Harris Corporation
Filed by Harris Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Harris Corporation
(Commission File No. 001-3863)
This filing consists of certain communications made in connection with the announcement of a
Formation, Contribution and Merger Agreement, dated as of September 5, 2006, between Harris
Corporation and Stratex Networks, Inc.:
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this communication constitute forward-looking statements. Forward-looking
statements in this release include, but are not limited to, the expected benefits and costs of the
transaction; the anticipated timing of completion of the transaction; any projections of earnings,
revenues, cost of goods sold, expenses, synergy, accretion, margins or other financial terms; any
statements of plans, strategies, objectives, market penetration, and any statements of expectation
or belief. 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. Actual results
could differ materially from those projected or forecast in the forward-looking statements. The
factors that could cause actual results to differ materially include the following: the possibility
that the parties may be unable to achieve expected synergies and operating efficiencies in the
proposed transaction within the expected time-frames or at all; integration of the operations of
Harris Microwave Communications Division with those of Stratex Networks now may be more difficult,
time-consuming or costly than expected and may not be as successful as the parties anticipate;
revenues of the combined business following the transaction may be lower than expected; operating
costs, customer loss and business disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or suppliers) of the combined business
may be greater than expected following the transaction; the ability to retain key employees in
Harris Microwave Communications Division and at Stratex Networks subsequent to the completion of
the transaction; the conditions to the completion of the transaction may not be satisfied;
regulatory approvals that might be required for the transaction might not be obtained on the terms
expected and obtaining any such approvals or any other necessary regulatory reviews may not occur
on the anticipated schedule; the parties ability to meet expectations regarding the timing,
completion and accounting and tax treatments of the transaction; Harris Microwave Communications
Division and Stratex Networks are subject to intense competition; the failure of either Harris
Microwave Communication Division or Stratex Networks to protect its intellectual property rights
may weaken the competitive position of the combined company; in the future third parties may assert
claims, including intellectual property infringement claims that could materially adversely affect
the operating results of the combined company; as well as other factors discussed in Risk Factors
under Item 1A. of Stratex Networks Annual Report on Form 10-K for the most recently ended fiscal
year and Stratex Networks other filings with the SEC (which may also be applicable to Harris
Microwave Communication Division), which are available at http://www.sec.gov. No person assumes
any obligation to update the information in this document, except as otherwise required by law.
Investors are cautioned not to place undue reliance on these forward-looking statements that speak
only as of the date hereof.
Additional information and Where to Find It
This communication is for informational purposes only. In connection with the transaction, the
parties will file a proxy statement/prospectus with the Securities and Exchange Commission (SEC).
This communication may be deemed to be solicitation material in respect of the proposed combination
of Harris Microwave Communications Division with Stratex Networks. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, INCLUDING
THE PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will
be able to obtain the documents free of charge at the SECs web site, http://www.sec.gov. Copies
of the proxy statement/prospectus and the filings with the SEC that will be incorporated by
reference in the proxy statement/prospectus may also be obtained when available, without charge, by
directing a request to Stratex Networks, Inc., 120 Rose Orchard Way, San Jose, CA 95134,
Attention: Office of the Secretary, or to Harris Corporation, 1025 West NASA Blvd., Melbourne, FL
32919, Attention: Office of the Corporate Secretary.
Participants in Solicitation
Stratex Networks, Harris and their respective directors and executive officers and other persons
may be deemed to be participants in the solicitation of proxies from the Stratex Networks
stockholders in respect of the proposed transaction. Information about the directors and executive
officers of Stratex Networks is set forth in the proxy statement for Stratex Networks 2006 Annual
Meeting of Stockholders, which was filed with the SEC on July 10, 2006. Information about the
directors and executive officers of Harris is set forth in the proxy statement for Harris 2005
Annual Meeting of Stockholders, which was filed with the SEC on September 14, 2005. Investors may
obtain additional information regarding the interest of such participants by reading the proxy
statement/prospectus regarding the transaction when it becomes available.
Set forth below is the text of an e-mail communication from Howard L. Lance to employees of
Harris Corporation delivered on September 5, 2006:
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DATE:
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September 5, 2006 |
TO:
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All Harris Employees |
FROM:
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Howard L. Lance, Harris Chairman, President and CEO |
SUBJECT:
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Harris Microwave Communications Division and Stratex |
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Networks To Merge |
Dear Fellow Employees:
As you know, Harris Corporation and Stratex Networks announced this afternoon that we have
signed a definitive agreement to combine the Harris Microwave Communications Division with Stratex
Networks, Inc., to create the worlds largest independent provider of wireless transmission network
solutions. This new company will be called Harris Stratex Networks, Inc., and it allows us to
achieve economies of scale that would not have been available to either stand-alone company for
years to come. This combination of industry-leading products and technology, complementary
geographic and customer coverage, and the best employees in the industry will be a formidable
competitor in the global marketplace. We believe this merger of two industry leaders is good for
Harris Corporation, our shareholders, our customers, and Harris employees, particularly those
employees in our Microwave Communications Division.
Legal headquarters of the new company will be at the current headquarters site of the Harris
Microwave Communications Division (MCD) in Research Triangle Park, North Carolina, with
headquarters functions both there and at the current site of Stratex Networks headquarters in San
Jose, California. The new management team will include a combination of executives from both
companies. Harris MCD President Guy Campbell will be the chief executive officer of the new
company, Sally Dudash will be the chief financial officer, and Thomas Waechter, current CEO of
Stratex Networks, will be the chief operating officer. Harris Stratex Networks will be a publicly
traded company on NASDAQ with its own board of directors.
Harris is contributing its Microwave Communications Division and $25 million of cash in exchange
for approximately 56 percent ownership of the combined company. Stratex Networks shareholders will
exchange their existing stock for approximately 44 percent ownership. Harris will consolidate the
financial results of the new company into its own financial results, then eliminate the portion of
the new company that it doesnt own as minority interest. Additional information about the terms
and structure of the transaction can be found in our joint press release, which can be accessed at
www.harris.com.
The Microwave Communications Division has done an excellent job over the past three years in
reducing costs, developing new products, expanding market reach, and returning the division to
solid profitability. In the most recent quarter, revenue increased 21 percent and operating income
more than tripled, excluding charges, compared to the prior-year quarter. More importantly, orders
in the fourth quarter exceeded sales for the sixth consecutive quarter, giving this business great
momentum in the new fiscal year. And the introduction of our new TRuepoint microwave radio
platform three years ago has given this division a family of new products that has been very well
received by customers worldwide. We have achieved market leadership in North America as well as
much of the Middle East and Africa. However, we have struggled to achieve growth on
our own in the important markets of Europe, Asia and Latin America. Stratex Networks has
significant revenues in these regions and also in the Middle East and Africa.
Some of you may be surprised by the decision to take a Harris operating division and separate it
from the company in this way. The overriding strategy in this combination is value creation for
our shareholders through the formation of a new company better able to compete, to generate
increased revenue and to lower costs. The combination of the two operations enhances the value of
the investment we have made in our Microwave Communications business and builds on the
accomplishments of the past three years. This should benefit the shareholders of Harris and
Stratex Networks, our mutual customers, and our employees.
We understand that mixed with the excitement of creating a new company is the prospect of the
unknown that comes with combining the two workforces. An integration planning team will be formed
comprised of leadership from all functional areas from both companies. This team will develop
specific action plans to align the combined workforce with the needs of the new company to take
advantage of the available business synergies. In addition, Human Resources and senior leadership
from both companies will be developing a harmonized employee benefits and retirement program for
the new company. It is hoped that all of this planning will be completed during the 3-4 months
between signing and closing.
I am very excited about this combination of two industry leaders that share a common vision of the
future. Two talented teams will be joining forces, and I think this combination will be a success.
Sincerely,
Additional information and where to find it
This letter is for informational purposes only. In connection with the transaction, the parties
will file a registration statement on Form S-4, which will include a proxy statement/prospectus,
with the Securities and Exchange Commission (SEC).
This communication may be deemed to be solicitation material in respect of the proposed combination
of Harris Microwave Communications Division with Stratex Networks. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, INCLUDING
THE PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The definitive proxy
statement/prospectus will be mailed to the stockholders of Stratex Networks. Investors and
security holders will be able to obtain the documents free of charge at the SECs web site,
http://www.sec.gov. Copies of the proxy statement/prospectus and the filings with the SEC that
will be incorporated by reference
in the proxy statement/prospectus may also be obtained when available, without charge, by directing
a request to Stratex Networks, Inc., 120 Rose Orchard Way, San Jose, CA 95134, Attention: Office
of the Secretary, or to Harris Corporation, 1025 West NASA Blvd., Melbourne, FL 32919, Attention:
Office of the Corporate Secretary.
Participants in solicitation
Stratex Networks, Harris Corporation and their respective directors and executive officers and
other persons may be deemed to be participants in the solicitation of proxies from the Stratex
Networks Networks stockholders in respect of the proposed transaction. Information about the
directors and executive officers of Stratex Networks is set forth in the proxy statement for
Stratex Networks 2006 Annual Meeting of Stockholders, which was filed with the SEC on July 10,
2006. Information about the directors and executive officers of Harris is set forth in the proxy
statement for Harris 2005 Annual Meeting of Stockholders, which was filed with the SEC on
September 14, 2005. Investors may obtain additional information regarding the interest of such
participants by reading the proxy statement/prospectus regarding the transaction when it becomes
available.
SOURCES: Harris Corporation and Stratex Networks Inc.
Set forth below is the text of form e-mail communication from Guy Campbell to employees of the
Microwave Communications Division of Harris Corporation delivered on September 5, 2006:
Distribution: MCD Employees via E-mail
Dear [Personalized with First Name],
We are pleased to share with you some very exciting news. As the attached press release outlines,
Harris Corporation and Stratex Networks, Inc. today announced the signing of a definitive agreement
under which Harris Microwave Communications Division and Stratex Networks will combine operations
to form a new publicly traded company named Harris Stratex Networks, Inc. With combined annual
revenue of approximately $600 million, Harris Stratex Networks will be the largest independent
provider of wireless transmission network solutions with global reach to customers in over 150
countries.
Harris and Stratex Networks are a potent combination, sharing a legacy of innovation and customer
focus. With this transaction, we combine critical resources and enhanced operating scale to further
our industry leadership, drive product innovation and maximize our efficiency. Harris Stratex
Networks brings together complementary global distribution channels and product offerings with
minimal customer overlap creating a much broader and more effective geographic footprint. Both
companies have a reputation for quality and innovation as evidenced by two of the most
technologically advanced product families in the industry the Harris TRuepoint and the Stratex
Networks Eclipse. Our network management solution NetBoss®, further strengthens our
product offering. Going forward, Harris Stratex Networks will provide an end-to-end product
portfolio with best-in-class transport, access, and network management solutions. The new
companys solutions offering will be the broadest in the industry including microwave radio and
IP-based transmission systems, nodal processors, network management software and turnkey services
that include network planning, engineering and implementation.
For you, as a Harris MCD employee, our actions today are expected to create more promise and
potential. The formation of the new company nearly doubles the size of our current business the
day the deal closes giving us access to new technologies, markets and products. Harris Stratex
Networks will be a new, publicly traded company with its own stock, its own management team, and
control of its own destiny. We are confident that Harris Stratex Networks will lead the industry
and allow us to maximize opportunities for our employees in a marketplace that becomes increasingly
competitive by the day. Before us stands a great opportunity!
As we create the new company, we make the following commitment to MCD employees:
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To communicate with you throughout this process as we create the new company |
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To make this transition as smooth as possible as we progress |
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To place a high priority on the design of a competitive Total Rewards package for
employees of the new company |
To help answer questions you may have regarding the merger and the integration process, a special
website has been created for you. The site includes Frequently Asked Questions (FAQs) as well as
other useful information. You can access this special area on the MCD intranet at
http://webapps.harris.com/mcd-intranet. The FAQs will be updated periodically as additional
questions are received. Your questions can be sent via email to: mcdnews@Harris.com. Questions
submitted will be forwarded to the appropriate individual for a timely reply.
Our congratulations and thanks go out to Harris MCD employees worldwide. Your performance has
helped prepare us for the next chapter in our companys history, and we enter this merger with
demonstrated momentum. Over the past three years, we have done what it takes to return to
profitability. In the most recent fourth quarter, sales of our Microwave Communications Division
were up 21 percent and operating income, excluding charges, more than tripled, compared with the
prior-year quarter. More important, orders in the fourth quarter exceeded sales for the sixth
consecutive quarter, which has given this business great momentum in the current fiscal year.
TRuepoint has given us a breakthrough product that has been very well received by customers
worldwide. We are ready to take full advantage of the accelerated growth in the telecom market as
Harris Stratex Networks becomes the global independent wireless network solutions leader and
reshapes the industry.
We recognize that you will have questions, so we have scheduled employee meetings over the next two
days to further discuss this announcement and to answer your questions. We anticipate some
workforce reductions as well as new opportunities within the new company, but it is too soon to
provide specifics until the transaction closes.
Until the transaction closes, we are required by law to act as separate companies. Certain
planning activities can occur, but there can be no implementation of these plans. In particular,
collaboration of any kind on sales opportunities is prohibited, and there can be no exchange of
sensitive information such as prices, costs, market or product strategies. Guidance on which
planning activities are allowable will be provided by legal counsel. Your continued performance
will help us create a new company positioned for continuing profitable growth. Please stay
focused on executing your personal objectives, serving our customers, and growing the business. In
the weeks ahead, we will provide you with regular updates on the progress of the integration teams
activities, and we will work hard to keep the lines of communication open and to be responsive.
Guy
President
[Attachment:
final press release] [omitted]
Additional information and where to find it
This letter is for informational purposes only. In connection with the transaction, the parties
will file a registration statement on Form S-4, which will include a proxy statement/prospectus,
with the Securities and Exchange Commission (SEC).
This communication may be deemed to be solicitation material in respect of the proposed combination
of Harris Microwave Communications Division with Stratex Networks. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, INCLUDING
THE PROXY STATEMENT/ PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The definitive proxy
statement/prospectus will be mailed to the stockholders of Stratex Networks. Investors and security
holders will be able to obtain the documents free of charge at the SECs web site,
http://www.sec.gov. Copies of the proxy statement/prospectus and the filings with the SEC that
will be incorporated by reference in the proxy statement/prospectus may also be obtained when
available, without charge, by directing a request to Stratex Networks, Inc., 120 Rose Orchard Way,
San Jose, CA 95134, Attention: Office of the Secretary, or to Harris Corporation, 1025 West NASA
Blvd., Melbourne, FL 32919, Attention: Office of the Corporate Secretary.
Participants in solicitation
Stratex Networks, Harris Corporation and their respective directors and executive officers and
other persons may be deemed to be participants in the solicitation of proxies from the Stratex
Networks Networks stockholders in respect of the proposed transaction. Information about the
directors and executive officers of Stratex Networks is set forth in the proxy statement for
Stratex Networks 2006 Annual Meeting of Stockholders, which was filed with the SEC on July 10,
2006. Information about the directors and executive officers of Harris is set forth in the proxy
statement for Harris 2005 Annual Meeting of Stockholders, which was filed with the SEC on
September 14, 2005. Investors may obtain additional information regarding the interest of such
participants by reading the proxy statement/prospectus regarding the transaction when it becomes
available.
SOURCES: Harris Corporation and Stratex Networks Inc.
Set forth below is the text of frequently asked questions made available to employees of the
Microwave Communications Division of Harris Corporation via intranet on September 5, 2006:
Distribution: MCD Employees via intranet
MCD Employee FAQs
Q. What is the deal?
A. Harris and Stratex Networks have signed an agreement to combine the Harris Microwave
Communications Division with Stratex Networks (signing and public announcement occurred on Sept 5,
2006).
Q. Why is Harris doing this deal?
A. The combination will create the worlds largest independent provider of wireless transmission
network solutions. The new company, called Harris Stratex Networks, will be a larger, more
competitive, pure-play wireless technology company capable of achieving stronger financial
performance than as two stand-alone companies. The combination creates significantly greater scale;
it delivers complementary distribution channels with minimal customer overlap; it serves a large
market with expected strong growth; and offers customers an unmatched product portfolio. Harris
will be the majority shareholder in the new company.
Q. What is the impact on MCD?
A. MCD employees will become part of a new company called Harris Stratex Networks. The new company
will be publicly traded on the NASDAQ Global Market and will have combined revenue of approximately
$600 million and customers in 150 countries. As a public company, Harris Stratex Networks will have
its own management team, which will include a combination of both MCD and Stratex Networks
management, their own Board of Directors, and their own shareholders.
Q. Why is it a good deal for MCD employees?
A. Many reasons.
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MCD employees will become part of a new, publicly traded company with it own stock, its
own management team and its own board of directors. |
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You will be on the ground floor of a newly created company that will chart its own future. |
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You will be creating your own framework for growth. |
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You will be in control of your own destiny, and every action you take will have an
impact on the success of this new business. |
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You will witness the excitement of seeing your new companys stock trade on the NASDAQ,
beginning the first day following the close of the deal. The success achieved by your new
company will be reflected directly in the price of that stock. |
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All of the energies of the new company will be focused on leadership in a single market
wireless transmission network solutions. |
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You will be part of a pure play wireless communications supplier with leading products
and market coverage that is truly global. |
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This deal is a great match. Between the two companies, there is little customer overlap
and the global distribution channels are complementary. |
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You will truly have the best of both worlds the agility, quick decision making,
rapid market response, as well as the stability of a larger company (Harris), which will
have a majority shareholder position in the new company. |
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The size of the new company will be almost double that of our current business the day
the deal closes, and you will have access to a broader product portfolio, additional R&D
resources, as well as new markets and customers. |
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This is a very exciting venture for employees of both entities. |
Q. When will this deal happen?
A. The transaction is subject to Stratex Networks shareholder approval, regulatory approvals, and
customary closing conditions and is expected to close in 3-4 months.
Q. Are we still considered part of Harris?
A. Until the deal closes, yes. After the deal is signed, Harris Stratex Networks will be a
majority-owned subsidiary of Harris Corporation, but will be a separate, publicly traded company.
Q. Who will run the new company?
A. Guy Campbell, president of Harris Microwave Communications Division, will be appointed chief
executive officer and will lead a combined team of executives from both companies. Thomas
Waechter, chief executive officer of Stratex Networks, will be appointed chief operating officer.
Sally Dudash, vice president and controller for Harris MCD will be appointed chief financial
officer. The Harris Stratex Networks nine-member Board of Directors will consist of a majority of
independent directors, including four current directors of Stratex Networks. Harris will nominate
five of the nine directors. The Board will include Guy Campbell; Howard L. Lance, chairman,
president and CEO of Harris; and Charles D. Kissner, executive chairman of Stratex, who will serve
as non-executive chairman.
Q. Where will the new company be headquartered?
A. Legal headquarters of the new company will be at the current headquarters site of the Harris
Microwave Communications Division in Research Triangle Park, North Carolina, with headquarters
functions both there and at the current site of Stratex Networks headquarters in San Jose,
California.
Q. Will my facility and my position be affected by the proposed merger?
A. We have made no decisions about facilities or employee positions, and no decisions will be made
until the transaction closes. However, following the close of the deal, some workforce reductions
will be required. As noted in the press release, we have committed to achieving $35 million in
annual pre-tax product cost and expense synergies. Much of those synergies will come from the
reduction of product costs, but some will also come from operational efficiencies, including any
overlap in functions. An integration team comprised of leadership from all functional areas from
both companies to address these issues will be formed. The integration team will be working
diligently on plans to align the combined workforce with the needs of the new company and how to
address duplication of resources. Fortunately, the two businesses bring together complementary
global distribution channels and product offerings with minimal existing customer overlap.
Q. What about MCD employees located at other Harris facilities?
A. As noted above, we have made no decisions about facilities, and no decisions will be made until
the transaction closes.
Q. Will the new company continue to offer the current product lines?
A. All current products from both companies will continue to be supported and maintained.
Q. Will MCD employees still work on the same projects/products, and have the same roles?
A. Until the deal is closed, we will continue to operate as separate entities. You will continue
working in the same capacity and area in which you currently work. Looking ahead, you can expect to
have new projects and even broader opportunities as part of the combined new company.
Q. Will my pay or benefits remain the same?
A. There will be no change to your pay and benefits before the close of the deal. As you would
imagine, the pay and benefit practices of the two entities MCD and Stratex have some
differences. A team of MCD and Stratex HR personnel are currently considering designs for a new
Total Rewards package that will be the basis for the new Harris Stratex Networks benefits
program. We understand this particular program will be of high interest to all employees of the new
company, and it will receive the highest priority in the integration process.
Q. Will my Harris years of service carry over to the new company?
A. Yes. Your time of service will be fully honored by Harris Stratex Networks.
Q. Is there an integration plan and a transition timeline?
A. The integration team, which will include employees from both MCD and Stratex, and from all
functional areas, will be working on plans for combining the two companies. No formal actions on
the integration can begin until the deal closes. Integration efforts will focus on planning to
ensure that employee issues, customer sales, marketing and service, and on-going business
operations proceed as seamlessly as possible after the close.
Q. How long will integration last?
A. A significant portion of integration will take place in the first 100 days after the close of
the deal. All employees will receive ongoing updates regarding the integration teams progress
during that time as well as changes that might occur subsequent to integration beyond the first
100-day period.
Q. Where can I send questions regarding the deal and the integration?
A. A special e-mail account has been established to help address your questions. Any questions
sent to mcd-news@harris.com will be forwarded to the integration team for a timely reply. Certain
questions and answers will be posted in this FAQ document posted on the Intranet.
Q. What should I do if approached by the media?
A. If you are approached by the national or trade media, please forward all inquiries to these
representatives in Marketing Communications:
Harris Public Relations: Brent Dietz 321-724-3554
Additional information and where to find it
These Frequently Asked Questions are for informational purposes only. In connection with the
transaction, the parties will file a registration statement on Form S-4, which will include a proxy
statement/prospectus, with the Securities and Exchange Commission (SEC).
This communication may be deemed to be solicitation material in respect of the proposed combination
of Harris Microwave Communications Division with Stratex Networks. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, INCLUDING
THE PROXY STATEMENT/ PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The definitive proxy
statement/prospectus will be mailed to the stockholders of Stratex Networks. Investors and security
holders will be able to obtain the documents free of charge at the SECs web site,
http://www.sec.gov. Copies of the proxy statement/prospectus and the filings with the SEC that
will be incorporated by reference in the proxy statement/prospectus may also be obtained when
available, without charge, by directing a request to Stratex Networks, Inc., 120 Rose Orchard Way,
San Jose, CA 95134, Attention: Office of the Secretary, or to Harris Corporation, 1025 West NASA
Blvd., Melbourne, FL 32919, Attention: Office of the Corporate Secretary.
Participants in solicitation
Stratex Networks, Harris Corporation and their respective directors and executive officers and
other persons may be deemed to be participants in the solicitation of proxies from the Stratex
Networks Networks stockholders in respect of the proposed transaction. Information about the
directors and executive officers of Stratex Networks is set forth in the proxy statement for
Stratex Networks 2006 Annual Meeting of Stockholders, which was filed with the SEC on July 10,
2006. Information about the directors and executive officers of Harris is set forth in the proxy
statement for Harris 2005 Annual Meeting of Stockholders, which was filed with the SEC on
September 14, 2005. Investors may obtain additional information regarding the interest of such
participants by reading the proxy statement/prospectus regarding the transaction when it becomes
available.
SOURCES: Harris Corporation and Stratex Networks Inc.
Set forth below is the text of Talking Points distributed to certain employees of the
Microwave Communications Division of Harris Corporation via e-mail on September 5, 2006:
Distribution: MCD Executive Management
Talking Points
The What Harris MCD and Stratex Networks to Merge
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Harris Corporation and Stratex Networks have signed an agreement to combine the Harris
Microwave Communications Division with Stratex Networks (signing and public announcement
occurred on Sept 5, 2006). |
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The combination will create a new publicly traded company with combined revenue of
approximately $600 million and customers in 150 countries. |
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The new company will be called Harris Stratex Networks, Inc., and its shares will be
listed on the NASDAQ Global Market. |
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Harris Stratex Networks will be the worlds largest independent provider of wireless
transmission network solutions, including transport and access microwave radios,
carrier-grade Ethernet transmission systems, network management software, and turnkey field
services that include network planning, engineering and implementation. |
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The transaction is subject to Stratex shareholder approval, regulatory approvals, and
customary closing conditions and is expected to close in 3-4 months. |
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In the interim, we will continue to operate on a business as usual basis, with both
companies operating their businesses independently. |
Strategic Rationale
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The combination creates a larger, more competitive, pure-play wireless technology
company capable of achieving stronger financial performance than two stand-alone companies. |
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Combination will create a global communications company offering end-to-end wireless
transmission solutions for mobile and fixed-wireless service providers and private
networks. |
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Product offering will be the broadest in the industry. |
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Both companies have a reputation for quality and innovation |
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The Harris TRuepoint and Stratex Eclipse are industry leaders |
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NetBoss® is the industrys only integrated communications management platform |
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Larger scale of the company will allow greater leverage of investments in technology
development, new products, and sales and marketing |
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The combination creates significantly greater scale Harris Stratex Networks will be
the #1 provider in North America and #3 in the Global market |
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The two companies currently have little overlap in customers, so the combined company
will have a significantly expanded customer and geographic footprint. |
Organization
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Guy Campbell, president of Harris Microwave Communications Division, will be appointed
Chief Executive Officer of the combined company. |
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Thomas Waechter, chief executive officer of Stratex Networks, will be appointed chief
operating officer. |
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Sally Dudash, vice president and controller of Harris Microwave Communications
Division, will be appointed chief financial officer. |
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The Harris Stratex Networks nine-member Board of Directors will consist of a majority of
independent directors and will include four current directors of Stratex Networks,
including Charles D. Kissner, executive chairman of Stratex Networks, who will serve as
non-executive chairman. Five of the directors will be nominated by Harris and will include
Guy Campbell and Howard Lance |
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Legal headquarters of the new company will be at the current headquarters site
of the Harris Microwave Communications Division in Research Triangle Park, North Carolina,
with headquarters functions both there and at the current site of Stratex Networks
headquarters in San Jose, California. |
Terms of Transaction
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Harris Corporation will contribute its Microwave Communications Division and $25 million
of cash in exchange for approximately 56 percent ownership of the combined company. |
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Stratex Networks shareholders will exchange their existing stock for approximately 44
percent ownership of the combined company. |
Additional information and where to find it
These Talking Points are for informational purposes only. In connection with the transaction, the
parties will file a registration statement on Form S-4, which will include a proxy
statement/prospectus, with the Securities and Exchange Commission (SEC).
This communication may be deemed to be solicitation material in respect of the proposed combination
of Harris Microwave Communications Division with Stratex Networks. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, INCLUDING
THE PROXY STATEMENT/ PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The definitive proxy
statement/prospectus will be mailed to the stockholders of Stratex Networks. Investors and security
holders will be able to obtain the documents free of charge at the
SECs web site, http://www.sec.gov. Copies of the proxy statement/prospectus and the filings with
the SEC that will be incorporated by reference in the proxy statement/prospectus may also be
obtained when available, without charge, by directing a request to Stratex Networks, Inc., 120 Rose
Orchard Way, San Jose, CA 95134, Attention: Office of the Secretary, or to Harris Corporation,
1025 West NASA Blvd., Melbourne, FL 32919, Attention: Office of the Corporate Secretary.
Participants in solicitation
Stratex Networks, Harris Corporation and their respective directors and executive officers and
other persons may be deemed to be participants in the solicitation of proxies from the Stratex
Networks Networks stockholders in respect of the proposed transaction. Information about the
directors and executive officers of Stratex Networks is set forth in the proxy statement for
Stratex Networks 2006 Annual Meeting of Stockholders, which was filed with the SEC on July 10,
2006. Information about the directors and executive officers of Harris is set forth in the proxy
statement for Harris 2005 Annual Meeting of Stockholders, which was filed with the SEC on
September 14, 2005. Investors may obtain additional information regarding the interest of such
participants by reading the proxy statement/prospectus regarding the transaction when it becomes
available.
SOURCES: Harris Corporation and Stratex Networks Inc.
Set forth below is the slide presentation used by Harris Corporation in presentations to
employees of the Microwave Communications Division commencing on September 5, 2006:
Harris Stratex Networks, Inc.
Creating a Leading Global Wireless Transmission
Networks Solutions Provider
MCD Employees
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Forward Looking Statements
Certain statements in this presentation constitute "forward-looking statements." Forward-looking statements in this
presentation include, but are not limited to, the expected benefits and costs of the transaction; the anticipated timing of
completion of the transaction; any projections of earnings, revenues, cost of goods sold, expenses, synergy, accretion,
margins or other financial terms; any statements of plans, strategies, objectives, market penetration, and any
statements of expectation or belief. 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. Actual results could differ
materially from those projected or forecast in the forward-looking statements. The factors that could cause actual
results to differ materially include the following: the possibility that the parties may be unable to achieve expected
synergies and operating efficiencies in the proposed transaction within the expected time-frames or at all; integration of
the operations of Harris' Microwave Communications Division with those of Stratex Networks now may be more difficult,
time-consuming or costly than expected and may not be as successful as the parties anticipate; revenues of the
combined business following the transaction may be lower than expected; operating costs, customer loss and business
disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or
suppliers) of the combined business may be greater than expected following the transaction; the ability to retain key
employees in Harris' Microwave Communications Division and at Stratex Networks subsequent to the completion of the
transaction; the conditions to the completion of the transaction may not be satisfied; regulatory approvals that might be
required for the transaction might not be obtained on the terms expected and obtaining any such approvals or any other
necessary regulatory reviews may not occur on the anticipated schedule; the parties' ability to meet expectations
regarding the timing, completion and accounting and tax treatments of the transaction; Harris' Microwave
Communications Division and Stratex Networks are subject to intense competition; the failure of either Harris'
Microwave Communication Division or Stratex Networks to protect its intellectual property rights may weaken the
competitive position of the combined company; in the future third parties may assert claims, including intellectual
property infringement claims that could materially adversely affect the operating results of the combined company; as
well as other factors discussed in "Risk Factors" under Item 1A. of Stratex Networks' Annual Report on Form 10-K for
the most recently ended fiscal year and Stratex Networks' other filings with the SEC (which may also be applicable to
Harris' Microwave Communication Division), which are available at http://www.sec.gov. No person assumes any
obligation to update the information in this document, except as otherwise required by law. Readers are cautioned not
to place undue reliance on these forward-looking statements that speak only as of the date hereof.
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Additional Information and
Where to Find it
Additional Information and Where to Find It
This presentation is for informational purposes only. In connection with the transaction, the parties will file a registration
statement on Form S-4, which will include a proxy statement/prospectus, with the Securities and Exchange Commission
("SEC").
This communication may be deemed to be solicitation material in respect of the proposed combination of Harris'
Microwave Communications Division with Stratex Networks. INVESTORS AND SECURITY HOLDERS ARE URGED
TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, INCLUDING
THE PROXY STATEMENT/ PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The
definitive proxy statement/prospectus will be mailed to the stockholders of Stratex Networks. Investors and security
holders will be able to obtain the documents free of charge at the SEC's web site, http://www.sec.gov. Copies of the
proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy
statement/prospectus may also be obtained when available, without charge, by directing a request to Stratex Networks,
Inc., 120 Rose Orchard Way, San Jose, CA 95134, Attention: Office of the Secretary, or to Harris Corporation, 1025
West NASA Blvd., Melbourne, FL 32919, Attention: Office of the Corporate Secretary.
Participants in Solicitation
Stratex Networks, Harris Corporation and their respective directors and executive officers and other persons may be
deemed to be participants in the solicitation of proxies from the Stratex Networks stockholders in respect of the
proposed transaction. Information about the directors and executive officers of Stratex Networks is set forth in the proxy
statement for Stratex Networks' 2006 Annual Meeting of Stockholders, which was filed with the SEC on July 10, 2006.
Information about the directors and executive officers of Harris is set forth in the proxy statement for Harris' 2005
Annual Meeting of Stockholders, which was filed with the SEC on September 14, 2005. Investors may obtain additional
information regarding the interest of such participants by reading the proxy statement/prospectus regarding the
acquisition when it becomes available.
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What Was Announced?
Harris Corporation and Stratex Networks have signed a definitive
agreement to combine operations to form a new publicly-traded
company named Harris Stratex Networks, Inc.
Harris to contribute its Microwave Communications Division assets and
$25 million in cash in exchange for approximately 56% ownership in the
combined company
Stratex shareholders to exchange their existing stock for approximately
44% ownership in the combined company
Transaction is expected to close within the next three to four months
The newly-created public company, Harris Stratex Networks, Inc., is
expected to trade on the NASDAQ Global Market
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Who Is Stratex Networks, Inc.?
NASDAQ-listed (STXN) company based San Jose, CA with 450
employees worldwide
Designs, manufactures and markets advanced wireless solutions for
mobile applications and broadband access
One of the world's leading providers of high-speed wireless
transmission solutions, serving markets for mobile, fixed and private
networks
Founded in January 1984 (formerly known as DMC Stratex
Networks, Inc. and Digital Microwave Corporation)
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Snapshot of the Two Companies
(Microwave Communications Division)
Continuing improvement in financial performance
LTM revenue of $349M and growing at 9%
Generated $21.7M in Non-GAAP operating income* and
margin of 6.2%
Latest quarter Non-GAAP operating margin* reached 9.1% Continuing improvement in financial performance
LTM revenue of $242M and growing at 28%
Generated $12.0M in Non-GAAP operating income* and
margin of 5.0%
Latest quarter Non-GAAP operating margin* reached 8.0%
Continuing momentum -- orders greater than sales
for 6 quarters Continuing momentum -- orders greater than sales
for 4 quarters
Regional strength in North America; Middle East
and Africa Regional strength in Europe, Middle East and Africa;
Asia Pacific
Recently invested in successful new market-leading TRuepoint(tm) product family Recently invested in successful new market-leading
Eclipse(tm) product family
* See reconciliation of non-GAAP financial measures on the Harris Investor Relations website
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Organization Overview
The legal headquarters of the new company will be at the current
headquarters site of the Harris Microwave Communications Division
in Research Triangle Park, NC, with headquarters functions both
here and at the current site of Stratex Networks headquarters in
San Jose, CA
Guy Campbell, President of MCD, will be appointed CEO of Harris
Stratex Networks
Tom Waechter, current CEO of Stratex Networks, will be appointed
chief operating officer of Harris Stratex Networks
Sally Dudash, current vice president and controller of MCD, will be
appointed chief financial officer of Harris Stratex Networks
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What Does It Mean For Us?
Become part of a new, publicly traded company with its own stock,
traded on the NASDAQ Global Market
Harris Stratex Networks will have its own management team and will
control its own destiny
Harris Stratex Networks will be a leading global player with over
$600 million in annual sales
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What Does It Mean For You?
Harris Stratex Networks employees will be part of a focused, agile,
standalone company that has the backing and support of Harris, the
majority shareholder
You will be part of a business nearly double the size of MCD the day
the deal closes, giving you access to:
New technologies
New products
Additional engineering and R&D resources
Access to new international markets
This is a very exciting venture for MCD employees
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Global Market
Harris Stratex 15%
Stratex
6%
Harris
9%
A Leading Global Provider of
Wireless Transmission Network Solutions
North American Market
Harris Stratex 48%
Estimated based on calendar year 2005 global market of $3.5 billion
Source: Management estimates
Harris
46%
Stratex
2%
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Complementary Global Distribution Channels
With Less Than 5% Overlap
$ 175
$ 11
$ 186
$ 29
$ 22
$ 51
$ 21
$ 56
$ 77
$ 100
$ 81
$ 181
$ 24
$ 72
$ 96
North America
Latin America
Middle East/Africa
Europe (incl. Russia)
Asia Pacific
* Based on the latest twelve months ended June 30, 2006
Revenue by Region*
($ in millions)
Harris $349
Stratex $242
Total $591
#3 Globally, #1 in North America, #2 in Middle East and Africa, and an expanded footprint
across Europe, Asia, Latin America, and emerging growth markets of Russia and India
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Microwave Market Growth
Expected Total Global Market Growth of 8%;
Strong Positioning in Higher Growth Segments
Source: Management estimates
2006 2007 2008 2009
PDH access 2317 2461 2608 2859
PDH Transport 200 210 210 215
SDH Access (incl Ethernet) 713 847 976 1083
SDH Transport 705 711 750 780
($ in millions)
CAGR: 7%
Eclipse E300SP;
TRuepoint 4000
CAGR: 3%
TRuepoint 6500
CAGR: 15%
Eclipse E300HP;
TRuepoint 5000
TRuepoint 6000
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Unmatched End-to-End Product Portfolio
Other
Independent
Suppliers
Transport
SDH
PDH
Access
SDH
PDH
Network management
solutions
IP
Turnkey planning,
engineering, and
implementation
Source: Management estimates
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A Strong Combined Offering
Transport and access
microwave radios
Carrier-grade Ethernet
transmission systems
Network management
software
Turnkey field services
Network planning
Engineering
Network implementation
TRuepoint(tm)
NetBoss(r)
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Our Commitment to You
To place a high priority on the design of a competitive
Total Rewards package
To communicate with you regularly throughout this process
Intranet web page is up and running
You may submit questions via the intranet
A list of FAQs is posted and will be updated for all to review
To make this transition as smooth as possible as we create a new
company
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Continue Our Day-to-Day Operations
We will continue providing high quality products to our customers as
efficiently and cost effectively as possible
We will continue to deliver superior results to our customers
We will operate as separate businesses until the close of the
transaction, which is expected in 3-4 months
We must receive customary regulatory approvals
Stratex shareholders must approve the transaction
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Next Steps
September 5 & 6: Presentations by members of the leadership
team
To facilitate the creation of the new company, we will form an
integration team comprised of leadership from all functional areas
of both Harris and Stratex
Following the close, we will emerge as a new company and market
leader
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Remember
Change is never easy, but it is inevitable
Your performance is the reason we can achieve this significant
milestone in our growth
Your continued performance will help us create a new company
positioned for profitable growth
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