ABERDEEN, United Kingdom and
MELBOURNE, Florida, November 8, 2010 /PRNewswire/ -- 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 US$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 US$50
million, resulting in an effective purchase price of
US$347.5 million. For the calendar
year ending December 31, 2010,
Schlumberger GCS revenue is expected to be US$170 million, and earnings before interest,
taxes, depreciation and amortization (EBITDA) is expected to be
US$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 +1-617-213-8058
(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 http://www.harris.com. A
recording of the call will be available on the Harris website 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 US$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 http://www.harris.com.
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.