Harris Reports Strong Second Quarter Earnings Growth

January 22, 1997

MELBOURNE, Florida -- Led by continued growth in its communications, electronic systems and office equipment businesses, Harris Corporation reported strong earnings growth for the second quarter ended December 31, 1996 -- the company's 14th consecutive quarter of double-digit, year-to-year profit increases.

Earnings per share for the quarter were up 14 percent to $1.17 versus $1.03 in the second quarter of last year. Net income rose 13 percent to $45.5 million compared with $40.4 million. Sales for the quarter increased to $945.9 million from $916.6 million last year. Total orders were about even with sales and were up strongly over the first quarter of this year.

Business Sectors

Phillip W. Farmer, Harris chairman and chief executive, said, "The Communications Sector had another strong quarter, continuing on its growth path. The sector reported increases of 19 percent in income and 17 percent in sales, led by strong demand for the company's microwave and broadcast products. Lanier Worldwide earnings were up 14 percent on higher sales in both its domestic and international operations.

"Earnings at the Electronic Systems Sector were up 27 percent on higher sales, representing strong performance in the sector's core U.S. government business and a gain from the sale of a facility. Sales and income at Harris' Semiconductor Sector were lower due to the industrywide slowdown and pricing pressures that continued into the October-December quarter."

Six Months

Net income for the six months was $83.6 million or $2.15 per share, compared with $73.9 million or $1.89 per share last year -- up 13 percent and 14 percent respectively. Sales for the six-month period were up almost 6 percent to $1,829.3 million, compared with $1,733.3 million last year.

Outlook

Mr. Farmer said, "We are very pleased with the earnings performance in the first half of the year, particularly given the poor conditions in the semiconductor market. Those conditions are improving, however. Even though commodity prices are still lagging, overall demand is on the rise, which should lead to improved sales and profit growth in the Semiconductor Sector in the second half of the year compared to the first half.

"On January 6, we announced a joint venture with GE to address the energy systems market. In December, the FCC formally announced approval for the Digital TV transmission standard. Both of these events will provide new growth opportunities for Harris. On an ongoing basis, we are continuing to make significant investments in new products and capital equipment covering a wide range of other exciting areas -- such as wireless and personal communications, health care information, multi-media communications, automotive electronics, transportation, business information, defense communications and information, and others."

Mr. Farmer added, "Overall, we expect the second half of fiscal 1997 to see continued double-digit earnings growth and some acceleration in revenue growth, resulting in another excellent year for Harris."


                                         HARRIS CORPORATION                               FY'97 Second Quarter Summary                          ----------------------------          Condensed Consolidated Statement of Income ------------------------------------------ (In millions except per share amounts)                                                 Quarter Ended         Two Quarters Ended                                     Dec. 31     Dec. 31       Dec. 31     Dec. 31                                1996        1995          1996        1995                               -------     -------       -------     -------     RevenueRevenue from sales,  rentals, and services . .    $945.9      $916.6      $1,829.3    $1,733.3Interest. . . . . . . . . .       9.1         9.3          18.2        18.0                               ------      ------      --------    --------                                955.0       925.9       1,847.5     1,751.3     Costs and ExpensesCost of sales, rentals,  and services. . . . . . .     634.3       615.5       1,220.0     1,160.6Engineering, selling,  and administrative  expenses  . . . . . . . .     239.0       223.0         469.9       434.5Interest. . . . . . . . . .      16.0        15.7          30.8        30.7 Other-net . . . . . . . . .      (3.8)        9.6           (.9)       11.8                                ------      -----       --------    -------Income before income  taxes . . . . . . . . . .      69.5        62.1         127.7       113.7Income taxes. . . . . . . .      24.0        21.7          44.1        39.8                               ------      ------        ------      ------Net Income. . . . . . . . .    $ 45.5      $ 40.4        $ 83.6      $ 73.9                               ======      ======        ======      ======     Net Income Per Share. . . .     $1.17       $1.03         $2.15       $1.89                                =====       =====         =====       =====     Cash dividends paid  per common share. . . . .      $.38        $.34          $.76        $.68                                 ====        ====          ====        ====     Average shares  outstanding . . . . . . .      39.0        39.2          39.0        39.1                                          HARRIS CORPORATION                               FY'97 Second Quarter Summary                    Condensed Consolidated Balance Sheet------------------------------------                   Dec. 31     Dec. 31 (In millions)                                           1996         1995                                                        -------     -------     AssetsCash, cash equivalents, and marketable  securities. . . . . . . . . . . . . . . .           $  178.6    $   85.2Trade receivables . . . . . . . . . . . . .              756.1       684.1 Unbilled costs and accrued earnings . . . .              401.1       384.9 Inventories . . . . . . . . . . . . . . . .              606.8       561.0 Deferred income taxes . . . . . . . . . . .              138.9       146.2 Plant and equipment . . . . . . . . . . . .              827.3       625.9 Non-current notes receivable - net. . . . .              217.9       164.5 Intangibles resulting from acquisitions . .              210.9       200.2 Other assets. . . . . . . . . . . . . . . .              175.0       155.3                                                      --------    --------                                                      $3,512.6    $3,007.3                                                      ========    ========     Liabilities and Shareholders' EquityShort-term debt . . . . . . . . . . . . . .           $  270.2    $  178.6 Trade payables and accrued expenses . . . .              618.0       519.1 Advance payments and unearned income. . . .              296.8       277.9 Income taxes. . . . . . . . . . . . . . . .               83.6        78.2 Current portion of long-term debt . . . . .                2.1       101.8 Non-current deferred income taxes . . . . .               70.6        58.2 Long-term debt. . . . . . . . . . . . . . .              689.0       488.4 Shareholders' equity. . . . . . . . . . . .            1,482.3     1,305.1                                                      --------    --------                                                      $3,512.6    $3,007.3                                                      ========    ========                                                HARRIS CORPORATION                                   FY'97 Second Quarter                              --------------------               Business Segment Information ----------------------------(In millions except per share amounts)                                                   Quarter Ended       Two Quarters Ended                                 Dec. 31    Dec. 31     Dec. 31    Dec. 31                                   1996      1995         1996       1995                                 -------    -------     -------    -------     Net SalesElectronic Systems. . . . . . .   $242.1    $236.2     $  496.5   $  449.9 Semiconductor . . . . . . . . .    161.3     180.1        322.8      352.7 Communications. . . . . . . . .    248.4     212.8        456.5      393.4 Lanier Worldwide. . . . . . . .    294.1     287.5        553.5      537.3                                  ------    ------     --------   --------Total . . . . . . . . . . . . .   $945.9    $916.6     $1,829.3   $1,733.3                                  ======    ======     ========   ========     Operating ProfitElectronic Systems. . . . . . .   $ 17.3    $ 17.0     $   36.6    $  37.4 Semiconductor . . . . . . . . .     19.1      20.3         39.8       39.4 Communications. . . . . . . . .     22.0      20.2         41.6       36.0 Lanier Worldwide. . . . . . . .     33.0      32.0         55.6       53.4 Corporate Expense . . . . . . .     (5.9)    (11.4)       (15.1)     (21.7) Interest Expense. . . . . . . .    (16.0)    (16.0)       (30.8)     (30.8)                                  -------   -------     --------   --------Total . . . . . . . . . . . . .   $ 69.5    $ 62.1     $  127.7   $  113.7                                  ======    ======     ========   ========     Net IncomeElectronic Systems. . . . . . .   $  8.0    $  6.3     $   16.0   $   13.9 Semiconductor . . . . . . . . .      9.6      10.0         19.6       19.4 Communications. . . . . . . . .     11.2       9.4         20.8       17.0 Lanier Worldwide. . . . . . . .     16.7      14.7         27.2       23.6                                  ------    ------     --------    -------Total . . . . . . . . . . . . .   $ 45.5    $ 40.4     $   83.6   $   73.9                                  ======    ======     ========   ========     Net Income Per Share. . . . . .    $1.17     $1.03        $2.15      $1.89                                   =====     =====        =====      =====