harris corporation

Integrated Network Solutions Segment
2011 2010
2011/2010
Percent
Increase/
(Decrease) 2009
2010/2009
Percent
Increase/
(Decrease)
(Dollars in millions)
Revenue ............................. $1,985.8 $1,485.1 33.7% $1,476.1 0.6%
Segment operating income (loss). .......... 70.2 85.3 (17.7)% (133.6) *
% of revenue ....................... 3.5% 5.7% (9.1)%
* Not meaningful
Fiscal 2011 Compared With Fiscal 2010: The increase in revenue in fiscal 2011 compared with 2010 was
primarily due to revenue from CapRock, which we acquired in the first quarter of fiscal 2011, and Schlumberger
GCS, which we acquired in the fourth quarter of fiscal 2011, and strong growth at Broadcast and New Media
Solutions. Integrated Network Solutions operating income and operating income as a percentage of revenue were
lower in fiscal 2011 compared with fiscal 2010, primarily due to the impact of $46.6 million in charges for
integration and other costs associated with our acquisitions of CapRock, Schlumberger GCS, the Core180
Infrastructure and Carefx, accelerated investments in Cyber Integrated Solutions and lower pricing on the IT
Services contract extension for the NMCI program, partially offset by much improved performance in Broadcast and
New Media Solutions. For Cyber Integrated Solutions, due to experiencing a much longer selling cycle than we
previously had expected and the associated impact to revenue and income, we expect an operating loss of
approximately $30 million in fiscal 2012.
On July 30, 2010, we acquired privately held CapRock, a global provider of mission-critical, managed satellite
communications services for the government, energy and maritime industries. CapRock’s solutions include
broadband Internet access, VOIP telephony, wideband networking and real-time video, delivered to nearly 2,000
customer sites around the world. The acquisition of CapRock increased the breadth of our assured communications»
capabilities, while enabling us to enter new vertical markets and increase our international presence. The total net
purchase price for CapRock was $517.5 million. Our fiscal 2011 results of operations included eleven months of
operating results associated with CapRock, representing the period subsequent to the acquisition.
On April 4, 2011, we acquired Schlumberger GCS, a provider of satellite and terrestrial communications
services for the worldwide energy industry. The total net purchase price for Schlumberger GCS was $380.6 million,
subject to post-closing adjustments. Our fiscal 2011 results of operations included three months of operating results
associated with Schlumberger GCS, representing the period subsequent to the acquisition.
On April 4, 2011, we acquired privately held Carefx, a provider of interoperability workflow solutions for
government and commercial healthcare providers. Carefx’s solution suite is used by more than 800 hospitals,
healthcare systems and health information exchanges across North America, Europe and Asia. This acquisition
expanded our presence in government healthcare, provided entry into the commercial healthcare market, and is
expected to leverage the healthcare interoperability workflow products offered by Carefx and the broader scale of
enterprise intelligence solutions and services that we provide. The total net purchase price for Carefx was
$152.6 million, subject to post-closing adjustments. Our fiscal 2011 results of operations included three months of
operating results associated with Carefx, representing the period subsequent to the acquisition.
For further information related to the acquisitions described above, including the allocation of the purchase
price and pro forma results as if the CapRock and Schlumberger GCS acquisitions had taken place as of the
beginning of the periods presented, see Note 4: Business Combinations in the Notes.
Orders for this segment were $2.00 billion for fiscal 2011 compared with $1.51 billion for fiscal 2010. During
fiscal 2011, we were not awarded the recompete for the Patriot program which will result in lower revenue from this
program in fiscal 2012 compared with fiscal 2011. In fiscal 2011 and fiscal 2010, this segment derived 55 percent
and 64 percent, respectively, of its revenue from U.S. Government customers, including the DoD and intelligence
and civilian agencies, as well as foreign military sales through the U.S. Government, whether directly or through
prime contractors.
Fiscal 2010 Compared With Fiscal 2009: The increase in revenue in fiscal 2010 compared with 2009 was
primarily driven by higher Healthcare Solutions revenue, which benefited from our acquisition of Patriot in the
second quarter of fiscal 2010 (as discussed in the next paragraph below), and higher IT Services revenue, driven by
increased revenue on the IT services relocation program for the USSOUTHCOM and the U.S. Air Force
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