MELBOURNE, Fla., Jan. 26, 2011 /PRNewswire/ -- Harris Corporation
(NYSE: HRS) reported revenue for the second quarter of fiscal 2011
of $1.44 billion, an 18 percent
increase compared with $1.22 billion
in the prior-year quarter. Organic revenue growth was 9
percent after adjusting for the impact from acquisitions.
GAAP net income for the second quarter of fiscal 2011 was
$151 million, or $1.18 per diluted share, compared with
$140 million, or $1.06 per diluted share, in the prior-year
quarter. Earnings benefited $0.05 per diluted share in the quarter from the
extension of the federal research and development tax credit,
including its catch-up effect. Non-GAAP net income in the
second quarter of fiscal 2011 was $155
million, or $1.20 per diluted
share, a 12 percent increase compared with the prior-year quarter
of $142 million, or $1.07 per diluted share. Non-GAAP net
income excludes acquisition-related costs in both quarters.
Orders in the second quarter were $1.41 billion, compared with $1.42 billion in the prior-year quarter.
The prior year benefited significantly from tactical radio
orders for MRAPs and M-ATVs (Mine Resistant Ambush Protected
All-Terrain Vehicles) for the U.S. Department of Defense. A
reconciliation of GAAP to non-GAAP financial measures is provided
in Tables 5 through 8, along with the accompanying notes.
“Our second quarter results were excellent, driven by strength
in RF Communications, solid results at Government Communications
Systems and significant improvement at Broadcast Communications.
Organic year-over-year revenue growth was strong at 9 percent
with all of our businesses contributing,” said Howard L. Lance, chairman, president and chief
executive officer. “In the second quarter, we announced a
definitive agreement to acquire Schlumberger’s Global Connectivity
Services business, adding scale to our global managed satellite
communications services capabilities, increasing our international
footprint and further diversifying the company into faster-growing
markets. The acquisition is expected to close in our fiscal
2011 third quarter. This crossover strategy allows the
company to provide the same trusted assured communications®
solutions to both government and commercial customers alike.”
“Fiscal 2011 is shaping up to be another strong year for revenue
and earnings growth, even in the face of the U.S. Government’s
continuing budget resolution and challenging state and local budget
environments. We are continuing to invest in attractive
growth markets for the longer term, including energy, cyber,
healthcare and international. We expect fiscal 2012 to
benefit from these investments along with an improving
economy.”
RF Communications
Second quarter orders for the RF Communications segment totaled
$391 million, including $300 million in Tactical Radio Communications and
$91 million in Public Safety and
Professional Communications. At the end of the second
quarter, total backlog for the RF Communications segment was
$1.52 billion, including $1.06 billion in Tactical Radio Communications
and $457 million in Public Safety and
Professional Communications.
New orders reflected excellent international growth driven by a
key tactical radio win valued at greater than $300 million, with an initial order in the second
quarter exceeding $100 million.
This key win, along with other large, multi-year program
awards such as the province-wide Alberta First Responders Radio
Communications System and the state-wide Oregon Wireless
Interoperability Network (OWIN) program will all lead to future
order bookings.
Revenue for RF Communications in the second quarter was
$545 million, compared with
$463 million in the prior-year
quarter. Revenue included $426
million in Tactical Radio Communications and $119 million in Public Safety and Professional
Communications. Revenue for the segment increased 18 percent,
driven by strong international deliveries to Pakistan, Australia and Iraq and an uptake in the U.S. Department of
Defense adoption of the company’s new Falcon III® radios.
Tactical radio deliveries for equipping MRAPs and M-ATVs
declined significantly.
Operating income for RF Communications was $189 million in the second quarter, compared with
$169 million in the prior-year
quarter. In the prior-year quarter, non-GAAP operating income
was $171 million, excluding
acquisition-related costs.
International tactical radio orders in the quarter included the
previously mentioned order of greater than $100 million as part of a multi-year tactical
radio modernization program exceeding $300
million for a critical communications backbone to support
defense and security missions. Other international orders
included a $9 million order from
Brazil for Falcon II® high
frequency radio equipment and an $8
million order from Mexico
to provide multiple types of Falcon III and Falcon II tactical
radio equipment.
U.S. tactical radio orders included two orders totaling
$35.5 million to provide the U.S.
Army and the U.S. Department of Defense with Falcon III handheld
and vehicular tactical radio systems, $16
million from a U.S. Department of Defense customer for the
development of a waveform for Harris radio platforms, and
$10.5 million from the U.S.
Department of Defense for Falcon III AN/PRC-117G multiband manpack
radio systems. Other orders were received from the U.S. Army,
Air Force, and Marine Corps.
In the Public Safety and Professional Communications business,
Harris received a $15 million order
from Monterey County, California
to modernize its regional public safety communications system and a
$7 million order from Dayton Power and Light Company. After the
close of the quarter, Harris was awarded a 10-year price agreement
requirements contract for the OWIN program with an expected total
value of more than $100 million.
The Oregon statewide public safety network will improve voice
and data interoperability among state, local, county, tribal and
federal agencies.
Government Communications Systems
Second quarter revenue for the Government Communications Systems
segment was $776 million, a 20
percent increase compared with $647
million in the prior-year quarter. Operating income
was $81 million in the second
quarter, compared with $87 million in
the prior-year quarter. Non-GAAP operating income, which
excludes acquisition-related costs, was $86
million in the second quarter, compared with $88 million in the prior-year quarter.
Non-GAAP operating margin was a strong 11.0 percent in the
second quarter.
Year-over-year revenue growth was driven by the July 2010 acquisition of CapRock Communications,
the Geostationary Operational Environmental Satellite – Series R
(GOES-R) Ground and Antenna Segment weather programs for the
National Oceanic and Atmospheric Administration (NOAA), and the
Healthcare Solutions business. Revenue declined on several
small classified programs and, as expected, on the Field Data
Collection Automation (FDCA) program for the 2010 U.S. Census.
Major awards during the quarter in the Government Communications
Systems segment included a nine-year, potential CAD $273 million follow-on contract by the Government
of Canada for the CF-18 Avionics
Optimized Weapon System Support (OWSS) program to provide
engineering services to support the avionics systems on the CF-18
Hornet fighter aircraft; a six-year, $80
million contract by a classified customer; a 30-month,
$42 million contract by Sierra Nevada
Corporation to design, build and integrate the synthetic aperture
radar (SAR) satellite payload as part of NASA's Rapid Response
Space Works and Modular Space Vehicles program; and a four-year,
$19 million contract by the State of
Florida Agency for Health Care Administration (AHCA) to implement a
statewide health information exchange (HIE) that will improve the
delivery and coordination of health care. Also during the
quarter, Harris CapRock Communications was awarded an $80 million option year extension on the Defense
Information Systems Network Access Transport Services (DATS)
contract with the Defense Information Systems Agency (DISA).
Broadcast Communications
Orders in the Broadcast Communications segment were $134 million in the second quarter, compared with
$139 million in the prior-year
quarter and $135 million in the first
quarter of fiscal 2011. Revenue in the second quarter was
$130 million, compared with
$117 million in the prior-year
quarter and $122 million in the first
quarter of fiscal 2011.
Operating loss in the second quarter was $1 million, compared with a $5 million operating loss in the prior-year
quarter, with both quarters including $1
million in charges related to cost-reduction actions.
Aggregate cost-reduction actions for fiscal 2011 are still
expected to result in total charges of about $5 million for the year. Year-over-year and
sequential revenue growth, near breakeven operating results, and a
book-to-bill ratio greater than 1.0 were all promising signs in the
second quarter for the Broadcast Communications segment.
Orders in the quarter included $4
million from CTV Television for transmitters to support
Canada’s transition from analog to digital, $4 million from Mustafa Sultan Security Co. to
build out a video distribution network, and $3.4 million from Viditec S.A. in Argentina to assist in the roll-out of digital
television services throughout the country.
Earnings Guidance
The company has reiterated its previous guidance for non-GAAP
net income for fiscal 2011 in the range of $4.80 to $4.90 per diluted share ($4.73 to $4.83 per diluted share on a GAAP
basis). Fiscal 2011 non-GAAP earnings guidance excludes
acquisition-related costs. Fiscal 2011 revenue is still
expected to be at the high end of the $5.9
to $6.0 billion range, which represents a year-over-year
increase of about 15 percent compared with the prior year.
Harris will host a conference call today, January 26, at 4:30 p.m.
Eastern Time (ET) to discuss its second quarter fiscal 2011
financial results. The dial-in numbers for the teleconference
are (800) 299-7928 (U.S.) and (617) 614-3926 (International), using
participant code 95898075. 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
recording of the call will be available on the Harris website
beginning at 7 p.m. ET on
January 26.
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 16,000 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
organic revenue growth for the second quarter of fiscal 2011,
adjusting for the impact of acquisitions; income and income per
diluted share for the second quarter of fiscal 2011 and the second
quarter of fiscal 2010, in each case excluding charges for
acquisition-related costs; operating income for the RF
Communications segment for the second quarter of fiscal 2010,
excluding acquisition-related costs; operating income and margins
for the Government Communications Systems segment, excluding
acquisition-related costs; and fiscal 2011 guidance for income per
diluted share, 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.
Attachments: Financial Statements (8 tables).
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 2011;
potential contract opportunities and awards; the potential value of
contract awards; timing of the closing and expected benefits of the
acquisition of the Schlumberger Global Connectivity Services
business; expected benefit from investments in energy, cyber,
healthcare and international; 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; risks inherent in developing new technologies; changes in
our effective tax rate; the potential impact of natural disasters
or other disruptions on our operations; the potential impact of a
security breach, through cyber attack or otherwise, or other
significant disruptions of our IT networks and systems or those we
operate for customers; the potential impact of satellite bandwidth
constraints on our managed satellite communications services;
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 '11
Second Quarter Summary
|
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Two Quarters
Ended
|
|
|
|
|
December
31,
|
|
January
1,
|
|
December
31,
|
|
January
1,
|
|
|
|
|
2010
|
|
2010
|
|
2010
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions, except per share amounts)
|
|
Revenue from product sales and
services
|
$
|
1,438.5
|
|
$
|
1,217.7
|
|
$
|
2,843.9
|
|
$
|
2,420.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales and
services
|
|
(940.5)
|
|
|
(778.6)
|
|
|
(1,821.6)
|
|
|
(1,590.7)
|
|
Engineering, selling and
administrative expenses
|
|
(255.2)
|
|
|
(215.7)
|
|
|
(510.4)
|
|
|
(427.8)
|
|
Non-operating loss
|
|
(0.9)
|
|
|
(0.3)
|
|
|
(1.3)
|
|
|
(0.5)
|
|
Interest income
|
|
0.4
|
|
|
0.3
|
|
|
1.0
|
|
|
0.7
|
|
Interest expense
|
|
(20.4)
|
|
|
(18.2)
|
|
|
(38.2)
|
|
|
(36.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
221.9
|
|
|
205.2
|
|
|
473.4
|
|
|
366.0
|
|
Income taxes
|
|
(70.8)
|
|
|
(65.7)
|
|
|
(158.4)
|
|
|
(122.0)
|
|
Net income
|
$
|
151.1
|
|
$
|
139.5
|
|
$
|
315.0
|
|
$
|
244.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.19
|
|
$
|
1.07
|
|
$
|
2.46
|
|
$
|
1.86
|
|
|
Diluted
|
$
|
1.18
|
|
$
|
1.06
|
|
$
|
2.44
|
|
$
|
1.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per common
share
|
$
|
0.25
|
|
$
|
0.22
|
|
$
|
0.50
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares
outstanding
|
|
125.9
|
|
|
129.8
|
|
|
126.3
|
|
|
130.3
|
|
Diluted weighted average shares
outstanding
|
|
126.8
|
|
|
130.8
|
|
|
127.3
|
|
|
131.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
2
|
|
HARRIS
CORPORATION
|
|
FY '11
Second Quarter Summary
|
|
BUSINESS
SEGMENT INFORMATION
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Two Quarters
Ended
|
|
|
|
|
December
31,
|
|
January
1,
|
|
December
31,
|
|
January
1,
|
|
|
|
|
2010
|
|
2010
|
|
2010
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RF Communications
|
$
|
544.7
|
|
$
|
462.9
|
|
$
|
1,111.2
|
|
$
|
886.6
|
|
|
Government Communications
Systems
|
|
775.7
|
|
|
647.3
|
|
|
1,511.2
|
|
|
1,315.0
|
|
|
Broadcast
Communications
|
|
130.0
|
|
|
116.8
|
|
|
251.6
|
|
|
235.5
|
|
|
Corporate
eliminations
|
|
(11.9)
|
|
|
(9.3)
|
|
|
(30.1)
|
|
|
(16.4)
|
|
|
|
|
$
|
1,438.5
|
|
$
|
1,217.7
|
|
$
|
2,843.9
|
|
$
|
2,420.7
|
|
Income Before Income
Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RF Communications
|
$
|
189.3
|
|
$
|
168.6
|
|
$
|
417.8
|
|
$
|
282.6
|
|
|
|
Government Communications
Systems
|
|
81.4
|
|
|
87.0
|
|
|
159.7
|
|
|
172.7
|
|
|
|
Broadcast
Communications
|
|
(0.8)
|
|
|
(4.8)
|
|
|
(9.4)
|
|
|
(4.5)
|
|
|
Unallocated corporate
expense
|
|
(22.0)
|
|
|
(24.8)
|
|
|
(47.7)
|
|
|
(44.0)
|
|
|
Corporate
eliminations
|
|
(5.1)
|
|
|
(2.6)
|
|
|
(8.5)
|
|
|
(4.6)
|
|
|
Non-operating
loss
|
|
(0.9)
|
|
|
(0.3)
|
|
|
(1.3)
|
|
|
(0.5)
|
|
|
Net interest expense
|
|
(20.0)
|
|
|
(17.9)
|
|
|
(37.2)
|
|
|
(35.7)
|
|
|
|
|
$
|
221.9
|
|
$
|
205.2
|
|
$
|
473.4
|
|
$
|
366.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
3
|
|
|
HARRIS
CORPORATION
|
|
|
FY '11
Second Quarter Summary
|
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters
Ended
|
|
|
|
|
|
|
December
31,
|
|
January
1,
|
|
|
|
|
|
|
2010
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net income
|
$
|
315.0
|
|
$
|
244.0
|
|
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
96.2
|
|
|
80.8
|
|
|
|
|
Share-based
compensation
|
|
26.1
|
|
|
21.2
|
|
|
|
|
Non-current deferred income
taxes
|
|
9.8
|
|
|
1.1
|
|
|
|
|
(Increase) decrease
in:
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
62.1
|
|
|
97.6
|
|
|
|
|
|
Inventories
|
|
(1.5)
|
|
|
(72.0)
|
|
|
|
|
Increase (decrease)
in:
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
|
(71.8)
|
|
|
(130.1)
|
|
|
|
|
|
Advance payments and unearned
income
|
|
12.9
|
|
|
73.7
|
|
|
|
|
|
Income taxes
|
|
(46.8)
|
|
|
7.9
|
|
|
|
|
Other
|
|
(12.7)
|
|
|
(2.8)
|
|
|
Net cash provided by operating
activities
|
|
389.3
|
|
|
321.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Cash paid for acquired
businesses
|
|
(518.0)
|
|
|
(33.7)
|
|
|
|
Cash paid for cost method
investment
|
|
(10.0)
|
|
|
--
|
|
|
|
Additions of property, plant and
equipment
|
|
(101.0)
|
|
|
(38.5)
|
|
|
|
Additions of capitalized
software
|
|
(7.2)
|
|
|
(3.9)
|
|
|
Net cash used in investing
activities
|
|
(636.2)
|
|
|
(76.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Proceeds from
borrowings
|
|
689.0
|
|
|
--
|
|
|
|
Repayments of
borrowings
|
|
(0.3)
|
|
|
(61.4)
|
|
|
|
Proceeds from exercises of
employee stock options
|
|
10.5
|
|
|
6.0
|
|
|
|
Repurchases of common
stock
|
|
(105.7)
|
|
|
(105.5)
|
|
|
|
Cash dividends
|
|
(64.0)
|
|
|
(57.8)
|
|
|
Net cash provided by (used in)
financing activities
|
|
529.5
|
|
|
(218.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
|
3.0
|
|
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents
|
|
285.6
|
|
|
29.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents,
beginning of year
|
|
455.2
|
|
|
281.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end
of quarter
|
$
|
740.8
|
|
$
|
310.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
4
|
|
|
HARRIS
CORPORATION
|
|
|
FY '11
Second Quarter Summary
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
July
2,
|
|
|
|
|
|
|
2010
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
740.8
|
|
$
|
455.2
|
|
|
|
Receivables
|
|
711.6
|
|
|
736.0
|
|
|
|
Inventories
|
|
651.9
|
|
|
615.3
|
|
|
|
Income taxes
receivable
|
|
47.8
|
|
|
15.3
|
|
|
|
Current deferred income
taxes
|
|
153.4
|
|
|
145.3
|
|
|
|
Other current assets
|
|
64.9
|
|
|
37.5
|
|
|
|
Property, plant and
equipment
|
|
706.9
|
|
|
609.7
|
|
|
|
Goodwill
|
|
1,935.3
|
|
|
1,576.2
|
|
|
|
Intangible assets
|
|
396.3
|
|
|
297.8
|
|
|
|
Non-current deferred income
taxes
|
|
60.1
|
|
|
107.7
|
|
|
|
Other non-current
assets
|
|
198.4
|
|
|
147.6
|
|
|
|
|
|
|
$
|
5,667.4
|
|
$
|
4,743.6
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
$
|
30.0
|
|
$
|
30.0
|
|
|
|
Accounts payable
|
|
362.7
|
|
|
329.4
|
|
|
|
Compensation and
benefits
|
|
207.0
|
|
|
239.7
|
|
|
|
Other accrued items
|
|
278.0
|
|
|
267.5
|
|
|
|
Advance payments and unearned
income
|
|
190.9
|
|
|
175.6
|
|
|
|
Income taxes payable
|
|
--
|
|
|
8.9
|
|
|
|
Current portion of long-term
debt
|
|
0.7
|
|
|
0.7
|
|
|
|
Long-term debt
|
|
1,876.3
|
|
|
1,176.6
|
|
|
|
Long-term contract
liability
|
|
126.6
|
|
|
132.4
|
|
|
|
Other long-term
liabilities
|
|
206.7
|
|
|
192.7
|
|
|
|
Equity
|
|
2,388.5
|
|
|
2,190.1
|
|
|
|
$
|
5,667.4
|
|
$
|
4,743.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HARRIS
CORPORATION
|
|
FY '11
Second 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 before
income taxes; income taxes; net income; and net income per diluted
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 '11
Second Quarter Summary
|
|
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
|
|
Condensed
Consolidated Statement of Income
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
|
|
|
|
December 31,
2010
|
|
January 1,
2010
|
|
|
|
|
|
As
Reported
|
|
Adjustment
|
|
Non-GAAP
|
|
As
Reported
|
|
Adjustment
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions, except per share amounts)
|
|
Revenue from product sales and
services
|
$
|
1,438.5
|
|
$
|
--
|
|
$
|
1,438.5
|
|
$
|
1,217.7
|
|
$
|
--
|
|
$
|
1,217.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales and
services (A)
|
|
(940.5)
|
|
|
--
|
|
|
(940.5)
|
|
|
(778.6)
|
|
|
0.4
|
|
|
(778.2)
|
|
Engineering, selling and
administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses (B)
|
|
(255.2)
|
|
|
4.2
|
|
|
(251.0)
|
|
|
(215.7)
|
|
|
3.1
|
|
|
(212.6)
|
|
Non-operating loss
|
|
(0.9)
|
|
|
--
|
|
|
(0.9)
|
|
|
(0.3)
|
|
|
--
|
|
|
(0.3)
|
|
Interest income
|
|
0.4
|
|
|
--
|
|
|
0.4
|
|
|
0.3
|
|
|
--
|
|
|
0.3
|
|
Interest expense
|
|
(20.4)
|
|
|
--
|
|
|
(20.4)
|
|
|
(18.2)
|
|
|
--
|
|
|
(18.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
221.9
|
|
|
4.2
|
|
|
226.1
|
|
|
205.2
|
|
|
3.5
|
|
|
208.7
|
|
Income taxes (C)
|
|
(70.8)
|
|
|
(0.7)
|
|
|
(71.5)
|
|
|
(65.7)
|
|
|
(1.2)
|
|
|
(66.9)
|
|
Net income
|
$
|
151.1
|
|
$
|
3.5
|
|
$
|
154.6
|
|
$
|
139.5
|
|
$
|
2.3
|
|
$
|
141.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted common
share
|
$
|
1.18
|
|
$
|
0.02
|
|
$
|
1.20
|
|
$
|
1.06
|
|
$
|
0.01
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters
Ended
|
|
Two Quarters
Ended
|
|
|
|
|
|
December 31,
2010
|
|
January 1,
2010
|
|
|
|
|
|
As
Reported
|
|
Adjustment
|
|
Non-GAAP
|
|
As
Reported
|
|
Adjustment
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions, except per share amounts)
|
|
Revenue from product sales and
services
|
$
|
2,843.9
|
|
$
|
--
|
|
$
|
2,843.9
|
|
$
|
2,420.7
|
|
$
|
--
|
|
$
|
2,420.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales and
services (A)
|
|
(1,821.6)
|
|
|
--
|
|
|
(1,821.6)
|
|
|
(1,590.7)
|
|
|
4.0
|
|
|
(1,586.7)
|
|
Engineering, selling and
administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses (B)
|
|
(510.4)
|
|
|
6.2
|
|
|
(504.2)
|
|
|
(427.8)
|
|
|
6.7
|
|
|
(421.1)
|
|
Non-operating loss
|
|
(1.3)
|
|
|
--
|
|
|
(1.3)
|
|
|
(0.5)
|
|
|
--
|
|
|
(0.5)
|
|
Interest income
|
|
1.0
|
|
|
--
|
|
|
1.0
|
|
|
0.7
|
|
|
--
|
|
|
0.7
|
|
Interest expense
|
|
(38.2)
|
|
|
--
|
|
|
(38.2)
|
|
|
(36.4)
|
|
|
--
|
|
|
(36.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
473.4
|
|
|
6.2
|
|
|
479.6
|
|
|
366.0
|
|
|
10.7
|
|
|
376.7
|
|
Income taxes (C)
|
|
(158.4)
|
|
|
(1.2)
|
|
|
(159.6)
|
|
|
(122.0)
|
|
|
(3.9)
|
|
|
(125.9)
|
|
Net income
|
$
|
315.0
|
|
$
|
5.0
|
|
$
|
320.0
|
|
$
|
244.0
|
|
$
|
6.8
|
|
$
|
250.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted common
share
|
$
|
2.44
|
|
$
|
0.04
|
|
$
|
2.48
|
|
$
|
1.84
|
|
$
|
0.06
|
|
$
|
1.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
6
|
|
HARRIS
CORPORATION
|
|
FY '11
Second Quarter Summary
|
|
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
|
|
Business
Segment Information
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
|
|
|
|
December 31,
2010
|
|
January 1,
2010
|
|
|
|
|
|
As
Reported
|
|
Adjustment
|
|
Non-GAAP
|
|
As
Reported
|
|
Adjustment
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RF Communications
|
|
$
|
544.7
|
|
$
|
--
|
|
$
|
544.7
|
|
$
|
462.9
|
|
$
|
--
|
|
$
|
462.9
|
|
|
Government Communications
Systems
|
|
|
775.7
|
|
|
--
|
|
|
775.7
|
|
|
647.3
|
|
|
--
|
|
|
647.3
|
|
|
Broadcast
Communications
|
|
|
130.0
|
|
|
--
|
|
|
130.0
|
|
|
116.8
|
|
|
--
|
|
|
116.8
|
|
|
Corporate
eliminations
|
|
|
(11.9)
|
|
|
--
|
|
|
(11.9)
|
|
|
(9.3)
|
|
|
--
|
|
|
(9.3)
|
|
|
|
|
|
$
|
1,438.5
|
|
$
|
--
|
|
$
|
1,438.5
|
|
$
|
1,217.7
|
|
$
|
--
|
|
$
|
1,217.7
|
|
Income Before Income
Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RF Communications (D)
|
|
$
|
189.3
|
|
$
|
--
|
|
$
|
189.3
|
|
$
|
168.6
|
|
$
|
2.7
|
|
$
|
171.3
|
|
|
|
Government Communications
Systems (E)
|
|
81.4
|
|
|
4.2
|
|
|
85.6
|
|
|
87.0
|
|
|
0.8
|
|
|
87.8
|
|
|
|
Broadcast
Communications
|
|
|
(0.8)
|
|
|
--
|
|
|
(0.8)
|
|
|
(4.8)
|
|
|
--
|
|
|
(4.8)
|
|
|
Unallocated corporate
expense
|
|
|
(22.0)
|
|
|
--
|
|
|
(22.0)
|
|
|
(24.8)
|
|
|
--
|
|
|
(24.8)
|
|
|
Corporate
eliminations
|
|
|
(5.1)
|
|
|
--
|
|
|
(5.1)
|
|
|
(2.6)
|
|
|
--
|
|
|
(2.6)
|
|
|
Non-operating loss
|
|
|
(0.9)
|
|
|
--
|
|
|
(0.9)
|
|
|
(0.3)
|
|
|
--
|
|
|
(0.3)
|
|
|
Net interest expense
|
|
|
(20.0)
|
|
|
--
|
|
|
(20.0)
|
|
|
(17.9)
|
|
|
--
|
|
|
(17.9)
|
|
|
|
|
|
$
|
221.9
|
|
$
|
4.2
|
|
$
|
226.1
|
|
$
|
205.2
|
|
$
|
3.5
|
|
$
|
208.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters
Ended
|
|
Two Quarters
Ended
|
|
|
|
|
|
December 31,
2010
|
|
January 1,
2010
|
|
|
|
|
|
As
Reported
|
|
Adjustment
|
|
Non-GAAP
|
|
As
Reported
|
|
Adjustment
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RF Communications
|
|
$
|
1,111.2
|
|
$
|
--
|
|
$
|
1,111.2
|
|
$
|
886.6
|
|
$
|
--
|
|
$
|
886.6
|
|
|
Government Communications
Systems
|
|
|
1,511.2
|
|
|
--
|
|
|
1,511.2
|
|
|
1,315.0
|
|
|
--
|
|
|
1,315.0
|
|
|
Broadcast
Communications
|
|
|
251.6
|
|
|
--
|
|
|
251.6
|
|
|
235.5
|
|
|
--
|
|
|
235.5
|
|
|
Corporate
eliminations
|
|
|
(30.1)
|
|
|
--
|
|
|
(30.1)
|
|
|
(16.4)
|
|
|
--
|
|
|
(16.4)
|
|
|
|
|
|
$
|
2,843.9
|
|
$
|
--
|
|
$
|
2,843.9
|
|
$
|
2,420.7
|
|
$
|
--
|
|
$
|
2,420.7
|
|
Income Before Income
Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RF Communications (D)
|
|
$
|
417.8
|
|
$
|
--
|
|
$
|
417.8
|
|
$
|
282.6
|
|
$
|
9.2
|
|
$
|
291.8
|
|
|
|
Government Communications
Systems (E)
|
|
159.7
|
|
|
6.2
|
|
|
165.9
|
|
|
172.7
|
|
|
1.5
|
|
|
174.2
|
|
|
|
Broadcast
Communications
|
|
|
(9.4)
|
|
|
--
|
|
|
(9.4)
|
|
|
(4.5)
|
|
|
--
|
|
|
(4.5)
|
|
|
Unallocated corporate
expense
|
|
|
(47.7)
|
|
|
--
|
|
|
(47.7)
|
|
|
(44.0)
|
|
|
--
|
|
|
(44.0)
|
|
|
Corporate
eliminations
|
|
|
(8.5)
|
|
|
--
|
|
|
(8.5)
|
|
|
(4.6)
|
|
|
--
|
|
|
(4.6)
|
|
|
Non-operating loss
|
|
|
(1.3)
|
|
|
--
|
|
|
(1.3)
|
|
|
(0.5)
|
|
|
--
|
|
|
(0.5)
|
|
|
Net interest expense
|
|
|
(37.2)
|
|
|
--
|
|
|
(37.2)
|
|
|
(35.7)
|
|
|
--
|
|
|
(35.7)
|
|
|
|
|
|
$
|
473.4
|
|
$
|
6.2
|
|
$
|
479.6
|
|
$
|
366.0
|
|
$
|
10.7
|
|
$
|
376.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
7
|
|
HARRIS
CORPORATION
|
|
FY '11
Second Quarter Summary
|
|
Reconciliation of FY '11 GAAP
Net Income per Diluted Share Guidance
|
|
to FY '10
GAAP Net Income per Diluted Share
|
|
and FY '11
Non-GAAP Net Income per Diluted Share Guidance
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
Year
|
|
|
|
|
|
2010
|
|
2011
|
|
Percent
|
|
|
|
(Actual)
|
|
(Guidance)
|
|
Change
|
|
|
|
|
|
|
|
|
|
GAAP net income per diluted
common share
|
$4.28
|
|
$4.73 to
$4.83
|
|
11% to
13%
|
|
Charges associated with the
acquisition of Tyco Electronics Wireless
|
|
|
|
|
|
|
|
Systems (F)
|
0.11
|
|
—
|
|
|
|
Charges associated with the
acquisitions of Crucial Security, Inc., the
|
|
|
|
|
|
|
|
ATC Business Unit of SolaCom
Technologies, Inc., Patriot
|
|
|
|
|
|
|
|
Technologies, LLC and SignaCert,
Inc. (G)
|
0.02
|
|
—
|
|
|
|
Charges associated with the
acquisition of CapRock Communications (H)
|
0.02
|
|
0.07
|
|
|
|
Non-GAAP net income per diluted
common share
|
$4.43
|
|
$4.80 to
$4.90
|
|
8% to
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
8
|
|
HARRIS
CORPORATION
|
|
FY '11
Second Quarter Summary
|
|
Harris
Corporation Organic Revenue Growth Calculation
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
|
|
December
31,
|
|
January
1,
|
|
|
|
|
|
2010
|
|
2010
|
|
Percent
Change
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Revenue
|
$
|
1,438.5
|
|
$
|
1,217.7
|
|
18.1%
|
|
Impact of acquisitions of
CapRock Communications, Patriot Technologies, LLC
|
|
|
|
|
|
|
|
|
|
and SignaCert, Inc.
(I)
|
|
-
|
|
|
102.6
|
|
|
|
Organic Revenue
|
$
|
1,438.5
|
|
$
|
1,320.3
|
|
9.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
HARRIS
CORPORATION
|
|
FY '11
Second Quarter Summary
|
|
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
|
|
(Unaudited)
|
|
Notes to
tables 5 through 8:
|
|
|
Note A – Adjustments to cost of product sales and
services for the quarter ended January 1,
2010 are due to integration costs associated with our
acquisition of the Tyco Electronics Wireless Systems business
("Wireless Systems") ($0.4 million).
Adjustments to cost of product sales and services for the two
quarters ended January 1, 2010 are
due to integration costs and the impact of a step up in inventory
associated with our acquisition of Wireless Systems ($4.0 million).
Note B – Adjustments to engineering, selling and
administrative expenses for the quarter and two quarters ended
December 31, 2010 are due to
integration and other costs associated with our acquisition of
CapRock Communications ("CapRock") ($4.2
million and $6.2 million,
respectively). Adjustments to engineering, selling and
administrative expenses for the quarter ended January 1, 2010 are due to integration costs
associated with our acquisitions of Wireless Systems ($2.3 million), Crucial Security, Inc. ("Crucial")
($0.4 million), the Air Traffic
Control business unit of SolaCom Technologies Inc. ("SolaCom ATC")
($0.3 million) and Patriot
Technologies, LLC ("Patriot") ($0.1
million). Adjustments to engineering, selling and
administrative expenses for the two quarters ended January 1, 2010 are due to integration costs
associated with our acquisitions of Wireless Systems ($5.2 million), Crucial ($0.8 million), SolaCom ATC ($0.6 million) and Patriot ($0.1 million).
Note C – Adjustments to our income taxes are based on the
applicable tax rate in the jurisdiction to which the item
applies.
Note D – Adjustments to our RF Communications segment
operating income for the quarter ended January 1, 2010 are due to integration costs
associated with our acquisition of Wireless Systems ($2.7 million). Adjustments to our RF
Communications segment operating income for the two quarters ended
January 1, 2010 are due to
integration costs and the impact of a step up in inventory
associated with our acquisition of Wireless Systems ($9.2 million).
Note E – Adjustments to our Government Communications
Systems segment operating income for the quarter and two quarters
ended December 31, 2010 are due to
integration and other costs associated with our acquisition of
CapRock ($4.2 million and
$6.2 million, respectively).
Adjustments to our Government Communications Systems segment
operating income for the quarter ended January 1, 2010 are due to integration costs
associated with our acquisitions of Crucial ($0.4 million), SolaCom ATC ($0.3 million) and Patriot ($0.1 million). Adjustments to our Government
Communications Systems segment operating income for the two
quarters ended January 1, 2010 are
due to integration costs associated with our acquisitions of
Crucial ($0.8 million), SolaCom ATC
($0.6 million) and Patriot
($0.1 million).
Note F – Adjustment for pre-tax charges of $19.3 million ($.11
per diluted share) for fiscal 2010 related to integration and other
costs associated with our acquisition of Wireless Systems.
Note G – Adjustment for pre-tax charges of $4.2 million ($.02
per diluted share) for fiscal 2010 related to integration and other
costs associated with our acquisitions of Crucial, SolaCom ATC,
Patriot and SignaCert, Inc. ("SignaCert").
Note H – Adjustment for pre-tax charges of $2.6 million ($.02
per diluted share) for fiscal 2010 and estimated pre-tax charges of
$12.0 million ($.07 per diluted share) for fiscal 2011 related
to integration and other costs associated with our acquisition of
CapRock.
Note I – Adjustment related to the revenue of CapRock,
Patriot and SignaCert for the quarter ended January 1, 2010.
SOURCE Harris Corporation