MEDIA RELEASE PR42085
Harris Corporation to Acquire Schlumberger Global Connectivity Services; Broadens Global
Managed Satellite Communications Services Capabilities
ABERDEEN, U.K. and MELBOURNE, Fla, Nov. 8 , 2010 /PRNewswire-AsiaNet/ --
Harris Corporation (NYSE: HRS) an international communications and information
technology company, has entered into a definitive agreement to acquire the Global
Connectivity Services (GCS) business from Schlumberger Information Solutions, an
operating unit of Schlumberger Limited (NYSE: SLB). The acquisition will significantly
extend Harris' capabilities as a global provider of mission-critical, end-to-end managed
satellite communications services for customers operating in remote and harsh
environments - including the energy, government and maritime industries. Schlumberger
GCS will be combined with recently acquired CapRock Communications to form Harris CapRock
Communications.
With customers in more than 50 countries, Schlumberger GCS provides global
communication services for a wide range of customers primarily in the oil and gas
industries, including Schlumberger. With principal operations in the United Kingdom,
Norway, Singapore and the U.S., Schlumberger GCS has 400 employees in more than 25
countries, as well as 12 globally deployed teleports, a 24x7 Network Operations Center
(NOC), worldwide terrestrial infrastructure, and Very Small Aperture Terminal (VSAT)
manufacturing capabilities in the U.K. and Singapore.
The agreement to acquire Schlumberger GCS follows the Harris acquisition of CapRock
Communications on July 30, 2010. CapRock Communications is a premier global provider of
managed satellite communications solutions - including broadband Internet, IP voice
services, secure networking and real-time video - for the energy, government and maritime
industries, as well as for disaster recovery. CapRock's robust global infrastructure
includes four self-owned and operated teleports and 11 regional support centers across
North America, Central and South America, Europe, West Africa and Asia Pacific.
"Combining Schlumberger GCS with CapRock Communications will create an organization
with unsurpassed global satellite network capabilities, broad service offerings, and a
large experienced service team to provide customers with superior remote and in-the-field
support," said Howard L. Lance, chairman, president and CEO of Harris. "Harris CapRock
Communications will be able to use its capabilities and expertise to offer customers the
most secure, reliable and efficient solutions in the industry."
Under the terms of the agreement, Harris will purchase the Schlumberger GCS business
for $397.5 million in cash, subject to post-closing adjustments. The goodwill arising on
completion of the acquisition will be an allowable tax expense with an estimated net
present value of $50 million, resulting in an effective purchase price of $347.5 million.
For the calendar year ending December 31, 2010, Schlumberger GCS revenue is expected to
be $170 million, and earnings before interest, taxes, depreciation and amortization
(EBITDA) is expected to be $41 million. Excluding acquisition-related charges, the
acquisition is expected to have minimal impact on Harris non-GAAP earnings in fiscal
2011; be slightly accretive in fiscal 2012; and a significant contributor to earnings and
growth in fiscal 2013 and beyond. The transaction is subject to customary regulatory
reviews and closing conditions, and it is expected to close during the third quarter of
fiscal 2011. Harris will finance the acquisition using a combination of cash on hand,
commercial paper, borrowings under its committed credit facilities, and long-term debt.
"Schlumberger has successfully developed its Global Connectivity Services business
over the past 10 years to reach an extensive global products and services offering. This
acquisition by Harris will ensure continued growth and new technology deployment in a
focused communications organization," said Tony Bowman, president of Schlumberger
Information Solutions. "Schlumberger will continue to take advantage of these
capabilities once the transaction is concluded through a long-term contract with Harris
CapRock Communications."
Harris will host a conference call at 10 a.m. ET today to discuss the acquisition of
Schlumberger GCS. The dial-in number for the teleconference is (866) 578-5801 (U.S.) or
(617) 213-8058 (International), using access code is 85645720. Please allow at least 10
minutes prior to the scheduled start time to connect to the teleconference. Participants
are encouraged to listen via web cast, which will be broadcast live at
beginning at Noon ET on November 8.
About Harris Corporation
Harris is an international communications and information technology company serving
government and commercial markets in more than 150 countries. Headquartered in
Melbourne, Florida, the company has approximately $5 billion of annual revenue and more
than 16,000 employees - including nearly 7,000 engineers and scientists. Harris is
dedicated to developing best-in-class assured communications(R) products, systems, and
services. Additional information about Harris Corporation is available at
Forward-Looking Statements
Statements in this press release 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 release include
but are not limited to: anticipated timing of the closing of the acquisition of
Schlumberger GCS and satisfaction of the conditions to closing, the impact of the
acquisition on Harris earnings, and statements regarding outlook, including revenue and
growth opportunities and GCS' expected revenue and EBITDA for calendar year 2010. 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: the loss of our relationship with the U.S.
government or a shift in U.S. government funding; potential changes in U.S. government or
customer priorities; risks inherent with large long-term fixed-price contracts,
particularly the ability to contain cost overruns; financial and government and
regulatory risks relating to international sales and operations; our ability to continue
to develop new products that achieve market acceptance; the consequences of future geo-
political events; strategic acquisitions and the risks and uncertainties related thereto,
including our ability to manage and integrate acquired businesses; performance of our
subcontractors and suppliers; 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; risks
inherent in developing new technologies; changes in our effective tax rate; the potential
impact of natural disasters or other disruptions on our operations; the potential impact
of a security breach, through cyber attack or otherwise, or other significant disruptions
of our IT networks and systems or those we operate for customers; the potential impact of
satellite bandwidth constraints on our managed satellite communications services; changes
in future business conditions that could cause business investments and/or recorded
goodwill to become impaired; and the recession in the United States and general downturn
in the global economy. 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. The forward-looking statements contained in this release are made as of the
date of this release, and the company 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.
SOURCE: Harris Corporation
CONTACT:
Investor Relations inquiries:
Pamela Padgett
+1-321-727-9383
pamela.padgett@harris.com
or Media:
Jim Burke
+1-321-727-9131
jim.burke@harris.com
or additional information, contact Harris Corporation
webmaster@harris.com.
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