Harris Reports 16 Percent Earnings Increase For Second Quarter

MELBOURNE, Florida, January 21, 1998 - Harris Corporation reported a 16 percent increase in earnings for the second quarter ended January 2 - representing the company’s eighteenth consecutive quarter of double-digit, year-to-year profit increases.

Net income rose 16 percent to $52.7 million compared with $45.5 million for the year earlier quarter. Sales for the quarter rose to $970 million. Earnings per share for the quarter were up 14 percent to $.67 versus $.59, adjusted for the company’s two-for-one stock split in September, 1997.

Business Sectors Commenting on the overall performance of the business units, Phillip W. Farmer, Harris chairman and chief executive, said, “Difficult market conditions caused by the Asian economic crisis impacted each of our businesses during the second quarter. These conditions slowed sales growth and increased pricing pressures.

“Earnings at the Semiconductor Sector rose 26 percent to $12.1 million, representing increased royalties, growth in the company’s power semiconductor area, and productivity improvements throughout the sector. Sector sales rose 8 percent to $174.7 million, spurred by strong demand for the company’s power products. The sector’s sales were hurt late in the second quarter by the downturn in the Asian markets, where we provide semiconductors for a variety of applications.

“The Communications Sector’s net income grew more than 40 percent to $15.7 million on a 4 percent decline in sales. The sector’s income benefited from the sale of investment securities, which was partially offset by marketing expenses associated with the rollout of digital television (DTV). The sector’s sales growth was slowed by uncertainties resulting from the international currency turmoil, and the deferral of the use of microwave radios in the PCS rollout in the U.S.

“Sales at Lanier Worldwide grew 8 percent to $318.9 million due to the demand for the full range of the sector’s products and services, particularly the new digital office devices. The sector’s net income rose 3 percent to $17.2 million during the quarter, as margins came under increasing pricing pressures in the face of the weakening yen.

“The Electronic Systems Sector recorded a sales decline of 2 percent to $238 million, while net income was off by 4 percent. During the quarter, the sector’s core defense-related business continued to demonstrate good growth performance, offsetting declines in FAA programs and the spin-out of sales to the GE Harris Energy Systems joint venture. ”

Six Months Net income for the six months was $96 million or $1.22 per share, compared with $84 million or $1.08 per share last year - up 15 percent and 13 percent respectively. Sales for the six-month period rose to $1,950 million, compared with $1,829 million last year.

Outlook Mr. Farmer said, “Harris continues to show strong earnings performance in the face of difficult market conditions. These conditions are not likely to improve in the near term. Worldwide market reaction to the Asian crisis will continue to place severe pricing pressures on our sectors, particularly semiconductor. However, we continue to experience strong demand for many of our products and services - especially microwave radio systems and Lanier office products. While we remain cautious about the near term, we are optimistic about our ability to achieve another year of double digit earnings growth this fiscal year.”

This press release contains forward-looking statements made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results of the company to differ materially from those matters expressed in or implied by such forward-looking statements. For more information and a discussion of such risks, reference is made to the company’s Form 10-K/A and other filings made with the Securities and Exchange Commission.