Harris Corporation to Acquire Multimax Incorporated, an IT and Communications Services Provider to the U.S. Government
Also Provides Updated Fiscal Year 2007 and 2008 Earnings Guidance
WASHINGTON and MELBOURNE, Fla., May 31 /-- Harris Corporation (NYSE:HRS), an international communications and information technology company, has signed a definitive agreement to acquire Multimax Incorporated, a leading provider of information technology and communications services for the U.S. government. Acquiring Multimax significantly expands the Harris technical services business -- providing greater scale, a broader customer base and new growth opportunities through key positions on Government-Wide Acquisition Contracts (GWACs).
Under terms of the agreement, Harris will purchase privately held Multimax for $400 million in cash, subject to post-closing adjustments. The transaction, which is subject to customary regulatory reviews and closing conditions, is expected to close prior to the Harris fiscal year end on June 29, 2007. Multimax latest 12 months pro forma revenue ended March 31, 2007 was $315 million and operating income was $55 million. The acquisition is expected to be accretive to Harris earnings in fiscal year 2008 by about $0.08 per diluted share, excluding acquisition-related charges.
Headquartered in Herndon, Virginia, Multimax has 1,100 employees located primarily at customer sites supporting a diverse portfolio of mission- critical, network infrastructure programs serving more than 800,000 users at over 3,800 locations in U.S. and overseas. A large portion of the workforce is technically certified and about 85 percent of the company's employees have government security clearances.
Customers include the U.S. Navy, Marine Corps, Air Force, Army, Department of Homeland Security, Department of State, Department of Veterans Affairs and the Federal Aviation Administration. Multimax has key positions on major contracts, such as the Navy Marine Corps Intranet (NMCI) program, and GWACs including NETCENTS, EAGLE, ITES-2S and FirstSource. These information technology procurement vehicles are broadly accessible by government agencies.
"Multimax is a very successful information technology and communications services company, with nearly 20 years of experience managing large-scale, mission-critical networks for the government," said Howard L. Lance, chairman, president and CEO of Harris. "The acquisition of Multimax is complementary to our existing technical services business and provides additional scale. Multimax has a strong management team and a track record of superior growth and profitability, solid backlog, and a pipeline of new business opportunities across DoD and civilian agencies. We expect double-digit growth to continue in this business, with operating margins above the current average for our Government Communications Systems segment.
"The outsourcing of IT and communications requirements by the U.S. government continues to increase, providing a number of future growth opportunities. Multimax has been awarded leadership positions on several key GWACs, opening the door for Harris to supply new and existing customers with not only additional technical services, but the full breadth of other Harris products and services as well. These growth opportunities will be a great addition to our government business."
Carleton Jones, Multimax chief executive officer added, "The combination of Multimax and Harris will provide government customers with a new, stronger ally in their quest for premier IT and communications services. Bringing these two companies together will give the Department of Defense and other U.S. government agencies access to a combined breadth of services, depth of expertise, and unparalleled customer commitment. We are excited about this opportunity for our customers and our employees."
Harris Corporation Guidance
With the expected earnings accretion from the acquisition, Harris revised upward its non-GAAP earnings guidance for fiscal year 2008, beginning June 30, 2007, to a new range of $3.28 to $3.38 per diluted share -- excluding acquisition-related charges -- from the previous range of $3.20 to $3.30. Revised fiscal year 2008 non-GAAP earnings guidance represents a year-over- year increase of 20 percent compared to non-GAAP earnings guidance for fiscal year 2007.
The company now expects non-GAAP earnings guidance for fiscal year 2007 to be at the lower end of the previous guidance range of $2.77 to $2.81 per diluted share. The new guidance includes reserves expected to be established in the fiscal fourth quarter in the Government Communications Systems segment resulting from schedule and cost overruns on a fixed price satellite deployable mesh reflector program. A reconciliation of GAAP to non-GAAP financial measures is provided on Table 1 and in the accompanying notes.
Harris will host a conference call at 5:00 p.m., Eastern Time, to discuss the above items. Interested individuals are invited to listen to the call by using a dial-in number: (719) 457-2617, access code: 6288314. The conference call also will be broadcast live via the Internet at www.harris.com/. A replay of the teleconference will be available beginning at 8:00 p.m., Eastern Time, and will run until midnight, Eastern Time, on Thursday, June 7. To access the replay, please call (719) 457-0820, access code: 6288314. A recording of the call will also be available on the Harris website beginning at 7:00 p.m., Eastern Time, on May 31.
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 annual revenue of about $4 billion and more than 14,000 employees - including more than 6,000 engineers and scientists. Harris is dedicated to developing best-in-class assured communications(TM) products, systems, and services for global markets, including government communications, RF communications, broadcast communications, and wireless transmission network solutions. Additional information about Harris Corporation is available at www.harris.com
About Multimax
Multimax is a premier resource for performance-based enterprise IT and communications services and solutions supporting the Department of Defense, federal civilian agencies, and state and local government entities, including, among others: U.S. Navy, U.S. Marine Corps, U.S. Air Force, U.S. Army, Department of Homeland Security, Department of State, Department of Veterans Affairs and Federal Aviation Administration. Headquartered in Herndon, Virginia, with operating locations worldwide, Multimax offers clear value over the full technology lifecycle, with proven expertise and execution meeting the highest professional standards. For more information regarding Multimax, please visit www.multimax.com.
Source: Harris Corporation
CONTACT: Investor Relations, Pamela Padgett, +1-321-727-9383, or pamela.padgett@harris.com, or Media, Jim Burke at +1-321-727-9131, or jim.burke@harris.com, both of Harris Corporation
Web site: www.harris.com/
