Company Increases Fiscal 2007 Guidance MELBOURNE, Fla., July 26
/PRNewswire-FirstCall/ -- Harris Corporation (NYSE:HRS) today
reported revenue for the fourth quarter of fiscal year 2006 of $992
million, a 21 percent increase compared to $822 million in the
prior- year quarter. Orders in the fourth quarter increased 45
percent to $1.2 billion and were higher in each of the company's
four business segments. GAAP net income increased 39 percent to
$85.1 million, or $.61 per diluted share. Non-GAAP net income rose
49 percent to $91.0 million, or $.65 per diluted share. Non-GAAP
earnings results in the fourth quarter excluded $.04 per diluted
share associated with previously announced actions and acquisition
expenses. The company has increased earnings guidance for its
fiscal year 2007 from a previous range of $2.50 to $2.60 per
diluted share to a new range of $2.60 to $2.70 per diluted share.
Revised fiscal year 2007 earnings guidance represents a
year-over-year increase of about 20 percent compared to non-GAAP
earnings for fiscal 2006. For the full fiscal year 2006, revenue
was $3.5 billion, representing a 16 percent increase compared to
fiscal year 2005. Net income increased 18 percent to $237.9
million, and net income was $1.71 per diluted share compared to
$1.46 in the prior year. Non-GAAP net income increased 48 percent
to $310.0 million, and non-GAAP earnings per diluted share were
$2.22 versus $1.51 per diluted share in the prior year. Details
related to charges excluded from non-GAAP earnings are provided in
the attached Reconciliation of Non-GAAP Financial Measures in
Tables 5 and 6 and accompanying notes. "All of our business
segments had improved operating performance and are entering the
new fiscal year with significant momentum," said Howard L. Lance,
chairman, president, and chief executive officer. "Orders of $1.2
billion made the fourth quarter the strongest in the company's
history. We have significantly increased new product introductions
across the company and will continue to fund a level of engineering
research and development investment that will further broaden our
product portfolio, market reach, and customer base. "Our RF
Communications segment continues to outperform the market as demand
for the high-performance Falcon(R) II radios and the new Falcon III
radios resulted in significantly higher revenue and orders for the
quarter and the year," Lance said. "Our largest business, the
Government Communications Systems segment, returned to growth in
the fourth quarter, driven by gains in the Civil, Department of
Defense, and Technical Services program areas. In our Broadcast
Communications business, the restructuring in fiscal year 2006 has
delivered significant improvements in operating performance in our
European transmitter and our software systems businesses. In
addition, the recent acquisitions of Leitch Technology, Optimal
Solutions, and Aastra Digital Video have positioned us in
higher-growth digital broadcast markets. Our Microwave
Communications segment continued to push sales and margins higher
with the success of its TRuepoint(TM) radio products and with a
strengthening microwave market." Government Communications Systems
Revenue in the Government Communications Systems segment increased
4 percent to $480 million in the fourth quarter, compared to $462
million in the year-ago quarter. Operating income was $54.2
million, compared to $52.9 million in the prior-year quarter.
Program performance continues to be excellent. Among the programs
that contributed to higher revenue in the quarter was the $2.2
billion FAA Telecommunications Infrastructure (FTI) program. Harris
made substantial progress in the quarter toward modernizing the
telecommunications network that serves more than 4,400 FAA
facilities nationwide. Equipment has been installed at more than
1,600 sites and more than a third of the National Airspace System's
20,000 communications services are now being conducted on the FTI
network. Since the initial program award, Harris has expanded its
work scope on the program to include the FAA's Mission Support
network for administrative functions and the Satellite
Communications network that links remote sites to the FTI network.
Also contributing to higher revenue in the quarter was the new
five-year, $600 million contract with the U.S. Census Bureau for
its Field Data Collection Automation program, which Harris won at
the close of the third quarter. Harris is integrating multiple
automated systems required to collect data from field census-takers
during the 2010 Census. Additional programs contributing to higher
revenue in the fourth quarter included the 10-year, $1 billion
Patriot program that provides technical services for the National
Reconnaissance Office, the Large Aperture Multiband Deployable
Antenna program for the U.S. Air Force and Marine Corps, and sales
of commercial satellite antenna products. At the close of the
fiscal year, total backlog for programs in our Government
Communications Systems segment stood at more than $4.5 billion. The
segment serves a diversified customer base representing
approximately 300 active programs. RF Communications Revenue in the
RF Communications segment was $243 million in the fourth quarter, a
48 percent increase compared to the year-ago quarter. Operating
income for the segment rose 58 percent in the quarter to $83.7
million. Strong revenue and order growth in the fourth quarter came
from both U.S. and international markets. International revenue in
the quarter benefited from deliveries to the United Kingdom, NATO,
Romania, Algeria, Iraq, Ethiopia, Niger, and Uganda. Orders in the
fourth quarter were higher than sales and, for the full year, were
above $1 billion. Orders in the fourth quarter included a $169
million contract from the U.S. Army Communications and Electronics
Command for Harris Falcon(R) III AN/VRC-110 vehicular radio
systems. The contract is the second major Army vehicular contract
for the new Falcon III radio system, confirming a strong entry into
a significant new market for Falcon radios. Harris has delivered
over 1,500 AN/VRC-110 systems to the Army. The Falcon III
AN/VRC-110 radios provide not only single-band SINCGARS
capabilities but also multiband multimission capabilities that
provide soldiers with total battlefield connections, including
secure ground-to-air and tactical satellite communications, and an
embedded global positioning system for situational awareness. The
radios are interoperable with a wide range of legacy military and
commercial VHF and UHF radios. By utilizing Software Communications
Architecture that complies with Joint Tactical Radio System (JTRS)
communications waveforms, the Falcon III AN/PRC-152 handheld radio
provides the Army with the capability to adapt to future mission
requirements. To continue to meet strong demand across all product
lines, Harris has significantly expanded its radio manufacturing
capacity. The manufacturing expansion and product ramp-up for the
new Falcon III radios were the fastest in the company's history and
were accomplished ahead of schedule. Microwave Communications
Revenue in the Microwave Communications segment increased 21
percent to $111 million in the fourth quarter. Non-GAAP operating
income in the quarter was $9.7 million, excluding charges of $3.8
million, compared to operating income of $3.1 million in the
prior-year quarter. Non-GAAP operating margin reached 8.8 percent
in the quarter, reflecting continuing improvements in gross margin,
primarily as a result of increased shipments and lower
manufacturing costs of the TRuepoint(TM) family of products. Orders
exceeded sales for the sixth consecutive quarter, driven by
continued strength in both international and North American
markets. In North America, microwave demand from both private
networks and mobile service providers continues to be driven by
capacity expansions and by network upgrades for high-reliability,
high-bandwidth applications. Significant international orders in
the quarter were received from service providers in the Ivory
Coast, Kenya, Nigeria, Iraq, Romania, and Italy. Significant
shipments in the quarter were made to a large service provider in
Nigeria for the build-out of a telecom network that spans more than
5,000 kilometers. As part of providing both backbone and access
microwave solutions for this complex and expansive network, Harris
is also providing network architecture and planning. During the
quarter, Harris introduced a new feature enhancement for its
premier TRuepoint product family -- a secure network management
functionality -- and also completed the full production launch for
the last two frequency bands -- the 10GHz and 38GHz. To further
enhance its product portfolio, Harris is developing a
next-generation transport solution. Initial release of the new
product directed at the high-capacity, long-haul transport segment
of the market is expected during the first quarter of calendar year
2007. Broadcast Communications Revenue in the Broadcast
Communications segment was $172 million in the fourth quarter, up
50 percent compared to $115 million in the prior-year quarter.
Revenue growth benefited from the October 2005 acquisition of
Leitch Technology. Non-GAAP operating income in the fourth quarter
of fiscal 2006 was $21.0 million, excluding charges of $3.2
million, compared to operating income of $7.9 million in the
prior-year quarter. Excluding charges, operating margin was 12.2
percent compared to 6.9 percent in the prior-year quarter. The
improvement in operating performance resulted from higher gross
margins, which have benefited significantly from fiscal year 2006
cost-reduction actions and from the addition of higher-margin video
distribution and digital media products from the Leitch
acquisition. Sequentially, revenue increased 20 percent, driven by
demand for HD Radio(TM) transmission systems, networking products,
software systems, sales of European transmission equipment, and
video distribution and digital media products. Orders increased
significantly over the prior-year quarter and benefited from the
Leitch acquisition and its double-digit orders growth for video
distribution and digital media products. Demand was particularly
strong for the X75(TM) processor, Platinum(TM) router, and
ICONmaster(TM) master control system. Orders benefited from several
large contracts for software systems and increased demand for radio
transmission systems, including the new FLEXSTAR(TM) family of HD
Radio products that Harris recently launched in U.S. markets.
During the quarter, Harris completed the acquisition of Aastra
Digital Video. Aastra is a developer and marketer of video
networking products. The acquisition further enables Harris to
offer broad networking solutions that transport media content over
a variety of broadcast, cable, satellite, and telco networks,
including those supporting new services such as IPTV and Mobile TV.
Outlook "Clearly, Harris performed well in all four segments during
fiscal year 2006. We concluded the year with a record quarter for
revenue, orders, and net income, and an improved outlook for each
business segment," Lance said. "The healthy orders growth has
produced a strong backlog, giving us confidence as we enter our new
fiscal year. Customer preference for Falcon radios in the U.S. and
international markets continues to present significant new
opportunities for our RF Communications segment. The Government
Communications Systems segment returned to growth and has a
significant opportunity pipeline. Operating performance in both
Broadcast Communications and Microwave Communications has improved
significantly. We have expanded the breadth of our Broadcast
Communications business through new product introductions and
acquisitions, which we expect will drive higher growth in the
coming year. In Microwave, we are winning large wireless
infrastructure programs in North America and emerging markets
around the globe, which should continue to drive growth in this
business." 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)
457-2625, access code: 1462662. 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 2. To access the replay, please call (719)
457-0820, access code: 1462662. A recording of the call will also
be available on Harris' website beginning at 7:00 p.m., Eastern
Time on July 26. Harris is an international communications and
information technology company serving government and commercial
markets in more than 150 countries. With its headquarters in
Melbourne, Florida, the company has more than 13,000 employees --
including 5,500 engineers and scientists -- dedicated to the
development of best-in-class assured communications(TM) products,
systems, and services. The company's operating divisions serve
markets for government communications systems, RF tactical radio
communications, broadcast communications, and microwave
communications. 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 earnings
per share for the fourth quarter and fiscal 2006 excluding the
impact of charges associated with product discontinuations in the
Microwave segment, cost-reduction actions in the Broadcast
Communications segment, acquisition-related costs associated with
the acquisition of Leitch Technology and the charge related to our
arbitration with Bourdex. Harris management 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 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 2007, the potential value of contract awards and potential
contract awards, 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, and 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, other
than imposed by law, to update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise. Attachments: Financial Statements (six tables). HD
Radio(TM) is a trademark of iBiquity Digital Corporation. For
additional information, contact Harris Corporation at . HARRIS
CORPORATION FY'06 Fourth Quarter Summary Consolidated Statement of
Income Quarter Ended Fiscal Year Ended June 30, July 1, June 30,
July 1, 2006 2005 2006 2005 (In millions, except per share amounts)
Revenue from product sales and services $992.4 $821.9 $3,474.8
$3,000.6 Cost of product sales and (651.4) (585.1) (2,372.7)
(2,176.8) services Engineering, selling and (205.1) (141.4) (695.4)
(502.6) administrative expenses Non-operating income (loss) (0.4)
(0.1) (1.2) (6.3) Interest income 3.3 2.0 11.8 7.5 Interest expense
(9.9) (5.9) (36.5) (24.0) Income before income taxes 128.9 91.4
380.8 298.4 Income taxes (43.8) (30.2) (142.9) (96.2) Net income
$85.1 $61.2 $237.9 $202.2 Net income per common share Basic $ .64 $
.46 $ 1.79 $1.52 Diluted $ .61 $ .44 $ 1.71 $1.46 Cash dividends
paid per common share $ .08 $ .06 $ .32 $ .24 Basic weighted
average shares outstanding 133.1 132.7 132.9 132.7 Diluted weighted
average shares outstanding 141.8 141.1 141.6 141.3 HARRIS
CORPORATION FY'06 Fourth Quarter Summary Business Segment
Information Quarter Ended Fiscal Year Ended June 30, July 1, June
30, July 1, 2006 2005 2006 2005 (In millions) Revenue Government
Communications Systems $ 479.7 $ 461.7 $1,812.5 $1,805.2 RF
Communications 242.7 163.8 808.6 537.1 Microwave Communications
110.5 91.0 348.7 320.2 Broadcast Communications 172.2 114.6 538.4
384.1 Corporate eliminations (12.7) (9.2) (33.4) (46.0) $ 992.4 $
821.9 $3,474.8 $3,000.6 Income Before Income Taxes Segment
Operating Income (Loss): Government Communications Systems $ 54.2 $
52.9 $ 216.5 $203.4 RF Communications 83.7 53.0 278.9 166.5
Microwave Communications 5.9 3.1 (19.6) 7.7 Broadcast
Communications 17.8 7.9 22.8 18.1 Headquarters expense (20.4)
(15.2) (75.4) (58.0) Corporate eliminations (5.3) (6.3) (16.5)
(16.5) Non-operating income (loss) (0.4) (0.1) (1.2) (6.3) Net
interest (6.6) (3.9) (24.7) (16.5) $ 128.9 $ 91.4 $ 380.8 $ 298.4
HARRIS CORPORATION FY'06 Fourth Quarter Summary CONSOLIDATED
STATEMENT OF CASH FLOWS Fiscal Year Ended June 30, July 1, 2006
2005 (In millions) Operating Activities Net income $ 237.9 $ 202.2
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: Depreciation and amortization 98.4 82.6
Non-current deferred income tax (1.8) 16.5 Loss (gain) on the sale
of securities available-for-sale --- 3.7 (Increase) decrease in:
Accounts and notes receivable (34.9) 2.7 Inventories (81.0) (17.0)
Increase (decrease) in: Accounts payable and accrued expenses 85.5
(3.5) Advance payments and unearned income (9.9) (11.2) Income
taxes 47.1 28.1 Other (7.1) 34.7 Net cash provided by operating
activities 334.2 338.8 Investing Activities Cash paid for acquired
businesses (509.6) (427.3) Additions of plant and equipment (101.8)
(75.0) Additions of capitalized software (44.6) (23.8) Proceeds
from the sale of securities available-for-sale -- 13.4 Net cash
used in investing activities (656.0) (512.7) Financing Activities
Proceeds from borrowings 345.3 126.5 Payment of borrowings (55.1)
(134.9) Proceeds from exercise of employee stock options 33.8 19.8
Repurchase of common stock (44.9) (56.4) Cash dividends (42.7)
(31.9) Net cash provided by (used in) financing activities 236.4
(76.9) Effect of exchange rate changes on cash and cash equivalents
1.7 0.9 Net (decrease) in cash and cash equivalents (83.7) (249.9)
Cash and cash equivalents, beginning of year 377.6 627.5 Cash and
cash equivalents, end of year $ 293.9 $ 377.6 HARRIS CORPORATION
FY'06 Fourth Quarter Summary CONDENSED CONSOLIDATED BALANCE SHEET
June 30, July 1, 2006 2005 (In millions) Assets Cash and cash
equivalents $293.9 $377.6 Receivables 560.6 494.0 Inventories 468.9
347.8 Current deferred income taxes 105.0 96.0 Plant and equipment
365.3 307.8 Goodwill 951.1 569.9 Identifiable intangible assets
193.4 99.1 Non-current notes receivable 4.3 13.6 Other assets 199.8
151.6 $3,142.3 $2,457.4 Liabilities and Shareholders' Equity
Short-term debt $1.6 $4.2 Accounts payable and accrued expenses
582.5 441.9 Advance payments and unearned income 129.9 139.0 Income
taxes payable 38.1 5.1 Non-current deferred income taxes 28.6 26.7
Long-term debt 699.5 401.4 Shareholders' equity 1,662.1 1,439.1
$3,142.3 $2,457.4 HARRIS CORPORATION FY'06 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); headquarters
expense; cost of product sales and services; engineering, selling
and administrative expenses; income before income taxes; income
taxes; 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: HARRIS CORPORATION FY'06 Fourth
Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Consolidated Statement Of Income Quarter Ended Quarter Ended June
30, 2006 July 1, 2005 As Adjust- As Adjust- Reported ment Non-GAAP
Reported ment Non-GAAP (In millions, except per share amounts)
Revenue from product sales and services $ 992.4 -- 992.4 821.9 --
821.9 Cost of product sales and services (A) (651.4) 0.2 (651.2)
(585.1) -- (585.1) Engineering, selling and administrative expenses
(B) (205.1) 6.8 (198.3) (141.4) -- (141.4) Non-operating income
(loss) (0.4) -- (0.4) (0.1) -- (0.1) Interest income 3.3 -- 3.3 2.0
-- 2.0 Interest expense (9.9) -- (9.9) (5.9) -- (5.9) Income before
income taxes 128.9 7.0 135.9 91.4 -- 91.4 Income taxes (43.8) (1.1)
(44.9) (30.2) -- (30.2) Net Income $85.1 $ 5.9 $ 91.0 $ 61.2 $ -- $
61.2 Net Income per diluted common share $ .61 $ .04 $ .65 $ .44 $
-- $ .44 Fiscal Year Ended Fiscal Year Ended June 30, 2006 July 1,
2005 As Adjust- As Adjust- Reported ment Non-GAAP Reported ment
Non-GAAP (In millions, except per share amounts) Revenue from
product sales and services $3,474.8 $ -- $3,474.8 $3,000.6 $ --
$3,000.6 Cost of product sales and services (A) (2,372.7) 49.0
(2,323.7) (2,176.8) 4.8 (2,172.0) Engineering, selling and
administrative expenses (B) (695.4) 32.9 (662.5) (502.6) 3.8
(498.8) Non-operating income (loss) (1.2) -- (1.2) (6.3) -- (6.3)
Interest income 11.8 -- 11.8 7.5 -- 7.5 Interest expense (36.5) --
(36.5) (24.0) -- (24.0) Income before income taxes 380.8 81.9 462.7
298.4 8.6 307.0 Income taxes (142.9) (9.8) (152.7) (96.2) (1.6)
(97.8) Net Income $237.9 $72.1 $310.0 $202.2 $ 7.0 $209.2 Net
Income per diluted common share $ 1.71 $ .51 $ 2.22 $ 1.46 $ .05 $
1.51 HARRIS CORPORATION FY'06 Fourth Quarter Summary RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES Business Segment Information Quarter
Ended Quarter Ended June 30, 2006 July 1, 2005 As Adjust- As
Adjust- Reported ment Non-GAAP Reported ment Non-GAAP (In millions)
Revenue Government Communications Systems $479.7 $ -- $479.7 $461.7
$ -- $461.7 RF Communications 242.7 -- 242.7 163.8 -- 163.8
Microwave Communications 110.5 -- 110.5 91.0 -- 91.0 Broadcast
Communications 172.2 -- 172.2 114.6 -- 114.6 Corporate eliminations
(12.7) -- (12.7) (9.2) -- (9.2) $992.4 $ -- $992.4 $821.9 $ --
$821.9 Income Before Income Taxes Segment Operating Income (Loss):
Government Communications Systems $54.2 $ -- $54.2 $52.9 $ -- $52.9
RF Communications 83.7 -- 83.7 53.0 -- 53.0 Microwave
Communications (C) 5.9 3.8 9.7 3.1 -- 3.1 Broadcast Communications
(D) 17.8 3.2 21.0 7.9 -- 7.9 Headquarters expense (20.4) -- (20.4)
(15.2) -- (15.2) Corporate eliminations (5.3) -- (5.3) (6.3) --
(6.3) Non-operating income (0.4) -- (0.4) (0.1) -- (0.1) (loss) Net
interest (6.6) -- (6.6) (3.9) -- (3.9) $128.9 $7.0 $135.9 $ 91.4 $
-- $ 91.4 Fiscal Year Ended Fiscal Year Ended June 30, 2006 July 1,
2005 As Adjust- As Adjust- Reported ment Non-GAAP Reported ment
Non-GAAP (In millions) Revenue Government Communications Systems
$1,812.5 $ -- $1,812.5 $1,805.2 $ -- $1,805.2 RF Communications
808.6 -- 808.6 537.1 -- 537.1 Microwave Communications 348.7 --
348.7 320.2 -- 320.2 Broadcast Communications 538.4 -- 538.4 384.1
-- 384.1 Corporate eliminations (33.4) -- (33.4) (46.0) -- (46.0)
$3,474.8 $ -- $3,474.8 $3,000.6 $ -- $3,000.6 Income Before Income
Taxes Segment Operating Income (Loss): Government Communications
Systems $216.5 $ -- $216.5 $203.4 $ -- $203.4 RF Communications
278.9 -- 278.9 166.5 -- 166.5 Microwave Communications (C) (19.6)
39.6 20.0 7.7 -- 7.7 Broadcast Communications (D) 22.8 36.9 59.7
18.1 8.6 26.7 Headquarters expense (E) (75.4) 5.4 (70.0) (58.0) --
(58.0) Corporate eliminations (16.5) -- (16.5) (16.5) -- (16.5)
Non-operating income (loss) (1.2) -- (1.2) (6.3) -- (6.3) Net
interest (24.7) -- (24.7) (16.5) -- (16.5) 307 $380.8 $81.9 $462.7
$298.4 $ 8.6 $ .0 HARRIS CORPORATION FY'06 Fourth 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 ended June 30, 2006 are related to lower margins
being recognized subsequent to our acquisition of Leitch Technology
Corporation ("Leitch") due to a step up in inventory recorded as of
the acquisition date. Adjustments to cost of product sales and
services for the year ended June 30, 2006 include inventory
write-downs associated with product discontinuances in our
Microwave Communications segment ($35.0 million), inventory
write-downs associated with previously announced cost reduction
actions including the transfer of European manufacturing to the
United States and outsourcing of other manufacturing activity in
our Broadcast Communications segment ($11.3 million) and lower
margins being recognized subsequent to our acquisition of Leitch
due to a step up in inventory recorded as of the acquisition date
($2.7 million). 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. ("Encoda"). Note B -
Adjustments to engineering, selling and administrative expenses for
the quarter ended June 30, 2006 include integration costs
associated with our acquisition of Leitch ($2.0 million), severance
and other expenses associated with cost reduction actions in our
Broadcast Communications segment ($1.0 million) and severance costs
associated with product discontinuances and the shut-down of our
manufacturing activities in Montreal, Canada in our Microwave
Communications segment ($3.8 million). Adjustments to engineering,
selling and administrative expenses for the year ended June 30,
2006 include the charge related to our arbitration with Bourdex
($5.4 million), the write- off of in-process research and
development ($3.6 million) and other expenses ($5.6 million)
associated with our acquisition of Leitch, severance costs
associated with product discontinuances and the shut-down of our
manufacturing activities in Montreal, Canada in our Microwave
Communication segment ($4.6 million) and severance and other costs
associated with cost reduction actions in our Broadcast
Communications segment ($13.7 million). 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). Note C -Adjustments to our Microwave
Communications segment operating income for the quarter ended June
30, 2006 relate to severance costs associated with previously
announced product discontinuances and the shut-down of our
manufacturing activities in Montreal, Canada. Adjustments to our
Microwave Communications segment operating loss for the year ended
June 30, 2006 relate to inventory write-downs and severance costs
associated with product discontinuances and the shut-down of our
manufacturing activities in Montreal, Canada. Note D - Adjustments
to our Broadcast Communications segment operating income for the
quarter ended June 30, 2006 are related to lower margins being
recognized subsequent to our acquisition of Leitch due to a step up
in inventory recorded as of the acquisition date ($2.2 million) and
severance and other expenses associated with previously announced
cost reduction actions in our Broadcast Communications segment
($1.0 million). Adjustments to Broadcast Communications segment
operating income for the year ended June 30, 2006 include inventory
write-downs, severance and other costs associated with cost
reduction actions ($25.0 million) and charges associated with our
acquisition of Leitch ($11.9 million) including the write-off of
in-process research and development, lower margins being recognized
subsequent to our acquisition due to a step up in inventory
recorded as of the acquisition date, integration activities and
other items. The adjustments to Broadcast Communications segment
operating income for the year ended July 1, 2005, 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. Note E -
Adjustments to headquarters expense for the year ended June 30,
2006 include a charge related to a previously announced decision we
received in our arbitration with Bourdex. DATASOURCE: Harris
Corporation CONTACT: Investors, Pamela Padgett, +1-321-727-9383, or
, or media, Tom Hausman, +1-321-727-9131, or , both of Harris Web
site: http://www.harris.com/
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