MSI
#So <UNK>, let's take Q1 first.
I think the way you think of the ingredients is, it's consistent with what we signaled last earnings call.
So in terms of the headwinds, Latin America will be down about $40 million.
That's inclusive of iDEN for Q1.
Europe we expect to be down approximately $40 million, primarily driven by Norway as the largest contract we've ever had transitions off of the systems integration phase.
And the third one as we've articulated, is FX of about $20 million, based on the spot rates today.
So think of about $100 million of headwind.
The tailwind is $55 million of Airwave, which represents the stub period of closing last Friday on February 19.
So that's how I would think about it.
The $450 million of Airwave on an annual basis also represents a partial year.
We haven't guided yet obviously and won't signal yet on the full-year FY07 for top line.
Hi, <UNK>.
Well first of all, I'll take the second one first.
We're thrilled with the acquisition of Airwave, both strategically and financially.
As we talked about, it's about $450 million of revenue this year.
I think probably the most important element is that as part of the negotiation, we've resolved all disputes and all contracts have been extended through the end of 2019.
So when we now think about the predictability and financial visibility and commensurate earnings in cash as it relates to that acquisition, it's substantial and represents just under $2 billion in backlog through the extension of those contracts through the end of 2019.
We've worked very closely with the UK home office.
They've been great in this engagement in working with us to successfully close the Airwave TETRA network, where all contracts are extended through 2019.
And also, we are, to your point, the beneficiaries of the ESN award of $430 million, which we view also we're well-positioned to pursue.
So we will work very closely with the home office customer as we transition and I think for a long time, have complimentary networks co-exist.
So we will drive the value creation through Airwave and also work closely with the customer on the rollout of ESN at some point in the future.
On the EBITDA for 2016.
EBITDA contribution of Airwave and I think <UNK>, you ---+ the question was specific to EPS contribution of Airwave in 2016.
It's approximately $0.50.
No that is not inclusive of the $430 million for LTE.
The $195 million, $1.95 million, is Airwave only.
I think we'll work with the customer in the appropriate transition and it's too early to make that call.
But from an acquisition standpoint, we feel very good about our risk adjusted return of capital as it relates to the acquisition of Airwave.
Thank you, <UNK>.
No.
I think from a financial planning standpoint, probably yes, I would push it out past 2017.
But again, we're going to work very diligently with the home office on the right optimization and mix.
But from a planning standpoint, that's probably a prudent thing to do.
Well, I'd let <UNK> add something but I would simply say that I think it's representative.
Those reductions are pretty consistent with the reductions we've made to date historically in terms of composition and mix.
But as importantly, <UNK>, the majority of the actions required to get to these cost targets for 2016 have already been taken.
That's important to know.
Thanks, <UNK>.
Well, I think if we go around the globe, North America, which again is two-thirds of our business, had a very strong 2015.
And as they built backlog, we expect that growth to continue into 2016, at low single-digits.
So we're very pleased with North America.
Latin America is distressed.
Its been consistently distressed from last year.
I think it will probably decline at rates comparable to last year.
I think it's worth noting that the majority of the decline in Latin America, which we expect to be down, will likely most likely occur in the first half of this year.
And then we would normalize through the balance of the year.
We expect EMEA to be up with Airwave.
Without Airwave, it would be down, primarily driven by the roll off of Norway.
And Asia-Pac, roughly we expect to be about flat.
Will grow in certain areas.
We would expect given the nature of some of the macroeconomic items in China as well as some of the dynamics of the Chinese marketplace, we would expect to be down in China.
So all-in, North America up low single digits.
Latin America down pretty markedly at levels in 2016 comparable to 2015.
EMEA up with Airwave, but down without Airwave, primarily driven by Norway.
And Asia-Pac, about flat with China declining.
Yes, your first question was depreciation.
Is that what it was, depreciation.
Depreciation associated with Airwave.
So the depreciation associated with the Airwave deployment is approximately $80 million a year.
And I'm sorry, what was the second part of the question.
Tax rate.
Yes, we'll follow-up, <UNK>, with tax rate.
So if we could follow-up, we'll get you that information on the specific tax rate.
<UNK>, we exceeded the number for 2015.
It was about $130 million in 2015, a little higher than we had projected, which we were pleased about.
In terms of 2016, and we look at the unevenness and rollout of the four contracts we're implementing, LA-RICS, two in the Middle East, and ESN is the fourth award.
But again, as we talked about earlier, won't have 2016 activity.
We're thinking of the 2016 PS LTE revenue contribution to be comparable to 2015, given that we were pleasantly surprised with the overperformance in 2015.
Well look, the idea of FirstNet around inner operable data in Public Safety we feel pretty good about.
The responses to the RFP are due back May 13.
We've had interest from a few different partners.
We do plan on participating, as you probably would expect in that response.
We view LTE and Public Safety LTE in regards to FirstNet, as we've said a number of times before, to be additive to our LMR business and we continue to grow in North America.
We continue to add multi-year service contracts in North America.
We continue to build backlog in North America with LMR.
So I think given our incumbency and our Public Safety expertise and our ability, I think an ideal position to provide interoperability between LMR and over time, Public Safety LTE in North America.
I think we're very well-positioned.
We don't think of any revenue contribution in 2016 or 2017.
And as FirstNet has talked about, they are targeting an award by the end of the year, may slip into early 2017.
But that's kind of the composite attributes of the way we're thinking about FirstNet.
Well, I think from a gross margin standpoint as we incorporate Airwave, everything blended together, we think of the gross margin in the high 40% for 2016.
That incorporates the shift to services a bit, incorporates obviously, the margin profile of Airwave.
But having said that, we expect to, as we talked about, grow EBITDA and grow EBITDA margins and grow operating cash and free cash flow, as well, in 2016.
Thanks.
Thanks.
So we look forward to speaking with all of you soon.
