Harris Corporation Fourth Quarter Net Income Increases 60%; Revenue
Grows 14% Company Raises Fiscal 2006 Earnings Guidance MELBOURNE,
Fla., July 27 /PRNewswire-FirstCall/ -- Harris Corporation
(NYSE:HRS) today announced significant increases in revenue and
income for the fourth quarter of fiscal year 2005 that ended July
1. Revenue in the fourth quarter increased 14 percent to $822
million, and net income increased 60 percent to $61.2 million.
Earnings were $.44 per diluted share, compared to $.28 per diluted
share in the prior-year quarter. Cash flow from operations during
the fourth quarter was $150 million, versus $83 million during the
prior-year quarter. The company also increased its
earnings-per-share guidance for fiscal year 2006 from previous
guidance of $1.73 to $1.78 per diluted share to a range from $1.80
to $1.90 per diluted share, excluding the expected impact of
charges related to cost-reduction actions (see notes to Tables 5
and 6 attached). Total revenue for fiscal year 2005 increased by 19
percent to $3.0 billion, net income climbed 52 percent to $202.2
million, and earnings per diluted share increased to $1.46,
compared to $.97 per diluted share in the prior year. Cash flow
from operations for fiscal year 2005 was $301 million, compared to
$270 million in the prior year. "Harris fiscal year 2005 closed
with a very strong quarter," said Howard L. Lance, chairman,
president, and chief executive officer. "The year produced improved
performance in each of our businesses and record financial results.
Our Government Communications segment achieved key wins on a number
of important new programs, and we increased global market
penetration in our tactical radio segment. Improving markets and
persistent attention to lowering costs, combined with the
introduction of new products, helped our commercial segments to
deliver improved performance in 2005. We also completed two very
successful acquisitions during the year, and both are making solid
contributions." Government Communications Systems Revenue in the
Government Communications Systems segment was $461.7 million in the
fourth quarter, a 6 percent increase compared to the year-ago
quarter. Operating income increased 25 percent to $52.9 million,
driven by excellent program execution. Contributors to
year-over-year revenue growth in the quarter included the $1
billion 10-year Patriot technical services program for the National
Reconnaissance Office, the $2.2 billion 15-year Federal Aviation
Administration (FAA) Telecommunications Infrastructure program, the
$275 million FAA Mission Support Services contract, a $75 million
three-year development contract for communications equipment for
the U.S. Army Aerial Common Sensor program, a three-year potential
$77 million program with the National Security Agency (NSA) to
develop new systems for NSA analysts, and several classified
programs. The segment also benefited from the July 2004 acquisition
of the Orkand Corporation, which has been fully integrated into
Harris Technical Services. During the fourth quarter, Harris
successfully completed the Iraqi Media Network contract, as well as
several classified programs. New programs won during the fourth
quarter included a 54-month $57 million follow-on contract with the
FAA for its Weather and Advanced Radar Processing System, a $35
million contract with the FAA for communications systems upgrades,
an $18 million contract to provide avionics for U.S. Navy F-18
aircraft, a potential $350 million program to provide tactical
common data links for the U.S. Navy LAMPS helicopters, an $11
million contract to continue development of the radar payload for
the Innovative Space Based Radar Antenna Technology (ISAT) program,
and a major classified program. RF Communications Revenue in the RF
Communications segment was $163.8 million, a 37 percent increase
compared to the year-ago quarter. Revenue growth was strong with
both U.S. and international customers. Orders were significantly
greater than revenue in the quarter and totaled $642 million for
the full fiscal year, a 54 percent increase over the prior year.
Operating income in the quarter was $53.0 million, a 69 percent
increase compared to the prior-year quarter. Improved margins
resulted from operating leverage on higher sales. Tactical radio
demand from U.S. Department of Defense customers continues to be
strong. Force modernization efforts have gained increasing momentum
and funding. This initiative delivers enhanced command, control,
and communications to more and smaller operating units. Demand in
international markets also remained strong. International revenue
was driven by initial deliveries of Falcon(R) II radios to
Pakistan, part of the $68 million contract awarded in the third
quarter of fiscal 2005, and continuing shipments under the Bowman
Tactical Radio Programme for the UK Ministry of Defence. New
domestic orders during the quarter included $50 million for high-
frequency (HF) radios and $22 million for multiband radios to
support the U.S. Army Modularity initiative, Army Reserve, and
National Guard. Orders also included $19 million from the U.S.
Marine Corps. New international orders included $16 million from
Algeria, $7 million from Ethiopia, $4 million from the Republic of
Georgia, $3 million from The Netherlands, and $3 million from
Sweden. Microwave Communications Revenue in the Microwave
Communications segment was $91.0 million, compared to $96.9 million
in the prior-year quarter. The prior-year results benefited from
the build-out of a large mobile telecom network for MTN Nigeria.
Sequential revenue increased 22 percent compared to the third
quarter of fiscal 2005. Orders in the fourth quarter were strong,
totaling $106 million and exceeding sales in both North American
and international markets. Operating income was $3.1 million,
compared to a loss of $5.8 million in the year-ago quarter. The
prior-year quarter included a charge of $7.3 million associated
with cost-reduction actions. Gross margin improved in the quarter
as a result of increased shipments of TRuepoint(TM), a new family
of lower-cost microwave radios, and from higher sales in North
America. TRuepoint orders and shipments continued to accelerate
during the quarter. Orders were $39 million, significantly greater
than sales of $22 million. TRuepoint sales for fiscal year 2005
totaled $45 million. Orders in North America in the quarter
included large, ongoing network projects for the Federal Bureau of
Investigation and a large defense contractor in support of an
international communications project. Other customers placing
significant orders in the quarter included the West Virginia
Emergency Medical Services, the City of Seattle, and various mobile
telecom service providers. International market activity reflected
an expanding customer base in the Middle East and Africa, higher
sales in Europe, and continued strength in Latin America. Orders
from several new channel partners, including IRTE in Italy, served
to expand international presence even further. The largest-to- date
order for TRuepoint 4000 and 5000 microwave radios was received in
the quarter from Radiomovil, a new telecom service provider in
Portugal. Other major orders included TRuepoint radios for Vee
Networks, a growing Nigerian telecom operator, Loteny Telecom in
the Ivory Coast, Onatel in Burkino Faso, Nextel in Mexico, and ZTE
in the People's Republic of China. Broadcast Communications Revenue
in the Broadcast Communications segment was $114.6 million,
compared to $89.1 million in the prior-year quarter. Operating
income for the segment was $7.9 million for the quarter, compared
to $3.9 million in the year-ago quarter. Fourth quarter 2005
results included Encoda Systems, which was acquired November 2004.
Encoda has been integrated into the Software Systems business unit
and is performing in line with management expectations. Revenue
drivers included increased sales in the U.S. of HD Radio(TM)
transmission equipment. The rollout of HD Radio continues to gain
momentum with 2,500 radio stations committed to begin their digital
broadcasts during the next four years. U.S. digital television
(HDTV) transmission equipment sales increased in the quarter as
broadcasters moved to meet FCC deadlines for full-power
transmission of digital signals. Revenue growth was partially
offset by continuing international market softness for both analog
and European-standard digital broadcast equipment and from
declining sales of legacy automation systems as Harris transitions
customers to its next- generation H-Class(TM) enterprise software
platform. Orders for the quarter included digital TV transmitters
for Entravision Communications, two stations with the Quincy
Newspapers Network, and for Gray Communications. Numerous HD Radio
transmission orders were booked for National Public Radio (NPR)
stations, Cox Communications, and Clear Channel Communications,
among others. In addition, an HD transmitter agreement was signed
for nine stations that are part of Entercom Communications, the
nation's fourth largest radio broadcaster. In the company's
Software Systems business, major orders were booked with Turner
Broadcasting and Sony Corporation. In the new Mobile Television
market Beijing Radio selected Harris DAB transmitters to support
its Digital Mobile Broadcasting (DMB) application. To address
ongoing international market weakness, and to further improve
profitability, the company is planning to implement a series of
cost-reduction actions in the first quarter of fiscal year 2006.
European-standard transmitter production will be moved from the
Huntingdon, UK facility to the company's Quincy, Illinois,
facility, creating a single global transmitter manufacturing
operation for both U.S. and European-standard products. Radio
console assembly and related products will be moved from the Mason,
Ohio, facility to an outside supplier. New synergies from the
Encoda Systems acquisition have also been identified, allowing for
the elimination of additional staffing duplications. In total,
these actions could result in the elimination of 150-200 positions
within the Broadcast division. Facility closure and relocation
expenses, severance costs, and other charges associated with these
actions could total approximately $27 million. Savings associated
with these actions are expected to yield a two-year payback.
Outlook The company increased earnings guidance for fiscal year
2006 from the previous range of $1.73 to $1.78 per diluted share,
provided on June 9, 2005, to a range of $1.80 to $1.90 per diluted
share. Revenue growth in fiscal year 2006 is expected to exceed 10
percent. "Our optimism for fiscal year 2006 reflects strong
performance in the fourth quarter and increased expectations for
revenue growth in each segment of the company," Lance said. "Order
rates and our opportunity pipeline remain very strong for Harris
tactical radios, and we anticipate decisions on large contract
opportunities at our Government Communications Systems business
over the next several quarters. The Microwave division finished
fiscal year 2005 with increased momentum, and initial success of
the new TRuepoint radio will expand opportunities in both
international and U.S. markets. In addition, cost reduction actions
we are taking in our Broadcast division, combined with market
synergies from Encoda Systems, new product introductions, and the
continuing transition to digital transmission technology, give us
optimism for increased contributions from this very exciting growth
segment." 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: 5462377. 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, August 3. To access the replay, please call (719)
457-0820, access code: 5462377. A recording of the call will also
be available on Harris' website beginning at 7:00 p.m., Eastern
Time on July 27. 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 contains non-GAAP
financial measures within the meaning of Regulation G promulgated
by the SEC, including fiscal 2006 earnings-per- share guidance
excluding the impact of any facility shutdown, relocation expenses,
severance costs, and other charges associated with the cost-
reduction items planned to take in our Broadcast Communications
segment. Management of Harris believes that these non-GAAP
financial measures, when considered together with the 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 disproportionately
positive or negative impact on results in any particular period.
Management also believes that these non-GAAP financial measures
enhance the ability of investors to analyze Harris business trends
and to better understand the company's performance. In addition,
the company may utilize non-GAAP financial measures as a guide in
its forecasting, 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 Statements 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 2006, the potential value of contract awards and potential
contract awards, savings from cost-reduction actions and statements
regarding outlook, including expected revenue growth. 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 in 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. HD Radio(TM) is a trademark of iBiquity Digital
Corporation. Table 1 HARRIS CORPORATION FY'05 Fourth Quarter
Summary Consolidated Statement of Income (in millions, except per
share amounts) Quarter Ended Fiscal Year Ended July 1, July 2, July
1, July 2, 2005 2004 2005 2004 Revenue from product sales and
services $821.9 $722.8 $3,000.6 $2,518.6 Cost of product sales and
services (585.1) (541.5) (2,176.8) (1,888.3) Engineering, selling
and administrative expenses (141.4) (124.8) (502.6) (421.0)
Non-operating income (loss) (0.1) (3.6) (6.3) (11.0) Interest
income 2.0 1.8 7.5 6.2 Interest expense (5.9) (6.0) (24.0) (24.5)
Income from continuing operations before income taxes 91.4 48.7
298.4 180.0 Income taxes (30.2) (15.6) (96.2) (54.3) Income from
continuing operations 61.2 33.1 202.2 125.7 Discontinued operations
net of income taxes --- 5.1 --- 7.1 Net income $61.2 $38.2 $202.2
$132.8 Net Income Per Common Share (1) Basic Continuing operations
$.46 $.25 $1.52 $.95 Discontinued operations .-- .04 .-- .05 $.46
$.29 $1.52 $1.00 Diluted Continuing operations $.44 $.24 $1.46 $.92
Discontinued operations .-- .04 .-- .05 $.44 $.28 $1.46 $.97 Cash
dividends paid per common share (1) $.06 $.05 $.24 $.20 Average
basic shares outstanding (1) 132.7 132.3 132.7 132.4 Average
diluted shares outstanding (1) 141.1 140.6 141.3 140.3 (1) Net
income per share, cash dividends paid per share, and weighted
average shares outstanding in all periods reflect a two-for-one
stock split effected as a 100 percent stock dividend in March 2005.
Table 2 HARRIS CORPORATION FY'05 Fourth Quarter Summary Business
Segment Information (in millions) Quarter Ended Fiscal Year Ended
July 1, July 2, July 1, July 2, 2005 2004 2005 2004 Revenue
Government Communications Systems $461.7 $435.4 $1,805.2 $1,506.1
RF Communications 163.8 119.5 537.1 430.4 Microwave Communications
91.0 96.9 320.2 329.8 Broadcast Communications 114.6 89.1 384.1
287.2 Corporate eliminations (9.2) (18.1) (46.0) (34.9) $821.9
$722.8 $3,000.6 $2,518.6 Income From Continuing Operations Before
Income Taxes Segment Operating Income (Loss): Government
Communications Systems $52.9 $42.2 $203.4 $153.4 RF Communications
53.0 31.4 166.5 118.9 Microwave Communications 3.1 (5.8) 7.7 (12.1)
Broadcast Communications 7.9 3.9 18.1 8.1 Headquarters expense
(15.2) (12.5) (58.0) (51.7) Corporate eliminations (6.3) (2.7)
(16.5) (7.3) Non-operating income (loss) (0.1) (3.6) (6.3) (11.0)
Net interest (3.9) (4.2) (16.5) (18.3) $91.4 $48.7 $298.4 $180.0
Table 3 HARRIS CORPORATION FY'05 Fourth Quarter Summary
CONSOLIDATED STATEMENT OF CASH FLOWS (in millions) Fiscal Year
Ended July 1, July 2, 2005 2004 Operating Activities Net income
$202.2 $132.8 Adjustments to reconcile net income to net cash
provided by (used in) operating activities: Depreciation and
amortization 71.4 55.1 Non-current deferred income tax 16.5 23.2
Gain on the sale of securities available for sale 3.7 (2.3) Gain on
the sale of the tools and test systems product line --- (18.9)
(Increase) decrease in: Accounts and notes receivable 2.7 (27.4)
Unbilled costs and inventories (17.0) 46.7 Increase (decrease) in:
Accounts payable and accrued expenses (3.5) 46.8 Advance payments
and unearned income (11.2) 22.6 Income taxes 28.1 (25.7) Other 8.5
17.4 Net cash provided by operating activities 301.4 270.3
Investing Activities Additions of plant and equipment (75.0) (66.4)
Cash paid for acquisition of businesses (427.3) --- Cash paid for
strategic investments --- (2.8) Proceeds from the sale of
securities available for sale 13.4 7.9 Proceeds from the sale of
the tools and test systems product line --- 44.7 Net cash used in
investing activities (488.9) (16.6) Financing Activities Proceeds
from borrowings 126.5 6.6 Payments of borrowings (134.9) (30.2)
Proceeds from sale of Common Stock 33.4 37.0 Purchase of Common
Stock for treasury (56.4) (56.5) Cash dividends (31.9) (26.6) Net
cash used in financing activities (63.3) (69.7) Effect of exchange
rate changes on cash and cash equivalents 0.9 0.9 Net increase
(decrease) in cash and cash equivalents (249.9) 184.9 Cash and cash
equivalents at beginning of year 627.5 442.6 Cash and cash
equivalents at end of year $377.6 $627.5 Table 4 HARRIS CORPORATION
FY'05 Fourth Quarter Summary CONDENSED CONSOLIDATED BALANCE SHEET
(in millions) July 1, July 2, 2005 2004 Assets Cash and cash
equivalents $377.6 $627.5 Receivables 494.0 457.5 Unbilled costs
and accrued earnings 119.7 111.1 Inventories 230.3 220.9 Current
deferred income taxes 96.0 114.1 Income taxes receivable --- 6.6
Plant and equipment 307.8 283.3 Goodwill 569.9 223.3 Identifiable
intangible assets 99.1 10.1 Non-current notes receivable 13.6 18.1
Other assets 149.4 153.3 $2,457.4 $2,225.8 Liabilities and
Shareholders' Equity Short-term debt $4.2 $9.9 Accounts payable and
accrued expenses 441.9 403.8 Advance payments and unearned income
139.0 129.1 Income taxes payable 5.1 --- Non-current deferred
income taxes 26.7 2.8 Long-term debt 401.4 401.4 Shareholders'
equity 1,439.1 1,278.8 $2,457.4 $2,225.8 HARRIS CORPORATION FY'05
Fourth 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 gains and losses. Management of Harris
believes that these non-GAAP financial measures, when considered
together with the 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 forecasting, 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 Fourth Quarter Summary RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES Consolidated Statement Of Income (in millions,
except Quarter Ended Quarter Ended per share amounts) July 1, 2005
July 2, 2004 As Adjustment Non- As Adjustment Non- Reported GAAP
Reported GAAP Revenue from product sales and services $821.9 $ --
$821.9 $722.8 $ -- $722.8 Cost of product sales and services
(585.1) -- (585.1) (541.5) -- (541.5) Engineering, selling and
administrative expenses (A) (141.4) -- (141.4) (124.8) 7.3 (117.5)
Non-operating income (loss) (0.1) -- (0.1) (3.6) -- (3.6) Interest
income 2.0 -- 2.0 1.8 -- 1.8 Interest expense (5.9) -- (5.9) (6.0)
-- (6.0) Income from continuing operations before income taxes 91.4
-- 91.4 48.7 7.3 56.0 Income taxes (30.2) -- (30.2) (15.6) (2.2)
(17.8) Income from continuing operations $61.2 $ -- $61.2 $33.1
$5.1 $38.2 Income from continuing operations per diluted common
share $.44 $ -- $.44 $.24 $.04 $.28 (in millions, except Fiscal
Year Ended Fiscal Year Ended per share amounts) July 1, 2005 July
2, 2004 As Adjustment Non- As Adjustment Non- Reported GAAP
Reported GAAP Revenue from product sales and services $3,000.6 $ --
$3,000.6 $2,518.6 $ -- $2,518.6 Cost of product sales and services
(B) (2,176.8) 4.8 (2,172.0) (1,888.3) -- (1,888.3) Engineering,
selling and administrative expenses (A) (C) (502.6) 3.8 (498.8)
(421.0) 7.3 (413.7) Non-operating income (loss) (6.3) -- (6.3)
(11.0) -- (11.0) Interest income 7.5 -- 7.5 6.2 -- 6.2 Interest
expense (24.0) -- (24.0) (24.5) -- (24.5) Income from continuing
operations before income taxes 298.4 8.6 307.0 180.0 7.3 187.3
Income taxes (96.2) (1.6) (97.8) (54.3) (2.2) (56.5) Income from
continuing operations $202.2 $7.0 $209.2 $125.7 $5.1 $130.8 Income
from continuing operations per diluted common share $1.46 $.05
$1.51 $.92 $.04 $.96 Table 6 HARRIS CORPORATION FY'05 Fourth
Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Business Segment Information Quarter Ended Quarter Ended (in
millions) July 1, 2005 July 2, 2004 As Adjustment Non- As
Adjustment Non- Reported GAAP Reported GAAP Revenue Government
Communications Systems $461.7 $ -- $461.7 $435.4 $ -- $435.4 RF
Communications 163.8 -- 163.8 119.5 -- 119.5 Microwave
Communications 91.0 -- 91.0 96.9 -- 96.9 Broadcast Communications
114.6 -- 114.6 89.1 -- 89.1 Corporate eliminations (9.2) -- (9.2)
(18.1) -- (18.1) $821.9 $ -- $821.9 $722.8 $ -- $722.8 Income From
Continuing Operations Before Income Taxes Segment Operating Income
(Loss): Government Communications Systems $52.9 $ -- $52.9 $42.2 $
-- $42.2 RF Communications 53.0 -- 53.0 31.4 -- 31.4 Microwave
Communications (D) 3.1 -- 3.1 (5.8) 7.3 1.5 Broadcast
Communications 7.9 -- 7.9 3.9 -- 3.9 Headquarters expense (15.2) --
(15.2) (12.5) -- (12.5) Corporate eliminations (6.3) -- (6.3) (2.7)
-- (2.7) Non-operating income (loss) (0.1) -- (0.1) (3.6) -- (3.6)
Net interest (3.9) -- (3.9) (4.2) -- (4.2) $91.4 $ -- $91.4 $48.7
$7.3 $56.0 Fiscal Year Ended Fiscal Year Ended (in millions) July
1, 2005 July 2, 2004 As Adjustment Non- As Adjustment Non- Reported
GAAP Reported GAAP Revenue Government Communications Systems
$1,805.2 $ -- $1,805.2 $1,506.1 $ -- $1,506.1 RF Communications
537.1 -- 537.1 430.4 -- 430.4 Microwave Communications 320.2 --
320.2 329.8 -- 329.8 Broadcast Communications 384.1 -- 384.1 287.2
-- 287.2 Corporate eliminations (46.0) -- (46.0) (34.9) -- (34.9)
$3,000.6 $ -- $3,000.6 $2,518.8 $ -- $2,518.6 Income From
Continuing Operations Before Income Taxes Segment Operating Income
(Loss): Government Communications $203.4 $ -- $203.4 $153.4 $ --
$153.4 Systems RF Communications 166.5 -- 166.5 118.9 -- 118.9
Microwave Communications (D) 7.7 -- 7.7 (12.1) 7.3 (4.8) Broadcast
Communications (E) 18.1 8.6 26.7 8.1 -- 8.1 Headquarters expense
(58.0) -- (58.0) (51.7) -- (51.7) Corporate eliminations (16.5) --
(16.5) (7.3) -- (7.3) Non-operating income (loss) (6.3) -- (6.3)
(11.0) -- (11.0) Net interest (16.5) -- (16.5) (18.3) -- (18.3)
$298.4 $8.6 $307.0 $180.0 $7.3 $187.3 HARRIS CORPORATION FY'05
Fourth Quarter Summary RECONCILIATION OF GAAP TO NON-GAAP
MEASUREMENTS Notes to tables 5 and 6: Note A - Adjustments to
engineering selling and administrative expenses for the year and
quarter ended July 2, 2004, relate to severance, moving, and other
costs associated with cost reduction actions aimed at reducing
expenses in our Microwave Communications segment, including the
consolidation of administrative and support functions at its
Durham, North Carolina location and the production support of its
TRuepoint(TM) microwave radio family in its San Antonio, Texas
manufacturing facility ($7.3 million). Note B - Adjustments to cost
of product sales and services for the year ended July 1, 2005,
relate to impairment losses on capitalized software development
costs ($4.8 million) associated with our acquisition of Encoda
Systems, Inc. The adjustments occurred during the second quarter.
Note C - Adjustments to engineering, selling and administrative
expenses for the year ended July, 1, 2005, relate to the write-off
of in-process research and development ($3.8 million) associated
with our acquisition of Encoda Systems, Inc. The adjustments
occurred during the second quarter. Note D - Adjustments to
Microwave Communications segment operating income (loss) for the
year and quarter ended July 2, 2004, relate to the adjustments
described above in Note A. Note E - Adjustments to Broadcast
Communications segment operating income for the year ended July 1,
2005, relate to the adjustments described above in Note B and Note
C. As noted in the release, the company raised its fiscal 2006
earnings guidance to a range of $1.80 to $1.90 per diluted share,
excluding the impact of any facility shutdown, relocation expenses,
severance costs, and other charges associated with the cost
reduction actions planned to take place in our Broadcast
Communications segment. On a GAAP basis including such costs, the
earnings guidance for fiscal 2006 is $1.65 to $1.75. DATASOURCE:
Harris Corporation CONTACT: Media, Tom Hausman, +1-321-727-9131, or
, or Investors, Pamela Padgett, +1-321-727-9383, or , both of
Harris Corporation Web site: http://www.harris.com/
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Harris (NYSE:HRS)
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