MELBOURNE, Fla., April 28 /PRNewswire-FirstCall/ -- Harris
Corporation (NYSE: HRS) reported GAAP income from continuing
operations for the third quarter of fiscal 2010 of $166 million, or $1.27 per diluted share, compared with
$136 million, or $1.02 per diluted share, in the prior-year
quarter. Excluding acquisition-related costs, non-GAAP income
from continuing operations in the third quarter of fiscal 2010 was
$170 million, or $1.30 per diluted share, compared with
$136 million, or $1.02 per diluted share, in the prior-year
quarter. Revenue for the third quarter of fiscal 2010 was
$1.33 billion, compared with
$1.21 billion for the third quarter
of fiscal 2009. Orders in the third quarter were $1.45 billion, compared with $1.03 billion in the prior-year quarter. A
reconciliation of GAAP to non-GAAP financial measures is provided
in Tables 5 through 7, along with the accompanying notes.
"Earnings in the third quarter increased 25 percent, reflecting
continued excellent operating performance in RF Communications and
Government Communications Systems," said Howard L. Lance, chairman, president and chief
executive officer. "Revenue increased 10 percent for the
company, and higher orders across all of our segments should
continue to drive double-digit revenue growth in the fourth
quarter. Our strategy of investing in new technology and
applications to solve our customers' complex, mission-critical, and
quickly evolving communications and information technology needs is
working. Higher orders, strong backlog and a robust
opportunity pipeline should position Harris for achieving another
year of higher revenue and earnings in fiscal 2011."
Increased Earnings Guidance
The company has increased its guidance for non-GAAP income from
continuing operations for fiscal 2010 to a range of $4.35 to $4.45 per diluted share ($4.23 to $4.33 per diluted share on a GAAP
basis). This increase compares with a previous range of
$4.25 to $4.35 per diluted share
($4.13 to $4.23 per diluted share on
a GAAP basis). Fiscal 2010 non-GAAP earnings guidance
excludes acquisition-related costs. Revenue in fiscal 2010 is
still expected to be in a range of $5.2 to
$5.3 billion.
Guidance for fiscal 2011 earnings is being initiated in a range
of $4.55 to $4.65 per diluted share,
representing a year-over-year increase of 3 to 6 percent, compared
with the mid-point of fiscal 2010 non-GAAP guidance. Fiscal
2011 revenue is expected to be in a range of $5.5 to $5.6 billion, representing a
year-over-year increase of 5 to 7 percent compared with the
mid-point of fiscal 2010 guidance.
RF Communications
Third quarter orders for the RF Communications segment totaled
$656 million, including $488 million in the Tactical Radio Communications
business and $168 million in the
Public Safety and Professional Communications business. At
the end of the third quarter, total backlog in RF Communications
was $1.50 billion, including
$1.01 billion in the Tactical Radio
Communications business and $489
million in the Public Safety and Professional Communications
business.
Revenue for RF Communications in the third quarter was
$551 million, compared with
$439 million in the prior-year
quarter. Revenue included $429
million in Tactical Radio Communications, driven primarily
by deliveries to the U.S. Army, Marine Corps and Air Force. Revenue
in Public Safety and Professional Communications was $122 million.
Operating income for RF Communications was $205 million in the third quarter, compared with
$151 million in the prior-year
quarter. Non-GAAP operating income, which excludes
acquisition-related costs, was $208
million. Non-GAAP operating margin was very strong at
37.8 percent due to favorable product mix, cost-reduction actions
implemented in the second half of fiscal 2009, and operational
efficiencies.
New orders for tactical radio communication systems in the
quarter were driven by:
- accelerating customer adoption of the company's next-generation
Falcon III® radios in U.S. and international markets;
- equipping the military's 6,644 M-ATVs (Mine Resistant Ambush
Protected All-Terrain Vehicles); and
- strengthening international demand.
Demand has increased for the company's JTRS-approved, Falcon III
family of ground tactical radios. At the end of the third
quarter year-to-date Falcon III orders totaled $620 million. The field-proven radios are
providing warfighters with unprecedented situational awareness,
bringing new applications such as streaming video for the first
time to the tactical edge of the battlefield.
Major Falcon III radio wins in
the third quarter included a $73
million order from the U.S. Marines for Falcon III
AN/PRC-117G multiband manpack radio systems to provide high-speed
networking applications such as streaming video and a $12 million order from the U.S. Marines to
upgrade existing Falcon III AN/VRC-110 multiband, multimode
vehicular tactical radio systems from 20-watt to 50-watt systems to
improve communications over longer distances and enhance
reliability in rough terrain. Harris also received a
$74 million order for Falcon III
AN/PRC-152(C) multiband handheld radio systems in vehicular
adapters to equip the military's new 6,644 M-ATVs. Following
the close of the quarter, Harris received a $20 million order from a Department of Defense
customer for Falcon III AN/PRC-117G multiband manpack radio
systems.
Other significant U.S. orders in the third quarter included a
$78 million order for Falcon II®
AN/VRC-104 high-frequency (HF) tactical radio systems also to equip
the military's 6,644 M-ATVs. Following the close of the
quarter, Harris received a $101
million order for Falcon II AN/PRC-117F multiband vehicular
radios to equip the next phase of M-ATV purchases and to retrofit
other existing MRAP vehicles.
International tactical radio wins in the third quarter included
a $112 million order from the
Australian Department of Defence that was predominantly Falcon III
AN/PRC-152(C) multiband handheld radios to provide next-generation
battlefield networking capabilities. Other major
international orders included a $44 million order for Falcon II
RF-5800H HF radio systems from a country in Asia, and a $10 million
order for Falcon II RF-5800H HF radio systems from the Iraq
Ministry of Interior.
In the Public Safety and Professional Communications business,
Harris was awarded orders totaling $100
million to upgrade the Miami-Dade
County public communications infrastructure to a modern, P25
standards-based digital radio system. The flexible system
platform will serve more than 80 agencies and 32,000 users,
increasing functionality and improving interoperability among first
responders and other radio system users. Also, a $13 million order was received in the quarter for
our OpenSky® system to connect employees at a Texas-based public utility serving 50
counties.
Following the close of the quarter, Harris received an order
from the New York State Police for
1,100 Unity™ XG-100P multiband radios. The Unity radios will
provide interoperability between the state police and local, metro
and county law enforcement organizations. In a single radio,
the state police will be able to communicate with local systems
that are conventional or digital, and that operate on the various
VHF, UHF, 700 MHz or 800 MHz bands.
Government Communications Systems
Third quarter revenue for the Government Communications Systems
segment was $666 million, compared
with $649 million in the prior-year
quarter. Operating income was $90
million in the third quarter, compared with $74 million in the prior-year quarter.
Operating margin was strong at 13.6 percent and reflected
continued excellent program performance and award fees.
Revenue increased for the Geostationary Operational
Environmental Satellite-Series R Ground Segment (GOES-R GS) weather
program for the National Oceanic and Atmospheric Administration
(NOAA), the Modernization of Enterprise Terminals (MET) program for
the U. S. Army, the IT services relocation program for the U.S.
Southern Command (USSOUTHCOM) and several classified programs for
national intelligence customers. Revenue also benefited from
several small, recent acquisitions related primarily to the new
growth initiatives of Cyber Integrated Solutions and Healthcare
Solutions. Revenue from the Field Data Collection Automation
(FDCA) program for the U.S. Census Bureau's 2010 census declined as
the program nears completion.
In the third quarter, Harris was awarded a three-year,
$72 million contract from the
Department of Veterans Affairs (VA) for further improvements to the
complex billing and collection activities of the VA, one of the
largest healthcare delivery organizations in the world with 21
networks and 170 medical centers nationwide. The contract was
awarded after successfully implementing a pilot project for its
Mid-Atlantic region.
Also during the quarter, Harris was awarded a $25 million contract to provide Highband
Networking Radios (HNR) to form the communications backbone of the
U.S. Army's new Integrated Air and Missile Defense Battle Command
System (IBCS). The radios provide the first-ever use of
directive beam technology to achieve higher throughput over longer
distances in a robust, self-forming and self-healing directional
mesh network.
Following the close of the quarter, Harris received a four-year,
$35 million network operations
support contract for the Defense Commissary Agency Global Network
Services.
Broadcast Communications
Orders in the Broadcast Communications segment were $130 million in the third quarter. Orders
were significantly higher compared with the prior-year quarter of
$108 million, but somewhat lower than
second quarter orders of $139
million. Revenue in the third quarter was $123 million compared with $132 million in the prior-year quarter, but was
sequentially higher than second quarter revenue of $117 million. Operating loss in the third
quarter was $5 million, compared with
operating income of $2 million in the
prior-year quarter and an operating loss of $5 million in the second quarter.
Operating performance for the segment is being impacted by a
still relatively weak U.S. broadcaster market and continued
investment to pursue opportunities in the international and new
media markets. Additional cost-reduction actions will be
implemented in the fourth quarter, which are expected to improve
operating performance and allow continued investment in opportunity
rich international and new media markets.
Orders in the second and third quarters suggest that the market
is bottoming and showing some signs of improvement. In the
international arena, opportunities are significant, but projects
have longer lead times and start-up phases. New media growth
initiatives – such as the in-arena network for the National
Basketball Association Orlando Magic that will combine IPTV and
digital signage and will merge broadcast technology with IT
infrastructure – are beginning to contribute to revenue.
Orders in the quarter included a $12
million order from Cox Broadcasting for a traffic and
billing system that provides access to order processing, sales
management reporting, sales proposal generation, and research and
administrator features – all in one comprehensive suite of
applications. A $4 million
order was received from Abu Dhabi Media Company for a
high-definition production and playout center, making it the first
broadcaster in the Middle East to
implement an end-to-end tapeless platform for HD production.
Also in the quarter, Harris received a $4 million order from the country of Rwanda for a turnkey DVB-T standard
transmission solution in support of the country's transition from
analog to digital.
At the 2010 National Association of Broadcasters (NAB) show held
earlier this month in Las Vegas,
Harris made several announcements related to new growth
initiatives. Harris introduced the industry's first and most
comprehensive end-to-end workflow for 3D applications. The
company also joined with the Open Mobile Video Coalition to
announce new mobile TV trials in Washington, D.C. next month. And, CEO
Howard Lance served as keynote
speaker at NAB's Second Annual Military and Government Summit,
highlighting how crossover commercial and government technologies –
such as the company's Full-Motion Video Asset Management Engine
(FAME™) – can speed innovation and create actionable intelligence
within both markets.
Harris will host a conference call today, April 28, at 4:30 p.m.
Eastern Time (ET) to discuss its third quarter fiscal 2010
financial results. The dial-in number for the teleconference
is (719) 325-4800. The access code is 2854826. Please
allow at least 10 minutes prior to the scheduled start time to
connect to the teleconference. Participants are encouraged to
listen via webcast, which will be broadcast live at
www.harris.com/conference-call. A replay of the
teleconference will be available beginning at 8:30 p.m. ET on April
28, and will run until midnight
ET on Wednesday, May 5.
To access the replay, please call (719) 457-0820, access code
2854826. A recording of the call also will be available on
the Harris website beginning at 7 p.m.
ET on April 28.
About Harris Corporation
Harris is an international communications and information
technology company serving government and commercial markets in
more than 150 countries. Headquartered in Melbourne, Florida, the company has
approximately $5 billion of annual
revenue and more than 15,000 employees -- including nearly 7,000
engineers and scientists. Harris is dedicated to developing
best-in-class assured communications® products, systems, and
services. Additional information about Harris Corporation is
available at 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
income from continuing operations and income from continuing
operations per diluted share for the third quarter of fiscal 2010,
in each case excluding charges for acquisition-related costs;
operating income and margins for the RF Communications segment,
excluding acquisition-related costs; and fiscal 2010 guidance for
income from continuing operations per diluted share and the
percentage increase of fiscal 2011 guidance for earnings per
diluted share over fiscal 2010 guidance for non-GAAP income from
continuing operations per diluted share, in each case excluding
acquisition-related costs. 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 understand Harris
performance. In addition, Harris 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 and revenue guidance for fiscal 2010 and
fiscal 2011; the potential value of contract awards; and statements
regarding outlook, including expected revenue and orders. 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:
the loss of our relationship with the U.S. government or a shift in
U.S. government funding; potential changes in U.S. government or
customer priorities; risks inherent with large long-term
fixed-price contracts, particularly the ability to contain cost
overruns; financial and government and regulatory risks relating to
international sales and operations; our ability to continue to
develop new products that achieve market acceptance; the
consequences of future geo-political events; strategic acquisitions
and the risks and uncertainties related thereto, including our
ability to manage and integrate acquired businesses; performance of
our subcontractors and suppliers; 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; risks inherent in developing new
technologies; changes in our effective tax rate; the potential
impact of natural disasters or other disruptions on our operations;
changes in future business conditions that could cause business
investments and/or recorded goodwill to become impaired; and the
recession in the United States and
general downturn in the global economy. 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. The forward-looking statements contained in
this release are made as of the date of this release, and the
company 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.
Table 1
HARRIS CORPORATION
FY '10 Third Quarter Summary
condensed Consolidated Statement of
Income
(Unaudited)
|
|
|
Quarter
Ended
|
|
Three Quarters
Ended
|
|
|
April
2,
|
|
April
3,
|
|
April
2,
|
|
April
3,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
(In millions,
except per share amounts)
|
|
|
|
|
Revenue from product sales
and services
|
$
|
1,329.5
|
$
|
1,205.1
|
$
|
3,750.2
|
$
|
3,710.9
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales
and services
|
|
(820.0)
|
|
(813.3)
|
|
(2,410.7)
|
|
(2,530.5)
|
|
Engineering, selling and
administrative expenses
|
|
(245.0)
|
|
(188.4)
|
|
(672.8)
|
|
(569.8)
|
|
Non-operating income
(loss)
|
|
(0.5)
|
|
6.6
|
|
(1.0)
|
|
(2.2)
|
|
Interest income
|
|
0.4
|
|
0.7
|
|
1.1
|
|
2.6
|
|
Interest expense
|
|
(18.1)
|
|
(12.6)
|
|
(54.5)
|
|
(38.8)
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income taxes
|
|
246.3
|
|
198.1
|
|
612.3
|
|
572.2
|
|
Income taxes
|
|
(80.1)
|
|
(62.2)
|
|
(202.1)
|
|
(176.3)
|
|
Income from continuing
operations
|
|
166.2
|
|
135.9
|
|
410.2
|
|
395.9
|
|
Discontinued operations, net of
income taxes
|
|
---
|
|
(21.7)
|
|
---
|
|
(201.6
|
|
Net income
|
$
|
166.2
|
$
|
114.2
|
$
|
410.2
|
$
|
194.3
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
1.27
|
$
|
1.02
|
$
|
3.13
|
$
|
2.97
|
|
Discontinued
operations
|
|
---
|
|
(0.16)
|
|
---
|
|
(1.51)
|
|
|
$
|
1.27
|
$
|
.86
|
$
|
3.13
|
$
|
1.46
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
1.27
|
$
|
1.02
|
$
|
3.12
|
$
|
2.96
|
|
Discontinued
operations
|
|
---
|
|
(0.16)
|
|
---
|
|
(1.51)
|
|
|
$
|
1.27
|
$
|
.86
|
$
|
3.12
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per common
share
|
$
|
.22
|
$
|
.20
|
$
|
.66
|
$
|
.60
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares
outstanding
|
|
130.4
|
|
132.7
|
|
131.0
|
|
133.3
|
|
Diluted weighted average shares
outstanding
|
|
130.7
|
|
133.1
|
|
131.3
|
|
133.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2
HARRIS CORPORATION
FY '10 Third Quarter Summary
Business Segment Information
(Unaudited)
|
|
|
Quarter
Ended
|
Three Quarters
Ended
|
|
|
April
2,
|
|
April
3,
|
April
2,
|
April
3,
|
|
|
2010
|
|
2009
|
2010
|
2009
|
|
|
(In
millions)
|
|
Revenue
|
|
|
RF Communications
|
$
|
550.7
|
$
|
439.1
|
$1,437.3
|
$
1,292.5
|
|
Government
Communications Systems
|
|
665.7
|
|
648.7
|
1,980.7
|
2,005.8
|
|
Broadcast
Communications
|
|
123.0
|
|
132.2
|
358.5
|
453.4
|
|
Corporate
eliminations
|
|
(9.9)
|
|
(14.9)
|
(26.3)
|
(40.8)
|
|
|
$
|
1,329.5
|
$
|
1,205.1
|
$3,750.2
|
$
3,710.9
|
|
|
|
|
|
|
|
|
|
Income From
Continuing Operations Before Income Taxes
|
|
|
|
|
|
|
|
Segment Operating Income
(Loss):
|
|
|
|
|
|
|
|
RF
Communications
|
$
|
204.7
|
$
|
151.3
|
$
487.3
|
$
437.5
|
|
Government
Communications Systems
|
|
90.4
|
|
73.9
|
263.1
|
225.4
|
|
Broadcast Communications
|
|
(5.2)
|
|
1.9
|
(9.7)
|
19.2
|
|
Unallocated
corporate expense
|
|
(23.0)
|
|
(18.8)
|
(67.0)
|
(56.8)
|
|
Corporate
eliminations
|
|
(2.4)
|
|
(4.9)
|
(7.0)
|
(14.7)
|
|
Non-operating income
(loss)
|
|
(0.5)
|
|
6.6)
|
(1.0)
|
(2.2)
|
|
Net interest expense
|
|
(17.7)
|
|
(11.9)
|
(53.4)
|
(36.2)
|
|
|
$
|
246.3
|
$
|
198.1
|
$
612.3
|
$
572.2
|
|
|
|
|
|
|
|
|
|
|
Table 3
HARRIS CORPORATION
FY '10 Third Quarter Summary
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
(Unaudited)
|
|
|
|
Three Quarters
Ended
|
|
|
|
April
2,
|
|
April
3,
|
|
|
|
2010
|
|
2009
|
|
|
|
(In
millions)
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
410.2
|
|
$
|
194.3
|
|
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
121.0
|
|
|
127.5
|
|
|
|
|
|
Purchased in-process research and
development write-off
|
|
|
---
|
|
|
2.4
|
|
|
|
|
|
Share-based compensation
|
|
|
28.8
|
|
|
27.5
|
|
|
|
|
|
Non-current deferred income
taxes
|
|
|
(0.6
|
|
|
(7.6)
|
|
|
|
|
|
Impairment of securities
available-for-sale
|
|
|
---
|
|
|
7.6
|
|
|
|
|
|
Impairment of goodwill and other
long-lived assets
|
|
|
---
|
|
|
301.0
|
|
|
|
|
|
Noncontrolling
interest in discontinued operations, net of income taxes
|
|
|
---
|
|
|
(155.1)
|
|
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
|
119.7
|
|
|
(30.0)
|
|
|
|
|
Inventories
|
|
|
(46.9)
|
|
|
(48.0)
|
|
|
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued expenses
|
|
|
(65.2)
|
|
|
(66.2)
|
|
|
|
|
Advance payments
and unearned income
|
|
|
38.9
|
|
|
24.0
|
|
|
|
|
Income
taxes
|
|
|
24.5
|
|
|
(3.6)
|
|
|
|
Other
|
|
|
4.9
|
|
|
30.7
|
|
|
Net cash provided by operating
activities
|
|
|
635.3
|
|
|
404.5
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
Cash paid for acquired
businesses
|
|
|
(40.2)
|
|
|
(9.1)
|
|
|
|
Additions of property, plant and
equipment
|
|
|
(129.9)
|
|
|
(86.8)
|
|
|
|
Additions of capitalized
software
|
|
|
(6.3)
|
|
|
(10.1)
|
|
|
|
Cash paid for short-term investments
available-for-sale
|
|
|
---
|
|
|
(1.2)
|
|
|
|
Proceeds from the sale of short-term
investments
available-for-sale
|
|
|
---
|
|
|
3.7
|
|
|
Net cash used in investing
activities
|
|
|
(176.4)
|
|
|
(103.5)
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
|
|
---
|
|
|
78.5
|
|
|
|
Repayments of borrowings
|
|
|
(106.6)
|
|
|
(80.5)
|
|
|
|
Proceeds from exercises of employee
stock options
|
|
|
12.1
|
|
|
7.6
|
|
|
|
Repurchases of common stock
|
|
|
(155.7)
|
|
|
(132.2)
|
|
|
|
Cash dividends
|
|
|
(86.4)
|
|
|
(80.1)
|
|
|
Net cash used in financing
activities
|
|
|
(336.6)
|
|
|
(206.7)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash and cash equivalents
|
|
|
2.2
|
|
|
(12.3)
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents
|
|
|
124.5
|
|
|
82.0
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning
of year
|
|
|
281.2
|
|
|
370.0
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of
quarter
|
|
|
405.7
|
|
|
452.0
|
|
|
|
|
|
|
|
|
|
|
|
Less cash and cash equivalents of
discontinued operations
|
|
|
---
|
|
|
(115.6)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents of
continuing operations, end of quarter
|
|
$
|
405.7
|
|
$
|
336.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4
HARRIS CORPORATION
FY '10 Third Quarter Summary
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
|
|
|
|
|
|
|
|
April
2,
|
|
July
3,
|
|
|
2010
|
|
2009
|
|
|
(In
millions)
|
|
Assets
|
|
|
|
|
Cash and cash equivalents
|
$
405.7
|
|
$
281.2
|
|
Receivables
|
656.6
|
|
770.8
|
|
Inventories
|
647.2
|
|
607.2
|
|
Income taxes receivable
|
---
|
|
21.0
|
|
Current deferred income
taxes
|
144.3
|
|
117.2
|
|
Other current assets
|
58.1
|
|
62.0
|
|
Property, plant and
equipment
|
584.3
|
|
543.2
|
|
Goodwill
|
1,576.8
|
|
1,507.1
|
|
Intangible assets
|
306.4
|
|
335.6
|
|
Non-current deferred income
taxes
|
93.7
|
|
85.3
|
|
Other non-current assets
|
154.6
|
|
134.5
|
|
|
$4,627.7
|
|
$4,465.1
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Short-term debt
|
$
---
|
|
$
105.7
|
|
Accounts payable
|
341.5
|
|
368.0
|
|
Compensation and benefits
|
191.6
|
|
224.9
|
|
Other accrued items
|
302.6
|
|
288.7
|
|
Advance payments and unearned
income
|
160.6
|
|
121.7
|
|
Income taxes payable
|
16.0
|
|
---
|
|
Current portion of long-term
debt
|
0.8
|
|
0.7
|
|
Long-term debt
|
1,176.7
|
|
1,177.3
|
|
Long-term contract
liability
|
135.7
|
|
145.6
|
|
Other long-term liabilities
|
185.3
|
|
163.4
|
|
Shareholders' equity
|
2,116.9
|
|
1,869.1
|
|
|
$4,627.7
|
|
$4,465.1
|
|
|
|
|
|
|
|
|
|
|
|
|
HARRIS CORPORATION
FY '10 Third Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION
G DISCLOSURE
To supplement our condensed consolidated financial statements
presented in accordance with U.S. generally accepted accounting
principles (GAAP), we provide additional measures of segments'
operating income (loss); cost of product sales and services;
engineering, selling and administrative expenses; income from
continuing operations before income taxes; income taxes; income
from continuing operations; and income from continuing operations
per diluted common share adjusted to exclude certain costs,
charges, expenses and losses. 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.
Harris management also believes that these non-GAAP financial
measures enhance the ability of investors to analyze Harris
business trends and to understand Harris performance. In addition,
Harris 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 '10 Third Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
Condensed Consolidated Statement of
Income
(Unaudited)
|
|
|
Quarter
Ended
April 2,
2010
|
|
Quarter
Ended
April 3,
2009
|
|
|
As
Reported
|
Adjustment
|
Non-GAAP
|
|
As
Reported
|
Adjustment
|
Non-GAAP
|
|
|
(In millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from
product sales and services
|
$
|
1,329.5
|
|
$
|
---
|
|
$
|
1,329.5
|
|
$
|
1,205.1
|
|
$
|
---
|
|
$
|
1,205.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product
sales and services (A)
|
|
(820.0)
|
|
|
1.0
|
|
|
(819.0)
|
|
|
(813.3)
|
|
|
---
|
|
|
(813.3)
|
|
Engineering,
selling and administrative expenses
(B)
|
|
(245.0)
|
|
|
4.3
|
|
|
(240.7)
|
|
|
(188.4)
|
|
|
---
|
|
|
(188.4)
|
|
Non-operating
income (loss)
|
|
(0.5)
|
|
|
---
|
|
|
(0.5)
|
|
|
6.6
|
|
|
---
|
|
|
6.6
|
|
Interest income
|
|
0.4
|
|
|
---
|
|
|
0.4
|
|
|
0.7
|
|
|
---
|
|
|
0.7
|
|
Interest expense
|
|
(18.1)
|
|
|
---
|
|
|
(18.1)
|
|
|
(12.6)
|
|
|
---
|
|
|
(12.6)
|
|
Income from
continuing operations before income taxes
|
|
246.3
|
|
|
5.3
|
|
|
251.6
|
|
|
198.1
|
|
|
---
|
|
|
198.1
|
|
Income taxes
(C)
|
|
(80.1)
|
|
|
(2.0)
|
|
|
(82.1)
|
|
|
(62.2)
|
|
|
---
|
|
|
(62.2)
|
|
Income from
continuing operations
|
$
|
166.2
|
|
$
|
3.3
|
|
$
|
169.5
|
|
$
|
135.9
|
|
$
|
---
|
|
$
|
135.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations per diluted common share
|
$
|
1.27
|
|
$
|
.03
|
|
$
|
1.30
|
|
$
|
1.02
|
|
$
|
---
|
|
$
|
1.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Quarters
Ended
April 2,
2010
|
Three Quarters
Ended
April 3,
2009
|
|
|
As
Reported
|
Adjustment
|
Non-GAAP
|
As
Reported
|
Adjustment
|
Non-GAAP
|
|
|
(In millions,
except per share amounts)
|
|
|
|
|
Revenue from
product sales and services
|
$
|
3,750.2
|
|
$
|
---
|
|
$
|
3,750.2
|
|
$
|
3,710.9
|
|
$
|
---
|
|
$
|
3,710.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product
sales and services (A)
|
|
(2,410.7)
|
|
|
5.0
|
|
|
(2,405.7)
|
|
|
(2,530.5)
|
|
|
---
|
|
|
(2,530.5)
|
|
Engineering,
selling and administrative expenses
(B)
|
|
(672.8)
|
|
|
11.0
|
|
|
(661.8)
|
|
|
(569.8)
|
|
|
---
|
|
|
(569.8)
|
|
Non-operating
loss
|
|
(1.0)
|
|
|
---
|
|
|
(1.0)
|
|
|
(2.2)
|
|
|
---
|
|
|
(2.2)
|
|
Interest income
|
|
1.1
|
|
|
---
|
|
|
1.1
|
|
|
2.6
|
|
|
---
|
|
|
2.6
|
|
Interest expense
|
|
(54.5)
|
|
|
---
|
|
|
(54.5)
|
|
|
(38.8)
|
|
|
---
|
|
|
(38.8)
|
|
Income from
continuing operations before income taxes
|
|
612.3
|
|
|
16.0
|
|
|
628.3
|
|
|
572.2
|
|
|
---
|
|
|
572.2
|
|
Income taxes
(C)
|
|
(202.1)
|
|
|
(5.9)
|
|
|
(208.0)
|
|
|
(176.3)
|
|
|
---
|
|
|
(176.3)
|
|
Income from
continuing operations
|
$
|
410.2
|
|
$
|
10.1
|
|
$
|
420.3
|
|
$
|
395.9
|
|
$
|
---
|
|
$
|
395.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations per diluted common share
|
$
|
3.12
|
|
$
|
.08
|
|
$
|
3.20
|
|
$
|
2.96
|
|
$
|
---
|
|
$
|
2.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6
HARRIS CORPORATION
FY '10 Third Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
Business Segment Information
(Unaudited)
|
|
|
Quarter
Ended
April 2,
2010
|
|
Quarter
Ended
April 3,
2009
|
|
|
As
Reported
|
Adjustment
|
Non-GAAP
|
|
As
Reported
|
Adjustment
|
Non-GAAP
|
|
|
(In
millions)
|
|
Revenue
|
|
|
|
RF Communications
|
$
|
550.7
|
|
$
|
---
|
|
$
|
550.7
|
|
|
$
|
439.1
|
|
$
|
---
|
|
$
|
439.1
|
|
|
Government
Communications
Systems
|
|
665.7
|
|
|
---
|
|
|
665.7
|
|
|
|
648.7
|
|
|
---
|
|
|
648.7
|
|
|
Broadcast
Communications
|
|
123.0
|
|
|
---
|
|
|
123.0
|
|
|
|
132.2
|
|
|
---
|
|
|
132.2
|
|
|
Corporate
eliminations
|
|
(9.9)
|
|
|
---
|
|
|
(9.9)
|
|
|
|
(14.9)
|
|
|
---
|
|
|
(14.9)
|
|
|
|
$
|
1,329.5
|
|
$
|
---
|
|
$
|
1,329.5
|
|
|
$
|
1,205.1
|
|
$
|
---
|
|
$
|
1,205.1
|
|
|
Income From Continuing Operations
Before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RF Communications
(D)
|
$
|
204.7
|
|
$
|
3.7
|
|
$
|
208.4
|
|
|
$
|
151.3
|
|
$
|
---
|
|
$
|
151.3
|
|
|
Government
Communications
Systems (E)
|
|
90.4
|
|
|
1.6
|
|
|
92.0
|
|
|
|
73.9
|
|
|
---
|
|
|
73.9
|
|
|
Broadcast
Communications
|
|
(5.2)
|
|
|
---
|
|
|
(5.2)
|
|
|
|
1.9
|
|
|
---
|
|
|
1.9
|
|
|
Unallocated corporate
expense
|
|
(23.0)
|
|
|
---
|
|
|
(23.0)
|
|
|
|
(18.8)
|
|
|
---
|
|
|
(18.8)
|
|
|
Corporate eliminations
|
|
(2.4)
|
|
|
---
|
|
|
(2.4)
|
|
|
|
(4.9)
|
|
|
---
|
|
|
(4.9)
|
|
|
Non-operating income (loss)
|
|
(0.5)
|
|
|
---
|
|
|
(0.5)
|
|
|
|
6.6
|
|
|
---
|
|
|
6.6
|
|
|
Net interest expense
|
|
(17.7)
|
|
|
---
|
|
|
(17.7)
|
|
|
|
(11.9)
|
|
|
---
|
|
|
(11.9)
|
|
|
|
$
|
246.3
|
|
$
|
5.3
|
|
$
|
251.6
|
|
|
$
|
198.1
|
|
$
|
---
|
|
$
|
198.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Quarters
Ended
April 2,
2010
|
|
Three Quarters
Ended
April 3,
2009
|
|
|
As
Reported
|
Adjustment
|
Non-GAAP
|
|
As
Reported
|
Adjustment
|
Non-GAAP
|
|
|
(In
millions)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RF Communications
|
$
|
1,437.3
|
|
$
|
---
|
|
$
|
1,437.3
|
|
|
$
|
1,292.5
|
|
$
|
---
|
|
$
|
1,292.5
|
|
|
Government
Communications
Systems
|
|
1,980.7
|
|
|
---
|
|
|
1,980.7
|
|
|
|
2,005.8
|
|
|
---
|
|
|
2,005.8
|
|
|
Broadcast
Communications
|
|
358.5
|
|
|
---
|
|
|
358.5
|
|
|
|
453.4
|
|
|
---
|
|
|
453.4
|
|
|
Corporate
eliminations
|
|
(26.3)
|
|
|
---
|
|
|
(26.3)
|
|
|
|
(40.8)
|
|
|
---
|
|
|
(40.8)
|
|
|
|
$
|
3,750.2
|
|
$
|
---
|
|
$
|
3,750.2
|
|
|
$
|
3,710.9
|
|
$
|
---
|
|
$
|
3,710.9
|
|
|
Income From Continuing Operations
Before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RF Communications
(D)
|
$
|
487.3
|
|
$
|
12.9
|
|
$
|
500.2
|
|
|
$
|
437.5
|
|
$
|
---
|
|
$
|
437.5
|
|
|
Government
Communications
Systems (E)
|
|
263.1
|
|
|
3.1
|
|
|
266.2
|
|
|
|
225.4
|
|
|
---
|
|
|
225.4
|
|
|
Broadcast
Communications
|
|
(9.7)
|
|
|
---
|
|
|
(9.7)
|
|
|
|
19.2
|
|
|
---
|
|
|
19.2
|
|
|
Unallocated corporate
expense
|
|
(67.0)
|
|
|
---
|
|
|
(67.0)
|
|
|
|
(56.8)
|
|
|
---
|
|
|
(56.8)
|
|
|
Corporate eliminations
|
|
(7.0)
|
|
|
---
|
|
|
(7.0)
|
|
|
|
(14.7)
|
|
|
---
|
|
|
(14.7)
|
|
|
Non-operating loss
|
|
(1.0)
|
|
|
---
|
|
|
(1.0)
|
|
|
|
(2.2)
|
|
|
---
|
|
|
(2.2)
|
|
|
Net interest expense
|
|
(53.4)
|
|
|
---
|
|
|
(53.4)
|
|
|
|
(36.2)
|
|
|
---
|
|
|
(36.2)
|
|
|
|
$
|
612.3
|
|
$
|
16.0
|
|
$
|
628.3
|
|
|
$
|
572.2
|
|
$
|
---
|
|
$
|
572.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7
HARRIS CORPORATION
FY '10 Third Quarter Summary
Reconciliation of FY '11 GAAP Income from Continuing
Operations per Diluted Share Guidance to FY '10 GAAP Income from
Continuing Operations per Diluted Share and FY '10 Non-GAAP Income
from Continuing Operations per Diluted Share Guidance
(Unaudited)
|
|
|
|
Fiscal Year 2010
(Guidance)
|
|
Fiscal Year 2011
(Guidance)
|
|
Percent
Change*
|
|
|
|
|
|
|
|
|
|
GAAP income from
continuing operations per diluted share
|
|
$4.23 to
$4.33
|
|
$4.55 to
$4.65
|
|
6% to
9%
|
|
Charges associated with the
acquisition of Tyco Electronics Wireless Systems
(F)
|
|
$0.10
|
|
$---
|
|
|
|
Charges associated with the
acquisitions of Crucial Security, Inc., the ATC Business Unit of
SolaCom Technologies Inc. and Patriot Technologies,
LLC(G)
|
|
$0.02
|
|
$---
|
|
|
|
Non-GAAP income from
continuing operations per diluted share
|
|
$4.35 to
$4.45
|
|
$4.55 to
$4.65
|
|
3% to
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Compared to midpoint of Fiscal Year 2010 Guidance
HARRIS CORPORATION
FY '10 Third Quarter Summary
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
Notes to tables 5 through 7:
Note A – Adjustments to cost of product sales and
services for the quarter ended April 2,
2010 are due to integration costs associated with our
acquisition of the Tyco Electronics Wireless Systems business
("Wireless Systems") from Tyco Electronics Ltd. ($1.0 million). Adjustments to cost of product
sales and services for the three quarters ended April 2, 2010 are due to integration costs and
the impact of a step up in inventory associated with our
acquisition of Wireless Systems ($5.0
million).
Note B – Adjustments to engineering, selling and
administrative expenses for the quarter ended April 2, 2010 are due to integration costs
associated with our acquisitions of Wireless Systems ($2.7 million), Crucial Security, Inc. ("Crucial")
($0.6 million), the ATC Business Unit
of SolaCom Technologies Inc. ("SolaCom ATC") ($0.2 million) and Patriot Technologies, LLC
("Patriot") ($0.8 million).
Adjustments to engineering, selling and administrative expenses for
the three quarters ended April 2,
2010 are due to integration costs associated with our
acquisitions of Wireless Systems ($7.9
million), Crucial ($1.4
million), SolaCom ATC ($0.8
million) and Patriot ($0.9
million).
Note C – Adjustments to our income taxes are primarily
based on our U.S. marginal tax rate.
Note D – Adjustments to our RF Communications segment
operating income for the quarter ended April
2, 2010 are due to integration costs associated with our
acquisition of Wireless Systems ($3.7
million). Adjustments to our RF Communications segment
operating income for the three quarters ended April 2, 2010 are due to integration costs and
the impact of a step up in inventory associated with our
acquisition of Wireless Systems ($12.9
million).
Note E – Adjustments to our Government Communications
Systems segment operating income for the quarter ended April 2, 2010 are due to integration costs
associated with our acquisitions of Crucial ($0.6 million), SolaCom ATC ($0.2 million) and Patriot ($0.8 million). Adjustments to our Government
Communications Systems segment operating income for the three
quarters ended April 2, 2010 are due
to integration costs associated with our acquisitions of Crucial
($1.4 million), SolaCom ATC
($0.8 million) and Patriot
($0.9 million).
Note F – Adjustment for estimated pre-tax charges of
$21.0 million ($.10 per diluted share) for fiscal 2010 related
to integration and other costs associated with our acquisition of
Wireless Systems.
Note G – Adjustment for estimated pre-tax charges of
$4.3 million ($.02 per diluted share) for fiscal 2010 related
to integration and other costs associated with our acquisitions of
Crucial, SolaCom ATC and Patriot.
SOURCE Harris Corporation