Harris Corporation Second Quarter Income Increases 42% On Revenue
Growth of 24%; Company Raises Earnings Guidance for Fiscal Year
2005 MELBOURNE, Fla., Jan. 26 /PRNewswire-FirstCall/ -- Harris
Corporation (NYSE:HRS) today announced significant increases in
revenue and earnings for the second quarter of fiscal 2005, driven
by strong growth in its government businesses and continuing
improvements in revenue and profitability in its commercial
businesses. Revenue in the second quarter of fiscal 2005 increased
24 percent to $737 million; income from continuing operations
increased 42 percent to $45 million; and diluted earnings per share
were $.65. Earnings were $.75 per diluted share, excluding costs
associated with the second quarter acquisition of Encoda Systems
(see tables 5 & 6). The company also raised its fiscal year
2005 earnings guidance from a range of $2.60 - $2.70 per diluted
share to a range of $2.85 - $2.95 per diluted share. The revised
guidance continues to exclude costs of $.10 per diluted share
associated with the Encoda Systems acquisition. "Financial results
in the second quarter were exceptional from virtually every
perspective," said Howard L. Lance, Harris chairman, president and
chief executive officer. "Each of our four businesses had
year-over-year and sequential revenue and operating income growth
during the quarter, excluding acquisition costs. In addition,
operating performance in our commercial businesses continued to
improve, reflecting our focus on cost reductions and operating
efficiencies. We delivered strong organic revenue growth of 17
percent, compared to the prior-year quarter, and both the Orkand
and Encoda acquisitions are on track and contributing to growth and
profitability." Government Communications Systems Revenue for
Harris' Government Communications Systems segment was $447.3
million in the second quarter, a 31 percent increase compared to
the year-ago quarter. Operating income increased 46 percent to
$53.1 million and continued to be driven by excellent program
execution. Results benefited from $5.7 million of income associated
with an unused reserve for the final settlement of fiscal year 2001
overhead rates for government programs. Revenue growth in the
segment was driven by programs across a broad spectrum of
government markets, including the FAA Telecommunications
Infrastructure (FTI) program, the Iraqi Media Network (IMN)
program, and the Patriot program for the U.S. National
Reconnaissance Office (NRO). Revenue growth also was driven by
recent program wins including a number of classified programs, the
Advanced Extremely High Frequency (AEHF) terminals program for the
U.S. Navy, the MAF/TIGER(R) database modernization program for the
U.S. Census Bureau, and the U.S. Army's Aerial Common Sensor (ACS)
program. New programs won during the quarter included a contract
with a potential value of $175 million over nine years from the
Defense Information Systems Agency to provide system maintenance
and engineering for the agency's Crisis Management System. Harris
also won a three-year, $80 million program with the National
Security Agency (NSA) for software development and integration, and
a $37 million, three-year contract to provide large unfurlable
spaceborne antennas for the Mobile User Objective System (MUOS), a
narrowband tactical satellite communications system for U.S.
warfighters. In addition, Harris won a two-year contract with
Boeing Satellite Systems to provide primary spot-beam
communications antennas for the next three DIRECTV(R) satellites.
Following the close of the quarter, Harris also received a $22
million, three-month contract for the Iraqi Media Network program.
RF Communications Revenue in the RF Communications segment was
$116.3 million, representing a 10 percent increase, compared to the
year-ago quarter. Operating income was $32.4 million, also a 10
percent increase. Operating margin remained strong at 27.9 percent
of revenue. Orders during the quarter increased significantly and
were greater than sales. Year-to-date orders for the segment are
now up 16 percent, compared to the first half of fiscal 2004.
Growth continues to be driven by requirements for Harris Falcon(R)
II tactical radios supporting troop deployments in Iraq and other
theaters of operation, by communications modernization programs for
U.S. armed forces, and for long-term standardization initiatives in
the United Kingdom and other allied nations. In late December, the
U.S. Army awarded Harris radio and service contracts valued at more
than $30 million for Falcon II radios. The contracts include
AN/PRC-150(C) radios in manpack and vehicular configurations to
support operations in Iraq and Afghanistan and the U.S. Army's
Modularity program. Earlier in the quarter, the U.S. Army also
awarded Harris a contract valued at more than $30 million for
AN/PRC-117F multiband, multimission radios. The radios use advanced
Harris software-defined radio technology to provide battle-proven
embedded communications security, satellite communications, and
electronic counter-countermeasure capabilities (ECCM). Additional
orders in the quarter included Falcon II radios for the U.S. Navy
and for allied military forces in the Philippines, Algeria, and
Uganda. "The RF segment's opportunity pipeline has expanded
significantly," Lance said. "In the domestic market, the
anticipated supplemental U.S. defense budget is expected to provide
immediate additional radio funding for the U.S. Army's Modularity
program, as well as requirements for the U.S. Marine Corps, Army
Reserve, and National Guard. In international markets, we are
anticipating a large order from Pakistan, and new orders from the
United Kingdom, Algeria, the Philippines, and other allied nations.
Together, these orders are expected to drive year-over-year revenue
growth well into next fiscal year." Microwave Communications
Revenue in the Microwave Communications segment was $85.5 million,
a 3 percent increase compared to the prior-year quarter, and a 23
percent sequential increase from the first quarter of fiscal 2005.
Operating income was $2.6 million, compared to a loss of $1.8
million in the year-ago quarter. Gross margin continued to improve
in the quarter as a result of increasing shipments of TRuepoint(TM)
5000, a new family of microwave radios targeted mainly at
international markets. The rollout of TRuepoint is on schedule.
Milestones in the quarter included the release of TRuepoint
products in the 13 and 15 GHz frequency bands and the relocation of
production from Montreal to the company's premier microwave
manufacturing facility in San Antonio, Texas. Year-to-date orders
for TRuepoint now total $17 million. TRuepoint sales continued to
increase over the preceding quarters, and the company still expects
sales of $30 million in fiscal 2005. Orders during the quarter
included microwave systems for international customers in Nigeria,
Eastern Europe, Latin America, China, and Asia. In North America,
growth continued to be driven by the availability of homeland
security funding for private network upgrades. Orders included
contracts from wireless service providers and from the City of
Tucson, a state emergency crisis management network in the
northeast, and Pacific Corporation. Broadcast Communications
Revenue in the Broadcast Communications segment was $98.9 million,
an increase of 49 percent compared to the prior-year quarter, and
included $21 million of revenue from Encoda Systems, which was
acquired November 3, 2004. Excluding $8.6 million in
acquisition-related costs, operating income was $9.6 million
including $3.7 million from Encoda Systems. Operating income for
the segment was $2.6 million in the year-ago quarter. Operating
income on a GAAP basis was $1.0 million. The segment achieved
double-digit organic revenue growth, compared to the prior-year
quarter. Revenue increased in all of the segments' five business
units, including television, radio, software systems, networking
and government solutions, and Europe. Growth drivers included HD
Radio(TM) equipment, domestic and international analog TV
equipment, and studio and networking equipment for the Iraqi Media
Network. During the quarter, Harris was awarded a contract from
Belo Corporation to upgrade four television stations to full-power
digital transmission. Harris also entered into a
multimillion-dollar agreement with Cox Radio for the provision of
digital radio transmitters through 2008. Cox Radio has 78 stations
in 18 markets. In international markets, Harris received a major
order from T-Systems for digital television systems. Harris also
was awarded a contract to provide FM radio transmission systems and
associated equipment to the International Broadcasting Bureau
(IBB). The IBB provides engineering support for U.S.
government-funded broadcast services throughout the world,
including Voice of America, Radio Sawa, and Radio and TV Marti
broadcasts to Cuba. Harris also announced the first Caribbean
installation of its NetVX(TM) high-speed, integrated networking
platform at Television Jamaica Limited. Financial Position The
company's financial position and level of liquidity continue to be
strong. Cash flow from operations in the first two quarters was $85
million. Harris continues to expect cash flow from operations for
the fiscal year to be in the range of $200 - $250 million. Cash and
cash equivalents on hand at the end of the quarter were $230
million compared to $628 million at the beginning of the 2005
fiscal year. The principal use of cash during this period was for
the Encoda and Orkand acquisitions. Outlook "Strong results in the
quarter, combined with a growing opportunity pipeline in our RF
Communications business, have allowed us to once again increase our
earnings expectations for fiscal year 2005," said Lance. "New
program wins and superior contract performance in our Government
Communications Systems business continue to position Harris to
outpace industry growth. In our Microwave business, we are quite
pleased with the ongoing rollout of TRuepoint 5000 radios and their
positive impact on our profitability. We also are very encouraged
by solid growth in our Broadcast business, and the expanded market
presence and opportunities expected from the acquisition of
Encoda." Harris will host a conference call today at 5:00 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)
457-2617, access code: 634936. The conference call also will be
broadcast live via the Internet at http://www.harris.com/ . A
replay of the teleconference will be available beginning at 8:00
p.m., Eastern Time, and will run until midnight, Eastern Time, on
Wednesday, February 2. To access the replay, please call (719)
457-0820, access code: 634936. A recording of the call will also be
available on Harris' website beginning at 7:00 p.m., Eastern Time
on January 26. Harris Corporation is an international
communications technology company focused on providing assured
communications(TM) products, systems and services for government
and commercial customers. The company's operating divisions serve
markets for government communications, tactical radio, broadcast,
and microwave systems. Harris provides systems and service to
customers in more than 150 countries. Additional information about
Harris Corporation is available at http://www.harris.com/ .
Non-GAAP Financial Measures This press release and related tables
contain non-GAAP financial measures within the meaning of
Regulation G promulgated by the SEC, including earnings per share,
fiscal 2005 guidance for income from continuing operations per
diluted common share and margin improvement and operating income
for the Broadcast Communications Division adjusted in each instance
to exclude the impact of an in-process R&D write-off and
one-time integration costs associated with the acquisition of
Encoda Systems Holdings, Inc. A reconciliation of the difference
between each non-GAAP financial measure, with the most directly
comparable financial measure calculated in accordance with GAAP, is
included in this release. Management of Harris believes that these
non-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
disproportionate positive or negative impact on results in any
particular period. Management also believes that these non- GAAP
measures enhance the ability of an investor to analyze Harris
business trends and to better understand the company's performance.
In addition, the company may utilize non-GAAP financials as a guide
in its 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 Statement 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 2005,
the potential value of contract awards and potential contract
awards, expected cash flow from operations for fiscal 2005 and
statements regarding outlook. 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; the potential impact
of hurricanes on our operations in Florida and the potential impact
of earthquakes on our operations is California; the ability to
recruit and retain qualified personnel; and general economic
conditions in the markets in which we operate. 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 to
update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise. Table 1
HARRIS CORPORATION FY'05 Second Quarter Summary CONSOLIDATED
STATEMENT OF INCOME Quarter Ended Two Quarters Ended December
January December January 31, 2, 31, 2, 2004 2004 2004 2004 (In
millions, except per share amounts) Revenue from product sales and
services $737.2 $593.9 $1,406.6 $1,141.8 Cost of product sales and
services (540.2) (440.4) (1,044.3) (854.1) Engineering, selling and
administrative expenses (124.2) (101.0) (225.2) (192.6)
Non-operating income (loss) (3.5) (6.0) (5.2) (6.0) Interest income
1.6 1.5 3.9 2.8 Interest expense (6.0) (6.3) (12.0) (12.6) Income
from continuing operations before income taxes 64.9 41.7 123.8 79.3
Income taxes (19.8) (10.0) (38.6) (22.1) Income from continuing
operations 45.1 31.7 85.2 57.2 Discontinued operations, net of
income taxes -- 1.4 -- 1.9 Net income $45.1 $33.1 $85.2 $59.1 Net
income per common share Basic Continuing operations $.68 $.48 $1.28
$.86 Discontinued operations -- .02 -- .03 $.68 $.50 $1.28 $.89
Diluted Continuing operations $.65 $.46 $1.23 $.84 Discontinued
operations -- .02 -- .03 $.65 $.48 $1.23 $.87 Cash dividends paid
per common share $.12 $.10 $.24 $.20 Basic weighted average shares
outstanding 66.5 66.3 66.4 66.3 Diluted weighted average shares
outstanding 70.9 70.1 70.6 70.0 Table 2 HARRIS CORPORATION FY'05
Second Quarter Summary BUSINESS SEGMENT INFORMATION Quarter Ended
Two Quarters Ended December January December January 31, 2, 31, 2,
2004 2004 2004 2004 (In millions) Revenue Government Communications
Systems $447.3 $341.5 $879.5 $675.9 RF Communications 116.3 105.6
229.6 194.8 Microwave Communications 85.5 83.0 154.9 151.4
Broadcast Communications 98.9 66.4 166.3 124.8 Corporate
eliminations (10.8) (2.6) (23.7) (5.1) $737.2 $593.9 $1,406.6
$1,141.8 Income From Continuing Operations Before Income Taxes
Segment Operating Income (Loss): Government Communications Systems
$53.1 $36.3 $98.2 $68.2 RF Communications 32.4 29.5 63.9 54.5
Microwave Communications 2.6 (1.8) 3.5 (4.1) Broadcast
Communications 1.0 2.6 3.3 3.7 Headquarters expense (13.6) (12.4)
(27.4) (24.9) Corporate eliminations (2.7) (1.7) (4.4) (2.3)
Non-operating income (loss) (3.5) (6.0) (5.2) (6.0) Net interest
(4.4) (4.8) (8.1) (9.8) $64.9 $41.7 $123.8 $79.3 Table 3 HARRIS
CORPORATION FY'05 Second Quarter Summary CONSOLIDATED STATEMENT OF
CASH FLOWS Two Quarters Ended December 31, January 2, 2004 2004 (In
millions) Operating Activities Net income $85.2 $59.1 Adjustments
to reconcile net income to net cash provided by (used in) operating
activities: Depreciation and amortization 32.0 27.1 Non-current
deferred income tax 4.5 5.0 Loss (gain) on the sale of securities
available-for-sale 3.1 (2.1) (Increase) decrease in: Accounts and
notes receivable 12.3 5.6 Unbilled costs and inventories (21.4)
18.6 Increase (decrease) in: Accounts payable and accrued expenses
(48.7) (7.0) Advance payments and unearned income 3.0 32.7 Income
taxes (7.6) (12.2) Other 22.4 0.6 Net cash provided by operating
activities 84.8 127.4 Investing Activities Cash paid for acquired
businesses (426.4) -- Additions of plant and equipment (34.4)
(28.9) Proceeds from the sale of securities available-for-sale 13.1
3.1 Net cash used in investing activities (447.7) (25.8) Financing
Activities Proceeds from borrowings 69.4 1.0 Payment of borrowings
(76.8) (26.2) Proceeds from exercise of employee stock options 22.8
8.0 Repurchase of common stock (36.2) (19.1) Cash dividends (16.0)
(13.3) Net cash used in financing activities (36.8) (49.6) Effect
of exchange rate changes on cash and cash equivalents 2.6 (0.7) Net
increase (decrease) in cash and cash equivalents (397.1) 51.3 Cash
and cash equivalents, beginning of year 627.5 442.6 Cash and cash
equivalents, end of period $230.4 $493.9 Table 4 HARRIS CORPORATION
FY'05 Second Quarter Summary CONDENSED CONSOLIDATED BALANCE SHEET
December 31, July 2, 2004 2004 (In millions) Assets Cash and cash
equivalents $230.4 $627.5 Receivables 485.0 457.5 Unbilled costs
and accrued earnings 124.6 111.1 Inventories 229.7 220.9 Current
deferred income taxes 118.3 114.1 Income taxes receivable 8.4 6.6
Plant and equipment 299.3 283.3 Goodwill 566.8 223.3 Identifiable
intangible assets 106.8 10.1 Non-current notes receivable 13.2 18.1
Other assets 143.0 153.3 $2,325.5 $2,225.8 Liabilities and
Shareholders' Equity Short-term debt $4.1 $9.9 Accounts payable and
accrued expenses 394.2 403.8 Advance payments and unearned income
154.5 129.1 Non-current deferred income taxes 14.7 2.8 Long-term
debt 401.4 401.4 Shareholders' equity 1,356.6 1,278.8 $2,325.5
$2,225.8 HARRIS CORPORATION FY'05 Second Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G
DISCLOSURE To supplement our consolidated financial statements
presented in accordance with accounting principles generally
accepted in the United States (GAAP), we provide additional
measures of segments' operating income (loss), net income, and net
income per diluted share adjusted to exclude certain costs,
expenses, and losses. Management of Harris believes that these non-
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
disproportionate positive or negative impact on results in any
particular period. Management also believes that these non- GAAP
measures enhance the ability of an investor to analyze trends in
Harris' business and to better understand our performance. In
addition, the Company may utilize non-GAAP financial measures as a
guide in its 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'05
Second Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES Consolidated Statement Of Income Quarter Ended Quarter
Ended December 31, 2004 January 2, 2004 As Adjustment Non- As
Adjustment Non- Reported GAAP Reported GAAP (In millions, except
per share amounts) Revenue from product sales and services $737.2
$-- $737.2 $593.9 $-- $593.9 Cost of product sales and services (A)
(540.2) 4.8 (535.4) (440.4) -- (440.4) Engineering, selling and
administrative expenses (B) (124.2) 3.8 (120.4) (101.0) -- (101.0)
Non-operating income (loss) (3.5) -- (3.5) (6.0) -- (6.0) Interest
income 1.6 -- 1.6 1.5 -- 1.5 Interest expense (6.0) -- (6.0) (6.3)
-- (6.3) Income from continuing operations before income taxes 64.9
8.6 73.5 41.7 -- 41.7 Income taxes (19.8) (1.6) (21.4) (10.0) --
(10.0) Income from continuing operations $45.1 $7.0 $52.1 $31.7 $--
$31.7 Income from continuing operations per diluted common share
$.65 $.10 $.75 $.46 $-- $.46 Two Quarters Ended Two Quarters Ended
December 31, 2004 January 2, 2004 As Adjustment Non- As Adjustment
Non- Reported GAAP Reported GAAP (In millions, except per share
amounts) Revenue from product sales and services $1,406.6 $--
$1,406.6 $1,141.8 $-- $1,141.8 Cost of product sales and services
(A) (1,044.3) 4.8 (1,039.5) (854.1) -- (854.1) Engineering, selling
and administrative expenses (B) (225.2) 3.8 (221.4) (192.6) --
(192.6) Non-operating income (loss) (5.2) -- (5.2) (6.0) -- (6.0)
Interest income 3.9 -- 3.9 2.8 -- 2.8 Interest expense (12.0) --
(12.0) (12.6) -- (12.6) Income from continuing operations before
income taxes 123.8 8.6 132.4 79.3 -- 79.3 Income taxes (38.6) (1.6)
(40.2) (22.1) -- (22.1) Income from continuing operations $85.2
$7.0 $92.2 $57.2 $-- $57.2 Income from continuing operations per
diluted common share $1.23 $.10 $1.33 $.84 $-- $.84 Table 6 HARRIS
CORPORATION FY'05 Second Quarter Summary RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES BUSINESS SEGMENT INFORMATION Quarter Ended
Quarter Ended December 31, 2004 January 2, 2004 As Adjustment Non-
As Adjustment Non- Reported GAAP Reported GAAP (In millions)
Revenue Government Communications Systems $447.3 $-- $447.3 $341.5
$-- $341.5 RF Communications 116.3 -- 116.3 105.6 -- 105.6
Microwave Communications 85.5 -- 85.5 83.0 -- 83.0 Broadcast
Communications 98.9 -- 98.9 66.4 -- 66.4 Corporate eliminations
(10.8) -- (10.8) (2.6) -- (2.6) $737.2 $-- $737.2 $593.9 $-- $593.9
Income From Continuing Operations Before Income Taxes Segment
Operating Income (Loss): Government Communications Systems $53.1
$-- $53.1 $36.3 $-- $36.3 RF Communications 32.4 -- 32.4 29.5 --
29.5 Microwave Communications 2.6 -- 2.6 (1.8) -- (1.8) Broadcast
Communications (C) 1.0 8.6 9.6 2.6 -- 2.6 Headquarters expense
(13.6) -- (13.6) (12.4) -- (12.4) Corporate eliminations (2.7) --
(2.7) (1.7) -- (1.7) Non-operating income (loss) (3.5) -- (3.5)
(6.0) -- (6.0) Net interest (4.4) -- (4.4) (4.8) -- (4.8) $64.9
$8.6 $73.5 $41.7 $-- $41.7 Two Quarters Ended Two Quarters Ended
December 31, 2004 January 2, 2004 As Adjustment Non- As Adjustment
Non- Reported GAAP Reported GAAP (In millions) Revenue Government
Communications Systems $879.5 $-- $879.5 $675.9 $-- $675.9 RF
Communications 229.6 -- 229.6 194.8 -- 194.8 Microwave
Communications 154.9 -- 154.9 151.4 -- 151.4 Broadcast
Communications 166.3 -- 166.3 124.8 -- 124.8 Corporate eliminations
(23.7) -- (23.7) (5.1) -- (5.1) $1,406.6 $-- $1,406.6 $1,141.8 $--
$1,141.8 Income From Continuing Operations Before Income Taxes
Segment Operating Income (Loss): Government Communications Systems
$98.2 $-- $98.2 $68.2 $-- $68.2 RF Communications 63.9 -- 63.9 54.5
-- 54.5 Microwave Communications 3.5 -- 3.5 (4.1) -- (4.1)
Broadcast Communications (C) 3.3 8.6 11.9 3.7 -- 3.7 Headquarters
expense (27.4) -- (27.4) (24.9) -- (24.9) Corporate eliminations
(4.4) -- (4.4) (2.3) -- (2.3) Non-operating income (loss) (5.2) --
(5.2) (6.0) -- (6.0) Net interest (8.1) -- (8.1) (9.8) -- (9.8)
$123.8 $8.6 $132.4 $79.3 $-- $79.3 HARRIS CORPORATION FY'05 Second
Quarter Summary RECONCILIATION OF GAAP TO NON-GAAP MEASUREMENTS
Notes to tables 5 and 6: Note A -- Adjustments to cost of product
sales and services for the quarter and two quarters ended December
31, 2004, relate to impairment losses on capitalized software
development costs ($4.8 million) associated with our acquisition of
Encoda Systems, Inc. Note B -- Adjustments to engineering, selling
and administrative expenses for the quarter and two quarters ended
December 31, 2004, relate to the write- off of in-process research
and development ($3.8 million) associated with our acquisition of
Encoda Systems, Inc. Note C -- Adjustments to Broadcast
Communications segment operating income for the quarter and two
quarters ended December 31, 2004, relate to the write- off of
in-process research and development ($3.8 million), and impairment
losses on capitalized software development costs ($4.8 million)
associated with our acquisition of Encoda Systems, Inc. As noted in
the release, the company raised its fiscal 2005 earnings guidance
to a range of $2.85 to $2.95 per diluted share, excluding $.10 per
diluted share of costs noted above for the second quarter
acquisition of Encoda. On a GAAP basis including such costs, the
earnings guidance for fiscal 2005 is $2.75 to $2.85 per diluted
share. This press release contains trademarks, service marks, and
registered marks of Harris Corporation and its subsidiaries.
DIRECTV(R) is a registered trademark of DIRECTV Group, Inc. HD
Radio(TM) is a registered trademark of iBiquity Digital
Corporation. For additional information, contact Harris Corporation
at . DATASOURCE: Harris Corporation CONTACT: Media, Tom Hausman,
+1-321-727-9131, or , or Investor relations, Pamela Padgett,
+1-321-727-9383, or , both of Harris Corporation Web site:
http://www.harris.com/
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