART) Cost of repurchase Since fiscal 2005, $842 million has been spent to repurchase 17.5 million shares at an average price of $48.21, reducing total shares outstanding by 13% ($ in millions)
Slide 48: Fiscal 2011 outlook
Fiscal 2011 outlook Based on fiscal 2011 guidance provided March 17, 2011. ($ in millions)
Slide 49: Targets for fiscal 2012 - 2014
Targets for fiscal 2012 - 2014 Based on company estimates. ($ in millions)
Slide 50: Summary
Summary We continue to operate from a very solid financial foundation and are well positioned for continued strong financial results
Slide 51: Integrated Network Solutions
Integrated Network Solutions Daniel R. Pearson Executive vice president & chief operating officer
Slide 52: Integrated Network Solutions overview
Integrated Network Solutions overview Transfer of TRUST from government to commercial customers High-growth markets Commercial model allows for margin expansion Leveraging information for better outcomes Leveraging proven capabilities, solutions and business models into new customer relationships Br
Slide 53: Operating performance
Operating performance ($ in millions) 1Represents non-GAAP operating income. Reference non-GAAP reconciliation on Harris investor relations website. 2Based on mid-point of fiscal 2011 guidance provided March 17, 2011.
Slide 54: Proven capabilities and business models
Proven capabilities and business models Cloud computing Service-oriented architectures Secure virtualization Network operations and management High performance computing Storage area networks NEW MARKETS NEW CUSTOMERS Geospatial production Large file transfer Imagery as a service Visualization High
Slide 55: Market demand is accelerating...
Market demand is accelerating...
Slide 56: Serving large and high-growth markets
Serving large and high-growth markets Based on company estimates.
Slide 57: Harris IT Services
Harris IT Services John Heller President
Slide 58: Harris IT Services executive summary
Proven, cost effective platform for communications and IT services Diverse government and commercial customers Trusted to run some of the world's largest networks Widely distributed workforce 50% firm fixed price, 30% T&M, 20% cost plus Harris IT Services designs, deploys and operates customer-centr
Slide 59: Widely distributed work force
3,300 employees in all 50 states and at eight international locations 24/7/365 support across 300 major cities with technicians certified in leading technologies Support to over 10,000 customer sites Widely distributed work force
Slide 60: A snapshot of the customer base
A snapshot of the customer base
Slide 61: Business model
Business m Program Management Different ‘ ~ + Program management ,) ona large scale * Certified and distributed workforce ility to integrate Operate, Stage, Maintain, andinstall and Suppor & Harris and COTS Ow 4 products + Level of expertise and information assurance INTEGRATED NETWORK SOLUTIONS PAG
Slide 62: Serves all Harris vertical markets
Serves all Harris vertical markets Harris IT Services
Slide 63: Serving the U.S. government market
Navy Marine Corps Intranet (NMCI) Air Force 50th Space Wing Networked Space Operations and Maintenance (NSOM) Serving the U.S. government market Management, operations and maintenance for global Air Force Satellite Control Network Potential program value $410M, 6.5 years Awarded January 2008 Harris
Slide 64: Serving other vertical markets
Amway Center Health First, Inc. Dallas/Fort Worth International Airport Serving other vertical markets Broadcast and new media Public safety and public service Healthcare Managed solutions of infrastructure and networks for 3 hospitals and 26 clinics, with 36,000 inpatients and 124,000 emergency pat
Slide 65: Cyber Integrated Solutions
Cyber Integrated Solutions Dale Meyerrose Vice president & general manager
Slide 66: Executive summary
Executive summary Tremendous cyber integration market potential Differentiated cloud solution that combines lower cost, higher performance, control, and trust World-class infrastructure, technology and partners Trust in the Harris cloud
Slide 67: Clear economic benefits enabled by technology
Clear economic benefits enabled by technology Capex and Opex reductions IT spend driven by massive data growth 44x by 2020 Pervasive mobility Workforce and individuals Increased expectations of business agility and speed (CHART) Source: Deutsche Bank, Gartner, IDC, company estimates. Cyber Integrati
Slide 68: Selling the cloud in today's environment
Selling the cloud in today's environment Leaders in emerging cyber market will provide trust and ensure client control over their own assets Sales discussion with large oil services company: Would you move to a cloud-based environment to save money? Absolutely, but I have other concerns besides cost
Slide 69: Harris is establishing the new standard
Harris is establishing the new standard Current barriers to cloud adoption Table stakes Harris differentiation
Slide 70: World Class Technology
World Class Technology Proven technology portfolio Best-of-breed systems and processes Trusted computing and compliance technology Continuous monitoring and assessment capabilities Portfolio of "customizable" applications Proven and Trusted Capabilities Track record delivering high reliability for m
Slide 71: Partner leadership and joint efforts
Undisputed leader in virtualization Leading innovator in cloud application enablement Pre-engineered, pre-integrated and validated Undisputed leader in storage Leading innovator in information management and security Undisputed leader in networking Leading innovator in blade technology Market leader
Slide 72: Competitive landscape provides a tremendous opportunity
Competitive landscape provides a tremendous opportunity Harris is establishing a new magic quadrant for cyber integration Managed Hosting and System Integrators Cloud Services Providers SMB / Low Security Enterprise / High Security Cyber Integration and Trust Note: Harris management view. Select com
Slide 73: World class infrastructure
World class infrastructure World class cloud for the enterprise begins with world class infrastructure Uptime Tier III and LEED Silver Certified facility World class infrastructure combined with the premier server, storage, and networking products in the market EMC, VMware, Cisco and HP The client o
Slide 74: World class technology
World class technology Provides your 3D x-ray of the cloud
Slide 75: Revenue and income sources
Revenue and income sources Trusted cloud services provided from Harris Cyber Integration Center Trusted cloud services on customer premise but monitored and protected from Harris Cyber Integration Center License fees and royalties from Harris IP used by partners to provide trusted cloud components
Slide 76: Harris CapRock Communications
Harris CapRock Communications Peter Shaper president
Slide 77: Executive summary
Executive summary Excellent value proposition for our customers Market leader in exciting and growing market that requires high availability, security, and reliability Expands Harris horizontal capabilities and provides access to new vertical markets Harris capabilities bring significant additional
Slide 78: Forming the new Harris CapRock Communications
Forming the new Harris CapRock Communications CapRock Communications Schlumberger Global Connectivity Services Maritime Communication Services Core180 Harris CapRock Communications
Slide 79: Most trusted provider of managed communications
Harris CapRock Communications is the world's most trusted provider of fully managed, end-to-end communication solutions for operations in remote and harsh environments Energy Maritime Government Mission-critical communications Converged voice, video and data Highly reliable and secure connectivity G
Slide 80: Harris CapRock Communications value proposition
Harris CapRock Communications value proposition GOVERNMENT Defense and Humanitarian MARITIME Transport and Research Enhance visibility into remote operations Empower real-time decision making Lower operational costs Improve personnel security and safety Retain talent and improve morale ENERGY Explor
Slide 81: Providing best fit end-to-end solutions
Providing "best fit" end-to-end solutions
Slide 82: Total Harris enhances value proposition
Total Harris enhances value proposition Providing the communications you've come to expect in places you wouldn't expect it(tm) Follow the communications chain from remote user to headquarters and pull from across all of Harris to integrate a customized solution Integrated Kits VSAT Manufacturing Te
Slide 83: Scale and geographic scope advantage
Harris CapRock Communications has scale and geographic scope advantage Harris CapRock Communications Stratos Rignet Vizada Self-owned Global Infrastructure Revenue from managed VSAT Network Services Energy, Maritime, and Government Energy and Maritime Energy Maritime Government Primary markets serve
Slide 84: Solutions tailored to the remote application environment
Solutions tailored to the remote application environment Satellite communications Subsea fiber management Terrestrial connectivity Microwave and wireless services Disaster recovery solutions Robust IT services Certified specialists Contract/dedicated labor Teleporting services On-site maintenance In
Slide 85: Value-added application services extend beyond the pipe
Value-added application services extend "beyond the pipe" Portal Provides views into service and operational performance of network Key benefit - provides transparency, enabling better management of network data Oil Partnering Network (Opnet) Closed-community network for oilfield operations, enginee
Slide 86: Global infrastructure and presence
Nigeria Countries in which Harris CapRock has provided service Countries with teleport locations Local presence Teleports on 6 continents Four 24 x 7 Network Operations Centers Local presence in 23 countries Customer projects in over 140 countries Global terrestrial network Self-owned and operated i
Slide 87: Customers depend on Harris' proven capabilities
Customers depend on Harris' proven capabilities and depth of experience 2010 $6 B+ In revenue 4,000+ VSATs under management 3,750MHz+ Satellite capacity 600+ Stabilized antennas continuousl y managed 275+ Global field service specialists 6 Continents with global teleports 900+ Offshore assets served
Slide 88: A trusted partner invested in customers' mission success
A trusted partner invested in our customers mission success Self-owned and operated infrastructure for quality control Proven track record in government and commercial Stability and credibility in challenging times Nearly 5 GHz of global satellite capacity across 60+ satellites Teleports on 6 contin
Slide 89: Healthcare Solutions
Healthcare Solutions Jim Traficant Vice president & general manager
Slide 90: Healthcare Solutions
Healthcare Solutions Healthcare is a high-growth market with strong demand for Harris core capabilities and business models Healthcare Solutions
Slide 91: Healthcare market drivers
$2.5T: 16% GDP and growing (4x DoD budget) Annual U.S. deaths due to medical mistakes equals a jumbo jet crashing every day Fragmented, dis-integrated information market No lead systems integrator in healthcare Federal policy driving Healthcare IT ARRA: $30B+ to fuel electronic health records Meanin
Slide 92: Leverage core Harris strengths
Government Commercial International Leverage core Harris strengths Situational Awareness for Healthcare Interoperability Imaging IT Managed Services ENTERPRISE INTELLIGENCE Harris positioned for strong growth Interoperability Imaging IT Managed Services
Slide 93: Interoperability, Imaging, IT Managed Services
Interoperability Imaging IT Managed Services Harris is the leader in federal health imaging Global architecture: Intelligence to Military Health - potential $18M Veterans Affairs Enterprise Imaging - potential $61M / 5 years Siemens: Disaster Recover / Business Continuity (DR / BC) Delivering IT man
Slide 94: Healthcare solution portfolio
Clinical enterprise portal Single sign-on / context management Business intelligence Express - for on-boarding to Nationwide Health Information Network (NHIN) Enterprise imaging as a service Disaster recovery Secure image sharing Imaging software analytics Managed services networks and IT infrastruc
Slide 95: Augmenting growth with key investments
Augmenting growth with key investments Interoperability Imaging IT Managed Services Clinical enterprise portal Single sign-on / context management Business intelligence Express - for on-boarding to Nationwide Health Information Network (NHIN) Enterprise imaging as a service Disaster recovery Secure
Slide 96: Leading health IT interoperability
Leading health IT interoperability Business partners Market channels with Harris is now in over 1000 healthcare facilities globally Interoperability
Slide 97: JV partnership with Johns Hopkins Medicine
Announcing JV business partnership with Johns Hopkins Medicine Answering market demand for cloud-based medical image management as a service Harris-Hopkins JV to create healthcare information businesses in high-demand, high-growth IT segments Aligning Hopkins brand and clinical expertise with Harris
Slide 98: Transferring trust to IT Managed Services
Transferring trust to IT Managed Services Harris is seen as unique and "trusted" Enter customer accounts at point of need Scale pulling full value of Harris into account Large hospital network CIO exploring Harris imaging and interoperability solutions Requesting bid for managed voice services value
Slide 99: Marquee customers and channels
Marquee customers and channels Vendor-neutral strategy builds trust with partners and customers
Slide 100: Broadcast Communications
Broadcast Communications Harris Morris president
Slide 101: Executive summary
Executive summary Global ad spending market is rebounding, especially in emerging markets Focusing on profitable growth segments Reduced costs and improved operational discipline Rationalized product portfolio Investments in new products and sales and marketing channels to effectively compete in gro
Slide 102: The world's video experts
The world's video experts
Slide 103: The global ad spending market is rebounding
The global ad spending market is rebounding Source: 2010.12.06 Group M Press Release Exceeds $500B for the first time ever Media USD $B, current prices 2009 2010 2011 2011 N. AMERICA 152 156 162 4% LATIN AMERICA 25 28 31 11% W. EUROPE 106 110 113 3% CENTRAL & E. EUROPE 17 18 20 11% ASIA-PACIFIC 134
Slide 104: Continuing global growth
Continuing global growth Middle East Central & Eastern Europe Latin America Asia Pacific
Slide 105: Customer example
Seven Networ INTEGRATED NETWORK SOLUTIONS PAGE 6 2011 ANALYST MEETING
Slide 106: Improved operational discipline
Improved operational discipline Partnered with Cognizant (India) on media software development Focusing on low-cost geographies for local manufacturing Including contract manufacturing in Brazil, China and Russia Consolidated facilities Realigned engineering to optimize resources
Slide 107: Focusing on profitable growth segments
Focusing on profitable growth segments Seven Networks, Saudi Television Nine Networks Australia, CTV Television, Gray Television, Amway Center, AOL Studios Abu Dhabi TV, Rainbow Media, Bharti Airtel Limited, Thai Public Broadcast Service, Univision, Telemadrid Harrods, Starwood, 7-Eleven, Orlando Ma
Slide 108: The golden age of television
The golden age of television TV viewing up in 2010, Nielsen finds Americans watched more television than ever in 2010, according to Nielsen. Total viewing of broadcast networks and basic cable channels rose about 1 percent for the year, to an average of 34 hours per person per week. The generation-l
Slide 109: Video so good...fans stay home?
Video so good...fans stay home? Video so good...fans stay home?
Slide 110: Consumer experience = new profit pools
Consumer experience = new profit pools MORE ways to view MORE places MORE content MORE viewers 9,000,000 LED lights in the center court video board 1,100 high-definition video screens 800 broadcast devices support the state-of-the-art IPTV and digital signage network 48 miles of cable 24/7 network m
Slide 111: Enrich the experience
Enrich the experience Enrich the experience
Slide 112: Expand our customers' profit opportunities
Expand our customers' profit opportunities
Slide 113: And deploy the next business models
And deploy the next business models MEASURABLE INTERACTIVE RELEVANT ADVANCED
Slide 114: New business models = bigger market opportunities
New business models = bigger, faster-growing market opportunities Broadcast market expanding $4.5B MARKET 3-4% GROWTH $1.6B MARKET 10-12% GROWTH New media markets emerging Source: IABM 2009, PricewaterhouseCoopers 2010, Magna Global 2010, Screen Digest 2010, isuppli 2009, PQ Media 2009
Slide 115: Bringing experience to the new media experience
Harris - bringing experience to support the "new media experience" Global reach, financial strength, experience in mission-critical situations Innovation partner with over 100 years in broadcasting and countless technological firsts Global customer base in traditional and new media Unique capability
Slide 116: Government Communications Systems
Government Communications Systems Sheldon J. Fox Group president, government communications systems
Slide 117: Executive summary
Executive summary The headwinds of government spending bring uncertainty and opportunity to the market Government Communications Systems is positioned to outperform the industry through this uncertainty We have a solid foundation of franchise programs in critical mission areas We lead in technology
Slide 118: Operating performance
Operating performance ($ in millions) 1Represents non-GAAP operating income. Reference non-GAAP reconciliation on Harris investor relations website. 2Based on mid-point of fiscal 2011 guidance provided March 17, 2011.
Slide 119: GCS served markets
GCS served markets C3 ISR Enterprise Systems National Intelligence ~40% of revenue NSA, NRO, NGA, Other classified Defense ~30% of revenue Army, Navy, Air Force, Marines Civil ~30% of revenue FAA, NOAA, NASA Revenue percents based on fiscal 2011 estimates.
Slide 120: Program portfolio highlights
Program portfolio highlights Current portfolio ~175 active programs Firm and follow-on programs make up 80% of revenue Top 20 programs represent about 60% of revenue Strong win performance over 18 months positions us for the next several years GOES-R antenna, SGSS, ISARA (NRO) Mexsat, Inmarsat, Oper
Slide 121: Civil - GOES-R
Civil - Geostationary Operational Environmental Satellite (GOES-R) Harris is the prime contractor and responsible for developing, deploying and operating the GOES-R Ground Segment and Antenna System Performs satellite operations, manages ground elements, produces operational weather products and dis
Slide 122: Civil - FAA Telecommunications Infrastructure
Civil - FAA Telecommunications Infrastructure (FTI) Harris Prime to FAA FTI Operations Network FTI Mission Support Network FTI Satellite/Microwave Network FTI Network and Security Operations Control Centers Over 4,500 locations nationwide; 22,500 services $600 million life-cycle savings Completed th
Slide 123: Civil - Space Network Ground Systems Sustainment
Civil - Space Network Ground Systems Sustainment (SGSS) Modernize ground systems at White Sands Complex and Guam Lead development of space-to-ground link and user services as sub to General Dynamics C4S Budgeted program is critical to NASA and its customers for continued operations Expands on Harris
Slide 124: Defense - Modernization of Enterprise Terminals
Defense - Modernization of Enterprise Terminals (MET) U.S. Army Communication-Electronics Command (CECOM) Design and replace existing DoD strategic terminals over the next 10 years - 90+ terminals located around the world Family of terminals ranging from 4.8-meters to 12.2-meters Supports Wideband G
Slide 125: Defense - F-35 and F/A-18
Defense - F-35 and F/A-18 Situational Awareness in the cockpit F-35 Fiber-optic network products Avionics infrastructure solutions Multifunction Advanced Data Link (MADL) antenna Potential program value: $4.2B F/A-18 Avionics processing and high speed networking products Digital map products Digital
Slide 126: National Intelligence - Global Geospatial Intelligence
National Intelligence - Global Geospatial Intelligence (GGI) Global Vector Maritime LIDAR/DSM Potential program value $750M IDIQ, 10 years Awarded January 2003 Feature Extraction Capture, aggregate, analyze and distribute images, from frames to video
Slide 127: National Intelligence - Ground Enterprise Solutions
National Intelligence - Ground Enterprise Solutions National Reconnaissance Office (NRO) Prime contractor developing ground-based enterprise wide systems and application services for mission critical data Data ingest and distribution, service oriented architecture, virtual private cloud, unstructure
Slide 128: Capabilities for growth
Capabilities for growth Solutions serve information-driven needs of critical missions Management of exponentially growing amounts of data Higher capacity data links, networking Enterprise systems - storage/retrieval, access/dissemination, fusion, analytics Security and mobility Solutions differentia
Slide 129: Command, Control, and Communications - Space
Command, Control, and Communications (C3) - Space Capabilities and products: Deployable reflectors Gimbaled dish antennas Programmable payload electronics Provided for: National security space Mobile satellite services Operationally responsive Space Ka band commercial and military services Internati
Slide 130: ISR - Geospatial Intelligence
Intelligence, Surveillance, and Reconnaissance (ISR) - Geospatial Intelligence Radar Mapping (c) Digital Globe (c) Digital Globe (c) MCA Full Motion Video UAV On Demand Processing LIDAR Panchromatic Multispectral GeoInt Data Services (GDS) New automation technologies for geospatial data readiness Fr
Slide 131: Enterprise Systems - FAA NextGen
Enterprise Systems - FAA NextGen NextGen portfolio relative to the total capital request NextGen transformational programs - DCIS, NVS, SWIM
Slide 132: Civil - NextGen pursuit: DCIS
Includes the infrastructure to make NextGen a reality Enables air traffic controllers and pilots to communicate more effectively via datalink Enhances today's operations by reducing errors common in voice communications and increasing airport efficiencies Potential program value $700M, 17 years Awar
Slide 133: Civil - NextGen pursuit: NVS
Next Generation Program to Voice Switching and Control System (VSCS) - Harris incumbent A modern and flexible operational voice enterprise capability common to the en route and terminal domains Provides for current and future telecommunications interfaces Voice switching and radio control functional
Slide 134: Civil - NextGen pursuit: SWIM
Establishes a Service-Oriented Architecture (SOA) based IT infrastructure on top of FTI Provides NAS stakeholders with a capability for exchanging information through the use of publish/subscribe and web services Provides the NAS an enterprise-wide, interoperable, shared platform for information exc
Slide 135: GCS is the technology engine
Government Communications Systems is the technology engine Among the nation's best - people, tools, technology and expertise Create technology and capabilities utilized across Harris 4000+ Engineers, over $700M R&D, 41 new patents this year Supporting new vertical market initiatives Healthcare: inte
Slide 136: RF Communications
RF Communications Dana A. Mehnert Group president, rf communications
Slide 137: RF Communications Business Units
RF Communications Business Units Tactical radio products and integrated systems JTRS-approved; delivering the JTRS promise today Leading the transformation from narrowband to wideband networking Tactical ISR products and applications Communications security products Full range of Land Mobile Radio p
Slide 138: Operating performance
Operating performance ($ in millions) 1Represents non-GAAP operating income. Reference non-GAAP reconciliation on Harris investor relations website. 2Based on mid-point of fiscal 2011 guidance provided March 17, 2011.
Slide 139: The journey continues - transformation of tactical communications
The journey continues ^ our vision to lead the transformation of tactical communications Harris is ideally positioned to transform the legacy narrowband tactical radio market into the network enabled wideband market of the future Stovepiped legacy radios in the field Single-band/mission radios Point
Slide 140: U.S. radios in service
U.S. radios in service < 1% wideband capable Harris estimate of radios in units. JTRS WIDEBAND Harris AN/PRC- 117G JTRS HH and MP Thales AN/PRC- 148 Thales AN/VRC-111 Harris AN/PRC- 152 Harris AN/VRC- 110 HF Harris AN/PRC- 150 SPR Motorola, ICOM, EFJ MB UHF/MP Raytheon PSC- 5 Raytheon EPLRS Harris A
Slide 141: Tactical Communications summary
Tactical Communications summary Global market leader in ground tactical radios for 6th consecutive year while reinvesting for the future Leading the global transformation of tactical communications from narrowband to wideband - enabling mission critical applications at the tactical edge Creating new
Slide 142: Harris has gained share points in the past five years
Harris has gained 20 share points in the past five years Worldwide tactical radio market Harris estimated market share was 43% in calendar 2010, five points higher compared with prior year, in a market that grew 6% (CHART) Note: Reflects Harris estimates of core tactical radio market and market shar
Slide 143: Macro market trends
Macro market trends Transition from narrowband to wideband networking for video dissemination, network-wide email and chat, situational awareness, and biometrics Government funded, long-cycle program of record procurement practices can no longer support the needs of the warfighter Pace of change in
Slide 144: Key differentiators based on commercial market approach
Key differentiators based on commercial market approach "Commercial" business model Invest internal R&D resources Ready-to-ship, off-the-shelf products Continuous reinvestment in spiral development "First-mover" advantage through technology innovation First and only widely deployed wideband tactical
Slide 145: Driving the innovation cycle and creating new demand
Driving the innovation cycle and creating new market demand $1.5B market in 2005 HF, VHF, MB PRC-152 Tactical Cellular SPR HCLOS PRC-117G COMSEC Intercoms ISR TACSAT RF-7800V HF, VHF, MB Packaged Systems PRC-152A RF-7800M VRC-110 Situational Awareness Modular Radio NCS $10.5B market in 2014 Core tac
Slide 146: Harris has first-mover advantage
Harris has "first-mover" advantage In service with all branches of U.S. Armed Forces and 15 allied countries 150,000 JTRS-approved AN/PRC-152 handheld radios shipped 10,000 AN/PRC-117G radios with ANW2 wideband networking shipped AN/PRC-117G with ANW2 wideband networking fielded across Afghanistan 9
Slide 147: Falcon III addresses full range of mission requirements
Falcon III addresses the full range of mission requirements today and enables the mission critical applications of the future Falcon III is changing the game with multi-mission JTRS radios Ground-to-air TACSAT First responders Legacy interoperability Biometrics data Network-wide email and chat ISR V
Slide 148: Falcon III enabling mission critical applications
Falcon III is enabling mission critical applications at the edge Video dissemination Situational awareness Biometrics data Network-wide email and chat UAV and ground surveillance video Email and chat messaging Tactical SharePoint access Call for fires MEDEVAC Convoy tracking Mission ops planning Fir
Slide 149: Enabling the applications soldiers know and need
Enabling the applications soldiers know and need Tactical chat Soldiers at Home Soldiers at War Chat All informed One to one Photo file sharing Mapping Situational Awareness/PLI Web search TIGR
Slide 150: Feedback from customers
Feedback from customers continues to support our vision Falcon III is changing the way we fight " The 117G is going to change the way we do battle and increases our advantage over the enemy" Special Operations Combat Controller "The combination of the PRC-117G and RF-7800W has provided our task forc
Slide 151: Evolving the Falcon III family
From market leadership to market transformation - evolving the Falcon III family of JTRS solutions The AN/PRC-117G with Advanced Networking Wideband Waveform (ANW2) has proven the power of battlefield networking by enabling a wide range of new transformational applications Proliferating ANW2 across
Slide 152: Extending Falcon III wideband networking
UAV Tablet Soldier Radios Embedded Modules UGV Extending Falcon III wideband networking to enable future ISR applications Interoperability Falcon III embedded solutions Smallest JTRS wideband networking radio is bringing networking to all echelons ANW2 SRW Extending Falcon III network into broader I
Slide 153: Falcon III tactical cellular networks
Falcon III BACKHAUL Falcon III tactical cellular networks Falcon III wideband networking will extend tactical cellular communications and related applications to the tactical edge Tactical Cellular Base Station Applique Integrated Falcon III solution enables cellular communications at the edge Signi
Slide 154: Falcon III strongly positioned in new DoD era
Commercially developed Falcon III JTRS solutions are strongly positioned in the new DoD era of focus on affordable, off-the-shelf solutions DoD embracing the "Enterprise Business Model" "I will pursue greater quantities of systems that represent '75 percent' solution instead of smaller quantities of
Slide 155: Combat Proven, Enhancing, Expanding
Combat Proven Enhancing Expanding Successful fielding to OEF NSA certified SRW in AN/PRC-117G in CY11 2 channel AN/PRC-117G based Vehicular System (AN/VRC-114(V)2) addresses multichannel GMR with enhanced capability Enabling networking ahead of programs of record with ANW2 connectivity to DoD SIPRNE
Slide 156: Marine Corps tactical communications modernization
Marine Corps tactical communications modernization Successful AN/PRC-117G fielding in OEF Providing critical collaboration and information sharing capabilities Defining their Battalion and below network architecture on Falcon III AN/PRC-117G and AN/PRC-152A Sponsored AN/PRC-152A NSA Certification Up
Slide 157: Tactical Communications International
Tactical Communications International Andy Start president, international Tactical communications
Slide 158: International growth
International growth Robust international market offers significant opportunities including multi-year standardization programs 12 - 18 month opportunity pipeline of $2B Leadership position in U.S. market is driving international adoption of Harris solutions World class global dealer network built o
Slide 159: Expanding international footprint
Harris offices RFCD Headquarters Regional Hub Offices Harris dealers Harris Falcon(r) customers Expanding International footprint Falcon tactical radio family users are in 100+ countries on five continents Expanding international presence with regional hubs Increasing forward deployed technical sale
Slide 160: Major multi-year standardization program wins
Major multi-year standardization program wins and opportunities in excess of $3B Multi-year program opportunities Saudi Arabia VHF Afghanistan Tactical Comms India SPR and HCDR Netherlands HF and VHF Chile MB Tactical Radio Systems Brazil VHF Denmark Networked radio Multi-year program wins Australia
Slide 161: $300M+ tactical radio standardization program
$300M+ tactical radio standardization program for an undisclosed international country $300M+ framework contract $110M order received for first phase of HF and VHF products Next phase planned for fiscal 12 delivers assembly line, test equipment, sub-assemblies and technical support to enable local a
Slide 162: Australia Land 200 program
Next-generation secure, voice and data communications infrastructure in support of vehicular and dismounted combat systems Potential $500M multi-year program $112M order received for initial phase Potential to capture multiple adjacent Australian Defence Force opportunities Australia Land 200 progra
Slide 163: Iraq standardization
Iraq standardization $250M orders received to-date Ministry of Interior standardized on Harris HF and Multiband Air Force has standardized on Harris Multiband Ministry of Defense standardized on Harris HF $500M of additional opportunity Standardization of VHF Tactical radios and integrated C3 system
Slide 164: Expanding available market with Integrated Communications Systems
Expanding available market with Integrated Communications Systems Solutions Soldier Systems Integrated Vehicle C4I Systems Defense and Security C4ISR Solutions Addressable annual market of approximately $2.5B Comprehensive Aftermarket Service Integrated Communication System Solutions Complete Portfo
Slide 165: Soldier systems
Soldier systems Over $150M of identified opportunities Leveraging success of RF-7800S secure personal radio In-service in over 40 countries Orders for over 30,000 secure personal radios expected by end of fiscal 2011 Falcon Fighter Soldier System provides integrated capability Video Battle managemen
Slide 166: Integrated vehicle C4I systems
Integrated vehicle C4I systems Major global C4I Vehicle Systems market Multiple $50M+ opportunities Australia Land121 UAE Marjan I Pre-packaged solutions based on Harris equipment provide integrated capability at low risk Falcon III communications Intercom Communications server Video server Satcom o
Slide 167: Defense and security C4ISR solutions
Defense and security C4ISR solutions Multiple $100M+ C4ISR systems opportunities Harris offers 'packaged' systems and subsystems based on integration of Harris proprietary products Faster, lower risk solutions that can be demonstrated Ideal for growing Middle East, Central Asia and Far East markets
Slide 168: Pakistan Frontier Corps C4ISR program
Leveraging tactical radio standardization programs to expand systems opportunities Implementing $300M multi- phase project, booked $90M orders inception-to-date System provides voice, data, situational awareness and real-time video Potential extensions to include FAME and UAV feeds Significant impac
Slide 169: Public Safety and Professional Communications
Public Safety and Professional Communications Stephen Marschilok President, Public Safety & Professional communications
Slide 170: Key markets for Public Safety and Professional Communications
Key markets for Public Safety and Professional Communications Public safety and public service U.S. DoD and federal government Utility International Enterprise Transit and transportation
Slide 171: Strategy for growth
Strategy for growth Gain share in public service and public safety market Drive terminal sales Provide value-added product differentiation Maintain outstanding program performance Lead the land mobile radio (LMR) to Long-Term Evolution (4G/LTE) transition Increase penetration in adjacent professiona
Slide 172: North America Land Mobile Radio market
(CHART) North America Land Mobile Radio market In calendar 2010, Harris estimated market share increased from 9% to 10% in a flat market of $4.7B Expecting approximately 3 percent annual market growth in the near-term Note: Reflects Harris estimates of North America land mobile radio market and mark
Slide 173: Product Portfolio
Product Portfolio Network Switching Products Network Administration Products Network Management Systems Infrastructure Site Products Vehicular and Hand-held Radios Dispatch Consoles Interworking Gateways Vertically integrated Multimode Multiband Tiered by market/user Broad product portfolio Systems
Slide 174: LTE VIDA network
LTE VIDA (voice, interoperability, data and access) network supports multiple platforms on a secure and scalable IP backbone Powerful network delivers competitive advantage for critical communications End-to-end IP capability Standards-based solutions and products LMR and LTE solutions PTT voice and
Slide 175: Key wins
Key wins Two largest public safety awards in North America in 2010 Province of Alberta, Canada $291M Oregon Wireless Interoperability $100M Network (OWIN) Miami-Dade County, FL $100M Monroe/Ontario Counties, NY $49M State of Maine $34M Center Point Energy $23M Dane County, WI $16M Lower Colorado Riv
Slide 176: Alberta First Responder Radio Communications System
Alberta First Responder Radio Communications System (AFRRCS) Design, build, test and maintenance for province-wide P25 trunked network Initial contract value of $291M Users Government of Alberta (GoA) Royal Canadian Mounted Police Public safety grade interoperability Coverage in urban and rural area
Slide 177: Oregon Wireless Interoperability Network
Oregon Wireless Interoperability Network (OWIN) One state system to replace four state agency systems Department of Corrections Department of Forestry Department of State Police Department of Transportation Requirements contract Supply of system and radios VIDA network - all IP solution P25 standard
Slide 178: Harris vs. Motorola
Harris vs. Motorola Bidder Technical Management References Demos Cost Total points The following table demonstrates how Harris significantly outranked Motorola in the proposal evaluation for awarding Oregon Wireless Interoperability Network (OWIN) 12,481 10,473
Slide 179: $3B opportunity pipeline in North America
$3B opportunity pipeline in North America Major opportunities include Canada Maritimes Radio Communications System Commonwealth of Massachusetts State of Washington State of Texas California Bay Area East Missouri Regional System State of Indiana State of Iowa San Francisco Municipal Transit Authori
Slide 180: Long-Term Evolution (4G/LTE) - future of public safety broadband
Long-Term Evolution (4G/LTE) - the future of public safety broadband communications Adoption of LTE accelerating Federal government grant and policy support Active RFP environment Comprehensive and fully integrated public safety solution Leverages Harris core IP network (VIDA) Integrates narrowband,
Slide 181: Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosures
Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosures
Slide 182: Regulation G Disclosures
Regulation G Disclosures To supplement our condensed consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we provide additional measures of segments' operating income (loss); cost of product sales and services; engineering, selling and
Slide 183: Reconciliation of Non-GAAP Financial Measures - Lance pages 5, 31, 32
Reconciliation of Non-GAAP Financial Measures Mr. Lance's Presentation - pages 5, 31 and 32
Slide 184: Reconciliation of Non-GAAP Financial Measures - Lance page 30
Reconciliation of Non-GAAP Financial Measures Mr. Lance's Presentation - page 30
Slide 185: Reconciliation of Non-GAAP Financial Measures - Lance page 32
Reconciliation of Non-GAAP Financial Measures Mr. Lance's Presentation - page 32
Slide 186: Reconciliation of Non-GAAP Financial Measures - McArthur page 3
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - page 3
Slide 187: Reconciliation of Non-GAAP Financial Measures - McArthur page 3
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - page 3
Slide 188: Reconciliation of Non-GAAP Financial Measures - McArthur page 3
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - page 3
Slide 189: Reconciliation of Non-GAAP Financial Measures - McArthur pages 3 and 5
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - pages 3 and 5
Slide 190: Reconciliation of Non-GAAP Financial Measures - McArthur page 3
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - page 3
Slide 191: Reconciliation of Non-GAAP Financial Measures - McArthur page 3
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - page 3
Slide 192: Reconciliation of Non-GAAP Financial Measures - McArthur page 3
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - page 3
Slide 193: Reconciliation of Non-GAAP Financial Measures - McArthur pages 3 and 5
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - pages 3 and 5
Slide 194: Reconciliation of Non-GAAP Financial Measures - McArthur pages 3 and 4
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - pages 3 and 4
Slide 195: Reconciliation of Non-GAAP Financial Measures - McArthur page 5
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - page 5
Slide 196: Reconciliation of Non-GAAP Financial Measures - McArthur page 10
Reconciliation of Non-GAAP Financial Measures Mr. McArthur's Presentation - page 10
Slide 197: Reconciliation of Non-GAAP Financial Measures - Lance and Pearson
Reconciliation of Non-GAAP Financial Measures Mr. Lance's Presentation - pages 30 and 31 and Mr. Pearson's Presentation - page 3
Slide 198: Reconciliation of Non-GAAP Financial Measures - Lance and Fox
Reconciliation of Non-GAAP Financial Measures Mr. Lance's Presentation - pages 30 and 31 and Mr. Fox's Presentation - page 3
Slide 199: Reconciliation of Non-GAAP Financial Measures - Lance and Mehnert
Reconciliation of Non-GAAP Financial Measures Mr. Lance's Presentation - pages 30 and 31 and Mr. Mehnert's Presentation - page 3