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FALLS CHURCH, Va., April 23 /PRNewswire-FirstCall/ — General Dynamics today reported first-quarter 2008 earnings from continuing operations of $573 million, or $1.42 per share on a fully diluted basis, compared with 2007 first-quarter earnings from continuing operations of $440 million, or $1.07 per share fully diluted. Revenues grew to $7 billion in the quarter, an 11.2 percent increase over first-quarter 2007 revenues of $6.3 billion. Net earnings for the first quarter of 2008 were $572 million, a 31.8 percent increase over first quarter 2007.
Margins
Company-wide operating margins for the first quarter of 2008 increased 150 basis points over the first quarter of 2007, to 12.3 percent.
Backlog
The company’s funded and total backlog each grew by approximately $2.9 billion in the first quarter of 2008, to $40 billion and $49.8 billion respectively at the end of the period. Compared to first-quarter 2007, funded backlog grew by 16 percent and total backlog grew by 14.1 percent.
Cash
Net cash provided by operating activities from continuing operations in the quarter totaled $431 million. Free cash flow from operations, defined as net cash provided by operating activities from continuing operations less capital expenditures, was $346 million for the period.
“General Dynamics’ performance in the first quarter of 2008 was excellent,” said Nicholas D. Chabraja, chairman and chief executive officer. “Earnings grew substantially over the first quarter of 2007, and significant sales-volume increases in Combat Systems, Marine Systems and the Aerospace segment reflect ongoing demand for each group’s products. While revenue in Information Systems and Technology was essentially unchanged year-over-year, the group’s operating earnings and margin rates increased for the period.
“Orders in the quarter were very strong, with $2.9 billion in future revenue being added to the company’s funded backlog. Notable contract awards include $1.2 billion for upgrades to Abrams tanks, $1.1 billion for a Virginia-class submarine and $1.4 billion for construction of the first DDG-1000 Zumwalt-class destroyer.
“Strong operating performance, lower interest expense and stock-repurchase activity in the quarter all contributed to a 34 percent increase in earnings per share on a fully diluted basis compared to the first quarter of 2007,” Chabraja said.
General Dynamics, headquartered in Falls Church, Virginia, employs approximately 84,000 people worldwide. The company is a market leader in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. More information about the company is available on the Internet at .
Certain statements made in this press release, including any statements as to future results of operations and financial projections, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on management’s expectations, estimates, projections and assumptions. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors. Additional information regarding these factors is contained in the company’s filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.
All forward-looking statements speak only as of the date they were made. The company does not undertake any obligation to update or publicly release any revisions to any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.
WEBCAST INFORMATION: General Dynamics will webcast its first-quarter securities analyst conference call, scheduled for 11:30 a.m. Eastern Time on Wednesday, April 23, 2008. The webcast will be a listen-only audio event, available at . An on-demand replay of the webcast will be available by 3 p.m. April 23 and will continue for 12 months. To hear a recording of the conference call by telephone, please call 888-286-8010 (international: 617-801-6888); passcode 25482657. The phone replay will be available from 3 p.m. April 23 until midnight April 30, 2008.
CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

First Quarter Variance
2008 2007 $ %

NET SALES $7,005 $6,300 $705 11.2 %
OPERATING COSTS AND
EXPENSES 6,144 5,619 (525)

OPERATING EARNINGS 861 681 180 26.4 %

Interest, Net (19) (26) 7
Other, Net 3 1 2

EARNINGS FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 845 656 189 28.8 %

Provision for Income Taxes 272 216 (56)

EARNINGS FROM CONTINUING
OPERATIONS $573 $440 $133 30.2 %

Discontinued Operations,
Net of Tax (1) (6) 5

NET EARNINGS $572 $434 $138 31.8 %

EARNINGS PER SHARE - BASIC
Continuing Operations $1.43 $1.08 $0.35 32.4 %
Discontinued Operations $- $(0.01) $0.01
Net Earnings $1.43 $1.07 $0.36 33.6 %

BASIC WEIGHTED AVERAGE
SHARES OUTSTANDING
(IN MILLIONS) 400.8 405.6

EARNINGS PER SHARE - DILUTED
Continuing Operations $1.42 $1.07 $0.35 32.7 %
Discontinued Operations $- $(0.01) $0.01
Net Earnings $1.42 $1.06 $0.36 34.0 %

DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING
(IN MILLIONS) 403.9 409.4

NET SALES AND OPERATING EARNINGS BY SEGMENT (UNAUDITED)
DOLLARS IN MILLIONS

First Quarter Variance
2008 2007 $ %
NET SALES:

AEROSPACE $1,279 $1,094 $185 16.9 %

COMBAT SYSTEMS 1,997 1,568 429 27.4 %

MARINE SYSTEMS 1,378 1,257 121 9.6 %

INFORMATION SYSTEMS
AND TECHNOLOGY 2,351 2,381 (30) (1.3)%

TOTAL $7,005 $6,300 $705 11.2 %

OPERATING EARNINGS:

AEROSPACE $236 $173 $63 36.4 %

COMBAT SYSTEMS 259 174 85 48.9 %

MARINE SYSTEMS 122 98 24 24.5 %

INFORMATION SYSTEMS
AND TECHNOLOGY 260 250 10 4.0 %

CORPORATE (16) (14) (2) (14.3)%

TOTAL $861 $681 $180 26.4 %

OPERATING MARGINS:

AEROSPACE 18.5 % 15.8 %

COMBAT SYSTEMS 13.0 % 11.1 %

MARINE SYSTEMS 8.9 % 7.8 %

INFORMATION SYSTEMS
AND TECHNOLOGY 11.1 % 10.5 %

TOTAL 12.3 % 10.8 %

PRELIMINARY CONSOLIDATED BALANCE SHEET (UNAUDITED)
DOLLARS IN MILLIONS

March 30, December 31,
2008 2007
ASSETS
Current Assets:
Cash and equivalents $2,605 $2,891
Accounts receivable 2,976 2,874
Contracts in process 4,381 4,337
Inventories 1,663 1,621
Other current assets 565 575
Total Current Assets 12,190 12,298

Noncurrent Assets:
Property, plant and equipment, net 2,487 2,472
Intangible assets, net 954 972
Goodwill 8,979 8,942
Other assets 1,097 1,049
Total Noncurrent Assets 13,517 13,435
Total Assets $25,707 $25,733
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt and current portion of
long-term debt $673 $673
Accounts payable 2,091 2,318
Customer advances and deposits 3,483 3,440
Other current liabilities 2,809 2,733
Total Current Liabilities 9,056 9,164

Noncurrent Liabilities:
Long-term debt 2,117 2,118
Other liabilities 2,757 2,683
Commitments and contingencies
Total Noncurrent Liabilities 4,874 4,801

Shareholders’ Equity:
Common stock 482 482
Surplus 1,190 1,141
Retained earnings 11,812 11,379
Treasury stock (2,399) (1,881)
Accumulated other comprehensive income 692 647
Total Shareholders’ Equity 11,777 11,768
Total Liabilities and Shareholders’ Equity $25,707 $25,733

PRELIMINARY CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
DOLLARS IN MILLIONS

Three Months Ended
Cash Flows from Operating Activities: March 30, April 1,
2008 2007
Net earnings $572 $434
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation 69 62
Amortization 33 39
Stock-based compensation expense 23 19
Excess tax benefit from stock-based compensation (15) (18)
Deferred income tax (benefit) provision (1) 24
Discontinued operations, net of tax 1 6
(Increase) decrease in assets, net of effects
of business acquisitions:
Accounts receivable (97) 74
Contracts in process (41) (119)
Inventories (42) (92)
Increase (decrease) in liabilities, net of
effects of business acquisitions:
Accounts payable (231) (54)
Customer advances and deposits 52 90
Income taxes payable 230 152
Other current liabilities (140) (85)
Other, net 18 (10)
Net Cash Provided by Operating Activities
from Continuing Operations 431 522
Net Cash Used by Discontinued Operations -
Operating Activities (1) (9)
Net Cash Provided by Operating Activities 430 513

Cash Flows from Investing Activities:
Purchases of available-for-sale securities (973) (30)
Sales/maturities of available-for-sale
securities 968 26
Capital expenditures (85) (53)
business acquisitions, net of cash acquired (65) (298)
Proceeds from sale of assets, net 31 14
Net Cash Used by Investing Activities (124) (341)

Cash Flows from Financing Activities:
Purchases of common stock (519) (153)
Dividends paid (117) (93)
Proceeds from option exercises 30 58
Excess tax benefit from stock-based
compensation 15 18
Other, net (1) (114)
Net Cash Used by Financing Activities (592) (284)

Net Decrease in Cash and Equivalents (286) (112)
Cash and Equivalents at Beginning of Period 2,891 1,604
Cash and Equivalents at End of Period $2,605 $1,492

PRELIMINARY FINANCIAL INFORMATION (UNAUDITED)
DOLLARS IN MILLIONS EXCEPT PER SHARE AND EMPLOYEE AMOUNTS

First Quarter First Quarter
2008 2007
Non-GAAP Financial Measures:
Free Cash Flow from Operations:
Net Cash Provided by Operating Activities
from Continuing Operations $431 $522
Capital Expenditures (85) (53)
Free Cash Flow from Operations (A) $346 $469

Return on Invested Capital:
Earnings from Continuing Operations $2,213 $1,763
After-Tax Interest Expense 94 104
After-Tax Amortization Expense 95 98
Net Operating Profit after Taxes 2,402 1,965
Average Debt and Equity 13,822 12,507
Return on Invested Capital (B) 17.4% 15.7%

Other Financial Information:
Debt-to-Equity ( C ) 23.7% 27.7%

Debt-to-Capital (D) 19.2% 21.7%

Book Value per Share (E) $29.57 $24.90

Total Taxes Paid $41 $26

Company Sponsored Research and
Development (F) $110 $98

Employment 84,000 82,600

Sales Per Employee (G) $335,900 $308,900

Shares Outstanding 398,321,560 404,665,744

(A) The company’s management believes free cash flow from operations is
a measurement that is useful to investors, because it portrays the
company’s ability to generate cash from its core businesses for such
purposes as repaying maturing debt, funding business acquisitions
and paying dividends. The company uses free cash flow from
operations to assess the quality of its earnings and as a
performance measure in evaluating management. The most directly
comparable GAAP measure to free cash flow from operations is net
cash provided by operating activities from continuing operations.

(B) The company’s management believes return on invested capital is a
measurement that is useful to investors, because it reflects the
company’s ability to generate returns from the capital it has
deployed in its operations. The company uses ROIC to evaluate
investment decisions and as a performance measure in evaluating
management. The company defines ROIC as net operating profit after
taxes for the latest 12-month period divided by the sum of the
average debt and shareholders’ equity for the same period. Net
operating profit after taxes is defined as earnings from continuing
operations plus after-tax interest and amortization expense. The
most directly comparable GAAP measure to net operating profit after
taxes is earnings from continuing operations.

( C ) Debt-to-equity ratio is calculated as total debt divided by total
equity as of the end of the period.

(D) Debt-to-capital ratio is calculated as total debt divided by the sum
of total debt plus total equity as of the end of the period.

(E) Book value per share is calculated as total equity divided by total
outstanding shares as of the end of the period.

(F) Includes independent research and development and bid and proposal
costs and Gulfstream product development costs.

(G) Sales per employee is calculated by dividing net sales for the
latest 12-month period by the company’s average number of employees
during that period.

BACKLOG (UNAUDITED)
DOLLARS IN MILLIONS

Estimated Total
Potential Estimated
Total Contract Contract
First Quarter 2008 Funded Unfunded Backlog Value* Value
AEROSPACE $11,802 $650 $12,452 $926 $13,378

COMBAT SYSTEMS 11,116 3,171 14,287 2,292 16,579

MARINE SYSTEMS 9,552 3,056 12,608 2,272 14,880

INFORMATION SYSTEMS
AND TECHNOLOGY 7,582 2,838 10,420 9,142 19,562

TOTAL $40,052 $9,715 $49,767 $14,632 $64,399

Fourth Quarter 2007
AEROSPACE $11,591 $665 $12,256 $925 $13,181

COMBAT SYSTEMS 10,824 2,077 12,901 2,347 15,248

MARINE SYSTEMS 7,621 4,439 12,060 2,513 14,573

INFORMATION SYSTEMS
AND TECHNOLOGY 7,158 2,457 9,615 8,721 18,336

TOTAL $37,194 $9,638 $46,832 $14,506 $61,338

First Quarter 2007
AEROSPACE $7,716 $730 $8,446 $964 $9,410

COMBAT SYSTEMS 10,550 1,809 12,359 1,818 14,177

MARINE SYSTEMS 8,927 4,445 13,372 237 13,609

INFORMATION SYSTEMS
AND TECHNOLOGY 7,343 2,111 9,454 7,998 17,452

TOTAL $34,536 $9,095 $43,631 $11,017 $54,648

* The estimated potential contract value represents management’s estimate
of the company’s future contract value under indefinite delivery,
indefinite quantity (IDIQ) contracts and unexercised options associated
with existing firm contracts. Because the value in the IDIQ
arrangements is subject to the customer’s future exercise of an
indeterminate quantity of delivery orders, the company recognizes these
contracts in backlog only when they are funded. Unexercised options are
recognized in backlog when the customer exercises the option and
establishes a firm order.

FIRST QUARTER 2008 SIGNIFICANT ORDERS (UNAUDITED)
DOLLARS IN MILLIONS

General Dynamics received the following significant contract orders during the first quarter of 2008:
Combat Systems

— A multi-year contract from the U.S. Army worth $1.2 billion to upgrade
435 M1A1 Abrams main battle tanks to the M1A2 System Enhancement
Package (SEP) Version Two (V2) configuration.
— $359 from the Army to continue performing contractor logistics support
for the Stryker program.
— Combined orders worth $200 from the Army for Abrams Tank Systems
Technical Support, bringing the total contract value to over $600.
— $127 for 186 armored Cougar vehicles and related spares and support
under the Mine Resistant Ambush Protected (MRAP) vehicle program.
— $81 for RG-31 support, spares and training under the MRAP vehicle
program.
— $97 from the Marine Corps to continue the System Development and
Demonstration phase of the Expeditionary Fighting Vehicle program.
— $166 from the Army for the production of Hydra-70 (2.75-inch) rockets.
This order brings the total contract value to date to almost $700. The
contract has a potential value of over $900.
— $110 from the Army for the production of small-caliber ammunition.
This award brings the total contract value to date to approximately
$630.

Marine Systems

— $1.1 billion in funding from the U.S. Navy for the final Block II
Virginia-class submarine.
— $325 from the Navy to purchase long-lead materials for the first Block
III Virginia-class submarine.
— $1.4 billion from the Navy to build the first DDG-1000 Zumwalt-class
destroyer.
— $360 from the Navy for the construction of the 10th T-AKE
combat-logistics ship and $100 to purchase long-lead materials for the
11th ship.

Information Systems and Technology

— $263 for the system development and demonstration of the Integrated
Computer System for the Future Combat Systems (FCS) program. This award
brings the total contract value to over $800.
— $133 from the Marine Corps to produce units of the next generation
Tactical Data Network (TDN)-Data Distribution Systems-Modular. This
indefinite delivery, indefinite quantity (IDIQ) contract has a
potential value of $375.
— $78 from the Army to provide specialized satellite communications earth
terminals and support services for Increment One of the Warfighter
Information Network-Tactical (WIN-T) program. This contract has a
potential value of over $700.
— $374 from the National Geospatial Intelligence Agency to plan,
engineer, design, install, test and operate IT infrastructure. This
contract has a potential value of $970.
— $30 from the Navy to provide systems engineering and program management
support to the Aegis Ballistic Missile Defense program. This contract
has a potential value of over $190.

AIRCRAFT DELIVERIES (UNAUDITED)

First Quarter
2008 2007
GREEN (UNITS):
LARGE AIRCRAFT 22 19
MID-SIZE AIRCRAFT 15 11
TOTAL 37 30

COMPLETIONS (UNITS):
LARGE AIRCRAFT 20 20
MID-SIZE AIRCRAFT 16 10
TOTAL 36 30

PRE-OWNED:
UNITS 1 2
SALES (millions) $9 $21
OPERATING EARNINGS (millions) $1 $2
AEROSPACE MARGINS EXCLUDING PRE-OWNED ACTIVITY 18.5% 15.9%

General Dynamics

HERNDON, Va., April 28 /PRNewswire/ — CertiPath, the identity management and secure information sharing authority, has appointed Kaus Phaltankar as vice president of business solutions.
Phaltankar, a certified information systems auditor (CISA) and certified information systems security professional (CISSP), brings two decades of innovative network and security experience coupled with a proven track record of driving new business initiatives. He has designed and implemented security architecture for numerous Fortune 500 companies, patented resilient network infrastructure design and authored an industry-leading book on implementing secure intranets and extranets.
Phaltankar is a veteran of PKI (public key infrastructure) technology, the leading mechanism for identity management and authentication exchange, and managed the Internet’s first commercial PKI certificate authority. His leadership ensures that CertiPath has the resources and intelligence to expand its PKI communications bridge, streamlining secure connectivity across various industries.
“Kaus has been on the frontlines of secure information sharing since its inception,” said Jeff Nigriny, CertiPath president and COO. “His business and technical experience enables CertiPath to provide the next generation of secure connectivity to global organizations, starting in the commercial aviation space. Kaus will spend the next year evaluating the networking structure of our nation’s airports and commercial aircrafts, ultimately devising a plan that will allow them to communicate securely with trusted partners and suppliers.”
With CertiPath’s highly scalable model for managing and conveying identity assurance, organizations join a “trust fabric” that provides industry-wide efficiency, risk-mitigation and new opportunities to engage with a broader pool of prospective partners.
Prior to CertiPath, Phaltankar founded multiple firms focused on providing network, security and compliance solutions for large enterprise customers in the U.S., Europe and Asia. As a founder and CEO of CLEAN Communications, a Managed Security Service Provider, he developed relationships with large telecommunications and security firms, rapidly growing the business before it was acquired by one of the nation’s largest managed service providers.
“CertiPath founded its service on trust, delivering secure communication to the A&D industry in the form of PKI. Now the organization is positioned to expand the service, making secure collaboration more accessible within aviation, defense and other industries. Because supply chains are rarely contained entirely in one vertical, the business benefits of wide-scale PKI adoption are immeasurable,” said Phaltankar, who will report to Nigriny. “It’s exciting to operate on the cutting edge of secure information sharing, delivering new capabilities around the world.”
About CertiPath
CertiPath provides the aerospace and defense industry’s only public key infrastructure (PKI)-based communications bridge where information can be shared widely, securely, effectively and affordably between partners, suppliers and customers — regardless of the size and scope of the supply chain.
Certipath’s disruptive solution tears down the burdensome and costly company, employee and program-centric approaches to identity assurance. Today, organizations in the U.S., U.K. and Europe including Boeing, BAE Systems, EADS, Lockheed Martin, Northrop-Grumman, Raytheon and the U.S. Federal Bridge (FBCA) are members of this fast-growing community. For more information, visit CertiPath on the web at
All product and company names herein may be trademarks of their registered owners.
CertiPath

MELBOURNE, Fla., April 29 /PRNewswire-FirstCall/ — Harris Corporation reported revenue for its third quarter of fiscal year 2008 of $1.33 billion, an increase of 24 percent compared to $1.07 billion in the prior-year quarter. Organic revenue increased 15 percent, excluding the impact of prior-year acquisitions.
Net income for the third quarter of fiscal year 2008 was $108 million, or $.78 per diluted share. Net income in the prior-year quarter, which included a significant gain associated with the Harris Stratex Networks combination, was $215 million, or $1.52 per diluted share. Non-GAAP net income, excluding acquisition-related costs and gains, was $110 million, or $.81 per diluted share, in the third quarter of fiscal year 2008, compared to $101 million, or $.72 per diluted share, in the prior-year quarter. Third quarter fiscal year 2008 earnings were adversely impacted by a previously announced charge of $47 million for cost overruns on several commercial satellite reflector programs. Also, as previously announced, third quarter earnings benefited from a low effective tax rate. A reconciliation of GAAP to non-GAAP financial measures is provided in Tables 5 through 8 along with accompanying notes.
“Strong revenue growth continued in the third quarter across all of our businesses. Even with the impact of the commercial reflector charge, Harris generated excellent earnings in the quarter,” said Howard L. Lance, chairman, president and chief executive officer. “Orders were particularly strong and our growing backlog should provide excellent momentum entering fiscal 2009.”
Defense Communications and Electronics
Results in the Defense Communications and Electronics segment continued to be excellent, with third quarter revenue of $507 million, an increase of 22 percent compared to the prior-year quarter. Orders were significantly greater than revenue. Operating income of $156 million increased 24 percent, compared to the prior-year quarter, and operating margin was 31 percent. The Defense Communications and Electronics segment is comprised of the RF Communications Division and Defense Programs.
Global market demand for Harris Falcon(R) tactical radios continued to increase at double-digit rates. Deployment of advanced communications systems remains a top customer priority in the U.S. as well as globally. Demand is being driven by modernization programs, force expansion, force restructuring and modularity, and network-centric operations that significantly improve situational awareness. International deliveries were made to a diverse set of customers, including Pakistan, Albania, Algeria, Bulgaria, Kazakhstan, Saudi Arabia, Georgia, Singapore, Chad, Jamaica, Romania, Spain, Thailand, and the United Kingdom.
Significant RF Communications orders in the third quarter included:

— A $118 million order from the U.S. Army to supply Falcon II(R) high-
frequency (HF) vehicular radio systems for HMMWV’s and other vehicles;

— A $97 million contract to continue upgrading U.S. Marine Corps tactical
radio communications with multiband, multimission JTRS-approved Falcon
III(R) handheld and vehicular radio systems;

— An $80 million order from the Philippines Ministry of Defence for Falcon
radios;

— A $45 million order to supply the U.S. Air Force with a complete suite
of Falcon tactical radios for its fleet of Mine Resistant Ambush
Protected (MRAP) vehicles; and

— A $25 million contract from the Brunei Ministry of Defence to supply
tactical radios, accessories and other equipment to the Combat Net Radio
replacement program of the Royal Brunei Armed Forces.

Announcements in the third quarter related to the robust RF Communications new product funnel included:
— First deliveries of the new Falcon III multiband, multimission manpack
radio, the first wideband networking radio to utilize the Software
Communication Architecture (SCA) and receive NSA Type 1 certification
for the protection of voice and data traffic up through the TOP SECRET
level;

— Deployment of the new Broadband Ethernet high-capacity line-of-site
radio by the 2-25th Stryker Brigade Combat Team of the U.S. Army’s 25th
Infantry Division;

— Introduction of the first multiband land mobile radio that provides
real-time interoperable communications for the growing federal public
safety and homeland security market;

— A contract from the Defence Forces of Norway to provide several
thousand RF-7800S Secure Personal Radios, a lightweight wideband radio
that delivers secure tactical communications to individual soldiers;
and

— Use of the JTRS-approved Falcon III handheld radios in U.S. Army Shadow
200 Unmanned Aerial Vehicles to extend the communications capabilities
of soldiers serving in mountainous and urban environments.

Defense Programs revenue increased in the third quarter of fiscal year 2008, compared to the prior-year quarter. Higher revenue was achieved in a number of strategic Department of Defense (DoD) programs including: the LMST (Lightweight Multiband Satellite Terminal) program for the U.S. Marine Corps, the WIN-T (Warfighter Information Network-Tactical) program for the U.S. Army, the IFCS (Improved Fire Control System) for the U.S. Army Multiple Launch Rocket System, the CDL (Common Data Link) Hawklink program for the U.S. Navy, and the MIDS (Multifunctional Information Distribution System) for DoD aircraft.
Harris products and systems are providing advanced battlespace networking capabilities at virtually every layer of the global communications grid — ground, air, sea and space. Harris develops mobile, ad hoc and self-healing networks for network-centric warfare, providing defense forces with true situational awareness and information assurance, along with multi-level security and leading-edge encryption solutions.
Government Communications Systems
Revenue growth also continued in the Government Communications Systems segment. Third quarter revenue was $491 million, an increase of 27 percent compared to the prior-year quarter. Orders were higher than revenue. Operating income for the third quarter was $6 million and was adversely impacted by the $47 million charge for commercial satellite reflector programs. Operating income in the prior-year quarter was $45 million. The Government Communications Systems segment is comprised of Civil Programs, National Intelligence Programs, and IT Services.
Organic revenue increased 6 percent in the third quarter, compared to the prior-year quarter, driven by the FDCA (Field Data Collection Automation) program for the U.S. Census Bureau, the Patriot IT services program for the NRO (National Reconnaissance Office), the NETCENTS IT integration and services program for the U.S. Air Force, and a number of classified programs.
Major program wins in the third quarter included the potential $410 million, 6.5-year Network and Space Operations and Maintenance (NSOM) program. Harris will provide operations and maintenance support to the 50th Space Wing Air Force Satellite Control Network at locations around the world. Harris also received a $22 million, 6-month extension to a Department of State contract to modernize IT architecture for the Bureau of Consular Affairs. During the quarter, Harris won new classified programs valued at approximately $140 million and was awarded a $20 million, 2-year program to provide satellite reflector antennas for the Sirius Satellite Radio FM 6 satellite expected to be launched in the fourth quarter of 2010.
In a new market for Harris — Healthcare IT — Harris won a $6 million contract during the third quarter from the U.S. Department of Health and Human Services. Harris will develop and integrate an open-source National Health Information Exchange Gateway solution that will enable federal healthcare agencies and healthcare providers to share patient information more quickly and easily, improving the quality of care and reducing costs.
Following the close of the quarter, Harris was awarded a 10-year contract valued at more than $40 million to supply depot support and engineering services for multiple space control systems for the U.S. Space and Missile Systems Center Space Superiority Systems Wing at Los Angeles Air Force Base, California. The value of the contract may increase through future options.
Broadcast Communications
Third quarter revenue in the Broadcast Communications segment was $159 million, an increase of 14 percent compared to the prior-year quarter. Orders were higher than revenue. Operating income was $7 million, compared to non-GAAP operating income of $5 million in the prior-year quarter. In the prior-year quarter, the segment had an operating loss, on a GAAP basis, of $18 million, which included the impact of cost-reduction actions and the discontinuance of a software development effort. Strong orders and an increase in backlog in the third quarter are expected to drive higher sales and operating income in the fourth quarter. A number of new initiatives are also underway to further reduce operating expenses and improve gross margins going forward.
Revenue growth in the third quarter was across all business areas in both U.S. and international markets. Higher revenue is being driven by the continuing global conversion to both digital and HD (high-definition) operations. Sales of Transmission Systems grew at double-digit rates, compared to the prior-year quarter, as a result of strong shipments in the U.S. market for the over-the-air digital transmission build-out. Double-digit growth continued in Infrastructure & Digital Media systems, including routers, graphics equipment and multiviewers. Third quarter sales of traffic and billing Software Solutions also improved, particularly in international markets.
Increasingly, large media customers are selecting the Harris ONE(TM) approach for workflow solutions across the entire broadcast delivery chain, tying workflow and signal flow together to improve productivity and responsiveness. Recent international examples include projects with Chunghwa Telecom in Taiwan; Brazilian broadcaster TV Anhanguera; the Saudi Arabia Ministry of Culture and Information for Saudi Television; Kuwait Television; RTV, the national public broadcaster in Slovenia; and HD suisse, the first HD television channel in Switzerland.
Harris Stratex Networks, Inc.
Revenue for the Harris Stratex Networks segment was $178 million in the third quarter, an increase of 21 percent compared to the prior-year quarter on a pro forma, non-GAAP basis (as if the former Harris Microwave Communications segment and Stratex Networks had been combined since the beginning of fiscal year 2007). Non-GAAP operating income in the third quarter was $11 million, excluding integration costs associated with the Harris Stratex Networks combination, compared with non-GAAP operating income of $4 million in the prior-year quarter. Segment operating income on a GAAP basis was $9 million, compared to $141 million in the prior-year quarter, which included a significant gain associated with the business combination, net of transaction- related costs.
North American revenue increased a strong 16 percent to $57 million in the third quarter compared to the prior-year quarter. Sales continue to be fueled by leased line substitution, foot-print expansion, grant money that is being made available to state, local and federal agencies, and right-of-way users responding to an increased demand for bandwidth expansion and some re-allocation to 1.7 / 2.7 GHz frequencies. International revenue increased 27 percent to $117 million in the third quarter. Growth was led by a 49 percent year-over-year increase in Africa, reflecting a rebound in capital investment following a series of mobile operator consolidations. Revenue growth was also strong in Europe, the Middle East and Russia.
During the quarter, Harald J. Braun was appointed president and chief executive officer of Harris Stratex Networks, succeeding Guy M. Campbell, who had previously announced his retirement. An industry veteran, Braun previously served as president and CEO of Siemens Networks LLC and was most recently senior executive in Nokia Siemens Networks North America.
Harris Stratex Networks management will host a conference call and webcast () today at 5:30 p.m., Eastern Time, to discuss financial results for their fiscal year third quarter.
Outlook
Harris reconfirmed its non-GAAP earnings guidance for fiscal year 2008 previously provided on February 28, 2008 at approximately $3.45 per diluted share. The company increased its earnings guidance for fiscal year 2009 to a new range of $4.05 to $4.15 per diluted share, compared to initial guidance provided on March 5, 2008, of $4.00 to $4.10 per diluted share. Fiscal 2009 earnings guidance now represents a year-over-year increase of 17 to 20 percent compared to current non-GAAP guidance for fiscal year 2008.
The corresponding fiscal year 2008 GAAP earnings guidance is approximately $3.34 per diluted share. A reconciliation of GAAP to non-GAAP guidance is provided in Table 7 and the accompanying notes. Harris will host a conference call today at 4:30 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) 325-4796, access code: 5925245. The conference call also will be broadcast live via the Internet at . A replay of the teleconference will be available beginning at 8:00 p.m., Eastern Time, and will run until midnight, Eastern Time, on May 6, 2008. To access the replay, please call (719) 457-0820, access code: 5925245. A recording of the call will also be available on the Harris website beginning at 7:00 p.m., Eastern Time, on April 29.
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 more than $5 billion 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 .
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the SEC, including net income and earnings per share for the third quarter of fiscal 2008 excluding the impact of costs associated with our acquisitions and integration costs associated with the formation of Harris Stratex Networks; and earnings per share guidance for fiscal 2008 also excluding the impact of integration costs associated with the formation of Harris Stratex Networks and acquisitions. Harris management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Management also believes that these non-GAAP financial measures enhance the ability of investors to analyze Harris business trends and to understand Harris performance. In addition, Harris may utilize non-GAAP financial measures as a guide in its forecasting, budgeting, and long-term planning process and to measure operating performance for some management compensation purposes. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.
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: earnings guidance for fiscal 2008 and fiscal 2009; the potential value of contract awards and potential contract awards; and statements regarding outlook, including expected revenue growth. 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: our participation in markets that are often subject to uncertain economic conditions which makes it difficult to estimate growth in our markets and, as a result, future income and expenditures; our dependence on the U.S. government for a significant portion of our revenues, as the loss of this relationship or a shift in U.S. government funding could have adverse consequences on our future business; potential changes in U.S. government or customer priorities due to program reviews or revisions to strategic objectives, including termination of or potential failure to fund U.S. government contracts; risks inherent with large long-term fixed-price contracts, particularly the ability to contain cost overruns; the performance of critical subcontractors or suppliers; financial and government and regulatory risks relating to international sales and operations, including fluctuations in foreign currency exchange rates and the effectiveness of our currency hedging program; our ability to continue to develop new products that achieve market acceptance; the consequences of future geo-political events, which may affect adversely the markets in which we operate, our ability to insure against risks, our operations or our profitability; strategic acquisitions and the risks and uncertainties related thereto, including our ability to manage and integrate acquired businesses; 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; customer credit risk; the fair values of our portfolio of passive investments, which values are subject to significant price volatility or erosion; risks inherent in developing new technologies; changes in our effective tax rate that may have an adverse effect on our results of operations; the impact of the results of Harris Stratex Networks, which may vary significantly and may be difficult to forecast; the potential impact of natural disasters on our significant operations in Florida, California and other locations; general economic conditions in the markets in which we operate; changes in future business conditions that could cause business investments and/or recorded goodwill to become impaired; and our ability to attract and retain key employees. 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. Harris 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.
Table 1
HARRIS CORPORATION
FY ‘08 Third Quarter Summary
condensed Consolidated Statement of Income
(Unaudited)

Quarter Ended Three Quarters Ended
March 28, March 30, March 28, March 30,
2008 2007 2008 2007
(In millions, except per share amounts)

Revenue from product sales and
services $1,329.6 $1,072.4 $3,877.8 $3,035.4
Cost of product sales and
services (933.9) (719.1) (2,691.7) (2,043.7)
Engineering, selling and
administrative expenses (236.4) (241.5) (683.6) (592.3)
Gain on combination with
Stratex Networks, Inc. — 163.4 — 163.4
Non-operating income (loss) 2.8 2.8 8.7 (15.9)
Interest income 1.9 4.6 5.5 9.5
Interest expense (13.9) (10.5) (42.8) (30.1)

Income before income taxes and
minority interest 150.1 272.1 473.9 526.3
Income taxes (38.9) (63.8) (149.0) (140.1)
Minority interest in Harris
Stratex Networks, Inc.,
net of tax (3.2) 6.6 (2.4) 6.6
Net income $108.0 $214.9 $322.5 $392.8

Net income per common share

Basic $.80 $1.62 $2.41 $2.95

Diluted $.78 $1.52 $2.35 $2.79

Cash dividends paid per common
share $.15 $.11 $.45 $.33

Basic weighted average shares
outstanding 134.6 133.0 134.0 133.0
Diluted weighted average shares
outstanding 136.2 141.7 136.9 141.7

Note: Results for the quarter ended March 30, 2007 include a $143.1 million after-tax ($1.01 per diluted share) gain on the combination with Stratex Networks, Inc. offset by $13.0 million after-tax and minority interest ($0.09 per diluted share) of transaction and integration costs related to the combination.
Table 2
HARRIS CORPORATION
FY ‘08 Third Quarter Summary
business Segment Information
(Unaudited)

Quarter Ended Three Quarters Ended
March 28, March 30, March 28, March 30,
2008 2007 2008 2007
(In millions)
Revenue
Defense Communications and
Electronics $506.8 $ 416.4 $1,408.4 $1,196.3
Government Communications
Systems 490.6 387.6 1,487.9 1,098.3
Broadcast Communications 158.6 138.6 468.9 433.4
Harris Stratex Networks 178.2 139.0 531.6 333.9
Corporate eliminations (4.6) (9.2) (19.0) (26.5)
$1,329.6 $1,072.4 $3,877.8 $3,035.4

Income Before Income Taxes
and Minority Interest
Segment Operating Income
(Loss):
Defense Communications
and Electronics $156.4 $ 126.3 $ 430.1 $355.2
Government Communications
Systems 5.7 44.5 97.8 106.8
Broadcast Communications 7.1 (18.1) 25.7 3.7
Harris Stratex Networks 9.2 141.0 7.4 157.0
Headquarters expense (18.2) (16.2) (55.2) (50.2)
Corporate eliminations (0.9) (2.3) (3.3) (9.7)
Non-operating income (loss) 2.8 2.8 8.7 (15.9)
Net interest (12.0) (5.9) (37.3) (20.6)
$150.1 $272.1 $473.9 $526.3

Table 3
HARRIS CORPORATION
FY ‘08 Third Quarter Summary
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

Three Quarters Ended
March 28, March 30,
2008 2007
(In millions)
Operating Activities
Net income $ 322.5 $ 392.8
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 125.8 89.1
Purchased in-process research and development
write-off 1.4 15.3
Share-based compensation 29.8 19.1
Non-current deferred income tax 2.3 (2.6)
Gain on the sale of securities available-for-sale (4.8) –
Gain on the combination with Stratex Networks, Inc. — (163.4)
Minority interest in Harris Stratex Networks, Inc.,
net of tax 2.4 (6.6)
(Increase) decrease in:
Accounts and notes receivable (96.7) (27.1)
Inventories (90.3) (26.2)
Increase (decrease) in:
Accounts payable and accrued expenses 67.4 (6.1)
Advance payments and unearned income 13.8 20.6
Income taxes (19.2) 6.3
Other (1.2) 12.1

Net cash provided by operating activities 353.2 323.3

Investing Activities
Cash paid for acquired businesses (12.8) –
Cash received in the combination with Stratex
Networks, Inc. — 33.2
Additions of property, plant and equipment (84.2) (66.6)
Additions of capitalized software (24.7) (32.2)
Proceeds from the sale of securities
available-for-sale 7.1 –
Cash paid for short-term investments
available-for-sale (8.4) (264.9)
Proceeds from the sale of short-term investments
available-for-sale 25.4 362.1

Net cash provided by (used in) investing activities (97.6) 31.6

Financing Activities
Proceeds from borrowings 450.2 36.0
Repayment of borrowings (541.3) (31.5)

Payment of treasury lock (8.8) –
Proceeds from exercise of employee stock options 27.1 27.8
Repurchases of common stock (200.0) (47.0)
Cash dividends (61.3) (44.2)

Net cash used in financing activities (334.1) (58.9)

Effect of exchange rate changes on cash and cash
equivalents 2.1 4.5
Net increase (decrease) in cash and cash
equivalents (76.4) 300.5
Cash and cash equivalents, beginning of year 368.3 181.3
Cash and cash equivalents, end of quarter $291.9 $481.8

Supplemental disclosure of noncash investing and
financing activities:
Formation and combination of Harris Stratex
Networks, Inc.:
Contribution of Harris Microwave Communications
Division assets and liabilities to the former
shareholders of Stratex Networks, Inc. $– $(117.9)
57% of the fair value of Stratex Networks, Inc.
received by Harris Corporation $– $281.3
Common stock issued in exchange for 3.5%
convertible debentures, due fiscal 2023 $163.5 $–

Table 4
HARRIS CORPORATION
FY ‘08 Third Quarter Summary
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

March 28, June 29,
2008 2007
(In millions)
Assets
Cash and cash equivalents $291.9 $368.3
Short-term investments 3.4 20.4
Marketable equity securities 31.1 40.5
Receivables 848.9 748.5
Inventories 649.3 556.8
Current deferred income taxes 119.7 94.3
Other current assets 64.8 67.3
Property, plant and equipment 481.3 459.2
Goodwill 1,539.3 1,525.2
Identifiable intangible assets 380.8 417.9
Other non-current assets 114.8 107.6
$4,525.3 $4,406.0

Liabilities and Shareholders’ Equity
Short-term debt $53.5 $410.0
Accounts payable 395.9 350.0
Compensation and benefits 174.9 188.1
Other accrued items 241.6 187.5
Advance payments and unearned income 142.3 128.5
Income taxes payable 15.2 64.2
Current portion of long-term debt 6.8 309.8
Non-current deferred income taxes 35.6 61.8
Long-term debt 833.5 408.9
Other long-term liabilities 105.8 66.5
Minority interest in Harris Stratex Networks,
Inc. 337.8 326.9
Shareholders’ equity 2,182.4 1,903.8
$4,525.3 $4,406.0

HARRIS CORPORATION
FY ‘08 Third Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G DISCLOSURE

To supplement our condensed consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we provide additional measures of segments’ operating income (loss), non- operating income (loss); cost of product sales and services; engineering, selling and administrative expenses; income before income taxes and minority interest; income taxes; minority interest; net income; and net income per diluted share adjusted to exclude certain costs, expenses, gains and losses. Harris management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Harris management also believes that these non-GAAP financial measures enhance the ability of investors to analyze Harris business trends and to understand Harris performance. In addition, Harris may utilize non-GAAP financial measures as a guide in its forecasting, budgeting, and long-term planning process and to measure operating performance for some management compensation purposes. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP follows:
Table 5
HARRIS CORPORATION
FY ‘08 Third Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Condensed Consolidated Statement of Income
(Unaudited)

Quarter Ended Quarter Ended
March 28, 2008 March 30, 2007

As Adjust- Non- As Adjust- Non-
Reported ment GAAP Reported ment GAAP
(In millions, except per share amounts)

Revenue from
product sales
and services $1,329.6 $– $1,329.6 $1,072.4 $– $1,072.4

Cost of product
sales and
services (A) (933.9) 0.2 (933.7) (719.1) 6.0 (713.1)
Engineering,
selling and
administrative
expenses(B) (236.4) 1.8 (234.6) (241.5) 43.6 (197.9)
Gain on combination
with Stratex
Networks, Inc. (C) — — — 163.4 (163.4) –
Non-operating income 2.8 — 2.8 2.8 — 2.8
Interest income 1.9 — 1.9 4.6 — 4.6
Interest expense (13.9) — (13.9) (10.5) — (10.5)
Income before
income taxes and
minority interest 150.1 2.0 152.1 272.1 (113.8) 158.3
Income taxes (38.9) 0.3 (38.6) (63.8) 9.1 (54.7)
Minority interest
in Harris Stratex
Networks, Inc.,
net of tax (3.2) (0.1) (3.3) 6.6 (9.7) (3.1)

Net income $108.0 $2.2 $110.2 $214.9 $(114.4) $100.5

Net income per
diluted common
share (N) $.78 $.03 $.81 $1.52 $(.80) $.72

Three Quarters Ended Three Quarters Ended
March 28, 2008 March 30, 2007
As Adjust- Non- As Adjust- Non-
Reported ment GAAP Reported ment GAAP
(In millions, except per share amounts)

Revenue from
product sales
and services $3,877.8 $– $3,877.8 $3,035.4 $– $3,035.4

Cost of product
sales and
services (A) (2,691.7) 6.2 (2,685.5) (2,043.7) 6.0 (2,037.7)
Engineering,
selling and
administrative
expenses(B) (683.6) 18.9 (664.7) (592.3) 45.3 (547.0)
Gain on combination
with Stratex
Networks, Inc. (C) — — — 163.4 (163.4) –
Non-operating
income (loss)(D) 8.7 — 8.7 (15.9) 19.8 3.9
Interest income 5.5 — 5.5 9.5 — 9.5
Interest expense (42.8) — (42.8) (30.1) — (30.1)
Income before
income taxes and
minority interest 473.9 25.1 499.0 526.3 (92.3) 434.0
Income taxes (149.0) (6.6) (155.6) (140.1) 1.9 (138.2)
Minority interest
in Harris Stratex
Networks, Inc.,
net of tax (2.4) (6.8) (9.2) 6.6 (9.7) (3.1)

Net income $322.5 $11.7 $334.2 $392.8 $(100.1) $292.7

Net income per
diluted common
share (N) $2.35 $.09 $2.44 $2.79 $(.70) $2.09

Table 6
HARRIS CORPORATION
FY ‘08 Third Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
business Segment Information
(Unaudited)

Quarter Ended Quarter Ended
March 28, 2008 March 30, 2007

As Adjust- Non- As Adjust- Non-
Reported ment GAAP Reported ment GAAP
(In millions)
Revenue
Defense
Communications
and Electronics $506.8 $– $506.8 $416.4 $– $416.4
Government
Communications
Systems 490.6 — 490.6 387.6 — 387.6
Broadcast
Communications 158.6 — 158.6 138.6 — 138.6
Harris Stratex
Networks 178.2 — 178.2 139.0 — 139.0
Corporate
eliminations (4.6) — (4.6) (9.2) — (9.2)
$1,329.6 $– $1,329.6 $1,072.4 $– $1,072.4

Income Before
Income Taxes and
Minority Interest
Segment Operating
Income (Loss):
Defense
Communications
and Electronics $156.4 $– $156.4 $126.3 $– $126.3
Government
Communications
Systems (E) 5.7 0.4 6.1 44.5 — 44.5
Broadcast
Communications (F) 7.1 0.1 7.2 (18.1) 23.1 5.0
Harris Stratex
Networks (G) 9.2 1.5 10.7 141.0 (136.9) 4.1
Headquarters
expense (18.2) — (18.2) (16.2) — (16.2)
Corporate
eliminations (0.9) — (0.9) (2.3) — (2.3)
Non-operating income 2.8 — 2.8 2.8 — 2.8
Net interest
expense (12.0) — (12.0) (5.9) — (5.9)
$150.1 $2.0 $152.1 $272.1 $(113.8) $158.3

Three Quarters Ended Three Quarters Ended
March 28, 2008 March 30, 2007
As Adjust- Non- As Adjust- Non-
Reported ment GAAP Reported ment GAAP
(In millions)
Revenue
Defense
Communications
and
Electronics $1,408.4 $– $1,408.4 $1,196.3 $– $1,196.3
Government
Communications
Systems 1,487.9 — 1,487.9 1,098.3 — 1,098.3
Broadcast
Communications 468.9 — 468.9 433.4 — 433.4
Harris Stratex
Networks 531.6 — 531.6 333.9 — 333.9
Corporate
eliminations (19.0) — (19.0) (26.5) — (26.5)
$3,877.8 $– $3,877.8 $3,035.4 $– $3,035.4

Income Before
Income Taxes and
Minority Interest
Segment Operating
Income (Loss):
Defense
Communications
and Electronics $430.1 $– $430.1 $355.2 $– $355.2
Government
Communications
Systems (E) 97.8 1.3 99.1 106.8 — 106.8
Broadcast Commu-
nications (F) 25.7 1.9 27.6 3.7 23.1 26.8
Harris Stratex
Networks (G) 7.4 21.9 29.3 157.0 (135.2) 21.8
Headquarters
expense (55.2) — (55.2) (50.2) — (50.2)
Corporate
eliminations (3.3) — (3.3) (9.7) — (9.7)
Non-operating
income (loss)(D) 8.7 — 8.7 (15.9) 19.8 3.9
Net interest
expense (37.3) — (37.3) (20.6) — (20.6)
$473.9 $25.1 $499.0 $526.3 $(92.3) $434.0

Table 7
HARRIS CORPORATION
Reconciliation of FY ‘08 GAAP EPS Guidance to Non-GAAP EPS Guidance
and
Reconciliation of FY ‘09 GAAP EPS Guidance to FY ‘08 GAAP and Non-GAAP EPS
Guidance
(Unaudited)

Fiscal Year Fiscal Year Percent
2008 2009 Growth

GAAP Earnings Per Share Guidance $3.34 $4.05 to $4.15 21% to 24%
Charges associated with the
combination with Stratex
Networks, Inc. (H) $0.07
Charges associated with the
acquisition of Multimax
Incorporated (I) $0.02
Charges associated with the
acquisition of Zandar
Technologies plc (J) $0.02
Non-GAAP Earnings Per Share
Guidance $3.45 $4.05 to $4.15 17% to 20%

Table 8
HARRIS CORPORATION
FY ‘08 Third Quarter Year Over Year Organic Revenue Growth
(Unaudited)

Quarter Ended
March 30, March 28, Percent
2007 2008 Growth
(In millions)

Harris Corporation
GAAP Revenue $1,072.4 $1,329.6 24 %
Impact of acquisitions (K) 82.6
Organic Revenue $1,155.0 $1,329.6 15 %

Government Communications
Systems
GAAP Revenue $387.6 $490.6 27 %
Impact of acquisitions (L) 73.1
Organic Revenue $460.7 $490.6 6 %

Table 9
HARRIS CORPORATION
FY ‘08 Third Quarter Summary

Comparison of Harris Stratex Networks Segment GAAP and Non-GAAP Revenue and
Operating Income to that Reported by Harris Stratex Networks, Inc.
(Unaudited)

Quarter Ended Quarter Ended
March 28, 2008 March 30, 2007
As Reported by As Reported by

Harris Harris
Stratex Stratex
Harris Networks Harris Networks
(In millions)
Revenue — As Reported $178.2 $178.2 $139.0 $139.0
Adjustments:
Stratex Networks, Inc. revenue:
January 2007 — — — 7.8
Revenue — Non-GAAP $178.2 $178.2 $139.0 $146.8

Operating Income(Loss) –
As Reported (M) $9.2 $9.2 $141.0 $(22.7)
Adjustments:
Gain on combination with
Stratex Networks, Inc. — — (163.4) –
Stratex combination transaction
costs — — 23.0 23.0
Stratex combination integration
costs 1.5 1.5 3.5 3.5
FAS 123R expense — 2.1 — 1.5
Other identifiable intangible
amortization — 3.7 — 2.4
Stratex Networks, Inc.
operating loss:
January 2007 — — — (2.1)
Operating Income — Non-GAAP $10.7 $16.5 $4.1 $5.6

HARRIS CORPORATION
FY ‘08 Third Quarter Summary
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)

Notes to tables 5 through 9:

Note A - Adjustments to cost of product sales and services for the quarter ended March 28, 2008 are due to the impact of a step up in fixed assets associated with the combination between Stratex Networks, Inc. (”Stratex”) and our former Microwave Communications Division ($0.2 million). Adjustments to cost of product sales and services for the three quarters ended March 28, 2008 are due to the impact of a step up in fixed assets and integration costs associated with the Stratex combination ($5.8 million) and a step up in inventory associated with our acquisition of Zandar Technologies plc (”Zandar”) ($0.4 million). Adjustments to cost of product sales and services for the quarter and three quarters ended March 30, 2007 are due to transaction-related costs including a step up in inventory, a step up in fixed assets and a write-off of deferred revenue associated with the Stratex combination ($6.0 million).
Note B - Adjustments to engineering, selling and administrative expenses for the quarter ended March 28, 2008 are due to the impact of a step up in fixed assets and integration costs associated with the Stratex combination ($1.3 million), integration costs associated with our acquisition of Multimax Incorporated (”Multimax”) ($0.4 million) and integration costs associated with our acquisition of Zandar ($0.1 million). Adjustments to engineering, selling and administrative expenses for the three quarters ended March 28, 2008 are due to the impact of a step up in fixed assets and integration costs associated with the Stratex combination ($16.1 million), integration costs associated with our acquisition of Multimax ($1.3 million) and integration costs and a write-off of in-process research and development associated with our acquisition of Zandar ($1.5 million). Adjustments to engineering, selling and administrative expenses for the quarter and three quarters ended March 30, 2007 are due to transaction costs associated with the Stratex combination, including a write-off of in-process research and development and the amortization of backlog ($17.0 million); integration costs associated with the Stratex combination ($3.5 million for the quarter and $5.2 million for the three quarters ended March 30, 2007); severance and other expenses associated with cost-reduction actions in our Broadcast Communications segment ($4.2 million) and a write down of capitalized software associated with management’s decision to discontinue an automation software development effort in our Broadcast Communications segment ($18.9 million).
Note C - Adjustment for the gain on the Stratex combination ($163.4 million).
Note D - The adjustment to non-operating income (loss) for the three quarters ended March 30, 2007 is due to the impairment to our investment in Terion, Inc. ($19.8 million).
Note E - Adjustments to our Government Communications Systems segment operating income for the quarter and three quarters ended March 28, 2008 are due to integration costs associated with our acquisition of Multimax ($0.4 million and $1.3 million, respectively).
Note F - Adjustments to our Broadcast Communications segment operating income for the quarter ended March 28, 2008 are due to integration costs associated with our acquisition of Zandar ($0.1 million). Adjustments to our Broadcast Communications segment operating income for the three quarters ended March 28, 2008 are due to the impact of a step up in inventory, integration costs and a write-off of in-process research and development associated with our acquisition of Zandar ($1.9 million). Adjustments to our Broadcast Communications segment operating income for the quarter and three quarters ended March 30, 2007 are due to severance and other expenses associated with cost-reduction actions ($4.2 million) and a write down of capitalized software associated with management’s decision to discontinue an automation software development effort ($18.9 million).
Note G - Adjustments to our Harris Stratex Networks segment operating income for the quarter and three quarters ended March 28, 2008 are due to the impact of a step up in fixed assets and integration costs associated with the Stratex combination ($1.5 million and $21.9 million, respectively). Adjustments to our Harris Stratex Networks segment operating income for the quarter and three quarters ended March 30, 2007 are due to the gain on the Stratex combination ($163.4 million) offset by transaction costs ($23.0 million) and integration costs ($3.5 million for the quarter and $5.2 million for the three quarters ended March 30, 2007) associated with the Stratex combination.
Note H - Adjustment for the estimated $0.07 per diluted share impact, after minority interest, is due to the impact of a step up in fixed assets and integration costs associated with the Stratex combination.
Note I - Adjustment for the estimated $0.02 per diluted share impact is for the estimated impact from integration and other charges associated with our acquisition of Multimax.
Note J - Adjustment for the estimated $0.02 per diluted share impact is for the estimated impact from integration and other charges associated with our acquisition of Zandar.
Note K - Adjustments to add revenue of Stratex, Multimax, and Zandar during the third quarter of Harris’ fiscal year 2007 and to subtract revenue during the third quarter of Harris’ fiscal year 2007 of our radio resale business exited in the fourth quarter of fiscal 2007.
Note L - Adjustments to add revenue of Multimax during the third quarter of Harris’ fiscal year 2007.
Note M - The difference between the GAAP operating income (loss) recorded during the quarter ended March 30, 2007 by Harris versus Harris Stratex Networks, Inc. is due to the $163.4 million gain recorded by Harris on the Stratex combination and $0.3 million of corporate allocations expense.
Note N - For the quarter and three quarters ended March 28, 2008 the “As Reported” calculations of net income per diluted common share include the potential dilutive effect of warrants to purchase the common stock of Harris Stratex Networks, Inc. The “Non-GAAP” calculations exclude the effects of this potential dilution.
Harris Corporation

NEWTON SQUARE, Pa., April 30 /PRNewswire/ — GMH Military Housing, the former military housing division of GMH Communities Trust , announced today that it has been successfully acquired by Balfour Beatty plc, a UK-based international engineering, construction, investment and services group, for an aggregate purchase price of $350.5 million. The military housing business will now be managed under the name Balfour Beatty Communities, and will continue its focus as a leading provider of housing for members of the U.S. military and their families throughout the United States. The entire executive management team, as well as existing corporate and project level military housing employees, will remain part of the new company and will work toward creating a seamless transition of the operating structure going forward.
Balfour Beatty Communities currently maintains interests, primarily through joint ventures with the Department of Defense, in 12 military housing projects on 37 military bases (representing approximately 25,700 end-state housing units) having an aggregate development value of approximately $3.0 billion, including one unaccompanied personnel housing project. In addition, the company is in exclusive negotiations for four additional projects on six military bases (representing approximately 6,000 end-state housing units) that are expected to close during the second and third quarters of 2008, as well as one unaccompanied personnel housing project expected to close in the second half of 2008.
The acquisition of the military housing business by Balfour Beatty significantly expands its already extensive presence in the defense sector. Among other development projects within the U.S., Balfour Beatty currently is involved in building the 9/11 Memorial at the Pentagon and provides master planning, engineering, design and design/build services for the U.S. Army Corps of Engineers and the Department of Veterans Affairs for healthcare facilities in the U.S., Puerto Rico and Germany. Balfour Beatty Group also has performed construction work on the U.S. Capitol Visitor Center, multiple National Archives and Records Administration facilities, project management of border stations for the General Services Administration (GSA) in Arizona and Washington, and project management for the GSA for several Federal Bureau of Investigation buildings.
Bruce Robinson, President and Chief Executive Officer of Balfour Beatty Communities stated, “We are extremely excited to become part of the Balfour Beatty family of companies. We enter into this new phase of our business with tremendous momentum, as we are currently finalizing agreements for several new privatization projects. Our management team and employee base remains unchanged, and is clearly focused on our core strengths of providing high quality housing communities to U.S. military members and their families. We look forward to a rewarding future and further growth of our business through the pursuit of additional defense sector privatization projects, as well as other opportunities within the public-private partnership (PPP) arena.”
Also commenting on the acquisition today, Balfour Beatty plc Chief Executive, Ian Tyler, said, “Balfour Beatty Communities will be central to implementing our U.S. strategy of building a high-quality, domestic U.S. business similar to our very successful UK model. It adds a major, high- quality PPP business to our U.S. group in one of our key target market sectors. GMH will be an excellent springboard into other emerging PPP and support service sectors in the U.S. market, will immediately enhance earnings and generate significant value for our shareholders.
“The military accommodation market is firmly established and is based on strong, long-term relationships between service providers and the U.S. military. We attach great importance to the skills and experience of the management team, who will play a key role in the further development of the business.”
Balfour Beatty Communities is based in Newtown Square, PA and employs approximately 1,000 employees nationwide.
Balfour Beatty Communities, LLC () operates 12 military housing privatization projects covering family housing at 37 military bases, including one unaccompanied personnel project; and is in exclusive negotiations relating to four additional family housing projects representing an additional six military bases as well as one unaccompanied personnel housing project. The Company previously has partnered with The Department of the Army for the military family housing privatization projects at Fort Stewart, Hinesville, Georgia and Hunter Army Airfield, Savannah, Georgia; Walter Reed Army Medical Center, Washington, DC and Fort Detrick, Frederick, Maryland; Fort Hamilton, Brooklyn, New York; Fort Carson, Colorado Springs, Colorado; Fort Gordon, Augusta, Georgia; Carlisle Barracks, Carlisle, Pennsylvania and Picatinny Arsenal, Dover, New Jersey; Fort Eustis, Newport News, Virginia and Fort Story, Virginia Beach, Virginia; and Fort Bliss, El Paso, Texas and the White Sands Missile Range, Las Cruces, New Mexico. The Company has partnered with the Department of the Navy for its Navy Northeast Region Project, covering eight Naval bases in Maine, Rhode Island, Connecticut, New York and New Jersey, as well as the Navy Southeast Region Project covering 11 Naval bases in South Carolina, Florida, Georgia, Mississippi, and Texas. The company has also partnered with the Department of the Air Force for the Air Education and Training Command (AETC) Group consisting of four Air Force bases located at Altus Air Force Base, Altus Oklahoma; Luke Air Force Base, Glendale, Arizona; Sheppard Air Force Base, Wichita Falls, Texas; and Tyndall Air Force Base, Panama City, Florida as well as Vandenberg Air Force Base, Lompoc, California. Balfour Beatty Communities is also partnered with the Department of the Army for the privatization of Unaccompanied Officer Quarters/Unaccompanied Senior Enlisted Quarters at Fort Stewart, Hinesville, GA.
About Balfour Beatty Communities ()
Balfour Beatty Communities, LLC (formerly known as GMH Military Housing) is responsible for the development, renovation, operation and management of military privatization housing projects for the U.S. Departments of the Army, Navy and Air Force. The company has been a leader in the military housing industry, and provides services to members of the U.S. military and their families residing on or near bases located in 20 states across the country. Currently based in Newtown Square, PA, the company employs approximately 1,000 people nationwide.
GMH

WICHITA, Kansas, April 29 /PRNewswire/ —

- First quarter 2008 revenues grew 9 percent to US$1.036 billion

- Operating margins expanded to 12.6 percent

- Fully Diluted Earnings Per Share increased 22 percent to US$0.61 per
share

- Total backlog increased to approximately US$27.5 billion

Spirit AeroSystems Holdings, Inc. (NYSE: SPR) reported first quarter 2008
financial results reflecting solid revenue and earnings growth in its core
businesses as volume increased on the 737 program and operating efficiencies
across the business offset the impact of delays in the 787 program.

Spirit’s first quarter 2008 revenues increased to US$1.036 billion, up
9 percent from the same period last year. Operating income increased
25 percent to US$130 million, up from US$104 million in the same period a
year ago. Net income was US$85 million, or US$0.61 per fully diluted share,
up from US$70 million, or US$0.50 per fully diluted share, in the same period
of 2007 (Table 1).

(All amounts in US$ unless otherwise noted)

Table 1. Summary Financial Results
1st Quarter
($’s in Millions, except per share data) 2008 2007 Change

Revenues $1,036 $954 9%
Operating Income $130 $104 25%
Operating Income as a % of Revenues 12.6% 10.9% 170 BPS
Net Income $85 $70 22%
Net Income as a % of Revenues 8.2% 7.3% 90 BPS
Earnings per Share (Fully diluted) $0.61 $0.50 22%
Fully Diluted Weighted Avg Share
Count (Millions) 139.6 139.0

“The first quarter results of our core businesses are in-line with my
expectations and I am pleased with the progress we are making towards
realizing our 2008 goals in spite of the challenges on the 787,” said
President and Chief Executive Officer Jeff Turner. “Revenues increased, and
company-wide operating margins and net income expanded as we continued to
execute well across our core businesses,” Turner added. “The additional delay
on the 787 schedule is unfortunate. Over the past four years we have made
significant investments in the program and our 787 team has worked tirelessly
to meet our customer commitments,” Turner continued. “In the first quarter we
aggressively began taking steps to mitigate the impact from slowing 787
production. Today, we are continuing to implement the revised Boeing
production and delivery schedule, and we are reflecting the financial
implications of the revised schedule in our outlook,” Turner added.

“During the quarter we made solid progress on our strategy to diversify.
We won major structures work on the new Cessna Citation Columbus business
jet; announced our participation on the new Gulfstream G650 business jet;
secured an aftermarket contract to provide overhaul, repair, and modification
services for Cathay Pacific Airways’ fleet of 777 Trent 800 Thrust Reversers;
and just last week we announced a new maintenance joint venture with HAECO to
establish a regional service center to serve the Asia-Pacific region,” Turner
concluded.

Spirit’s backlog during the quarter increased four percent from
$26.5 billion to $27.5 billion, as combined net orders for 683 aircraft at
Boeing and Airbus outpaced their combined deliveries of 238 aircraft.
Spirit’s backlog is calculated based on contractual prices for products and
volumes from the published firm order backlogs of Boeing, Airbus, and other
customers.

Spirit updated its contract profitability estimates during the first
quarter of 2008, resulting in a $2 million favorable cumulative catch-up
adjustment, compared to a $6 million favorable cumulative catch-up adjustment
for the first quarter of 2007.

Table 2. Cash Flow and Select Balance Sheet Information
1st Quarter
($’s in Millions) 2008 2007

Cash Flow from Operations $70 $50
Purchases of Property, Plant & Equipment ($66) ($88)

Mar. 27, Dec. 31,
Cash and Debt Balances 2008 2007

Cash $203 $133
Current Portion of Long-term Debt plus
Long-term Debt $667 $595

Cash flow from operations was $70 million for the first quarter, compared
to $50 million for first quarter 2007, as the company continued to invest in
the 787 program and other development programs (Table 2). During the quarter
Spirit and Boeing reached an agreement to revise certain 787 contract payment
terms. The revised terms, among other things, alter the payment terms for 787
unit deliveries from Spirit to Boeing. The amendment also eliminated the
existing delayed payment schedule for ship sets delivered prior to aircraft
certification and ties all payments for ship sets not covered by the
additional advances to the date of delivery by Spirit to Boeing. The revised
terms will result in additional cash advance payments to Spirit from Boeing
during 2008. The initial payment of $124 million was received by Spirit in
the first quarter. The balance of the advance payments will be made to Spirit
over the remaining three quarters of 2008. The additional advances will be
applied against the purchase price of ship sets delivered until fully repaid.

On March 19, 2008, Spirit amended its credit agreements, to among other
things, increase the company’s revolving credit facility from $400 million to
$650 million. Cash balances at the end of the first quarter were $203
million, up $46 million from a year ago, reflecting the $124 million advance
payment from Boeing; planned investment in Spirit’s core business, primarily
for the 787 program; and $75 million of borrowings against the company’s
$650 million credit facility. Debt balances at the end of the first quarter
were $667 million, up $72 million from year-end 2007, reflecting the
outstanding borrowing on the credit facility and planned debt principal
payments. The $75 million in outstanding borrowings against the company’s
credit line was repaid in full on April 2, 2008.

During the quarter, Standard & Poor’s revised the company’s credit
outlook from negative to stable following Spirit’s announcement of its
increased credit line. Standard & Poor’s and Moody’s confirmed their
respective BB and Ba3 corporate ratings for Spirit.

2008 Outlook

Spirit previously issued 2008 revenue guidance of approximately
$4.7 billion based on previously issued 2008 Boeing delivery guidance of
480-490 aircraft and internal Spirit forecasts for Airbus and other products.
Spirit’s revenue guidance assumed delivery of approximately forty-five 787
ship sets from Spirit to Boeing. On April 9, 2008, Boeing announced a revised
schedule that shifted first customer deliveries of the 787 to the third
quarter of 2009, with approximately twenty-five 787 aircraft now expected to
be delivered by the end of 2009.

Spirit now expects to achieve 2008 revenues of approximately $4.4 billion
based on the revised 787 schedule; 2008 Boeing delivery guidance of 480-490
aircraft; 2008 Airbus delivery guidance of greater than 470 aircraft; and
internal Spirit forecasts for other products.

Fully diluted earnings per share for 2008 is now expected to be between
$2.25 and $2.35 as improved operating efficiencies are expected to offset a
portion of the impact of delays in the 787 program (Table 3).

Table 3. Financial Outlook
2008 Guidance

Revenues ~$4.4 billion

Earnings Per Share (Fully Diluted) $2.25 - $2.35

Effective Tax Rate (% Pre-Tax Earnings) ~33%*

Cash Flow From Operations ~$400 million

Capital Expenditures ~$275 million

Capital Reimbursement ~$116 million

* Effective tax rate guidance among other factors, assumes the benefit of
an extension to the U.S. research tax credit.

For 2008, cash flow from operations is expected to be approximately $400
million as revised 787 payment terms shift cash receipts from 2009 and early
2010 into 2008. Capital expenditures are expected to be approximately $275
million in 2008.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements that reflect the
plans and expectations of Spirit AeroSystems Holdings, Inc. To the extent
that statements in this press release do not relate to historical or current
facts, they may constitute forward-looking statements. Forward-looking
statements can generally be identified by the use of forward-looking
terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “plan”,
“forecast”, “anticipate”, “believe”, “project”, “continue”, or other similar
words. These statements reflect Spirit AeroSystems Holdings, Inc.’s current
view with respect to future events and are subject to risks and
uncertainties, both known and unknown. Such risks and uncertainties may cause
the actual results of Spirit AeroSystems Holdings, Inc. to vary materially
from those anticipated in forward-looking statements, and therefore we
caution investors not to place undue reliance on them. Potential risks and
uncertainties include, but are not limited to: our customers’ aircraft build
rates; the ability to enter into supply arrangements with additional
customers and satisfy performance requirements under existing contracts; any
adverse impact on our customers’ production of aircraft; the success and
timely progression of our customers’ new programs including, but not limited
to The Boeing Company’s 787 aircraft program; future levels of business in
the aerospace and commercial transport industries; competition from original
equipment manufacturers and other aerostructures suppliers; the effect of
governmental laws; the effect of new commercial and business aircraft
development programs; the cost and availability of raw materials; the ability
to recruit and retain highly skilled employees and relationships with unions;
spending by the United States and other governments on defense; our
continuing ability to operate successfully as a stand-alone company; the
outcome of ongoing or future litigation and regulatory actions; and our
exposure to potential product liability claims. Additional information as to
factors that may cause actual results to differ materially from our
forward-looking statements can be found in Spirit AeroSystems Holdings,
Inc.’s filings with the United States Securities and Exchange Commission.
Spirit AeroSystems Holdings, Inc. undertakes no obligation and does not
intend to update publicly any forward-looking statements after the date of
this press release, except as required by law.

Appendix

Segment Results

Fuselage Systems

Fuselage Systems segment revenues for the first quarter of 2008 were
$492 million, up 11 percent over the same period last year, as deliveries to
Boeing increased 8 percent. Operating margin for the first quarter of 2008
was 18.1 percent, compared to 18.6 percent in the first quarter of 2007,
reflecting higher R&D expense.

Propulsion Systems

Propulsion Systems segment revenues for the first quarter of 2008 were
$275 million, up 6 percent over the same period last year as 737 deliveries
increased and fewer wide-body deliveries were made to Boeing during the first
quarter of 2008. Operating margin for the first quarter of 2008 was 16.2
percent compared to 15.5 percent in the first quarter of 2007, reflecting
improved operating efficiencies.

Wing Systems

Wing Systems segment revenues for the first quarter of 2008 were
$262 million, up 9 percent over the same period last year, as deliveries to
Boeing increased by 8 percent and deliveries to Airbus increased 7 percent.
Operating margin for the first quarter of 2008 was 12.4 percent compared to
9.6 percent in the first quarter of 2007, reflecting improved operating
efficiencies and lower R&D expenses. Wing Systems benefited from a favorable
cumulative catch-up adjustment of approximately $2 million in the first
quarter of 2008, compared to approximately $6 million favorable cumulative
catch-up adjustment for the first quarter of 2007.

Table 4. Segment Reporting
1st Quarter
($’s in Millions, except margin percent) 2008 2007 Change

Segment Revenues
Fuselage Systems $492.0 $445.2 10.5%
Propulsion Systems $274.7 $260.4 5.5%
Wing Systems $262.3 $241.2 8.7%
All Other $7.4 $7.3 1.4%
Total Segment Revenues $1,036.4 $954.1 8.6%

Segment Earnings from Operations
Fuselage Systems $89.1 $83.0 7.3%
Propulsion Systems $44.5 $40.3 10.4%
Wing Systems $32.5 $23.2 40.1%
All Other $0.4 $0.8 (50.0%)
Total Segment Operating Earnings $166.5 $147.3 13.0%

Unallocated Corporate SG&A Expense ($36.1) ($42.5) (15.1%)
Unallocated Research & Development Expense ($0.2) ($1.0) (80.0%)
Total Earnings from Operations $130.2 $103.8 25.4%

Segment Operating Earnings as % of Revenues
Fuselage Systems 18.1% 18.6% (50) BPS
Propulsion Systems 16.2% 15.5% 70 BPS
Wing Systems 12.4% 9.6% 280 BPS
All Other 5.4% 11.0% (560) BPS
Total Segment Operating Earnings as %
of Revenues 16.1% 15.4% 70 BPS

Total Operating Earnings as % of Revenues 12.6% 10.9% 170 BPS

Spirit Ship Set Deliveries
(BASED ON FUSELAGE DELIVERIES)

2007 Spirit AeroSystems Deliveries

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2007
B737 83 85 84 79 331
B747 5 4 5 4 18
B767 3 4 3 3 13
B777 21 21 21 20 83
B787* 0 1 0 0 1
Total 112 115 113 106 446

A320 93 84 91 91 359
A330/340 22 21 22 20 85
A380 0 0 2 3 5
Total 115 105 115 114 449

Hawker 850XP 16 15 17 20 68

Total Spirit 243 235 245 240 963

* Full-Revenue Units Only, Does not include Static and Fatigue test
units

2008 Spirit AeroSystems Deliveries

1st Qtr
B737 93
B747 4
B767 3
B777 20
B787* 1
Total 121

A320 95
A330/340 24
A380 4
Total 123

Hawker 850XP 15

Total Spirit 259

* Full-Revenue Units Only, Does not include Static and Fatigue test
units

Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Statements of Operations (unaudited)

For the Three Months Ended
March 27, 2008 March 29, 2007

($ in millions, except per share
data)

Net Revenues $1,036.4 $954.1
Operating costs and expenses:
Cost of sales 857.3 794.8
Selling, general and administrative 39.1 45.1
Research and development 9.8 10.4
Total Costs and Expenses 906.2 850.3
Operating Income 130.2 103.8
Interest expense and financing fee amortization (9.1) (8.9)
Interest income 5.7 7.7
Other income, net 1.4 2.0
Income From Continuing Operations
Before Income Taxes 128.2 104.6
Income tax provision (43.0) (34.8)
Net Income $85.2 $69.8

Earnings per share
Basic $0.62 $0.54
Shares 136.8 129.7

Diluted $0.61 $0.50
Shares 139.6 139.0

Spirit AeroSystems Holdings, Inc.
Condensed Consolidated Balance Sheets

March 27, December 31,
2008 2007
(unaudited)
($ in millions)
Current assets
Cash and cash equivalents $203.4 $133.4
Accounts receivable, net 266.5 159.9
Other receivable 112.1 109.5
Inventory, net 1,499.5 1,342.6
Prepaid expenses 12.1 14.2
Income tax receivable 1.1 9.6
Other current assets 72.7 73.6
Total current assets 2,167.4 1,842.8
Property, plant and equipment, net 1,001.4 963.8
Long-term receivable 101.6 123.0
Pension assets 331.9 318.7
Other assets 99.2 91.6
Total assets $3,701.5 $3,339.9

Current liabilities
Accounts payable $417.8 $362.6
Accrued expenses 184.4 182.6