Good afternoon and welcome to Harris Corp. conference call. This call is being recorded. Beginning today’s meeting is Pamela Padgett, Vice President of Investor Relations and Corporate Communications; please go ahead.

Hello, everyone. Good afternoon, and welcome to Harris second quarter fiscal 2010 conference call. I’m Pamela Padgett, Vice President of Investor Relations and Corporate Communications. Also on the call today is Howard Lance, Chairman, President and CEO; and Gary McArthur, Senior Vice President and Chief Financial Officer. Before we get started, a few words about forward-looking statements. In the course of this teleconference, Howard, Gary or our management may make forward-looking statements. Forward-looking statements involve assumptions, risks, and uncertainties that could cause actual results to differ materially from those statements. For more information and a discussion of such assumptions, risks and uncertainties, please see the press release and filings made by Harris with the SEC. In addition, in our press release and on this teleconference, we will discuss certain financial measures that are non-GAAP financial measures reconciliation to the comparable GAAP measures have included in the tables of our press release and on the Investor Relations section of our website, which is www.harris.com. A replay of this call will also be available on in the Investor Relations section on our website. With that, Howard, I’ll turn the call to you.

Thank you, Pam and welcome everyone to our second quarter fiscal 2010 earnings call. Excellent operating performance across the company delivered higher bottom line results in the second quarter. New orders, stronger than the prior year in both the first and second quarters, are expected to drive significant revenue growth in the second half of fiscal 2010. As a result, we have again increased our revenue and earnings guidance for the fiscal year. Looking beyond 2010, our backlog has grown considerably and the business opportunity pipeline for our assured communications solutions remains quite robust. We continue to invest in new products, new capabilities, and adjacent new markets to fuel growth for the longer term. We believe that our strategies will continue to drive growth and deliver solid returns to create value for our shareholders. Revenue in the second quarter was $1.22 billion compared with $1.33 billion in the prior year. New orders for the company were significantly higher, at $1.42 billion compared with $1.03 billion in the prior year led by strong demand for Harris tactical radios, which are delivering combat-proven solutions for the most demanding missions in defense and global security applications. Non-GAAP income excluding acquisition-related costs was also higher in the second quarter at $142 million, or $1.08 per diluted share compared with a strong prior year of $141 million, or $1.05 per share. Combination of factors continued to enhance our bottom line performance in the quarter, including excellent program award fees across the government communications systems business, and strong product gross margins at the RF communications business. Now let’s move on to the segment results. Second quarter revenue for the RF communications segment was $463 million compared with $438 million in the prior year. Tactical radio revenue was $355 million in the quarter and public safety and…

Thank you, Howard. Good afternoon. From balance sheet and liquidity perspectives, we had another very solid quarter. As of quarter end, we had $310 million of cash and cash equivalents on hand and $705 million available under our $750 million revolving credit facility. We generated $187 million in cash flow from operations and $165 million in free cash flow. Our revolving credit facility does not come up for renewal until 2013 and we have no long term debt maturities coming due until October of 2015. On a separate, but related note, all our domestic retirement plans are defined contribution plans. Worldwide, we have only one defined benefit plan with benefit obligations of just over 50 million, which are funded in accordance with U.K. law. Based on our very strong first half results and our outlook for a strong second half, we are increasing our forecasts for cash flow from operations for the year from a range of $600 to $650 million to between $650 and $700 million. During the quarter, we acquired Patriot Technologies for $35 million in cash, repurchased $50 million of our outstanding common stock, at an average purchase price of $43.78 per share, and as of quarter end, we have $550 million remaining under our stock repurchase program. Depreciation and amortization for the second quarter was $39 million, as compared to $43 million in the second quarter of the prior year. Our expectations for depreciation and amortization for fiscal year 2010 are unchanged at $160 to $170 million. Capital expenditures were $22 million for the second quarter as compared to $35 million in the second quarter of fiscal 2009. Our current guidance for fiscal year 2010 for CapEx is unchanged at between $150 and $160 million. The effective tax rate in the second quarter was 32%. Our outlook for the full year tax rate for fiscal 2010 remains at 34%, noting, again, that the tax rate for any given quarter could vary up or down as a result of discreet tax events. In summary, we continue to operate from a very strong financial foundation. Back to you Howard.

Thanks, Gary. Before we open up the line for your questions, let me provide some perspective on our revised revenue and earnings outlook for fiscal 2010. As we said, we have once again increased our full year non-GAAP earnings for fiscal 2010. The new range is $4.25 to $4.35 per share. That’s about a 10% increase compared to our previous range of $3.85 to $3.95 per share. Revenue in fiscal 2010 is now expected to be in a range of 5% to 6% higher for the year than the prior year, between $5.2 and $5.3 billion. For the RF communications segment, fiscal 2010 revenue is now expected to be in a range of 17% to 19% higher than fiscal 2009. That includes the contribution of the acquired public safety and professional communications business of about $500 million, consistent with our prior guidance. Segment operating margin for the year is now projected to be about 33% and that’s compared to our previous guidance of 29% to 31%. We expect segment operating margin in the third fiscal quarter to remain quite high, at about 37%, comparable to the second quarter, and then because of mix to decline to a more typical level in the fourth quarter. Again, the higher operating margin is being driven by favorable tactical radio product mix, the impact of cost reduction actions that were taken, and favorable operational efficiencies. The acquired public safety and personal communications business is performing about as we expected. For government communications systems, we expect revenue for fiscal 2010 in a range of 0% to 2% above the prior year. After adjusting for the impact of acquisitions and excluding the FDCA program supporting the 2010 census, which we’ve noted is winding down, the guidance reflects underlying growth of about 9% compared to the prior year. Operating margin is now expected to be about 12.5% that’s slightly higher than our previous guidance as a result of continued strong program performance and related award fees. For broadcast communications, we’ve reduced our expected revenue a bit to a range of $490 to $510 million, with operating margin of 1% to 3% of revenue. The new outlook reflects a pickup, though, in both revenue and income in the second half as a result of our building backlog in the first half on better first half orders. With that, I’ll ask the operator to open the line and we’ll be pleased to take your questions.

(Operator Instructions) Your first question comes from Jason Kupferberg - UBS

Given the fact that the backlog is really building nicely here, especially in RF comment, at what point in time do you think you’ll be in a position to offer some initial guidance on fiscal ‘11? I know you’ve done it at different points in the future, whether it be your fiscal third quarter call or if there’s going to be a spring analyst meeting, or how should we think about potential timing on that?

Jason, no decision’s been made precisely on when we’ll offer specific guidance, but clearly comments I’ve made today should suggest that we’re feeling very good about how we’re going to perform in the second half of this year across the company and how we’re going to end the year, especially in the critical area of Tactical Radio backlog. So we’re feeling much stronger about that and feel like we have a lot of good momentum as we head into the second half and we’re certainly hopeful that we’ll continue into next year.

Just one clarification on the increased outlook for fiscal ‘10, it looks like its incremental pretax margins of about 80% on the $100 million increase in the revenue outlook. So if that math is right, is that just RF com mix that’s really driving those very high incremental margins, or are there other factors at work here that we should be aware of?

It’s principally the tactical radio mix, but we’ve also increased our expectation for margins in the Government Communications Systems segment, and even movement there of maybe 50 basis points on a relatively large revenue number clearly is helping income and EPS, Jason.

Your next question comes from Gautam Khanna - Cowan & Co. Gautam Khanna - Cowan & Co.: Just want to make sure I understand this. If I ascribe an 8% to 10% operating margin on the Tyco business, the implied margin and the core RF legacy business is like 45% this quarter. Could you walk me through kind of, I understand you said it’s going to tick down in Q4, but I mean to what level are we sort of expectations going forward in Q4 and beyond?

Again, we’re not going to get into individual quarterly guidance. I think we’ve provided color around Q3 looking a lot like Q2. Q4, we expect sequentially to have lower margins in Tactical Radios and the segment than in Q3, where it goes in the long run is still TBD. We started out this year, if you’ll recall, at something in the 27% to 29% margin range for the segment, so including Tactical Radios, as well as the acquired Public Safety business. I certainly see that as a floor going forward. We’re doing much better than that this year. The whole segment, we’re now up to 33%, and as we go into next year, it’s going to have a lot to do with the mix and the volume and our ability to continue to leverage it. So I think the end points in that discussion are probably kind of the guidance we provided at the beginning of this year and where we are now. I don’t expect it, Gautam, to drop off a step to that, but we would expect to see in ‘11 somewhat lower margins. How much, I think we don’t have that visibility yet in terms of exactly what the product mix will look like and the total revenue. So we’ll provide more color as we’re going forward, but we don’t want to set an expectation that we will maintain operating margins at Q2 or Q3 levels because that’s not probably realistic.

Your next question comes from Joe Nadol - JP Morgan.

Just wanted to follow-up on that same topic, on the mix, Howard, could you help us out understand, where in the RF business the mix is favorable. Is this M-ATV, or volume, or is it international, or what exactly is a good mix in Q2 and Q3? Then secondly, in the costs side, which you highlighted last quarter as well as this quarter, is R&D a big component to this or are there multiple factors?

First of all, in terms of the product mix that drives the gross margin, Joe, it’s a function of which products we’re getting orders for, whether it’s just radios, is it vehicular adapters, is it a lot of ancillary equipment, what contracts are they buying under, so there’s a fair amount of variability, depending on those factors. Clearly, it’s being driven in aggregate by the $555 million of orders to-date for the M-ATV program. With regard to the cost side of the equation, clearly this year’s turning out to be a lot stronger than we expected, we took actions in the second half of last year to take costs out. Frankly, we didn’t take a lot out of R&D. We took it out of other areas, and we also, what we did reduce from R&D was largely on R&D provided by outside partners rather than our inside headcount. As we’re going through this year now, we’re ramping some of that backup, but as is usually the case, the revenues coming in stronger than we’re adding costs. So that’s where we talk about getting the benefit of the cost reductions. I feel like we’re spending at a very good rate in R&D. We’re not starving R&D at all. In fact, we will continue to invest as effectively as we can, because that engine of new products is what will continue to drive our growth going forward, as it has in the past, producing the whole Falcon III product line, making enhancements to the product line, and adding on additional capabilities. Then finally, when you get a big ramp up in volume after you’ve taken your manufacturing overhead costs down, expecting a slowdown, you get a lot of operational efficiency leverage on that. So it’s lots of factors coming together. We’re going to benefit from it in a major way in Q2 and Q3. We’re still going to have very good margins in Q4, but, and going forward, but not quite at this overheated level of Q2 and Q3.

Your next question comes from Chris Quilty - Raymond James & Associates. Chris Quilty - Raymond James & Associates: I had a question on the ATV program and orders you received to-date. Given the number of orders we’ve seen to-date, and it looks like, you know, JROC is actually increasing the authorization for the number of those vehicles, assuming that you’re taking this whole source, and I haven’t seen any other contract awards, it looks as though you could see upsize orders on this in the range of maybe another 300 million to 500 million. Does that sound about right?

So to-date, Chris, we have booked orders of 555 million against the initial authorized construction amount of 6,600 and change units. We have not booked any orders against the potential additional 4,000 units. So to the extent that we can win business in those 4,000 that does represent upside this year and/or next year. In terms of how much we’ll get out of that, if you just ratio the numbers, it’s somewhere between zero and probably 300 million or so. We’ve got to go in that business in the same way that we did. The orders we’ve received, so I don’t want you to conclude because we haven’t concluded that those are going to be given to us 100%. Again, it plays on winning the business and also how they decide to configure. They may not configure the next 4,000. Some of those are M-ATVs from Oshkosh. Some of those are other vehicles coming from other manufacturers. They may choose to configure them slightly different in terms of the mix of which ones get an HF radio, which ones get the VHF and multiband radios. Make no mistake, we’re going to go after all the business we can and it does represent an upside of, potentially as high, I suppose as $300 million, $350 million, but that’s not representative in our guidance per se and don’t know what the timing or ultimate award of that will be.

Your next question comes from Myles Walton - Oppenheimer & Co. Myles Walton - Oppenheimer & Co.: Just following up on that, just to clarify quickly, the $800 million that you’re targeting for tactical RF backlog at year end would exclude any incremental orders above and beyond the 6,000 plus those are program of record, is that right?

So, Myles, the guidance on our backlog makes an assumption of orders for the year, for Tactical Radios and as we’ve said before, we look at our pipeline of billions of dollars of opportunities and we try and go through and factor those into that guidance, but it does not explicitly expect that we’re going to get orders against those 4,000 additional units. Don’t know, when those orders would even be released, whether they will be in the next six months or after the six months. Don’t know how many of those we’ll win. So I think for all purposes, there’s not a significant amount in our current estimates for backlog for additional orders on what we call Phase II of the M-ATV program, the additional 4,000 units.

Your next question comes from Rich Valera - Needham & Co. Rich Valera - Needham & Co.: You mentioned your international pipeline was $2 billion, Howard, today that was up. Can you give us what that prior number was and what the increase was due to?

I think the magnitude of the increase is kind of $1.5 billion, up to $2 billion. The total Tactical Radio pipeline has been pretty steady in the $3.5 billion to $4 billion range. So we’ve seen a little bit of a reduction in the U.S. pipeline, as we’ve gotten the orders and a little bit of an increase in the international pipeline, as some of those orders have slipped into the second half of the year. So the total pipeline hasn’t changed much. It’s really more of a function of the timing. We still are very bullish and probably in Central Asia, our optimism for countries, Afghanistan, Pakistan, many of the other markets around the current conflict, and as a result of NATO forces going into support along with U.S. forces, we’re feeling pretty strongly that probably there’s more, not less demand in that part of the world, but overall feeling very good about the international market. In selected countries, I think we have probably seen some delay in orders due to the overall economies in countries, where they are funding their own purchases and even a few FMS programs have slipped a little, not because of the money issues, but because all the focus in procurement in DoD as it should be, has been focused around the M-ATV program and urgent operational needs. So the important point is, we haven’t lost any international business. I think we’re going to see a very strong second half in orders international, and we’re going to see a very strong fiscal ‘11 in international.

Your next question comes from Larry Harris - CL King.

Just sort of following up on that international item, I think last quarter it was mentioned that some of the international shipments had been pushed out because the capacity issues. Wondering if you can give a sense in terms of, what the current sales mix is to say, between domestic versus international and say, Falcon II versus Falcon III?

Falcon III, Larry, is clearly on the rise as a result of the real ramp up in penetration and adoption of 117G and now what we felt was just a very important statement that the Department of Defense made in putting the AN/PRC-152 and its vehicular adapter version of the 110. So the Falcon III handheld into the M-ATVs, suggests that adoption of the Harris Falcon III is now in kind of full bloom. I don’t know the precise percentages. It’s still going to be well less than half of our revenue because the HF radios are still classified as Falcon II technology. So it’s still going to be less than half, but it’s growing obviously and I think what I’m very excited about with our team is not only the adoption. The margins on the Falcon IIIs are right there with our previous technology, even though we’re still fairly, early. So to me, that’s very encouraging. So as our teams are doing a great job in taking costs out, I think still continues to validate the value of the commercial model and allowing us to price based on value, but in improved margins, when we can take cost out. With regard to the specific mix of international and domestic, obviously it has changed when we where at the beginning of the year kind of saying 50/50 now. It’s clearly swung more on the side of the Department of Defense business, not because international customers don’t want the product, but because the prioritization. We push that international there about as far as we will push them out. So again, I don’t know specifically, what the mix is. I’m not sure all that significant, Larry. I think going forward, what’s important is, we expect to certainly see more of that 50/50 kind of mix broadly in the long run. We expect to see FY ‘11 and beyond returning to year-over-year growth in shipments. We’ll have a good year in orders, but shipments won’t be all that robust in international because of the timing and our scheduling of the orders.

Your next question comes from Michael French - Morgan Joseph.

Obviously, the Pentagon budget was passed late and they were operating under continuing resolutions during the quarter, and some of the money is still trickling through. Obviously, you didn’t see any slowdowns on the Tactical Radio side, but I’m wondering if there’s anyplace where you did see order delays and that’s likely to be accelerated in the current quarter.

I think that we expect our national business to be picking up. It was up in the first half, as all of the segments were the business areas within the Government Systems segment, but we’re expecting money to be flowing more readily to the National Intelligence Programs that we participate on the second half of our fiscal year. So it’s part of what is giving us good optimism that we can ex the fit care program continue to have underlying growth of about 9%. Our Government Systems business, which we think is extremely competitive from a peer standpoint based on how we see other companies performing, and giving guidance. So, again, we think our mix of programs, mix of customers, really does give us a very good diversification. Other than that, I’m not aware of any particular impact we’ve seen from the continuing resolution up until now.

Your next question comes from Chris Donaghey - SunTrust Robinson.

I really don’t think you’re going to be able to escape the RF questions tonight great job on the quarter. The guidance, what I’m trying to do is determine from the margin guidance, should we expect to see without getting specific, a pretty significant surge in revenue in the third quarter and then back down in Q4? Then as we get into 2011, I know you talked about a robust outlook, but, are you comfortable at this point saying that you would expect 2011 to be a growth year from an earnings perspective?

Well, first of all, speaking to Tactical Radio, we expect Q3 based on the guidance we give, you would conclude the second half revenue is going to be stronger than the first half. In terms of the two quarters, probably about the same at this point, but earnings in the third quarter, because of the margin guidance we’ve given, will probably be higher than they will in the fourth quarter in terms of segment income from Tactical Radios. So revenue probably about the same in the two quarters for Tactical Radios that’s the only thing that you were asking about, and income from Tactical Radios, probably a little higher in Q3 than Q4, because of the higher mixes more favorable mix and higher margin. In terms of growth, beyond that, all I will say is I’m feeling much better about this business and the outlook than we were six months ago. I think back to a year ago on this call, when we were talking about ‘10 being a down year. Obviously, we were far too pessimistic. At this point, we have a lot of very good momentum, not just in Tactical Radios, but the contribution from the acquisition in Public Safety, given this great platform for growth there, Government Systems, which we don’t spend a lot talking about the other, you know, $2.5 billion or $3 billion business, but it’s outgrowing its peers and providing significantly, I think a very good competitive margins there. So overall, I think the tone is very positive, not only for the second half, but for next year. Will we deliver or be able to commit to delivering higher EPS next year than this year as a company? I don’t know. Time will tell, but I’m certainly feeling very positive about it and you know that’s certainly our objective.

Your next question comes from Jim Mcilree - Merriman Curhan Ford.

You talk about the impact of ANW2 on your revenue growth over the next year or so, and particularly the impact it might have on margins, given that it’s just a software add to the 117G?

Jim, it’s a great question, and I think, you’re hunting in the right place. The ANW2, while it is not at this point been adopted as a long term JTRS solution as the SRW, or WNW waveforms are supposed to be, it’s available now, it works, it’s been now approved for deployment, and it gives us really clear air in terms of having the only wide band networking solution at a time when our troops and our allies desperately need it for current operations in Afghanistan. So it’s, it’s a real positive, and we certainly have the opportunity to use it to enhance or at a minimum, maintain margins going forward as you indicate. So I think you hit the nail on the head and in terms of how long we have this lead remains to be seen, but right now, we’re the only ones that have it. Whether the ANW2 will ever be adopted long term as a standard, I don’t know. It has a lot to do with the performance of the other programs of record and whether they really get approval and are ready to introduce this other wave forms, but we have clearly a lead and we’re trying to take full advantage of that.

Your next question comes from Mark Jordan - Noble Financial.

Likely to go back and look talk a little bit about the public service radial accent issue, when that was purchased, you stated that you’re looking for modest growth this year kind of a push on a profit contribution standpoint, but assumed in the second year of ownership that it would be much more accretive. Could you give an update as to what’s your expectations are now relative to this forecast of about nine months ago?

We’re very pleased that we are still feeling good about delivering the guidance that we announced when we did the acquisition, around about $500 million in revenue, and 8% to 10% EBIT margins. The top line was up about 6% in the quarter. We’re pleased with that. We have a lot of opportunities in the pipeline. We’re very pleased to try and be the supporter on the i-Win program commitment for the first two regions. There are four more. So the opportunity there to triple the $130 million or so is out there if we perform and that was clearly a very competitive situation that we prevailed. I think it illustrates the synergies we hoped were there, to put together Harris and the former M/A-COM business, strengths from both companies coming together to create a more formidable competitor. I’m very pleased that we’re off to a good start. Our long term vision hasn’t changed. This acquisition is all about top line growth and market share gains, and that will bring along with it the higher growth, higher volume, will bring along expanded margins. So I haven’t seen anything in our first six months of ownership that suggests that we’re not on the right path. We clearly have to execute. I think we talked earlier about some of our programs that had been previously won, that were not performing quite as well in terms of hitting schedules and hitting performance. I’m very pleased to report that we’ve made a lot of progress there, as we’ve helped to focus the Public Safety team, bring in additional resources from both RF and our Government Systems group, to help them get some of these programs on track, and some of those problematic programs are now going to be our best advocates for testimonials to other customers going forward, so lots of progress, but still lots of work there. The pipeline still has a lot of big opportunities in it, and I’m hopeful that over the next six months we’ll be able to talk about some other major wins that helped illustrate it’s not just talk, we’re actually delivering on the synergy opportunities that we spoke of.

Your next question comes from Gautam Khanna - Cowen & Co. Gautam Khanna - Cowen & Co.: I just wanted to ask again, I think you made a comment earlier about exiting fiscal ‘10 with about $800 million of core RF backlog. Is that you’re expecting to book-to-bill of less than one. Is that in the second half and is that just because of the M-ATV winds down and conversion of some of the international bookings will move out to the right? How should we think about, like what kind of has to tail off to get there?

The book-to-bill and I’m going for memory, that I think the book-to-bill on RF Tactical was 1.9 in the first quarter, 1.6 in this quarter. Those are numbers that we would not expect to sustain. Obviously, they come in big lumps. $800 million implies a positive book-to-bill for the year, but not 1.6 or 1.9. So you’re right, you do the math, you get slightly less than 1.0 in the second half. Maybe, we’re conservative, but that’s kind of our current read on it, and as indicated, it does not include potential upside from the Phase II of the M-ATV program, or other things that may be in the pipeline that we haven’t fully realized in our forecast. What’s important is strong momentum coming into the second half of the year and into fiscal ‘11, which is quite a different situation than we were sitting with at the beginning of fiscal ‘10. We expect to have a much larger backlog, $800 million I think that compares with something under $500 million at the beginning of this year, and with potential to do even better than that. So we’re feeling pretty positive, but clearly we’ve gotten a very, very strong first half of orders from DoD and we wouldn’t expect that same volume of DoD orders in the second half currently, but I guess as we’ve seen, the visibility has had more upside and we haven’t had quite the visibility to call it. I don’t feel like there’s a lot of downside to that particular guidance and the order outlook, so I think you’re doing the math about right.

Your next question comes from Michael French - Morgan Joseph.

I had a question about the same product. That was really a standout product at the IT sec. I was wondering, if you could provide some more information on the opportunities you discuss particularly a timing of any potential orders.

We think the opportunities some of that forecast is clearly near term. The major program we’re working on that we’ve already received some orders on is called Valiant Angel. Lockheed Martin is the prime contractor, and we are providing this VAME technology as part of an integrated system to collect and store and analyze all of this video data. There are significant opportunities to expand the Valiant Angel program and then there are a number of other programs like Valiant Angel. We can’t talk about the details, but I can tell you that some of them are what you might call strategic, very big pipes, gathering data, and analyzing it, and other programs are more tactical in nature, more theater of operations oriented gathering and analyzing in the field level, but lots of different opportunities. Again, right now, we don’t expect to own the market, but we have developed a very unique solution based on this commercial broadcast capability for digital asset management and then wrapping around that specific needs for the intelligence customers and for Department of Defense. That’s about all I can say about the details, but it’s a unique capability. It’s good margin business. It helps volumes and margins at broadcast, but also the value-added Government Systems as we integrate the unique needs of our National Intelligence customers.

Your final question comes from Mark Jordan - Noble Financial.

Question is Howard, relative to the FAA. Is there any Postmortem on the network outage and has that had any impact on your marketing position potentially, say, for the next generation contract that’s out there?

I don’t think it’s had any impact on our credibility as a current major communications partner for the FAA or for the future. The blue ribbon panel is doing their work as announced. There’s also a technical panel and I believe that both of them will include that this was an anomaly having to do with the changeover of the network to the new optical back bone. Certainly there will be some lessons learned that we’ll take away from it and that the FAA will takeaway from it and that will help us to work better together and more effectively in the future, but it really was an anomaly, not something we expect to repeat and overall, the FTI network has had exemplary performance in terms of its availability and its ability to lower the operating costs for the FAA, which were both objectives in the program. So I don’t think there will be any ongoing negative impact.

Okay and I thank everyone for joining us today. We appreciate it.