CL King 8th Annual Best Ideas Conference
CL King 8th Annual Best Ideas Conference
CL King 8th Annual Best Ideas Conference
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<strong>CL</strong> <strong>King</strong> 8 th <strong>Annual</strong> <strong>Best</strong> <strong>Ideas</strong> <strong>Conference</strong><br />
September 15, 2010<br />
Gary L. McArthur<br />
Sr. Vice President and Chief Financial Officer<br />
RF COMMUNICATIONS • GOVERNMENT COMMUNICATIONS SYSTEMS • BROADCAST COMMUNICATIONS<br />
Corporate Strategy & Outlook, 1<br />
Investor Briefing, September 2010
Corporate strategic vision<br />
Corporate Strategy & Outlook, 2<br />
Investor Briefing, September 2010
Executive summary<br />
• We have established a culture focused on delivering continuous<br />
growth in revenue, earnings and cash flow<br />
• Our core businesses are well-positioned with a track record of<br />
solid execution and market share gains<br />
• Growth initiatives in adjacent markets are contributing<br />
• Strategic acquisitions further enhance revenue and earnings<br />
growth and business diversification<br />
• Operating margins are sustainable<br />
• Strong operating cash flow and conservative balance sheet<br />
management provides flexibility<br />
Corporate Strategy & Outlook, 3 Investor Briefing, September 2010
Solid track record of growth<br />
Revenue ($ in billions)<br />
Earnings per share<br />
14% CAGR 17% CAGR<br />
$3.1<br />
$3.7<br />
FY06 FY07 FY08 FY09 FY10 FY11E<br />
Corporate Strategy & Outlook, 4<br />
$4.6<br />
$5.0<br />
$5.2<br />
$5.9 – 6.0 $4.60 – 4.70<br />
$4.43<br />
$2.15<br />
$2.71<br />
$3.33<br />
$3.85<br />
FY06 FY07 FY08 FY09 FY10 FY11E<br />
Based on fiscal 2011 guidance provided on August 3, 2010. Reference non-GAAP reconciliation on the Harris investor relations website.<br />
Investor Briefing, September 2010
Fiscal 2011 seasonality<br />
Earnings per share<br />
$1.89<br />
H1'10 H2'10 H1'11 F H2'11 F<br />
Based on midpoint of fiscal 2011 guidance provided August 3, 2010. Reference non-GAAP reconciliation on the Harris investor relations website.<br />
Corporate Strategy & Outlook, 5<br />
$2.53<br />
$2.20<br />
$2.45<br />
• RF Communications first quarter<br />
revenue expected to be 30%<br />
higher than the prior year with<br />
segment margins of about 39%,<br />
driving atypical seasonality in<br />
fiscal 2011<br />
• Second quarter revenue is<br />
expected to be sequentially<br />
lower, with sequential increases<br />
in the third and fourth quarter<br />
• Fiscal 2011 Q1 EPS expected to<br />
be in a range of $1.20 to $1.25<br />
per share<br />
• Fiscal 2011 Q2 EPS expected to<br />
be in a range of $0.95 to $1.00<br />
per share<br />
Investor Briefing, September 2010
Revenue by segment<br />
RF Communications<br />
segment<br />
Corporate Strategy & Outlook, 6<br />
International<br />
Public<br />
Safety<br />
Broadcast<br />
Communications<br />
segment<br />
Based on company estimates for fiscal 2011.<br />
DoD<br />
Broadcast<br />
Managed<br />
Satellite<br />
Services<br />
Defense<br />
Programs<br />
National<br />
Programs<br />
IT Services<br />
Civil<br />
Programs<br />
Government<br />
Communications<br />
Systems segment<br />
Investor Briefing, September 2010
Revenue by business model<br />
Commercially developed<br />
Based on company estimates for fiscal 2011.<br />
Corporate Strategy & Outlook, 7<br />
Government programs<br />
Investor Briefing, September 2010
Engineering R&D investments<br />
Fiscal 2010 – $1.0 billion<br />
Government<br />
funded<br />
$721<br />
Corporate Strategy & Outlook, 8<br />
Internally<br />
funded<br />
$326<br />
$90 $118<br />
$169 $196<br />
$248<br />
($ in millions)<br />
$244<br />
$326<br />
FY04 FY05 FY06 FY07 FY08 FY09 FY10<br />
Investor Briefing, September 2010
$900<br />
$800<br />
$700<br />
$600<br />
$500<br />
$400<br />
$300<br />
$200<br />
$100<br />
$-<br />
Strong cash flow<br />
($ in millions)<br />
$334<br />
Corporate Strategy & Outlook, 9<br />
Operating cash flow Free cash flow<br />
$439<br />
$556<br />
$667<br />
FY06 FY07 FY08 FY09 FY10 FY11 Guidance<br />
120%<br />
100%<br />
80%<br />
60%<br />
40%<br />
20%<br />
0%<br />
62%<br />
$803<br />
$775<br />
$900<br />
$800<br />
$700<br />
$600<br />
$500<br />
$400<br />
$300<br />
$200<br />
$100<br />
$-<br />
$188<br />
Free cash flow/net income<br />
82%<br />
90%<br />
106%<br />
$310<br />
$410<br />
FY06 FY07 FY08 FY09 FY10 FY11 Guidance<br />
$545<br />
$605<br />
FY06 FY07 FY08 FY09 FY10 FY11 Guidance<br />
Based on midpoint of fiscal 2011 guidance provided August 3, 2010. Reference non-GAAP reconciliation on the Harris investor relations website.<br />
104%<br />
86%<br />
$513<br />
Investor Briefing, September 2010
Solid financial position<br />
• Excellent liquidity<br />
– $455 million in cash and cash equivalents at year end<br />
– No long-term debt maturities before October 2015<br />
– $750 million credit facility in place through 2013 – subsequent to<br />
year end borrowed $320 million to fund acquisition of CapRock<br />
– Cash flow from operations expected to be in a range of<br />
$750 - $800 million in fiscal 2011<br />
• Strong balance sheet<br />
– Total-debt-to-total-capital ratio of 36%<br />
– Debt ratings at BBB+/Baa1<br />
• $450 million remaining under stock repurchase program<br />
authorized February 2009<br />
• Quarterly dividend of $.25 per share<br />
Corporate Strategy & Outlook, 10 Investor Briefing, September 2010
RF Communications<br />
RF Communications, 11 Investor Briefing, September 2010
RF Communications business units<br />
• Advanced JTRS approved<br />
tactical radio products<br />
and systems<br />
• NSA certified<br />
Communications<br />
Security products<br />
• Intelligence<br />
Surveillance<br />
Reconnaissance (ISR)<br />
products and applications<br />
• Full range of tactical<br />
radio products<br />
and systems<br />
• Exportable<br />
communications<br />
security products<br />
• Integrated<br />
Communications<br />
systems<br />
• Full range of Land<br />
mobile radio (LMR)<br />
products<br />
• Integrated LMR<br />
communications<br />
systems with end<br />
to end IP capability<br />
• Professional<br />
communications<br />
over cellular<br />
RF Communications, 12 Investor Briefing, September 2010
RF Communications snapshot<br />
($ in millions)<br />
$2,500<br />
$2,250<br />
$2,000<br />
$1,750<br />
$1,500<br />
$1,250<br />
$1,000<br />
40.0%<br />
30.0%<br />
20.0%<br />
10.0%<br />
0.0%<br />
Revenue guidance<br />
$2.1B<br />
7% to<br />
8%<br />
growth<br />
Fiscal 2010 Fiscal 2011F<br />
Operating margin guidance<br />
35.2%<br />
Based on fiscal 2011 guidance provided August 3, 2010.<br />
~33%<br />
Fiscal 2010 Fiscal 2011F<br />
Highlights<br />
• Segment backlog of $1.76B<br />
providing foundation for continued<br />
growth in fiscal 2011<br />
• Tactical radios orders opportunity<br />
pipeline of $2B for international and<br />
$1.5B in the U.S. market<br />
• Stronger international orders reflect<br />
a strengthening global market and a<br />
significant uptake in customer<br />
adoption of Falcon III radio family<br />
• Continue to invest Harris funds for<br />
development of new products<br />
• Public Safety and Professional<br />
Communications opportunity<br />
pipeline exceeding $3 billion in<br />
North America<br />
RF Communications, 13 Investor Briefing, September 2010
FY06 – FY10 Tactical radio orders<br />
($ in millions)<br />
$800<br />
$700<br />
$600<br />
$500<br />
$400<br />
$300<br />
$200<br />
$100<br />
$0<br />
Q1<br />
'06<br />
Q2<br />
'06<br />
Q3<br />
'06<br />
Q4<br />
'06<br />
Q1<br />
'07<br />
Q2<br />
'07<br />
Q3<br />
'07<br />
Q4<br />
'07<br />
Q1<br />
'08<br />
Q2<br />
'08<br />
RF Communications, 14 Investor Briefing, September 2010<br />
Q3<br />
'08<br />
Q4<br />
'08<br />
Q1<br />
'09<br />
Q2<br />
'09<br />
Q3<br />
'09<br />
Q4<br />
'09<br />
Q1<br />
'10<br />
Q2<br />
'10<br />
Q3<br />
'10<br />
Q4<br />
'10
Worldwide tactical radio market leadership<br />
Selex<br />
3%<br />
Ultra<br />
Electronics<br />
3%<br />
All<br />
Others<br />
18%<br />
Raytheon<br />
4%<br />
Harris<br />
38%<br />
Tadiran<br />
5%<br />
Thales<br />
13%<br />
ITT<br />
16%<br />
Harris market share was 38% in CY2009,<br />
one point lower than in CY2008, in a<br />
market that declined 8%<br />
Harris market share has doubled over<br />
the past 5 years<br />
Note: Definition of “core tactical radio market” expanded in CY2009 include High-Capacity Data Radio, Secure Personal Radios and High-Capacity LOS<br />
Harris market share estimates based on calendar year 2009 ground-based, global tactical radio market of $3.9B compared to $4.2B in the prior year.<br />
RF Communications, 15 Investor Briefing, September 2010<br />
19%<br />
23%<br />
28%<br />
32%<br />
39%<br />
38%<br />
2004 2005 2006 2007 2008 2009
U.S. Armed Forces ground tactical<br />
radios in service 2010<br />
MB MP<br />
Raytheon PSC- 5<br />
Raytheon EPLRS<br />
Harris AN/PRC- 117F<br />
Legacy radios<br />
Harris estimate of radios in units.<br />
MB HH<br />
Thales MBITR<br />
1.1 million radios<br />
Acquisition cost ~ $14 Billion<br />
SPR<br />
Motorola, ICOM, EFJ<br />
HF<br />
Harris AN/PRC- 150<br />
JTRS HH and MP<br />
Thales AN/PRC- 148<br />
Harris AN/PRC- 152<br />
Harris AN/PRC- 110<br />
Harris AN/PRC- 117G<br />
VHF- SINCGARS<br />
ITT<br />
Large long-term replacement<br />
market for non-JTRS radios<br />
RF Communications, 16 Investor Briefing, September 2010
Addressable tactical communications<br />
market expansion<br />
Core tactical radio market<br />
Expanded tactical radio market<br />
Expanding into other adjacent markets<br />
$1.6B<br />
CY05<br />
$2.7B<br />
CY06<br />
$8,000<br />
$0<br />
$6.4B<br />
International<br />
Communications<br />
Systems<br />
Narrowband<br />
SATCOM<br />
COMSEC<br />
Falcon Watch Sensors<br />
International<br />
Communications<br />
Systems<br />
International<br />
Communications<br />
Systems<br />
COTS Tactical Intercoms<br />
Narrowband SATCOM<br />
COMSEC COMSEC<br />
Falcon Falcon Watch Watch Sensors Sensors<br />
Falcon Watch<br />
Falcon Watch Sensors<br />
High-Capacity Sensors<br />
LOS LOS Falcon Watch Sensors<br />
Falcon Watch Sensors<br />
Falcon Watch Sensors<br />
Falc<br />
High-Capacity Secure Secure Personal LOS Personal Radio Radio High-Capacity High-Capacity Falcon LOS Watch LOS Sensors High-Capacity LOS Falcon W<br />
High-Capacity LOS<br />
Secure Personal Radio<br />
Secure Secure Personal Personal Radio Radio<br />
Secure Personal Falcon Radio Watch SensorsH<br />
High-C<br />
High-Capacity LOS<br />
Secure Personal Radio<br />
MB Handheld<br />
MB Manpack<br />
VHF International<br />
MB Handheld<br />
MB Handheld<br />
MB MB Manpack<br />
MB Manpack<br />
VHF VHF International VHF International<br />
High-Capacity Secure LOS Personal Wideband Radio<br />
Sec<br />
High-Capacity LOS<br />
Secure Personal Radio Networking Secure P<br />
Radio Secure Personal Radio<br />
MB Handheld<br />
MB Handheld MB Handheld MB Handheld<br />
MB Handheld<br />
MB Manpack MB Handheld<br />
M<br />
MB Manpack MB Manpack MB Manpack MB H<br />
MB Manpack<br />
MB Manpack<br />
M<br />
VHF International<br />
MB M<br />
VHF SINCGARS<br />
VHF International VHF International VHF International<br />
VHF SINCGARS<br />
VHF International<br />
VHF International<br />
VH<br />
VHF SINCGARS<br />
VHF SINCGARS<br />
VHF Int<br />
VHF SINCGARS<br />
HF<br />
RF Communications, 17 Investor Briefing, September 2010<br />
$8,000<br />
$7.0B<br />
Narrowband<br />
Narrowband SATCOM<br />
SATCOM<br />
HF<br />
HF HF<br />
$7.8B<br />
International International<br />
InterI<br />
Communications Communications Systems International Communic Comm<br />
Systems<br />
Communications<br />
Systems<br />
COTS Tactical Intercoms<br />
Narrowband SATCOM<br />
COMSEC<br />
COMSEC<br />
COMSEC<br />
$0<br />
CY07 CY08<br />
CY09 CY08<br />
CY08<br />
CY10CY09<br />
CY09<br />
Narrowband SATCOM Tactical ISR Narrowband SATCOM SATCOM Narrowba Narro<br />
Narrowband SATCOM<br />
HF<br />
VHF SINCGARS<br />
VHF SINCGARS VHF SINCGARS<br />
VHF SINCGARS<br />
V<br />
VHF S<br />
HF<br />
HF<br />
COTS Tactical Intercom<br />
Narrowband SATCO<br />
COMSEC COMSEC<br />
CO<br />
COMSEC<br />
HF<br />
HF<br />
CY11CY10<br />
HF<br />
CY10<br />
C
Macro market trends<br />
• Ongoing conflicts will likely drive Defense and Homeland Security<br />
Communications requirements<br />
• DoD supplemental budgets have migrated to base budget<br />
• Increased ISR spending and convergence with<br />
Networked Communications<br />
• Emergence of new regional/country markets – Libya, India, Africa<br />
• Transition from narrowband to wideband networking<br />
• Continued focus on reduction in size, weight and power<br />
• Increased use of 4G cellular/broadband in defense and public safety<br />
• Greater fielding of integrated Soldier Systems<br />
Market trends should drive additional demand and funding for more<br />
capable mission critical communications capabilities<br />
RF Communications, 18 Investor Briefing, September 2010
Key differentiators<br />
• “Commercial” business model<br />
– Anticipate market needs; invest<br />
internal R&D resources; and provide<br />
ready-to-ship, off-the-shelf products<br />
• Faster-to-market with new technology<br />
• Broadest product portfolio<br />
• World-class international<br />
distribution channels<br />
• Outstanding field service and support<br />
• Global player – strong across<br />
U.S. and international markets<br />
RF Communications, 19 Investor Briefing, September 2010
Expanded tactical communications<br />
product portfolio<br />
• Greatly expanded<br />
product portfolio<br />
provides strong<br />
entry position in<br />
multiple segments<br />
of expanded market<br />
HF, VHF, MB<br />
BFT<br />
Encryptor<br />
Situational<br />
Awareness<br />
PRC-152<br />
Sensors<br />
PRC-117G<br />
RF-7800M<br />
Intercoms<br />
SecNet<br />
2005 2010<br />
RF Communications, 20 Investor Briefing, September 2010<br />
BGAN<br />
SPR<br />
VRC-110<br />
System<br />
Products<br />
H<strong>CL</strong>OS<br />
ISR<br />
RF-7800V HF, VHF, MB<br />
310M-HH
Falcon III is changing the game with<br />
battlefield proven, multi-mission JTRS radios<br />
• Multiband, multi-mission interoperability<br />
• Advanced features<br />
– Secure wideband networking<br />
• Streaming video, soldier-to-soldier data<br />
transmission, ISR applications; SIPRNET<br />
IP connection with Pentagon<br />
– Extended frequency range<br />
– Significantly reduced size and weight<br />
– Programmable HAIPE encryption<br />
– Waveform portability / upgradability to<br />
address future mission needs<br />
• Mission critical waveforms –<br />
ROVER, HPW, IW, COBRA<br />
• JTRS ready – SRW, WNW, MUOS<br />
Video<br />
Dissemination<br />
Network-wide<br />
Email & Chat<br />
Ground-to-Air<br />
Situational<br />
Awareness<br />
TACSAT<br />
Biometrics<br />
Data<br />
Legacy<br />
Interoperability<br />
First<br />
Responders<br />
APCO P-25<br />
RF Communications, 21 Investor Briefing, September 2010<br />
ISR<br />
Falcon III addresses the full range of mission requirements<br />
today and enables the mission critical applications of the future
Accelerating adoption of Falcon III radios<br />
• Embraced by all branches of U.S. Armed Forces<br />
for a wide variety applications<br />
• 125,000+ JTRS-approved Falcon III radios fielded<br />
• AN/PRC-152 handheld and AN/VRC-110 vehicular<br />
systems in service with all branches<br />
of U.S. Armed forced and 15 allied countries<br />
• AN/PRC-117G manpack radio with ANW2<br />
wideband networking now in service with all<br />
branches of the U.S. armed forces<br />
• Major AN/PRC-117G contract vehicles in place<br />
– U.S. Army<br />
– USMC<br />
– USSOCOM<br />
First JTRS-approved tactical radio to be used in a<br />
wideband networking battlefield application<br />
RF Communications, 22 Investor Briefing, September 2010
AN/PRG-117G feedback from the<br />
82 nd Airborne Division<br />
“Leveraging the capabilities of the PRC-117G …<br />
directly translates to warfighters having SIPRNet<br />
voice and data at anytime and from any location.”<br />
“PRC-117Gs … cost far less than … Joint Tactical<br />
Radio System (JTRS) … These radios are available<br />
today and can be fully integrated into the …<br />
architecture.”<br />
“Expand the use of ANW2…This is tremendous<br />
capability…to save precious SATCOM bandwidth”<br />
“Include the ANW2 waveform and AN/PRC-117G as<br />
a solution & component of the JTRS family/program<br />
of record; this will allow immediate fielding of JTRS<br />
– capable platforms …”<br />
Reference: A tactical commander's vision of ideal communications<br />
Feb 17, 2010<br />
By Maj. Paul Sparks and Maj. Graham Fox,<br />
G6, 82 nd Airborne Division<br />
RF Communications, 23 Investor Briefing, September 2010
AN/PRC-117G Army capability set (CS)<br />
2009 — 2010 fielding<br />
Army capability sets – interoperable<br />
communications systems and applications<br />
fielded together to strengthen Brigade Combat<br />
Team (BCT) Battle Command Network<br />
• Will provide secure wideband<br />
networking for all Army Brigade<br />
Combat Teams in Afghanistan<br />
• Operational Need Statements for<br />
1,700 AN/PRC-117G systems<br />
• Wideband networks from Platoon<br />
through Battalion<br />
• Enables full range of wideband<br />
networking applications<br />
• Establishes the standards and<br />
procedures for future battlefield<br />
networking<br />
Will extend JTRS-approved wideband networking radio fielding to<br />
all Army BCTs deployed to Afghanistan<br />
RF Communications, 24 Investor Briefing, September 2010
Marine Corps AN/PRC-117G<br />
standardization<br />
Light Anti-Air Defense (LAAD) program<br />
• Early USMC AN/PRC-117G adoption<br />
• Total requirement 400+ systems<br />
Tactical Networking Trials (TNT)<br />
• Joint USA/USMC Operational Evaluation<br />
• AN/PRC-117G/ANW2 determined to be a<br />
“game-changing capability”<br />
Multiband Radio (MBR) program<br />
• Amended contract to incorporate<br />
AN/PRC-117G line items<br />
• Initial $75M deliver order<br />
• $148 of remaining contract headroom<br />
USMC’s next generation multimission networking<br />
radio standard<br />
RF Communications, 25 Investor Briefing, September 2010
Continuing innovation — family<br />
of mission module appliqués<br />
Expands PRC-117G<br />
capability to address future<br />
customer-specific<br />
requirements<br />
• 30 to 512 MHz<br />
• ANW2, SINCGARS,<br />
HAVEQUICK, DAMA, HPW<br />
• Type 1 encryption<br />
• 1.6 to 30 MHz<br />
• Type 1 encryption<br />
• Interoperable w/PRC-150<br />
• Common data link (CDL)<br />
• ROVER<br />
• SUAS DDL<br />
• ISR video dissemination<br />
• RF scanning<br />
• Signal intercept<br />
• Direction finding<br />
RF Communications, 26 Investor Briefing, September 2010<br />
PRC-152<br />
PRC-150<br />
RF-7800T<br />
SIGINT<br />
Not in current JTRS ORD
ISR product line expansion<br />
Tactical<br />
Operations<br />
Center (TOC)<br />
Airborne<br />
Embedded Video<br />
Communications Module<br />
Target<br />
Dismount<br />
Ground Mobile<br />
Market Segment Size Product Form Factor Funded Service Programs<br />
Airborne $100M<br />
Ground Mobile $200M<br />
Dismount $300M<br />
Falcon III<br />
Common Data Link (CDL)<br />
Mission Module<br />
Remote Video Terminal<br />
(RVT)<br />
• RAVEN Small UAS (SUAS) Program<br />
• Shadow 200 Ground Maneuver UAS<br />
• Fire Scout<br />
• USMC - CDL program<br />
• Video (Cubic partnership with Harris Corp.)<br />
• SOCOM-Next Gen Tactical C4I program<br />
• U.S. Army -One System Remote Video<br />
Terminal (OSRVT)<br />
• Joint Tactical C4I Transceiver system<br />
• USAF -Tactical Air Control Party (TACP)<br />
RF Communications, 27 Investor Briefing, September 2010
Communications security programs<br />
VACM<br />
TKL<br />
KGV-72<br />
• USAF VINSON Advanced Narrowband Voice<br />
Terminal Cryptographic Modernization (VACM)<br />
– Next generation stand alone COMSSEC terminal<br />
replacement program<br />
– Contract award August 2010<br />
– Potential value $400M<br />
• Tactical Key Loader (TKL)<br />
– Development complete – 2010<br />
– Production contract – 2011<br />
– Market opportunity $50 – $100M<br />
• KGV-72 Blue Force Tracking (BFT) Encryptor<br />
– Production contract – May 2010<br />
– Market opportunity $150 – $200M<br />
• Multiple new NSA strategic initiatives for next<br />
generation communications security devices<br />
Addressing over $700M in communications security program opportunities<br />
RF Communications, 28 Investor Briefing, September 2010
Global footprint<br />
Harris presence<br />
Harris dealers<br />
Harris Falcon ® customers<br />
Falcon tactical radio family users are in 100+ countries on five continents<br />
RF Communications, 29 Investor Briefing, September 2010
Major international standardization<br />
programs and opportunities<br />
Standardization Program Wins<br />
Standardization Program Opportunities<br />
Multi-year standardization programs create long-term stability in the international market<br />
RF Communications, 30 Investor Briefing, September 2010
Pakistan Frontier Corps C4ISR program<br />
• Secure, high-speed<br />
communications<br />
infrastructure backbone<br />
• Fixed, mobile and man<br />
portable tactical<br />
radio extension<br />
• Implementing phases 1 – 3<br />
of potential $250M<br />
multi-phase project<br />
• Complete turnkey system<br />
using full range of Falcon II<br />
and Falcon III radio families<br />
RF Communications, 31 Investor Briefing, September 2010
Australia Land 200 program<br />
• Next generation secure, voice and data<br />
communications infrastructure in support of<br />
vehicular and dismounted combat systems<br />
• AN/PRC-152 Falcon III Multiband and AN/PRC-150C<br />
HF radio systems deployed in initial phase<br />
• Future phases will use AN/PRC-117G Falcon III<br />
for wideband networking<br />
• $500M multi-year program<br />
RF Communications, 32 Investor Briefing, September 2010
Iraq<br />
Ministry of Interior<br />
• Tactical radios and integrated<br />
C3 system for Border Security<br />
Forces and anti-terrorism units<br />
Ministry of Defense<br />
• Standardized on HF and<br />
multiband tactical radios<br />
• $500M market potential<br />
RF Communications, 33 Investor Briefing, September 2010
Mexico Navy C4ISR system<br />
Video relay via VHF<br />
and SPR radios and<br />
then over BGAN to<br />
HQ, using Inmarset<br />
network.<br />
• Integrated tactical C4ISR system<br />
• Enables land, air and sea operations<br />
• Leverages full range of Falcon II/III<br />
radios and BGAN SATCOM<br />
• Phase 1 implementation – $10M<br />
• Future phases – $30M – $50M<br />
RF Communications, 34 Investor Briefing, September 2010
Public Safety and Professional<br />
Communications — key markets<br />
Public Safety / Public Service<br />
Transit and Transportation<br />
Utility<br />
U.S. DoD and Federal<br />
International<br />
RF Communications, 35 Investor Briefing, September 2010
North American land mobile radio market<br />
Motorola<br />
62%<br />
RF Communications, 36 Investor Briefing, September 2010<br />
EADS<br />
1%<br />
Kenwood<br />
6% iCOM<br />
2%<br />
Others<br />
4%<br />
Tait<br />
1%<br />
EFJ<br />
2%<br />
Applications<br />
13%<br />
HARRIS<br />
PSPC<br />
9%<br />
Harris market share was 9% of a total $4.7B market in CY2009
Broad product portfolio<br />
Vertical integration<br />
Network Switching<br />
Products<br />
Network Administration<br />
Products<br />
Network Management<br />
Systems<br />
Infrastructure Site<br />
Products<br />
Mobile and Portable<br />
Radios(Terminals)<br />
Dispatch Consoles<br />
Interworking Gateways<br />
Product Portfolio Description / Comments<br />
• Voice and data switching<br />
• End to end IP<br />
• High availability<br />
• Soft-switch technology<br />
• COTS hardware<br />
• WEB-based administration server<br />
• System database<br />
• Key management facility<br />
• Configuration management<br />
• Fault management<br />
• Real-time monitoring<br />
• Advanced Information Assurance<br />
• Multimode Master V<br />
• P25 Phase II<br />
• Multimode<br />
• Multiband<br />
• Market / user tiers<br />
• Multimode<br />
• Customizable<br />
• Analog to IP<br />
• Legacy protocols<br />
• Priority / pre-emption<br />
RF Communications, 37 Investor Briefing, September 2010<br />
End-to-end internet protocol
Powerful network backbone<br />
delivers competitive advantage<br />
• Standards based<br />
solutions and products<br />
• Internet Protocol (IP)<br />
VIDA networks<br />
• LMR and<br />
Broadband solutions<br />
• Multiband,<br />
Multimode radios<br />
• IP Gateway<br />
for inter-system<br />
interoperability<br />
VIDA – voice, interoperability, data and access network supports multiple<br />
platforms on a secure and scalable IP backbone<br />
RF Communications, 38 Investor Briefing, September 2010
Delivering interoperability<br />
Unity™ XG-100<br />
Full Spectrum<br />
Land Mobile Radio<br />
• In production<br />
• FCC certified<br />
• Early customers<br />
– NY State Police<br />
– LA County Sheriff<br />
RF Communications, 39 Investor Briefing, September 2010
Key wins as Harris in first year<br />
Federal program $134M potential<br />
Miami Dade County, FL $100M<br />
State of Maine $34M<br />
Monroe County, NY $30M<br />
Center Point Energy $23M<br />
Lower Colorado River Authority $16M<br />
Monterey County, CA $15M<br />
State of Vermont $14M<br />
RF Communications, 40 Investor Briefing, September 2010
U.S. Department of Justice<br />
Integrated Wireless Network (IWN)<br />
• Nationwide digital P25 trunked system for<br />
federal first responders<br />
• U.S. Department of Justice – 30,000 users<br />
– FBI, U.S. Marshalls, Bureau of Alcohol<br />
Tobacco and Firearms and Treasury agents<br />
• Contract award for regions 1 and 3<br />
infrastructure with a potential value<br />
of $130M<br />
• Initial delivery order for Mid-Atlantic<br />
region<br />
• Uses Harris’ VIDA end-to-end IP<br />
infrastructure network, advanced<br />
Information Assurance (IA) capability and<br />
nationwide network management system<br />
• Significant follow on potential for multiband<br />
subscriber radios<br />
RF Communications, 41 Investor Briefing, September 2010
Miami Dade County, Florida<br />
• $100M integrated communications systems<br />
• Countywide P25 700/800 MHz network<br />
• Provides interoperable digital LMR<br />
communications for over 100 state,<br />
local, county and federal agencies<br />
• 14,100 – Dual-band portable radios<br />
• 10,000 – Dual-band mobile radios<br />
Miami-Dade County<br />
Aventura<br />
Coconut Grove<br />
Coral Gables<br />
Homestead<br />
Kendall<br />
Miami<br />
Miami Beach<br />
Miami Lakes<br />
Naranja Lakes<br />
North Bay Village<br />
North Miami Beach<br />
North Miami<br />
South Miami<br />
Sunny Isles<br />
Surfside<br />
RF Communications, 42 Investor Briefing, September 2010
$3B plus major opportunity pipeline<br />
in North America<br />
AK<br />
OR<br />
CA NV<br />
CA<br />
Major opportunities<br />
Local systems<br />
Harris<br />
Motorola<br />
WA<br />
British<br />
Columbia<br />
ID<br />
UT<br />
AZ<br />
Alberta<br />
MT<br />
WY<br />
CO<br />
NM<br />
Saskatchewan Manitoba<br />
ND<br />
SD<br />
NE<br />
TX<br />
KS<br />
OK<br />
RF Communications, 43 Investor Briefing, September 2010<br />
MN<br />
TN<br />
IA<br />
WI<br />
IA IL<br />
MO<br />
AR<br />
LA<br />
Ontario<br />
MI<br />
MS<br />
IN<br />
TN<br />
AL<br />
OH<br />
KY KY<br />
Quebec<br />
GA<br />
WV<br />
PA<br />
NC<br />
SC<br />
FL<br />
NY<br />
MD<br />
VA<br />
Newfoundland<br />
MRCI<br />
VT<br />
DE<br />
NH<br />
ME<br />
MA<br />
CT RI<br />
NJ<br />
Newfoundland
Government Communications Systems
Diversified customer base<br />
National Intelligence<br />
Programs<br />
• NSA<br />
• NRO<br />
• NGA<br />
• Other classified<br />
Managed Satellite Services<br />
• Government<br />
• Energy<br />
• Maritime<br />
Based on company forecast for fiscal 2011.<br />
Defense Programs<br />
• U.S. Army<br />
• U.S. Air Force<br />
• U.S. Navy<br />
• U.S. Marine Corps<br />
IT Services<br />
• NRO<br />
• U.S. Air Force<br />
• U.S. Navy<br />
• U.S. Army<br />
• Dept. of State<br />
Civil Programs<br />
• FAA<br />
• Census Bureau<br />
• Military & VA Healthcare<br />
• NOAA<br />
Over 300 programs, with no single program representing more than 10% of revenue<br />
Government Communications Systems, 45 Investor Briefing, September 2010
Government Communications<br />
Systems snapshot<br />
($ in millions)<br />
$3,500<br />
$3,000<br />
$2,500<br />
$2,000<br />
$1,500<br />
$1,000<br />
15.0%<br />
10.0%<br />
5.0%<br />
0.0%<br />
Revenue guidance<br />
$2.7B<br />
20% to<br />
22%<br />
growth<br />
Fiscal 2010 Fiscal 2011F<br />
Operating margin guidance<br />
12.8%<br />
~11%<br />
Fiscal 2010 Fiscal 2011F<br />
Based on fiscal 2011 guidance provided August 3, 2010.<br />
CapRock<br />
Highlights<br />
• CapRock Communications<br />
acquisition expected to add $380M<br />
to $390M of revenue in fiscal 2011<br />
• Pipeline of opportunities for<br />
Government Communications<br />
remains very large, including<br />
a strong pipeline in healthcare<br />
solutions<br />
• Fiscal 2011 will benefit from the<br />
recent wins on GOES-R, healthcare,<br />
NASA and classified cyber<br />
• Expect continued growth in FAA<br />
programs and IT services<br />
• Confident that backlog along with<br />
opportunities to be awarded in fiscal<br />
2011 support projected growth<br />
Government Communications Systems, 46 Investor Briefing, September 2010
CapRock Communications<br />
acquisition strategic rationale<br />
• Expands Harris position as a leading provider of mission-critical<br />
communications “solutions-as-a-service” in high-growth market segments<br />
that demands high-availability, security and reliability<br />
• Addresses $2.7B market with double digit growth rate<br />
• Harris / CapRock is the market leader with 13 percent market share<br />
• Serves the energy, government and maritime markets – providing Harris entry<br />
into energy market and expands offering in the government and maritime<br />
markets to include managed satellite communications solutions<br />
• Considerably expands Harris international footprint<br />
• Opportunity to provide CapRock solution to existing Harris customers and<br />
markets – public safety, international communications systems and cyber<br />
• Brings scalable, installed-base, commercial business model providing high<br />
customer retention (>95% renewal rate) with revenue and profit visibility from<br />
3-5 year duration contracts<br />
Government Communications Systems, 47 Investor Briefing, September 2010
CapRock Communications<br />
global operations footprint<br />
Extensive global infrastructure<br />
Government Communications Systems, 48 Investor Briefing, September 2010
CapRock summary financials<br />
and outlook<br />
• Expect growth and cost synergies to drive margin expansion<br />
($ in millions)<br />
1 Based on fiscal 2011 guidance provided August 3, 2010 (includes 11 months of CapRock based on July 30 close). Reference non-GAAP reconciliation on the<br />
Harris investor relations website.<br />
Calendar year Fiscal 2011<br />
2008 2009 guidance¹<br />
Revenue $ 291 $ 359 $380 – $390<br />
EBITDA 47.3 53.5 61 – 65<br />
margin 16.3% 14.9% 16 – 17%<br />
Depreciation and amortization 24.6 25.2 37 – 39<br />
Operating income 22.7 28.3 24 – 26<br />
margin 7.8% 7.9% 6 – 7%<br />
Government Communications Systems, 49 Investor Briefing, September 2010
Geostationary Operational Environmental<br />
Satellite R-Series (GOES-R)<br />
teammates –<br />
Harris is the prime contractor and responsible<br />
for developing, deploying and operating the<br />
GOES-R Ground Segment<br />
• Performs satellite operations, manages ground<br />
elements, produces operational weather products<br />
and distributes these products to users<br />
• These weather data products are used by National<br />
Weather Service forecasters, climate scientists<br />
and academia<br />
Potential program value<br />
• $800M, 10 years (~$400M planned over<br />
three years)<br />
• Awarded May 2009<br />
Government Communications Systems, 50 Investor Briefing, September 2010
Geostationary Operational Environmental<br />
Satellite R-Series (GOES-R) antenna<br />
Prime contractor responsibilities for<br />
developing, deploying and sustaining the<br />
GOES-R antenna system<br />
• Installing or refurbishing a total of 10 antennas<br />
at three locations, includes site preparation<br />
and sustainment<br />
• Antenna system receives raw weather data from<br />
the GOES-R satellites and distributes this data<br />
to the ground segment for processing<br />
Potential program value<br />
• $130M, 10 years (~$100M planned over<br />
three years)<br />
• Awarded July 2010<br />
Government Communications Systems, 51 Investor Briefing, September 2010
Modernization of Enterprise<br />
Terminals (MET)<br />
• U.S. Army CECOM<br />
• Design and replace the AN/GSC-52 strategic<br />
terminals over the next 10 years<br />
• Transportable 7.2-meter antenna to fixed terminal<br />
12-meter antenna<br />
• Supports legacy and Wideband Global<br />
Satellites (WGS)<br />
• Strategic terminals with X/Ka operation<br />
Potential program value<br />
• $650M, 10 years<br />
• Awarded April 2009<br />
Government Communications Systems, 52 Investor Briefing, September 2010
Situational awareness in the cockpit<br />
F/A-18<br />
• Avionics processing and<br />
mass storage products<br />
• Digital map products<br />
Potential program value: $675M<br />
F-22<br />
• Fiber-optic network products<br />
• Fiber network interface unit<br />
• High speed data bus products<br />
Potential program value: $450M<br />
F-35<br />
• Fiber-optic network products<br />
• Avionics infrastructure solutions<br />
• Multifunction Advanced Data Link<br />
(MADL) antennae<br />
Potential program value: $4.2B<br />
F/A-18<br />
New opportunities<br />
• Image georegistration<br />
• DTP upgrades<br />
Network processor<br />
F-22 and F-35<br />
New opportunities<br />
• IP networking and SATCOM<br />
• Harris extremely<br />
sensitive receiver<br />
• Image georegistration<br />
• Wideband network rack<br />
• Retrofit opportunities<br />
Government Communications Systems, 53 Investor Briefing, September 2010
Warfighter Information Network-Tactical (WIN-T)<br />
Highband Networking Radio<br />
H<strong>CL</strong>OS P-<br />
MP<br />
FOB<br />
CP 3<br />
FOB<br />
Brigade<br />
FOB<br />
Deployed<br />
LCN_ LRIP _v04<br />
SecNet<br />
HNR<br />
Deployed<br />
LCN_ LRIP _v04<br />
Compan<br />
y<br />
HNR<br />
C2<br />
OT<br />
M<br />
Battalion<br />
HN<br />
R<br />
HNR<br />
Highband Network Radio demonstration<br />
Deployed<br />
LCN_ LRIP _v04<br />
H<strong>CL</strong>OS P-P<br />
FOB<br />
Deployed<br />
LCN_ LRIP _v04<br />
SR<br />
W<br />
CP 2<br />
HNR<br />
Company<br />
HNR<br />
Company<br />
H<strong>CL</strong>OS<br />
Pt-Pt<br />
CP-1<br />
H<strong>CL</strong>OS<br />
Pt-Pt<br />
FOB<br />
Highband Networking Radio creates a<br />
tactical backbone network<br />
• Ad Hoc mobile, self-forming, self-healing<br />
• High throughput: up to 54 Mbps shared<br />
(burst rate)<br />
• TDMA time division duplex – dynamically<br />
assigned bandwidth<br />
• Directive beam antenna technology<br />
• C and Ku bands ATH and OTM<br />
• Long range<br />
Potential program value<br />
• $750M, 16 years<br />
• Awarded August 2002<br />
Providing battlefield situational awareness<br />
Government Communications Systems, 54 Investor Briefing, September 2010
TDRSS Ground Systems Modernization — Space<br />
Network Ground Systems Sustainment (SGSS)<br />
Obsolete 70s, 80s, 90s technology<br />
• Modernize ground systems at White Sands<br />
Complex and Guam<br />
– Lead development of space-to-ground link<br />
and user services as sub to General Dynamics C4S<br />
– Budgeted program is critical to NASA and its<br />
customers for continued operations<br />
• Expands on Harris legacy ground systems<br />
credentials as well as recent wins on GOES-R<br />
and MET<br />
– Harris developed the TDRSS ground station in the<br />
late 70’s<br />
• $140M, 5 years<br />
• Awarded June 2010 (under protest)<br />
Government Communications Systems, 55 Investor Briefing, September 2010
Global Geospatial Intelligence (GGI)<br />
moving from frames to video<br />
Feature Extraction<br />
Capture, aggregate, analyze and distribute<br />
images, from frames to video<br />
Global<br />
Vector<br />
Maritime<br />
LIDAR/DSM<br />
Potential program value<br />
• $800M, 10 years<br />
• Awarded January 2003<br />
Government Communications Systems, 56 Investor Briefing, September 2010
FAA Telecommunications<br />
Infrastructure (FTI) program<br />
• FTI Operations Network<br />
• FTI Mission Support Network<br />
• FTI Satellite/Microwave Network<br />
• FTI Network and Security Operations<br />
Control Centers<br />
• Over 4,500 locations nationwide; 21,000 services<br />
• $600 million life-cycle savings<br />
• On going network evolution – national optical<br />
backbone build-out underway<br />
Potential program value<br />
• $2.6B, 15 years, awarded July 2002<br />
• $3.5B contract ceiling – FAA communications franchise<br />
• Entering years 8 thru 15<br />
• Harris prime<br />
Government Communications Systems, 57 Investor Briefing, September 2010
NextGen vision for the FAA<br />
NextGen’s five transformational programs – NVS, DataComm,<br />
SWIM, ADS-B, NNEW<br />
Government Communications Systems, 58 Investor Briefing, September 2010
NextGen pursuit — NAS (National<br />
Air Space) Voice Switch (NVS)<br />
• Next Generation Program to Voice<br />
Switching and Control System<br />
(VSCS) – Harris incumbent<br />
• Provide a scalable, net-centric<br />
switch meeting NextGen<br />
requirements for en route and<br />
terminal domains consisting of:<br />
– Dynamic resectorization<br />
– Business continuity<br />
– Full interoperability<br />
Potential program value<br />
• $700M, 10 years<br />
• Award expected fall 2012<br />
Government Communications Systems, 59 Investor Briefing, September 2010
NextGen pursuit — DataComm<br />
• Deployment and<br />
management of a data link<br />
network in support of the<br />
FAA NextGen initiative<br />
• Provides equivalent of text<br />
messaging to airplanes for<br />
air traffic control<br />
• Provides data to augment<br />
voice system<br />
Potential program value<br />
• $700M, 17 years<br />
• Award expected winter 2011<br />
Government Communications Systems, 60 Investor Briefing, September 2010
NextGen pursuit — System-Wide Information<br />
Management Services (SWIM)<br />
SWIM 2025 Vision<br />
• IT infrastructure based on a<br />
Service-Oriented Architecture (SOA)<br />
• Provide seamless information to users who<br />
have a valid need for the data – a trusted<br />
data exchange service<br />
• Implementation of a network-centric<br />
architecture for the National Air Space<br />
(NAS) Manager of FAA information in<br />
publisher/subscriber manner as advocated<br />
by the Federal Enterprise Architecture (FEA)<br />
Potential program value<br />
• $400M, 10 years<br />
• FAA finalizing acquisition strategy<br />
• Multiple segment awards expected<br />
• Initial segment award of $30M expected fall<br />
2011; additional segments by 2013<br />
Government Communications Systems, 61 Investor Briefing, September 2010
National Reconnaissance Office (NRO)<br />
Operations, maintenance and support<br />
Patriot program<br />
• 24/7 365 days/year, 100% reliable<br />
and available<br />
• Operations, maintenance and<br />
support services for the NRO’s<br />
information systems network<br />
in space and on the ground,<br />
which support their global<br />
analyst community<br />
• New processes, efficiency tools<br />
and a centralized enterprise<br />
management system<br />
Potential program value<br />
• $1B+, 10 years<br />
• Harris prime<br />
• Awarded August 2004<br />
Government Communications Systems, 62 Investor Briefing, September 2010
Navy Marine Corps Intranet (NMCI) program<br />
Providing U.S. Navy with<br />
comprehensive, end-to-end<br />
support for data, video and<br />
voice communications<br />
• NMCI is largest government<br />
managed services contract<br />
– 700,000 users<br />
– 100 million email messages<br />
per month<br />
– 5.2 million unauthorized intrusion<br />
attempts prevented each month<br />
• Largest subcontractor to HP<br />
Potential program value<br />
• Original award October 2000<br />
• Negotiated 5-year, $500M<br />
extension through 2015<br />
Government Communications Systems, 63 Investor Briefing, September 2010
Expanding in Healthcare Solutions<br />
• CONNECT Solution<br />
– Foundational standards-based integration solution enabling health information<br />
exchange between federal agencies – and with the private sector<br />
– Customer is Federal Health Architecture (FHA) within Health and Human Services,<br />
Office of National Coordinator<br />
– Phase 1 award $15M, 2+ years – phase 2 potential $80M, 4 years<br />
• Military Health System’s Global Healthcare Artifact and Image<br />
Management Solution (HAIMS)<br />
– Providing all 65 military hospitals, medical centers and clinics with enterprise-wide<br />
access and viewing of healthcare artifacts and images<br />
– Award $18M, 2 years<br />
• Revenue Improvement System Enhancement – Consolidated<br />
Patient Account Center (RISE CPAC)<br />
– Management consulting, workflow tool implementation, training, reporting and<br />
sustainment for the VAs RISE CPAC nationwide deployment<br />
– Award $73M, 3 years<br />
• Health First – $96M, 10 years<br />
– Multi-hospital IT Infrastructure Services<br />
Harris is trusted at the intersection of life and data™<br />
Government Communications Systems, 64 Investor Briefing, September 2010
Expanding in cyber market — strategy<br />
for Cyber Integrated Solutions<br />
• Leveraging Harris reputation as trusted provider and technology leader for<br />
mission-critical government networks<br />
– Federal Aviation Administration (FAA) Telecommunications Infrastructure – trusted<br />
to protect network communications at more than 4,000 FAA and Department of Defense<br />
(DoD) facilities nationwide<br />
– Navy Marine Corps Intranet (NMCI) – trusted to deploy and implement the services<br />
required to provide and maintain a secure computing environment<br />
– National Reconnaissance Office (NRO) – trusted to operate, maintain and support services<br />
for the agency's global communications and information systems<br />
• Establishing Cyber Integration Center as the foundation for a trusted<br />
hosting platform<br />
– Leveraging recently acquired SignaCert “white listing” expertise – the only National<br />
Institute of Standards and Technology (NIST), Security Content Automation Protocol<br />
(SCAP)-validated solution on the market today<br />
– High security cloud computing environment<br />
• Applying acquired Crucial Security, Inc. – proven IT forensics technology<br />
for Federal Law Enforcement<br />
Providing trusted tailored solutions for today’s changing marketplace<br />
Government Communications Systems, 65 Investor Briefing, September 2010
Increasing Customer Value<br />
Trust — integrated into every<br />
cyber solution<br />
Healthcare<br />
Content Mgt & Delivery<br />
Image Mgt & Analytics<br />
Forensics (Crucial)<br />
White Listing (SignaCert)<br />
Trusted Platform<br />
Disaster Recovery<br />
Government<br />
Assured Operations<br />
Assured Information<br />
Application Hosting<br />
Managed Security Services<br />
Communication, Networks,<br />
Storage, Servers<br />
Assured Communications<br />
Enterprise<br />
& Media<br />
Leveraging Proven<br />
Capabilities Trusted<br />
To Meet Mission<br />
Critical Government<br />
Requirements<br />
Application Services<br />
Security Services<br />
Infrastructure Services<br />
Government Communications Systems, 66 Investor Briefing, September 2010<br />
Cyber Service Layers
Expanding into international market<br />
Harris Atlas Systems joint venture<br />
• Abu Dhabi, UAE based Joint<br />
Venture between Atlas Telecom<br />
and Harris formed in April 2010<br />
• Focus on Middle East and North<br />
Africa markets<br />
• Systems integration and regional<br />
tailoring of solutions in:<br />
- Situational awareness<br />
- Command and Control<br />
- Emergency management<br />
- Healthcare Solutions<br />
Saudi<br />
Arabia<br />
Government Communications Systems, 67 Investor Briefing, September 2010<br />
Kuwait Bahrain<br />
UAE
Broadcast Communications<br />
Broadcast Communications, 68 Investor Briefing, September 2010
Broadcast Communications<br />
snapshot<br />
($ in millions)<br />
$600<br />
$500<br />
$400<br />
$300<br />
$200<br />
$100<br />
$0<br />
5.0<br />
(5.0)<br />
(15.0)<br />
(25.0)<br />
(35.0)<br />
Revenue guidance<br />
$486M<br />
$490M<br />
to<br />
$510M<br />
Fiscal 2010 Fiscal 2011F<br />
Operating income guidance<br />
$ (31M)<br />
Break<br />
Even<br />
Fiscal 2010 Fiscal 2011F<br />
Based on fiscal 2011 guidance provided August 3, 2010.<br />
Highlights<br />
• New leadership team put in place in<br />
fourth quarter<br />
• Significant cost reductions were<br />
implemented in 2010 in response to<br />
the lower revenue trends; further<br />
actions will be completed in early<br />
fiscal 2011<br />
• Continuing to invest in growth<br />
markets of the future at a time<br />
when the legacy market has<br />
continued to decline in order<br />
to drive long-term success<br />
• Highlighted growth areas:<br />
– International markets<br />
– U.S. government market for full-motion<br />
video systems (FAME™)<br />
– Digital-out-of-home advertising<br />
Broadcast Communications, 69 Investor Briefing, September 2010
Diverse and global customer base,<br />
serving every type of media entity<br />
Broadcast Communications, 70 Investor Briefing, September 2010
End-to-end solutions<br />
Broadcast Communications, 71 Investor Briefing, September 2010
Key elements of strategy<br />
• Invest in international and new media markets for growth versus<br />
traditional U.S. over-the-air broadcast<br />
• Focus core into a few attractive market segments with higher growth<br />
and more sustainable margins<br />
– Production – especially Sports/News/Live<br />
– Content management and channel launch<br />
– Key international growth markets such as Brazil, China, and SE Asia<br />
– New-media initiatives such as digital out-of-home networks and government ISR<br />
• Deliver differentiated solutions for these segments<br />
• Increase gross margin through significant, continuous improvement<br />
in supply chain efficiency, quality, and process sourcing<br />
Broadcast Communications, 72 Investor Briefing, September 2010
Global digital market opportunities<br />
Transmitter market value ($ in millions)<br />
Americas<br />
APAC<br />
EMEA<br />
Committed<br />
Pending<br />
Complete<br />
53 of 203 countries committed – only 10 countries have reached analog switch-off<br />
Broadcast Communications, 73 Investor Briefing, September 2010
3-D emerging — creating more<br />
―rich content‖ to manage<br />
Broadcast Communications, 74 Investor Briefing, August 2010
Emerging new-media market opportunities<br />
Digital Out-Of-Home networks<br />
• Opportunities for customers to<br />
expand revenue through out-of-home<br />
content and targeted advertising<br />
• Harris win strategy<br />
– <strong>Best</strong>-of-class digital signage player<br />
(Infocaster)<br />
– Ad sales and scheduling software<br />
(Punctuate)<br />
– Network management software<br />
(Connectus)<br />
– Field deployment<br />
– Managed IT services for the network<br />
• $4B market with 28% CAGR ($1.5B<br />
addressable)<br />
Harris end-to-end video networking skills are key<br />
Broadcast Communications, 75 Investor Briefing, September 2010
Emerging new-media market opportunities<br />
Sports, live-event venues<br />
• Worldwide opportunity for Harris<br />
– Router, infrastructure, multiviewer, fiber, T&M,<br />
server, graphics<br />
– Instant replay<br />
– Highlights editing and playout<br />
– Digital signage – OOHA and IPTV solutions<br />
• $2B+ worldwide solutions market<br />
opportunity over 5 years<br />
– $1M – $10M per Tier 1 stadium x 300+ worldwide<br />
– $200K – $2M per Tier 2 stadium x 3,000+ worldwide<br />
• Harris win strategy<br />
– Leverage Broadcast brand and association<br />
– Digital signage solution (Infocaster)<br />
– Ad sales and scheduling software (Punctuate)<br />
– Field deployment (Harris IT Services)<br />
– Managed IT services for the stadium network<br />
Video/imagery is a critical factor in fan experience<br />
Broadcast Communications, 76 Investor Briefing, September 2010
Full-Motion Video Asset<br />
Management Engine (FAME™)<br />
• Enables users to change the way they<br />
ingest, catalog, analyze, archive, retrieve<br />
and distribute ISR information<br />
– Multiple intel sources of data, audio, and video<br />
– One UI, one digital asset management<br />
platform<br />
– Simultaneous motion video feeds<br />
– Multiple sensor types, all in real time<br />
– A highly collaborative platform<br />
– Replaces silos that slow knowledge transfer<br />
– Shortens decision cycle from weeks to<br />
seconds<br />
FAME applies advanced commercial video technology to the ISR<br />
market dramatically reducing the analysis-to-action time using<br />
multimedia situational awareness information<br />
Broadcast Communications, 77 Investor Briefing, September 2010
<strong>CL</strong> <strong>King</strong> 8 th <strong>Annual</strong> <strong>Best</strong> <strong>Ideas</strong> <strong>Conference</strong><br />
September 15, 2010<br />
Gary L. McArthur<br />
Sr. Vice President and Chief Financial Officer<br />
RF COMMUNICATIONS • GOVERNMENT COMMUNICATIONS SYSTEMS • BROADCAST COMMUNICATIONS<br />
Broadcast Communications, 78 Investor Briefing, September 2010