MELBOURNE, Fla., March 8, 2011 /PRNewswire/ -- Harris Corporation
(NYSE: HRS), an international communications and information
technology company, has strategically realigned its operating
businesses to provide increased market focus and address the
fast-growing global market for integrated communications and
information technology and services. The realignment will
enable the company to effectively integrate its technology,
products and services to meet the demands of government and
commercial markets.
The three Harris segments are:
- RF Communications – no change; includes the Tactical
Communications and Public Safety and Professional Communications
businesses. Provides tactical and land mobile radios, systems
and networking applications for global defense, security, public
safety and public service, transportation, and utility markets.
- Government Communications Systems – includes the Civil
Programs, Defense Programs and National Intelligence Programs
businesses. Provides communications and information
technology and systems integration for mission-critical government
applications.
- Integrated Network Solutions – includes the Harris IT Services,
Harris CapRock Communications, Healthcare Solutions, and Cyber
Integrated Solutions businesses (all of which were previously part
of the Government Communications Systems segment), and the
Broadcast Communications business. Provides IT services,
managed services, cyber integration, interoperability, imaging, and
digital media management solutions to support government, energy,
healthcare, broadcast, and enterprise networks.
"Harris has established a strong reputation and track record for
delivering innovative solutions across an increasingly broad
spectrum of markets. This strategic business realignment will
enable each of our segments to more effectively combine
technologies, products and services from throughout the company
into integrated solutions tailored for the specific markets that
they serve," said Howard L. Lance,
chairman, president and chief executive officer.
"This approach represents a tremendous opportunity for our
current and prospective customers, as we introduce more integrated
end-to-end solutions for existing and new markets. This
realignment positions the company to further expand into adjacent
markets and global regions that are growing faster and have higher
margins than some of our traditional government markets," he added.
Integrated Network Solutions
Integrated Network Solutions represents a new segment that
combines the resources and capabilities of existing and recently
acquired operations into a powerful organization targeting the
fast-growing global market for highly reliable and secure
communications and IT networks.
The new segment will leverage the company's strong and expanding
technology and service capabilities – along with its growing global
presence – to provide integrated solutions to meet individual
customer and market needs. Harris is unique in its ability
to integrate advanced technology and services to capture,
aggregate, distribute, and analyze any type of communications or
information – including voice, video, data, and imaging.
Integrated Network Solutions builds on Harris' legacy of
creating and operating some of the world's most trusted networks
for customers in established markets including defense,
intelligence, air traffic control, public safety, and broadcast.
The company is extending this reach into new markets,
including healthcare, energy, cloud computing, sports,
entertainment, and retail venues. Harris customers operate
under very demanding requirements where high reliability and secure
communications is critical.
"Commercial businesses and government customers around the globe
are increasingly seeking total solutions – combining innovative
technology with managed services," said Dan
Pearson, executive vice president and chief operating
officer, and acting group president for the new segment.
"With a flexible technology and managed services approach,
Integrated Network Solutions is uniquely positioned to create
tailored end-to-end solutions for customers seeking a trusted
communications and IT partner."
The company will report its financial results under the new
segment structure effective with its third quarter of fiscal 2011,
which ends April 1, 2011.
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. A
reconciliation of GAAP to non-GAAP financial measures is provided
in Tables 1 and 2 along with accompanying notes.
There have been no changes to previous guidance other than
giving effect to the segment realignment. In the RF
Communications segment, fiscal 2011 revenue is still expected to be
in the range of 9 to 10 percent higher, compared with the prior
year, and operating margin is still expected to be in the range of
34 to 35 percent. In the realigned Government Communications
Systems segment, fiscal 2011 revenue is expected to be in the range
of 3 to 5 percent higher, compared with the prior year, and
operating margin is expected to be in the range of 12.5 to 13.0
percent. In the new Integrated Network Solutions segment,
fiscal 2011 revenue is expected to be in the range of 33 to 35
percent higher, compared with the prior year, which represents
organic revenue growth in the range of 7 to 9 percent.
Non-GAAP operating margin in the segment is expected to be in
the range of 5 to 6 percent.
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
fiscal 2011 guidance for income per diluted share, excluding
acquisition-related costs; fiscal 2011 operating margin for the
Integrated Network Solutions segment, excluding acquisition-related
costs; and fiscal 2011 organic revenue growth guidance for the
Integrated Network Solutions segment, adjusting for the impact of
acquisitions. 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 2011,
fiscal 2011 segment revenue and operating margin guidance;
and statements regarding outlook. The company cautions
investors that any forward-looking statements are subject to risks
and uncertainties that may cause actual results and future trends
to differ materially from those matters expressed in or implied by
such forward-looking statements. The company's consolidated
results and the forward-looking statements could be affected by
many factors, including but not limited to: 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
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.
HARRIS
CORPORATION
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RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES AND REGULATION G DISCLOSURE
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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; 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:
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Table
1
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HARRIS
CORPORATION
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Reconciliation of FY '11 GAAP
Net Income per Diluted Share Guidance
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to FY '10
GAAP Net Income per Diluted Share
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and FY '11
Non-GAAP Net Income per Diluted Share Guidance
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(Unaudited)
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Fiscal
Year
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2010
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2011
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Percent
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(Actual)
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(Guidance)
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Change
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GAAP net income per diluted
common share
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$4.28
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$4.73 to
$4.83
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11% to
13%
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Charges associated with the
acquisition of Tyco Electronics Wireless
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Systems (A)
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0.11
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—
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Charges associated with the
acquisitions of Crucial Security, Inc., the
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ATC Business Unit of SolaCom
Technologies Inc., Patriot
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Technologies, LLC and SignaCert,
Inc. (B)
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0.02
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—
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Charges associated with the
acquisition of CapRock Communications (C)
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0.02
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0.07
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Non-GAAP net income per diluted
common share
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$4.43
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$4.80 to
$4.90
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8% to
11%
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Table
2
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HARRIS
CORPORATION
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Integrated
Network Solutions Organic Revenue Growth and Operating Margin
Calculations
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(Unaudited)
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Fiscal
Year
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2010
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2011
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(Actual)
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(Guidance)
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Percent
Change
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(In
millions)
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Revenue (reclassified
segment)
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$
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1,485.1
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$1,975 -
$2,010
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33% to
35%
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Impact of acquisitions of
CapRock Communications, Patriot
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Technologies, LLC and SignaCert,
Inc.
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364.4
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Organic revenue
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$
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1,849.5
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$1,975 -
$2,010
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7% to
9%
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Operating
Margin
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Based
on
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Revenue
Midpoint
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GAAP operating margin
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$93 -
$108
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4.7% to
5.4%
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Non-GAAP adjustments
(D)
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$12
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Non-GAAP operating
margin
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$105 -
$120
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5.3% to
6.0%
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HARRIS
CORPORATION
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RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
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(Unaudited)
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Notes to tables 1 and
2:
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Note A
– 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
the Tyco Electronics Wireless Systems business.
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Note B – 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 Security, Inc., the Air Traffic control
business unit of SolaCom Technologies Inc., Patriot Technologies,
LLC and SignaCert, Inc.
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Note C –
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 Communications
("CapRock").
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Note D –
Adjustment for estimated pre-tax
charges of $12.0 million for fiscal 2011 related to integration and
other costs associated with our acquisition of CapRock.
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SOURCE Harris Corporation