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  1. 1. JPMorgan Basics and Industrials Conference June 11, 2007 Howard L. Lance Chairman, President and Chief Executive Officer
  2. 2. Forward looking statements Statements in this presentation that are not historical facts are 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 Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this presentation include but are not limited to: anticipated timing of the closing of the acquisition of Multimax and satisfaction or the conditions to closing, the impact of the acquisition on Harris fiscal 2008 earnings, earnings-per-share guidance for fiscal 2007 and 2008, and statements regarding revenue growth and outlook. The Company cautions investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements. The Company's consolidated results and the forward-looking statements could be affected by many factors, including but not limited to: our participation in markets that are often subject to uncertain economic conditions which makes it difficult to estimate growth in our markets and, as a result, future income and expenditures; our dependence on the U.S. government for a significant portion of our revenues, and the loss of this relationship or a shift in U.S. government funding could have adverse consequences on our future business; potential changes in U.S. government or customer priorities due to program reviews or revisions to strategic objectives, including termination of or potential failure to fund U.S. government contracts; risks inherent with large long-term fixed-price contracts, particularly the ability to contain cost overruns; the performance of critical subcontractors or suppliers; financial and government and regulatory risks relating to international sales and operations, including fluctuations in foreign currency exchange rates and the effectiveness of our currency hedging program; our ability to continue to develop new products that achieve market acceptance; the consequences of future geo- political events, which may affect adversely the markets in which we operate, our ability to insure against risks, our operations or our profitability; strategic acquisitions and the risks and uncertainties related thereto, including our ability to manage and integrate acquired businesses; potential claims that we are infringing the intellectual property rights of third parties; the successful resolution of patent infringement claims and the ultimate outcome of other contingencies, litigation and legal matters; customer credit risk; the fair values of our portfolio of passive investments, which values are subject to significant price volatility or erosion; risks inherent in developing new technologies; the potential impact of hurricanes on our operations in Florida and the potential impact of earthquakes on our operations in California; the impact of the results of Harris Stratex Networks, which may vary significantly and may be difficult to forecast; the ability to recruit and retain qualified personnel; and general economic conditions in the markets in which we operate. Further information relating to factors that may impact the Company's results and forward-looking statements are disclosed in the Company's filings with the SEC. Harris disclaims any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Investor Briefing, 2 June 2007
  3. 3. Business segment revenue mix Harris Stratex Government Networks Communications 15% Systems Broadcast 45% Communications 14% RF Communications 26% Based on latest 12 months ended March 2007 pro forma revenue of $4.2B (including Harris Stratex Networks for the entire period). Reference non-GAAP reconciliation on Harris Investor Relations website Investor Briefing, 3 June 2007
  4. 4. Revenue trends ($ in millions) +18-22% $4,900-$5,100 +20% Harris Stratex ~$4,170 Networks +16% Broadcast $3,475 +19% $3,001 RF Comm $2,519 Government Comm Systems FY04 FY05 FY06 FY07* FY08* * Fiscal 2007 and 2008 guidance provided on May 31, 2007 Investor Briefing, 4 June 2007
  5. 5. Earnings per share trends +19% $3.28-3.38 +26% $2.77-2.81 +47% $2.22 +57% $1.51 Non-GAAP $.96 EPS* FY04 FY05 FY06 FY07** FY08** FY04 FY05 FY06 FY07 FY08 GAAP EPS $3.39-3.43 $3.21-3.31 $.92 $1.46 $1.71 * Reference non-GAAP reconciliation on Harris Investor Relations website ** Fiscal 2007 and 2008 guidance provided on May 31, 2007 Investor Briefing, 5 June 2007
  6. 6. Engineering R&D investments Fiscal 2006 – $814 ($ in millions) Government Funded $626 Internally Funded $188 $188 $137 $111 FY04 FY05 FY06 Investor Briefing, 6 June 2007
  7. 7. Major new product introductions Falcon® III MB Falcon® Secure SINCGARS alternative Personal Role Radio Falcon® III manpack SecNet® 54 Secure and high-capacity Wireless LAN data radios Falcon® III MB handheld FlexStar™ HD radio exciter TRuepoint™ 6000 NEXIO™ video server Microwave radio HD master control Mobile TV CENTRIO™ Multi-viewer MPEG-4 HD Encoder Platinum router transmitter Investor Briefing, 7 June 2007
  8. 8. Increasing new product revenue Percent of Revenue revenue $800M 40% Total product revenue % 35 New product revenue 600 30 25 400 20 15 200 10 5 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Fiscal 2007 Fiscal 2006 Projected New products defined as products introduced within past 3 years Investor Briefing, 8 June 2007
  9. 9. Current financial position • Excellent liquidity – $523 million in cash, cash equivalents and short-term investments at end of third quarter – $525 million in unused credit facilities (Harris Stratex $25 million) – Universal shelf in place with no limitations as to amounts we can raise – Cash flow from operations for fiscal 2007 is expected to exceed $450 million • Strong balance sheet – Total-debt-to-total-capital ratio of 27% – Debt ratings at BBB+/Baa2 • Increased dividend – Quarterly dividend is currently $.11 per share • $600 million stock repurchase announced May 1, 2007 Investor Briefing, 9 June 2007
  10. 10. Harris Government businesses Aviation electronics Communications and information networks Space and ground SATCOM systems Intelligence, surveillance, Mission operations and and reconnaissance support services Tactical radio communications Investor Briefing, 10 June 2007
  11. 11. Diverse government customer base Dept of Defense International • Army • over 100 countries • Navy • Marine Corps • Air Force Products Intelligence • National Guard agencies • NSA • NRO • NGA Systems • Other classified Technical Services • NRO Civil agencies • Air Force • FAA • Naval Research Labs • Census Bureau • Dept of State • NOAA • Postal Service • Gov’t Printing Office • Dept of Health & Human Services • Dept of Justice Based on latest 12 months ended March 2007 revenue of $3B for the Harris Government businesses Investor Briefing, 11 June 2007
  12. 12. Driving revenue growth and diversity in Government Communications Systems $1.9B DoD Intelligence agencies $904M DoD Technical Services Intelligence agencies Technical Services Civil agencies Civil agencies 12 months 12 months ended 3/30/02 ended 3/30/07 Investor Briefing, 12 June 2007
  13. 13. Program diversity — over 300 programs (LTM revenue $ in millions) No single program represents more than 9% of revenue in Government Communications Systems 180 Top 15 programs 160 140 120 100 80 60 40 20 0 Intelligence Agencies Department of Defense Civil Agencies Technical Services Investor Briefing, 13 June 2007
  14. 14. Government Communications Systems program diversity — over 300 programs Civil Department of Defense Technical Services FAA Telecommunications F/A 35 Joint Strike Fighter (JSF); National Reconnaissance Office Infrastructure (FTI); Mission F/A 22 Raptor; F/A 18 E/F Super Hornet (NRO) operations, maintenance, Support; Satellite Network and support (Patriot) Multi-functional Information Distribution FAA Voice Switching and Control System (MIDS) Air Force 50th Space Wing System (VSCS) Operational Space Services and Large Aperture Multiband Deployable FAA Weather and Radar Processing Support (OSSS) Antennas (LAMDA) (WARP) Air Force 50th Space Wing Mission Multiple Launch Rocket System (MLRS) NGA mapping, imagery Communication Operations and Multi-band Shipboard SATCOM Terminal Maintenance (MCOM) U.S. Census Bureau databases (MSSCT) (MAF/TIGER) DISA Crisis Management System U.S. Census Bureau Field Data Advanced Extremely High Frequency (CMS) Collection Automation Program Navy Multi-band Terminal (AEHF) * (FDCA) U.S. Department of State, Bureau of Hawklink Common Data Link (LAMPS) Consular Affairs modernization Geostationary Operational and support Environmental Satellite System (GOES-R) * Intelligence Programs (classified) * Down-select follows development phase. Investor Briefing, 14 June 2007
  15. 15. Growth strategies • Build on success in core markets – avionics, data links, space antennas and electronics, communications networks, database and image processing, wireless products, mission IT services • Continue customer diversification – leverage capabilities into new civilian agencies with secure communications and information technology needs • Win major positions on key IDIQ contracts • Leverage synergies with RF Communications – systems technologies and products for selective pursuits in international markets Investor Briefing, 15 June 2007
  16. 16. Acquisition of Multimax — excellent financial rationale Multimax is a leading provider of mission-critical communications and IT network systems and services for U.S. government • Acquiring Multimax for $400 million in cash; funded through existing $500M credit facility with long-term debt financing put into place post-closing; expected to close prior to Harris fiscal year end June 29, 2007 • Track record of strong revenue growth and excellent profitability – Latest 12 months pro forma revenue and EBIT of $315 million and $55 million, respectively • Contributes double-digit revenue growth at operating margins that are above the Government Communications Systems segment ROS • Adds by $.08 per diluted share earnings accretion in fiscal year 2008, excluding acquisition-related charges Investor Briefing, 16 June 2007
  17. 17. Acquisition of Multimax — excellent strategic rationale • Capitalizes on U.S. government market trend for increased outsourcing of IT systems and communications networks support services • Adds experienced management team and workforce – 1,100 employees; primarily located at customer sites, providing strong relationships and access to new opportunities – Majority with IT technical certifications – 85% have security clearances – Excellent track record of meeting service-level commitments • Complements existing Harris services business, providing greater scale – Creates $700 million revenue base and combined workforce of more than 3,000 • Broadens customer list – New DoD customers within Air Force, Army and Navy, including services to key bases such as Wright Patterson AFB, Gunter AFB, and Ft. Monmouth Army base – Department of Homeland Security and Department of Veterans Affairs • Provides excellent growth opportunities through Multimax’s prime positions on large Government-Wide Acquisition Contracts (GWACs) Investor Briefing, 17 June 2007
  18. 18. Acquisition of Multimax – key contracts and customers • The NETCENTS program for the U.S. Air Force, a procurement vehicle for network-centric information technology with a $9 billion ceiling (Prime contract) • The ITES-2S program for the U.S. Army, a procurement vehicle for information technology enterprise solutions with a $20 billion ceiling (Prime contract) • The EAGLE program for the Department of Homeland Security, a procurement vehicle for systems and services, with a $45 billion ceiling (Prime contract) • The FirstSource program for the Department of Homeland Security, a procurement vehicle for products with a $3 billion ceiling (Prime contract) • The Navy Marine Corps Intranet (NMCI) program providing a full range of network-based voice, video and data communications on a single, enterprise-wide Intranet (sub- contract to EDS) • The Network Enterprise program for the U.S. General Services Administration (GSA), a procurement vehicle for over 135 government agencies (sub-contract to Level 3). Investor Briefing, 18 June 2007
  19. 19. Acquisition of Multimax – locations Alaska Hawaii HQ Offices Employees Service area with 4-hour maximum to respond Network services support more than 800,000 users at 3,800 locations Investor Briefing, 19 June 2007
  20. 20. Principal products • Tactical radios – Interoperable Falcon® II, software-defined tactical radios • HF, VHF, UHF, and multiband – manpack, handheld and vehicular – Falcon® III multiband, multi-mission radios • JTRS SCA compliant multiband handheld and manpack radios and secure personal radio with wideband networking capability • Cryptographic solutions – NSA-recognized leaders in embedded encryption • Sierra™, Citadel® – Core differentiator and competitive barrier Investor Briefing, 20 June 2007
  21. 21. Global ground tactical radio market leadership All Others Harris Raytheon 33% General Dynamics ITT Thales Rohde & Schwarz Tadiran Harris market share increased from 27% in CY2005 to 33% in CY2006 in a market that grew 23% Harris market share estimates based on calendar year 2006 ground-based, global tactical radio market of $2.7B compared to $2.2B in the prior year. Investor Briefing, 21 June 2007
  22. 22. Key differentiators • Successful “commercial” business model – Anticipate market needs and design to military standards – Ready-to-ship, off-the-shelf products for both U.S. and international customers – Primarily use internal R&D resources to create leading- edge products • Technical leadership • Outstanding field service and support • World-class international distribution channels supporting historically strong and growing international position • Global strength — strong positions in both U.S. and international markets Investor Briefing, 22 June 2007
  23. 23. Ongoing growth drivers • Modernization and expansion of tactical communications capability – Expanded mobility – Broader command, control and communications required at lower levels – DoD funding continues to place high priority on investment in tactical communications • Expanding International modernization opportunities – Pakistan, Mexico, Algeria, Iraq, UAE, Australia • Falcon III JTRS certified radios creating additional demand – We are JTRS! • Doubling addressable markets to $6B by entering into new growth areas with new products Investor Briefing, 23 June 2007
  24. 24. Near-term U.S. DoD opportunities total more than $3B HF and Multiband, Multimission Radio HF and multiband expansion, Mine Resistant Ambush Protected vehicle follow-on (MBMMR) and tactical handheld SINCGARS alternative for U.S. Army (MRAP) program radios for the Marine Corps JTRS Handheld Radio Program and TACP DoD-wide HF radio procurement DoD-wide competitive procurement for modernization for the U.S. Air Force contract for the U.S. SOCOM JTRS handheld radios (CISCHR) Investor Briefing, 24 June 2007
  25. 25. Near-term international opportunities total more than $1.5B Europe Central Asia • UK MOD • Pakistan Army • Netherlands Army • Pakistan Frontier Corps • Netherlands Air Force • Georgia MOD • Romania MOD Middle East and Africa • Algeria MND + • Algeria Gendarmerie • UAE SOC • Saudi SANG • Kenya MOD + • Iraq National Army Latin and Central America • Mexico Army • Mexico Navy Asia Pacific • Chile Army • Philippines MOD • Chile Air Force • Australia Army • Chile SOF • Indonesia MOD Investor Briefing, 25 June 2007
  26. 26. Falcon III • Builds on the success of Falcon II and fulfills tomorrow’s promise of JTRS today • Next-generation multiband, multimission platform • Handheld, manpack, vehicular, high-capacity data radio, soldier radio • Designed for today’s legacy interoperability needs and tomorrow’s data networking requirements • Supports transformation to true network-centric operations • Certified by the JTRS Joint Program Executive Office (JPEO), a significant endorsement in the marketplace • Gaining significant market traction! – AN/PRC-152 multiband handheld and vehicular AN/VRC-110 version are in high volume production – Fielded with great success – over 15,000 units shipped – In service with U.S. Army, Air Force, Navy, other government agencies, Australia and NATO countries – Demonstrated ease of upgradeability with new waveforms – Successful manpack and international soldier radio product launches – Networked soldier radio prototype demonstrated • Advanced capability – JTRS SCA compliant architecture – Extends frequency range from 512 MHz to 2 GHz – Significant reduction in weight and size – Adds wideband secure networking – Secure interoperability with First Responders – Programmable encryption – NSA certified Investor Briefing, 26 June 2007
  27. 27. Tactical radio products competitive landscape Domestic International HF VHF Multiband HF VHF Multiband SPR HCDR HCLOS SPR HCDR HCLOS MP MP/HH MP HH MP MP/HH MP HH HARRIS Falcon II Falcon III Thales ITT Raytheon Tadiran Selex Rohde & Schwarz Investor Briefing, 27 June 2007
  28. 28. Falcon III “Which would you rather carry?” Investor Briefing, 28 June 2007
  29. 29. Falcon III is changing the game • Legacy SINCGARS radios only provide single-mode, short-range, line-of-site communications SINCGARS Legacy SINCGARS Investor Briefing, 29 June 2007
  30. 30. Falcon III is changing the game – Multiband, Multimission • Legacy SINCGARS radios support only a single mode TACSAT Ground-to-air • Falcon III multiband, multimission radios provide multimode interoperability: – Ground-to-ground SINCGARS SINCGARS – Ground-to-air Easy dismount – Long range tactical satellite – Easy vehicle dismount – mobility – Interoperability to legacy radios • Software upgradeable to incorporate new waveforms as developed – Examples: • APCO P25 first responder interoperability FALCON III • Search & rescue functionality AN/VRC-110 • Other wideband networking waveforms First responders Search & rescue Falcon III addresses the full range of mission requirements today with the upgrade capability to address the requirements of the future Investor Briefing, 30 June 2007
  31. 31. Expanding the addressable market $6.0B Harris core tactical radio addressable market size Addressable market expansion – Falcon III International Systems Further addressable market expansion & Programs Portable SATCOM COMSEC Terminals High-Capacity LOS Falcon Watch Sensor High-Capacity Data Radio Secure Personal Radio $2.7B VHF SINCGARS VHF SINCGARS MB Handheld MB Handheld $1.6B VHF Other VHF Other VHF Other MB Manpack MB Manpack MB Manpack HF HF HF UHF UHF UHF Addressable CY05 Addressable CY06 Addressable potential Investor Briefing, 31 June 2007
  32. 32. Harris Stratex Networks • Provider of wireless transmission network solutions – Transport, access, and carrier-grade Ethernet microwave systems – Nodal processors – Network management solutions – Turnkey field services • Global customer base – Mobile & fixed wireless operators (cellular, GSM, 3G/UMTS, WiMAX) – Government agencies – Public utility and transportation companies – State and local government and public safety providers – Wireline operators – Enterprise networks Investor Briefing, 32 June 2007
  33. 33. Combination offers compelling strategic and financial rationale • Creates significantly greater scale — the largest independent provider of wireless transmission network solutions – #4 globally and #1 in North America • Delivers complementary global distribution channels and significantly expanded customer footprint • Serves a large market with expected strong growth over next five years • Offers customers an unmatched end-to-end product portfolio • Offers expected annual savings of approximately $35M through product costs and operating expenses • Creates a larger, highly relevant, and more competitive company – Stronger financial performance potential – Greater financial capacity – Product leadership – Ability to serve adjacent markets Positioned to deliver double-digit growth and margin expansion Investor Briefing, 33 June 2007
  34. 34. Market leadership World’s largest independent supplier of wireless transmission network solutions North American market Ot he rs 7 % Others Harris Stratex 48% Harris Stratex 48% T Tadiran % a dira n 4 C Ceragon % e ra go n 5 NEC N ec 12 % Global market OOthers8 % t he rs Fujitsu F ujit s u 1% Harris Stratex 15% Stratex 15% E lt Eltek-Nera % e k - N e ra 7 Alcatel A lc a t e l 2 6 % N ENEC % C 13 E ric s s o n 2 3 % Ericsson Nokia-Siemens N o k ia - S ie m e ns 16 % A Alcatel17 % lc a t e l Investor Briefing, 34 June 2007
  35. 35. Revenue by region ($ in millions) Europe/Middle East /Russia North America $141 $210 Asia/Pacific $57 Africa $199 Latin America $41 • #1 in North America • #2 in Middle East and Africa • #4 Globally Based on revenue of $656 million for the 12 months ended March 2007 Investor Briefing, 35 June 2007
  36. 36. Growth strategies • Focus on execution of the business plan – deliver cost reduction synergies, focus on customers, stabilize the organization • Capitalize on North America leadership position – exploit Federal and state recapitalization opportunities, 2GHz spectrum relocation, and increasing capacity requirements by operators • Increase international penetration – leverage new products and expanded sales channels to penetrate major regional players • Increase turn-key solutions offering – network design, engineering services, deployment and implementation Investor Briefing, 36 June 2007
  37. 37. Broadcast Communications Video Infrastructure & Digital Media (Leitch, Aastra) – servers, graphics, test & measurement, routing, networking Software Solutions to manage broadcast and media workflow (Encoda, OSi) – traffic, billing, automation and video asset management Transmission – Combination of TV and radio businesses Investor Briefing, 37 June 2007
  38. 38. Harris workflow capabilities Harris workflow can take you from start to finish Transmission Automation Control & monitoring Channel release Test & measurement Core processing Networking & routing Broadcast graphics Newsrooms & editing Media management Ingest Scheduling Sales Investor Briefing, 38 June 2007
  39. 39. ONE company along the broadcast chain — Harris complete approach Investor Briefing, 39 June 2007
  40. 40. Broadest offering in the market Video Distribution Systems TV & Radio Software Transmitters Digital Media Video & Networking News Post- Branding/ Storage/ Video Video Signal Manage/ Traffic Automation Production Graphics Servers Distribution Processing Mgmt/T&M Ingest Harris Avid/Pinnacle Thomson Grass Valley/Thales Tektronix Sony Broadcast Miranda Evertz Omnibus Investor Briefing, 40 June 2007
  41. 41. Revenue mix $606M Infrastructure Digital Media $287M Infrastructure Software Software Transmission Transmission Fiscal 04 12 months ended March 2007 Investor Briefing, 41 June 2007
  42. 42. New consumer services… Global HDTV households by service In millions 25 20 15 10 5 Investor Briefing, 42 June 2007
  43. 43. drive technology spending… Global broadcast technology revenue projections In billions $8 $7 $6 $5 $4 $3 $2 $1 Investor Briefing, 43 June 2007
  44. 44. in which we participate fully… Global broadcast technology revenue by segment Total market size: $12B Available to Broadcast Communications: $5.8B Source IABM Investor Briefing, 44 June 2007
  45. 45. and capitalize through ONE company approach… Example 1: HD conversion costs for typical station in the U.S. $4M $3.3M Other 3 Monitoring/distribution Production/routingswitcher HD production server & graphics 2 Non-linear editing $1.3M Other HD tape machinery Cameras 1 Systems integration Encoder upgrade Software Automation/Traffic Hardware HD playout server Systems Switches/Routers/Monitoring 0 HD Master Control HD Production Studio Available to Broadcast Communications $0.9M $1.8M ≈ 10% Stations HD capable <15% Investor Briefing, 45 June 2007
  46. 46. Services innovation Technology innovation ONE face to the customer ONE supplier of integrated ONE approach for order fulfillment workflow solutions ONE number to call for ONE supplier of integrated service and support signal flow solutions ONE resource for technical expertise and envisioning Investor Briefing, 46 June 2007
  47. 47. Growth strategies • Exploit Digital & HD leadership – end-to-end new product solutions for production studio, master control, infrastructure and digital media investments, mobile TV, IPTV, HD Radio • Deploy next-generation workflow software – replace legacy applications with integrated traffic, billing, scheduling, and advertising applications across an open platform architecture • Integrate content delivery solutions – offer HD content transport and digital video asset management solutions Investor Briefing, 47 June 2007