Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2010 Harris Corp. Earnings Conference Call. My name is Kate Lynn, and I will be your operator for today. [Operator Instructions] I would now like to turn the call over to your host for today, Ms. Pamela Padgett of Harris Corp. Please proceed.

Thank you, and good afternoon, everyone, and welcome to Harris' Fourth Quarter Fiscal 2010 Conference Call. On the call with me today is Howard Lance, Chairman, President and CEO; Gary McArthur, Senior Vice President and Chief Financial Officer. And a few words about forward-looking statements. In the course of this teleconference, 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 and information that are non-GAAP financial measures. A reconciliation to the comparable GAAP measures is 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 the Investor Relations section of our website. With that, Howard, I’ll turn it over to you.

Thank you, Pam, and welcome, everyone, to our fourth quarter fiscal 2010 earnings call. Harris ended fiscal 2010 with a very strong quarter. Orders, revenue and income were significantly higher than the prior-year quarter, and we generated significant operating cash flow. Orders were higher than revenue, further increasing our backlog. Revenue in the fourth quarter was $1.46 billion. That's 13% higher than the prior year. On an organic basis excluding the impact of acquisitions, revenue was 8% higher. Non-GAAP income, which excludes acquisition-related costs, was $161 million in the fourth quarter or $1.24 per diluted share. That's an increase of 38% compared with the prior-year quarter. Orders in the fourth quarter were $1.72 billion, and that's 33% higher than the prior-year quarter. We saw a continued strong performance in the quarter in the RF Communications segment, as well as strong underlying revenue growth and excellent program execution across the Government Communications Systems segment. Our track record of delivering consistent growth in revenue and earnings continued in fiscal 2010, with momentum building as the year progressed. Revenue for the full fiscal year was $5.21 billion, 4% higher than the prior year. Non-GAAP income was $582 million or $4.43 per diluted share, that's an increase of 15% compared with the prior year. Orders for the full year were a record $6.08 billion, 36% higher than fiscal 2009. As a result of the full year book-to-bill of 1.2, we have very strong momentum as we begin fiscal 2011. In RF Communications, fourth quarter revenue for the segment was $630 million, 35% higher compared to $468 million in the prior-year quarter. The results included $486 million in revenue in Tactical Communications, up 17% from $415 million in the prior year and $144 million in revenue in Public Safety and Professional Communications. Non-GAAP segment operating…

Thank you, Howard. Fiscal year 2010 was another very solid financial year for Harris. We ended the year with $455 million of cash and cash equivalents on hand. We generated $803 million of operating cash flow, $605 million of free cash flow, repurchased $201 million of our outstanding stock and paid $115 million in dividends. None of our outstanding long-term debt comes due prior to October 2015. And as of year-end, we had $720 million available under our $750 million revolving credit facility. Once again, as of year end, our return on invested capital was more than twice our cost of capital and improved nearly 300 basis points to 22% as compared to 19% as of the end of fiscal 2009. As to the fourth quarter, cash flow generated from operating activities was $167 million as compared to $262 million in the fourth quarter of fiscal 2009, and capital expenditures were $62 million for the fourth quarter as compared to $25 million in the fourth quarter of fiscal 2009. The $37 million higher CapEx resulted primarily from the continuing build out of our newly acquired cyber security solutions facility, and our RF Communications manufacturing facility. Depreciation and amortization was $45 million for the fourth quarter as compared to $55 million for the fourth quarter of the prior year. During the quarter, we repurchased 1.1 million shares of our common stock at an average purchase price per share of $46.53. Total shares repurchased during fiscal 2010 were 4.8 million. And as of year end, we have $450 million remaining availability under our $600 million share repurchase program. Our priorities for excess cash continue to be in the order of priority, internal investments, acquisitions that further our strategic objectives and increase shareholder value, the payment of competitive dividends and share repurchases. Our…

Thank you, Gary. As we indicated in our press release this afternoon, we've increased our financial guidance for fiscal 2011 to include the expected contribution from the CapRock Communications acquisition. Consolidated revenue is now expected to be in a range of $5.9 billion to $6 billion, about 13% to 15% higher than fiscal 2010. Non-GAAP income excluding acquisition-related costs is now expected to be in a range of $4.60 to $4.70 per share, representing a year-over-year increase of 4% to 6%. Our previous guidance was $4.55 to $4.65 per share. As a result of recent acquisitions and some of the facility investment Gary discussed, we’re seeing an increase in our non-cash amortization and depreciation expenses. We believe that EBITDA growth, earnings before interest, taxes, depreciation and amortization, has become an important metric to track cash profitability improvement alongside of net income and EPS growth. Non-GAAP EBITDA for fiscal 2011, which excludes acquisition-related costs, is expected to be in a range from $1.18 billion to $1.21 billion, and that represents an increase of 7% to 10% above fiscal 2010 EBITDA of $1.10 billion. For the RF Communications segment, fiscal 2011 revenue is expected to be 7% to 8% higher than fiscal 2010. Segment operating margin for the year is expected to be about 33%. For the Government Communications Systems segment, we expect revenue for fiscal 2011 to be 20% to 22% higher than fiscal 2010. This represents 6% to 8% growth in the existing Government Communications Systems business, and then adds CapRock Communications revenue in a range from $380 million to $390 million for 11 months of fiscal 2011. Segment operating margin is expected to be approximately 11%. For the Broadcast Communications segment, we continue to expect revenue in a range of $490 million to $510 million with break-even operating results.…

[Operator Instructions] Your first question comes from the line of Jason Kupferberg of UBS.

As far as expectations for fiscal '11 order growth in RF Comm, on the Tactical and Public Safety side, if you could comment there. And then any thoughts on how much EPS accretion is built into fiscal '11 for the Tyco acquisition because I think you had expected that to uptick quite a bit versus how it performed in year one.

Related to orders in the RF segment, Jason, certainly our goal and our internal objectives are to achieve a 1.0 book-to-bill for the year. As I indicated, we have a significant pipeline of opportunities, $2 billion in International for Tactical Comms and $1.5 billion in U.S. DoD for Tactical Comms, and then we talked about a $3 billion opportunity pipeline in Public Safety and Professional Comms. So big pipelines and our internal goal is to maintain and achieve the 1.0 book-to-bill. With regard to any specific accretion on the wireless acquisition, I don't have that number at my fingertips. Certainly, it provided accretion in fiscal '10 as a result of favorable financing rates on the acquisition, and the results we delivered for the acquisition were essentially on target for our expectations that we said at the beginning of the year. We're expecting further growth in fiscal '11, as we had previously indicated about 8% to 10% above fiscal ’10, and we're seeing consistent year-over-year margin expansion, ultimately getting up to the goals that Gary and I have talked about previously in the three- to five-year time frame of 15% kind of operating margins and 20% EBITDA margins for the segments. So bottom line is it'll be more accretive than it was in 2010.

Your next question comes from the line of Michael French of Morgan Joseph. Michael French - Morgan Joseph & Co., Inc.: The question is on the mission modules that you mentioned. Can you give us a sense of the timing of when these will be available and what the pricing will look like?

Certainly I can't comment on pricing per se. In terms of the timing, I don't know that I know the precise date. We have started to show kind of what I would call beta copies of the products and started testing those with customers. I would say in the fiscal year, but I don't know a specific date. We'll try and make sure we communicate that going forward, Michael.

Your next question comes from the line of Joe Nadol of JP Morgan. Joseph Nadol - JP Morgan Chase & Co: Howard, the tactical radio orders have been excellent recently. I'm a little surprised that the guidance both for next year and for the first quarter, I guess in the second quarter, just the profile you laid out, that they aren't higher. I mean your backlog is -- it might be a record, it's close. Is the duration changing? Is there something going on within the mix that's pushing the duration longer than it's been historically?

No, I think, Joe, what’s really skewing the whole mix is the urgency for the radios that are going into the MRAP and M-ATV vehicles. If we look at the seasonality for the rest of the business, it looks a lot more traditional, starting lower and then growing during the year. We had prebuilt a lot of these radios as we have been exiting the fourth quarter of fiscal '10 and so we're seeing this huge uptick in shipments in the first quarter of '11. But I think once you see that pass through as we ship those, we’d expect to get back to more traditional kinds of run rates and so on. So I think it's really a function of that and because it's so atypical, we felt it would be helpful and transparent to give overall EPS guidance for the first and second quarter. We normally would not do that. So that's kind of what's behind that portion of my discussion today.

Your next question comes from the line of Rich Valera of Needham & Company. Richard Valera - Needham & Company, LLC: I was wondering if you could tell us how much of the RF Comm backlog is for M-ATV- or MRAP-related shipments. And just a quick follow-up, I'm wondering if you could give any update on the status of the ANW2 waveform and your efforts to get that incorporated into the JTRS standard.

On the second question, there are ongoing discussions with regard to utilization of the ANW2 standard from Harris. We have certainly offered to make that waveform available under commercial terms, and at this point, I think discussions continue. There's nothing specifically to be announced. To your first question, I'm going to ballpark it, not be precise, but maybe $300 million of shipments under the MRAP and ATV program in our numbers for this fiscal year.

Your next question comes from the line of Gautam Khanna of Cowen and Company.

Just wanted to get your updated thoughts on the M/A-COM margin potential. When you first bought it I think you guided somewhere around 8% to 10%. Where are you in that -- where are you now? Where were you in the quarter roughly? And how do you see that playing out over the next year?

So initially, we provided first-year target of 8% to 10% EBIT margins, and we indicated over three to five years our goal was to get that to around 15%, which we felt was market competitive. When you factor in the amortization of intangibles, you'd really be at about 20% EBITDA margins. So the acquisition achieved its objectives in the first year, and we’re expecting to grow margins this year. We're losing a little bit of precise visibility on the operating income for the business, because we’re leveraging a lot of the back-office and combined systems. So we have good visibility to revenue and gross margin, but beyond that, you start to allocate cost. So that's why we're not providing any specific numbers in terms of the profitability within the segment, because it would be somewhat subject to those allocations. But certainly, our plans at the gross margin level see continued improvement in '11 over '10, and we're not up to our goal yet certainly so we think there's some continued growth beyond '11 as we talk about margins.

With respect to the FY '11 budget, do you anticipate any sort of go-forward, no-go-forward definitive decision on the JTRS HMS or GMR program?

Hard to say. I don't expect any specific decision, but we certainly know that the DoD is working hard to find ways to cut costs. I think every program is up for review, but I'm not aware of any specific milestone that would drive a go or no-go decision. So nothing specific. Certainly, we're very pleased with how we’re continuing progress, and we have made a lot of strides over the last year, most recently in the deployment of the 117G across what's called capability set 9 and 10 into Afghanistan. The performance of the radios really is speaking for itself in terms of the enabling of real-time broadband communications or wideband communications across the comms networks for the first time, allowing you to have streaming video and other bandwidth-intensive data at the tactical edge in the hands of the war fighter. So I think that the radio’s capability is proving itself real-time on the battlefield, and we think, as a result, it's going to continue to get a lot of attention and the demand for the radios, we think, will continue to grow as well as a result of its performance. There's no better way to prove what it can do than in the kind of tactical battlefield operations that are going on right now.

Your next question comes from the line of Larry Harris of CL King. Lawrence Harris - CL King & Associates: Question about the Public Safety business. You recently announced that you're working with Nokia Siemens on an old TV technology or model for public safety, and of course, Motorola recently announced an order in San Francisco. Do you see this as being something that could have a significant impact on 2011 revenues? And do you think the fact that you're working with Nokia Siemens that's won a lot of orders in the LTE area could prove to be an advantage?

Well, Larry, we certainly see it as offering a lot of opportunity. I'm not sure that the adoption rate will be all that material in our fiscal year '11. But I certainly think that we hope to get several important program wins under our belt and start to demonstrate the value of that broadband communications capability in the 700 megahertz area. We also continue to lobby with other companies to get the FCC to designate that Block D of that spectrum for public safety. That's a little bit of a contentious area right now, because as I understand it, to really deploy the most effective LTE 700 megahertz networks, you really need the 20 megahertz band and only half of that has been allocated. The other half they're planning on auctioning, making available to public safety on a so-called emergency basis, which most of us think is a little problematic how you'd actually do that. So we continue to lobby on that basis, but we agree that we think we've got the right partner in Nokia Siemens and are certainly excited. The opportunity to bring the kind of data to the public safety situational awareness field in the way that we have in the military examples could really make a difference in terms of not only officer safety, but effectiveness. So it's an area of real focus especially in the large metropolitan police departments. Lawrence Harris - CL King & Associates: But in terms of revenues, it might be more fiscal 2012?

Yes, I don't recall in our plans that it's a huge year-over-year increase from '10, but I think is important as a foundation for growth over the next two to three years, Larry.

Your next question comes from the line of Ted Wheeler of Buckingham Research.

On the guidance, the MRAP-ATV revenues, will they be predominantly in that first quarter, or will there be revenues from that stream throughout the year?

Yes, predominantly in the first quarter. And again, that's what's causing this huge revenue growth in the segment of 30% in Q1 in terms of our expectation.

And if I just kind of play with the margins, I get a margin fairly below 33% for the back half, by the math, for the rest of the year. Now if we were to think about normalized margins, let's just say it’s 31% average for the back three quarters. Would that be a good base margin to think about going forward? Or do you think the pickup in Public Safety over the next few years would allow you to drift the segment margin up?

Well, you know me, Ted, I would view that as the floor and we certainly would expect to continue to get some contribution as we continue to improve the Public Safety business margins, but also are certainly not of a mind to allow our margins to slip in the core Tactical Communications business any more than they have to because of this product mix. So I think ultimately, that's the floor. Does it come in above that in '11 or '12 or '13? A lot of it has to do with our investment profile. As we've said before, we could meter less investment, deliver more short-term profits but we try and balance that investment relative to the margin and getting the top line growth that we want in terms of continuing to churn out these industry-leading products in the Tactical Comms area and now in the Public Safety area. But bottom line, I would view that as kind of the floor for you to think about going forward, and we certainly are going to work to deliver higher numbers than that.

Your next question comes from the line of Ed Keller of Oppenheimer. Edwin Keller - Oppenheimer & Co. Inc.: Just a quick question on RF for next year. Given the heavy MRAP and M-ATV deliveries in the first quarter, how do you expect International to flow through the year?

Well first of all, in general, kind of around the color of orders, we would expect International orders for the year to probably outpace Domestic orders, but because of the backlog, especially in ATV, we would expect the revenue for Domestic to still outpace International. We feel like we're starting the year strong in terms of backlog, but also in International, I think. Orders probably in the first quarter certainly are going to be very heavy in International, and for the whole year, as I said, I think International orders will probably overcome DoD orders. But we're very encouraged, I must say, that even with all the orders we've gotten on the MRAP, the M-ATV, to have up orders in DoD last year and to have still a very solid pipeline for this year we think is very encouraging. Edwin Keller - Oppenheimer & Co. Inc.: Late last week, there was an announcement on a strategic partnership with Applied Signal, and I was wondering if you could just give any additional color on that. What you're looking for there. What's your thinking and your expectations?

I'm sorry, I'm not in the weeds on that particular announcement other than there’s a lot of continued opportunity for us to serve the intelligence surveillance and reconnaissance market, and Applied Signal has worked with us in the past on several programs. I think this is, to some extent, kind of a codification of what we've already been doing together. But beyond that, I don't really have any details.

And the final question comes from the line of Chris Quilty of Raymond James & Associates. Chris Quilty - Raymond James & Associates: Howard, I think this question may have been asked a couple of times, but I'll ask it a different way. Given the orders, MRAP-related orders you've seen in the last two years and what you sort of characterized as a $300 million lump moving through this year, was it -- knowing that Oshkosh seems to be full on all the orders and unless something new fills in and JLTV is still too far out, that creates a headwind of that $300 million magnitude going into the following fiscal year on that particular program, kind of like FDCA.

Yes, certainly, but it's going to be all about -- as it has been the last couple of years, it's going to be all about orders in aggregate, right, for the year. So we certainly don't expect that we would have, we won't have the same $300 million in revenue in '12 from MRAP and ATV orders, so the question is what's going to fill that hole, and it's going to come from the $3.5 billion pipeline that we have. It's going to be all about winning additional International orders as well as additional DoD orders that are in that pipeline. And that's what's going to maintain, hopefully, the 1.0 book-to-bill that’s our target so that we exit this year with a good strong backlog. What a difference a year makes. Our backlog a year ago compared to our backlog now, it’s quite stronger. We don't need quite this level of backlog to still grow the business but, no question, there is a whole there that has to be filled with other new business. So we certainly agree and understand. Chris Quilty - Raymond James & Associates: Just a question regarding the FCC and broadband stimulus and proposals for building out a nationwide network, can you give us your thoughts on where you think the government driven model may go in the next year or two in terms of major government-funded programs for – federal government-funded versus this continuing to be more of a state-by-state locality-by-locality type of business?

Yes, Chris, I don't have a lot of visibility into that, I don't think any more than what's been publicly written. There is a commitment to this national broadband plan. How that will actually play itself out and what that might drive in new businesses who put in place terrestrial or satellite-based networks to provide some of this additional broadband capability, I think it remains to be seen. So we will stay tuned and will, next quarter, try and address your question in terms of ways that we might see that evolving and how we might participate in it.

Thank you, everyone. Appreciate you joining us tonight.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation, and you may all now disconnect. Have a great day.