Business Combinations

12 Months Ended

Jul. 01, 2011


*NOTE 4:*	*BUSINESS COMBINATIONS*

During fiscal 2011 we made the following significant acquisitions:


	•	Acquisition of CapRock. On July 30, 2010, we acquired privately held CapRock Holdings, Inc. and its subsidiaries, including CapRock Communications, Inc. (collectively, “CapRock”), a global provider of mission-critical, managed satellite communications services for the government, energy and maritime industries. CapRock’s solutions include broadband Internet access, voice over Internet Protocol (“VOIP”) telephony, wideband networking and real-time video, delivered to nearly 2,000 customer sites around the world. The acquisition of CapRock increased the breadth of our assured communications^® capabilities, while enabling us to enter new vertical markets and increase our international presence. The total net purchase price for CapRock was $517.5 million. Our fiscal 2011 results of operations included revenue of $357.0 million and a pre-tax loss of $16.3 million (including $21.9 million of acquisition-related charges) associated with CapRock for the eleven-month period following the date of acquisition. We report CapRock as part of Managed Satellite and Terrestrial Communications Solutions under our Integrated Network Solutions segment.

	•	Acquisition of Schlumberger GCS. On April 4, 2011, we acquired from Schlumberger B.V. and its affiliates (“Schlumberger”) substantially all of the assets of the Schlumberger group’s Global Connectivity Services business (“Schlumberger GCS”), a provider of satellite and terrestrial communications services for the worldwide energy industry. The total net purchase price for Schlumberger GCS was $380.6 million, subject to post-closing adjustments. Our fiscal 2011 results of operations include revenue of $34.6 million and a pre-tax loss of $12.5 million (including $17.0 million of acquisition-related charges) associated with Schlumberger GCS for the three-month period following the date of acquisition. We report Schlumberger GCS as part of Managed Satellite and Terrestrial Communications Solutions under our Integrated Network Solutions segment.

	•	Acquisition of Carefx. Also on April 4, 2011, we acquired privately held Carefx Corporation (“Carefx”), a provider of interoperability workflow solutions for government and commercial healthcare providers. Carefx’s solution suite is used by more than 800 hospitals, healthcare systems and health information exchanges across North America, Europe and Asia. The acquisition expanded our presence in government healthcare, provided entry into the commercial healthcare market and is expected to leverage the healthcare interoperability workflow products offered by Carefx and the broader scale of enterprise intelligence solutions and services that we provide. The total net purchase price for Carefx was $152.6 million, subject to post-closing adjustments. We report Carefx as part of Healthcare Solutions under our Integrated Network Solutions segment.

The following tables provide further detail of these acquisitions in fiscal 2011:


	CapRock	Schlumberger GCS	Carefx
	(In millions)

Date of acquisition	7/30/10	4/4/11	4/4/11
Reporting business segment	Integrated	Integrated	Integrated
	Network Solutions	Network Solutions	Network Solutions


Cash consideration paid to former owners	$	540.2		$	384.6		$	153.8
Less cash acquired		(22.7	)		(4.0	)		(1.2	)

Total net purchase price paid as of July 1, 2011		517.5			380.6			152.6
Estimated post-closing acquired cash true-up		—			—			0.7

Total estimated net purchase price	$	517.5		$	380.6		$	153.3

Allocation of purchase price:
Accounts and notes receivable	$	41.3		$	4.8		$	5.8
Inventories		36.6			3.9			4.4
Other current assets		4.3			4.2			0.3
Current deferred income taxes		14.3			—			1.5
Property, plant and equipment		59.1			33.7			—
Goodwill		381.9			268.3			118.8
Identifiable intangible assets		131.5			75.4			31.4
Other assets		—			—			0.1

Total assets acquired		669.0			390.3			162.3

Accounts payable and accrued expenses		88.6			5.4			4.7
Advance payments and unearned income		3.3			—			2.8
Non-current deferred income taxes		50.1			4.3			0.6
Other liabilities		9.5			—			0.9

Total liabilities acquired		151.5			9.7			9.0

Net assets acquired	$	517.5		$	380.6		$	153.3


	CapRock				Schlumberger GCS				Carefx
	Weighted				Weighted				Weighted
	Average				Average				Average
	Amortization				Amortization				Amortization
	Period		Total		Period		Total		Period		Total
	(In years)		(In millions)		(In years)		(In millions)		(In years)		(In millions)

Identifiable Intangible Assets:
Customer relationships		16.0	$	68.0		13.0	$	66.7		11.0	$	7.1
Contract backlog		5.0		49.0		2.0		7.2		4.5		10.6
Trade names		5.0		14.0		6.0		0.2		3.5		2.9
Developed technology						6.0		1.3		4.5		10.8
Other		15.0		0.5

Weighted average amortization period and total		10.7	$	131.5		11.8	$	75.4		5.9	$	31.4

The purchase price for the CapRock acquisition gives effect to post-closing adjustments while the purchase prices for the Schlumberger GCS and Carefx acquisitions remain subject to post-closing adjustments. The purchase price allocations for all of these acquisitions are preliminary and subject to changes in the fair value of working capital and other assets and liabilities on the effective dates, completion of an appraisal of assets acquired and liabilities assumed, and final valuation of intangible assets.

Pro Forma Results (Unaudited)

The following summary, prepared on a pro forma basis, presents our unaudited consolidated results of operations as if the acquisitions of CapRock and Schlumberger GCS had been completed as of the beginning of fiscal 2010, after including in fiscal 2010 integration and other costs associated with these acquisitions, and after including the impact of adjustments such as amortization of intangible assets and interest expense on related borrowings and, in each case, the related income tax effects. This pro forma presentation does not include any impact of transaction synergies. In the following table, “income from continuing operations” refers to income from continuing operations attributable to Harris Corporation common shareholders.


	2011		2010
	(In millions, except per share amounts)

Revenue from product sales and services — as reported	$	5,924.6	$	5,206.1
Revenue from product sales and services — pro forma	$	6,082.4	$	5,750.8
Income from continuing operations — as reported	$	588.0	$	561.6
Income from continuing operations — pro forma	$	595.8	$	539.3
Income from continuing operations per diluted common share — as reported	$	4.60	$	4.28
Income from continuing operations per diluted common share — pro forma	$	4.66	$	4.11

The pro forma results are not necessarily indicative of our results of operations had we owned CapRock and Schlumberger GCS for the entire periods presented.

During fiscal 2009 we made the following significant acquisition:


	•	Acquisition of Tyco Electronics Wireless Systems Business. On May 29, 2009, we acquired substantially all of the assets of the Tyco Electronics wireless systems business (“Wireless Systems”) (formerly known as M/A-COM), an established provider of mission-critical wireless communications systems for law enforcement, fire and rescue, public service, utility and transportation markets. In connection with the acquisition, we assumed liabilities primarily related to Wireless Systems. We did not assume the State of New York wireless network contract awarded to Wireless Systems in December 2004. The total purchase price for Wireless Systems was $674.9 million. We report Wireless Systems, which we now call Public Safety and Professional Communications, within our RF Communications segment. We believe the acquisition created a powerful supplier of end-to-end wireless network solutions to the global land mobile radio systems market.

The goodwill resulting from all the above acquisitions was associated primarily with the acquired companies’ market presence and leading positions, growth opportunities in the markets in which the acquired companies operated, experienced work forces and established operating infrastructures. The goodwill related to the Schlumberger GCS and Wireless Systems acquisitions is deductible for tax purposes, the goodwill related to the Carefx acquisition is nondeductible for tax purposes, and most of the goodwill related to the CapRock acquisition is nondeductible for tax purposes.