Harris Corporation (NYSE:HRS) reported revenue in the second
quarter of fiscal 2012 of $1.45 billion compared with $1.44 billion
in the prior-year quarter. GAAP net income was $133 million, or
$1.16 per diluted share, compared with $151 million, or $1.18 per
diluted share, in the prior year. Non-GAAP net income was $140
million, or $1.22 per diluted share, compared with $155 million, or
$1.20 per diluted share, in the prior year. Revenue and earnings in
the prior-year quarter benefited from $80 million in expedited
shipments of tactical radios to equip MRAP vehicles. Non-GAAP net
income excludes acquisition-related costs in both quarters. A
reconciliation of GAAP to non-GAAP financial measures is provided
in Tables 5 through 8, along with accompanying notes. Orders in the
second quarter were $1.20 billion.
“Harris posted solid second quarter results with earnings per
share in line with the prior year, despite orders and revenue being
dampened by the constrained government spending environment,” said
William M. Brown, president and chief executive officer. “The
sequential increase in operating income for the company, driven by
operating margin improvement in all of our segments, was
encouraging. Cash flow from operations increased significantly
compared to the previous quarter and the prior year, supporting
expectations for strong cash flow again this year.”
RF Communications
Revenue for the RF Communications segment was $526 million
compared with $545 million in the prior year. Tactical
Communications revenue of $391 million reflected a significant
increase in international revenue, which partially offset a decline
in Department of Defense revenue. International revenue was driven
by major deliveries to countries in Asia and Africa. Public Safety
and Professional Communications revenue was $135 million and
increased 14 percent over the prior year. Operating income for the
RF Communications segment was $172 million compared with $189
million in the prior year.
Orders for the segment totaled $268 million, including $183
million in Tactical Communications and $85 million in Public Safety
and Professional Communications. At the end of the second quarter,
backlog was $581 million in Tactical Communications and $671
million in Public Safety and Professional Communications.
Orders in the quarter included $70 million from a country in
Africa for Falcon II® radios for the next phase of a multi-year
modernization program, bringing orders to a total of $257 million
for this program that has a potential value of $400 million. Orders
also included $11 million from the Brazilian Ministry of Defence
for Falcon II and Falcon III® radios in support of multi-year
modernization programs, bringing orders to a total of $29 million
for these programs that have a potential opportunity in excess of
$300 million over the next several years in this rapidly emerging
market.
Following the close of the quarter, Harris received a $235
million order from the Australian Department of Defence for Falcon
II and Falcon III radios for the second phase of JP2072. This is
the second order under this potential $500 million multi-year
modernization program and brings orders to a total of $347 million
for this program.
Integrated Network Solutions
Revenue for the Integrated Network Solutions segment was $526
million, an increase of 6 percent compared with $496 million in the
prior year. Revenue benefited from the April 2011 acquisition of
Schlumberger’s Global Connectivity Services business. On an organic
basis, revenue declined 4 percent primarily as a result of weakness
at IT Services.
Operating income for the segment was $16 million compared with
$21 million in the prior year. Non-GAAP operating income, excluding
acquisition-related costs, was $25 million and flat with the prior
year, despite the combined loss of $8 million in Cyber Integrated
Solutions and Healthcare Solutions.
New Indefinite Delivery Indefinite Quantity (IDIQ) contract
vehicles awarded in the quarter included Connections II from the
General Services Administration, with a total ceiling value of $5
billion, to deliver IT communications and networking solutions for
U.S. federal government agencies worldwide; a five-year, $82
million contract with a classified customer to provide a
fully-managed, end-to-end communications solution using both
terrestrial and satellite capabilities; and a five-year, $31
million IT services subcontract for the U.S. Navy Cyber Forces
Command OCONUS Navy Enterprise Network (ONE-Net).
Government Communications Systems
Revenue for the Government Communications Systems segment was
$422 million and flat with the prior year. Operating income was $63
million compared with $59 million in the prior year. Operating
margin was a strong 14.9 percent driven by a more favorable product
mix and outstanding cost performance on fixed-priced programs.
New contract wins in the quarter included awards totaling $46
million over two years for avionics and other communications
components for the F-35 fighter aircraft; a two-year, $18 million
contract from a classified customer; and a follow-on contract for
$11 million from the U.S. Air Force for telemetry modules. Harris
has also been selected, as part of the Boeing team, to continue to
provide critical communications capability for the U.S. Missile
Defense Agency’s Ground-based Midcourse Defense (GMD) Development
and Sustainment Contract.
Earnings Guidance
The company reiterated its previous guidance for non-GAAP net
income for fiscal 2012 in the range of $5.10 to $5.30 per diluted
share ($4.92 to $5.12 per diluted share on a GAAP basis). Fiscal
2012 non-GAAP earnings guidance excludes acquisition-related costs.
Fiscal 2012 revenue is now expected to be about $6 billion,
compared to the previous range of $6.15 to $6.30 billion.
Harris will host a conference call today, January 31, at 8:30
a.m. Eastern Time (ET) to discuss its second quarter fiscal 2012
financial results. The dial-in numbers for the teleconference are
(800) 901-5248 (U.S.) and (617) 786-4512 (International), using
participant code 75982302. Please allow at least 10 minutes before
the scheduled start time to connect to the teleconference.
Participants may listen to the call and view management’s
supporting slide presentation at www.harris.com/conference-call. A
recording of the call will be available on the Harris website
beginning at 12 p.m. ET on January 31.
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 $6 billion of annual revenue and about
17,000 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 net
income and net income per diluted share for the second quarter of
fiscal 2012 and the second quarter of fiscal 2011, in each case
excluding charges for acquisition-related costs; the decrease in
revenue for the Integrated Network Solutions segment for the second
quarter of fiscal 2012 compared with the second quarter of fiscal
2011, adjusting for the impact of acquisitions; operating income
for the Integrated Network Solutions segment for the second quarter
of fiscal 2012 and the second quarter of fiscal 2011, in each case
excluding charges for acquisition-related costs; and guidance for
fiscal 2012 net income per diluted share, excluding charges for
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 2012;
potential contract opportunities and awards; the potential value of
contract awards; and statements regarding outlook, including
expected revenue, orders, and cash flow. 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 and
requirements (including potential deferrals of awards,
terminations, reductions of expenditures, changes to respond to the
priorities of Congress and the Administration, budgetary
constraints, debt ceiling implications, and cost-cutting
initiatives); risks inherent with large long-term fixed-price
contracts, particularly the ability to contain cost overruns; 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; financial and government
and regulatory risks relating to international sales and
operations; the continued effects of the general downturn in the
global economy and U.S. government’s budget deficits and national
debt; 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 changes in the regulatory
framework that applies to, or of satellite bandwidth constraints
on, our managed satellite and terrestrial communications solutions;
and changes in future business conditions that could cause business
investments and/or recorded goodwill to become impaired. 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 '12 Second
Quarter Summary CONDENSED CONSOLIDATED STATEMENT OF
INCOME (Unaudited)
Quarter Ended Two Quarters Ended
December 30, December 31, December 30,
December 31, 2011 2010 2011 2010
(In millions, except per share amounts) Revenue from
product sales and services $ 1,446.4 $ 1,438.5 $ 2,906.7 $ 2,843.9
Cost of product sales and services (933.9 ) (940.5 )
(1,900.6 ) (1,821.6 ) Engineering, selling and administrative
expenses (286.4 ) (255.2 ) (577.3 ) (510.4 ) Non-operating income
(loss) 2.9 (0.9 ) 3.6 (1.3 ) Interest income 0.2 0.4 1.1 1.0
Interest expense (28.2 ) (20.4 ) (56.2 )
(38.2 ) Income before income taxes 201.0 221.9 377.3
473.4 Income taxes (68.7 ) (70.8 ) (123.9 )
(158.4 ) Net income 132.3 151.1 253.4 315.0 Noncontrolling
interests, net of income taxes 0.8 ―
1.3 ― Net income attributable to Harris Corporation $
133.1 $ 151.1 $ 254.7 $ 315.0
Net income per common share attributable to Harris
Corporation common shareholders Basic $ 1.17 $ 1.19 $ 2.17 $
2.46 Diluted $ 1.16 $ 1.18 $ 2.16 $ 2.44 Cash dividends paid
per common share $ 0.28 $ 0.25 $ 0.56 $ 0.50 Basic weighted
average common shares outstanding 112.4 125.9 116.1 126.3 Diluted
weighted average common shares outstanding 112.8 126.8 116.5 127.3
Table 2 HARRIS CORPORATION FY '12
Second Quarter Summary BUSINESS SEGMENT INFORMATION
(Unaudited)
Quarter Ended Two Quarters Ended December
30, December 31, December 30, December 31,
2011 2010 2011 2010 (In
millions) Revenue RF Communications $ 525.7 $ 544.7 $
1,022.8 $ 1,111.2 Integrated Network Solutions 526.4 495.9 1,080.6
937.5 Government Communications Systems 422.4 421.7 866.1 845.8
Corporate eliminations (28.1 ) (23.8 ) (62.8 )
(50.6 ) $ 1,446.4 $ 1,438.5 $ 2,906.7 $
2,843.9
Income Before Income Taxes Segment Operating
Income: RF Communications $ 172.4 $ 189.3 $ 326.4 $ 417.8
Integrated Network Solutions 15.6 20.5 24.8 47.1 Government
Communications Systems 62.9 59.4 126.0 104.0 Unallocated corporate
expense (22.0 ) (22.0 ) (40.6 ) (47.7 ) Corporate eliminations (2.8
) (4.4 ) (7.8 ) (9.3 ) Non-operating income (loss) 2.9 (0.9 ) 3.6
(1.3 ) Net interest expense (28.0 ) (20.0 )
(55.1 ) (37.2 ) $ 201.0 $ 221.9 $ 377.3
$ 473.4
Table 3 HARRIS
CORPORATION FY '12 Second Quarter Summary CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Two Quarters Ended December
30, December 31, 2011 2010 (In
millions) Operating Activities Net income $ 253.4 $
315.0 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 129.3 96.2
Share-based compensation 16.6 26.1 Non-current deferred income
taxes (3.4 ) 9.8 (Increase) decrease in: Accounts and notes
receivable (21.7 ) 62.1 Inventories 21.5 (1.5 ) Increase (decrease)
in: Accounts payable and accrued expenses (169.4 ) (71.8 ) Advance
payments and unearned income 43.0 12.9 Income taxes 7.3 (46.8 )
Other 1.4 (12.7 ) Net cash provided by
operating activities 278.0 389.3
Investing Activities Net cash paid for acquired businesses
(14.0 ) (518.0 ) Cash paid for cost-method investment ― (10.0 )
Additions of property, plant and equipment (111.3 ) (101.0 )
Additions of capitalized software (11.2 ) (7.2 ) Net
cash used in investing activities (136.5 ) (636.2 )
Financing Activities Proceeds from borrowings 364.9
689.0 Repayments of borrowings (3.7 ) (0.3 ) Proceeds from
exercises of employee stock options 6.2 10.5 Repurchases of common
stock (423.2 ) (105.7 ) Cash dividends (64.5 ) (64.0
) Net cash provided by (used in) financing activities (120.3
) 529.5 Effect of exchange rate changes on
cash and cash equivalents (1.1 ) 3.0
Net increase in cash and cash equivalents 20.1 285.6
Cash and cash equivalents, beginning of year 366.9
455.2
Cash and cash equivalents, end
of quarter $ 387.0 $ 740.8
Table
4 HARRIS CORPORATION FY '12 Second Quarter
Summary CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited) December
30, July 1, 2011 2011 (In
millions) Assets Cash and cash equivalents $
387.0 $ 366.9 Receivables 858.1 836.5 Inventories 701.3 720.8
Income taxes receivable 53.5 57.3 Current deferred income taxes
154.4 171.0 Other current assets 73.5 64.3 Property, plant and
equipment 894.4 872.8 Goodwill 2,358.9 2,381.4 Intangible assets
472.1 502.4 Non-current deferred income taxes 36.3 5.7 Other
non-current assets 182.7 193.7 $ 6,172.2 $ 6,172.8
Liabilities and Equity Short-term debt $ 544.9 $
180.0 Accounts payable 348.1 450.8 Compensation and benefits 206.6
266.2 Other accrued items 279.5 295.8 Advance payments and unearned
income 275.8 232.8 Current deferred income taxes 0.9 ― Current
portion of long-term debt 5.3 4.9 Non-current deferred income taxes
20.9 ― Long-term debt 1,883.2 1,887.2 Long-term contract liability
115.9 120.9 Other long-term liabilities 238.5 222.2 Equity
2,252.6 2,512.0 $ 6,172.2 $ 6,172.8
HARRIS CORPORATION
FY '12 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; cost of product sales and services; engineering,
selling and administrative expenses; income before income taxes;
income taxes; net income; net income attributable to Harris
Corporation; and net income per diluted common share attributable
to Harris Corporation common shareholders, 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 '12 Second
Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES Condensed Consolidated Statement of Income
(Unaudited)
Quarter Ended Quarter Ended December 30, 2011
December 31, 2010 As Reported Adjustment
Non-GAAP As Reported Adjustment
Non-GAAP (In millions, except per share
amounts) Revenue from product sales and services $ 1,446.4 $ ―
$ 1,446.4 $ 1,438.5 $ ― $ 1,438.5 Cost of product sales and
services (933.9 ) ― (933.9 ) (940.5 ) ― (940.5 ) Engineering,
selling and administrative expenses (A) (286.4 ) 9.7 (276.7 )
(255.2 ) 4.2 (251.0 ) Non-operating income (loss) 2.9 ― 2.9 (0.9 )
― (0.9 ) Interest income 0.2 ― 0.2 0.4 ― 0.4 Interest expense
(28.2 ) ― (28.2 ) (20.4 ) ―
(20.4 ) Income before income taxes 201.0 9.7 210.7
221.9 4.2 226.1 Income taxes (B) (68.7 ) (3.1 )
(71.8 ) (70.8 ) (0.7 ) (71.5 ) Net
income 132.3 6.6 138.9 151.1 3.5 154.6 Noncontrolling interests,
net of income taxes 0.8 ― 0.8
― ― ― Net income attributable to Harris
Corporation $ 133.1 $ 6.6 $ 139.7 $ 151.1
$ 3.5 $ 154.6 Net income per diluted
common share attributable to Harris Corporation common shareholders
$ 1.16 $ 0.06 $ 1.22 $ 1.18 $ 0.02 $ 1.20
Two
Quarters Ended Two Quarters Ended December 30,
2011 December 31, 2010 As Reported
Adjustment Non-GAAP As Reported
Adjustment Non-GAAP (In millions, except
per share amounts) Revenue from product sales and services $
2,906.7 $ ― $ 2,906.7 $ 2,843.9 $ ― $ 2,843.9 Cost of
product sales and services (1,900.6 ) ― (1,900.6 ) (1,821.6 ) ―
(1,821.6 )
Engineering, selling and administrative
expenses (A)
(577.3 ) 19.3 (558.0 ) (510.4 ) 6.2 (504.2 ) Non-operating income
(loss) 3.6 ― 3.6 (1.3 ) ― (1.3 ) Interest income 1.1 ― 1.1 1.0 ―
1.0 Interest expense (56.2 ) ― (56.2 )
(38.2 ) ― (38.2 ) Income before income taxes
377.3 19.3 396.6 473.4 6.2 479.6 Income taxes (B) (123.9 )
(5.7 ) (129.6 ) (158.4 ) (1.2 )
(159.6 ) Net income 253.4 13.6 267.0 315.0 5.0
320.0 Noncontrolling interests, net of income taxes 1.3
― 1.3 ― ― ― Net
income attributable to Harris Corporation $ 254.7 $ 13.6
$ 268.3 $ 315.0 $ 5.0 $ 320.0
Net income per diluted common share attributable to Harris
Corporation common shareholders $ 2.16 $ 0.11 $ 2.27 $ 2.44
$ 0.04 $ 2.48
Table 6 HARRIS
CORPORATION FY '12 Second Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Business
Segment Information (Unaudited)
Quarter Ended Quarter
Ended December 30, 2011 December 31, 2010 As
Reported Adjustment Non-GAAP As Reported
Adjustment Non-GAAP (In millions)
Revenue RF Communications $ 525.7 $ ― $ 525.7 $ 544.7 $ ― $
544.7 Integrated Network Solutions 526.4 ― 526.4 495.9 ― 495.9
Government Communications Systems 422.4 ― 422.4 421.7 ― 421.7
Corporate eliminations (28.1 ) ― (28.1 )
(23.8 ) ― (23.8 ) $ 1,446.4 $ ― $
1,446.4 $ 1,438.5 $ ― $ 1,438.5
Income
Before Income Taxes Segment Operating Income: RF Communications
$ 172.4 $ ― $ 172.4 $ 189.3 $ ― $ 189.3 Integrated Network
Solutions (C) 15.6 9.7 25.3 20.5 4.2 24.7 Government Communications
Systems 62.9 ― 62.9 59.4 ― 59.4 Unallocated corporate expense (22.0
) ― (22.0 ) (22.0 ) ― (22.0 ) Corporate eliminations (2.8 ) ― (2.8
) (4.4 ) ― (4.4 ) Non-operating income (loss) 2.9 ― 2.9 (0.9 ) ―
(0.9 ) Net interest expense (28.0 ) ― (28.0 )
(20.0 ) ― (20.0 ) $ 201.0 $ 9.7 $ 210.7
$ 221.9 $ 4.2 $ 226.1
Two Quarters
Ended Two Quarters Ended December 30, 2011
December 31, 2010 As Reported Adjustment
Non-GAAP As Reported Adjustment
Non-GAAP (In millions) Revenue RF
Communications $ 1,022.8 $ ― $ 1,022.8 $ 1,111.2 $ ― $ 1,111.2
Integrated Network Solutions 1,080.6 ― 1,080.6 937.5 ― 937.5
Government Communications Systems 866.1 ― 866.1 845.8 ― 845.8
Corporate eliminations (62.8 ) ― (62.8 )
(50.6 ) ― (50.6 ) $ 2,906.7 $ ― $
2,906.7 $ 2,843.9 $ ― $ 2,843.9
Income
Before Income Taxes Segment Operating Income: RF Communications
$ 326.4 $ ― $ 326.4 $ 417.8 $ ― $ 417.8 Integrated Network
Solutions (C) 24.8 19.3 44.1 47.1 6.2 53.3 Government
Communications Systems 126.0 ― 126.0 104.0 ― 104.0 Unallocated
corporate expense (40.6 ) ― (40.6 ) (47.7 ) ― (47.7 ) Corporate
eliminations (7.8 ) ― (7.8 ) (9.3 ) ― (9.3 ) Non-operating income
(loss) 3.6 ― 3.6 (1.3 ) ― (1.3 ) Net interest expense (55.1
) ― (55.1 ) (37.2 ) ― (37.2 ) $
377.3 $ 19.3 $ 396.6 $ 473.4 $ 6.2 $ 479.6
Table 7 HARRIS CORPORATION FY
'12 Second Quarter Summary Reconciliation of FY '12 GAAP Net
Income per Diluted Share Guidance to FY '11 GAAP Net Income
per Diluted Share and FY '12 Non-GAAP Net Income per Diluted Share
Guidance (Unaudited) Fiscal
Year 2011 2012 (Actual) (Guidance)
GAAP net income per diluted common share $4.60 $4.92 to $5.12
Charges associated with acquisitions (D) .29 .18 Non-GAAP net
income per diluted common share $4.89 $5.10 to $5.30
Table 8 HARRIS CORPORATION FY '12 Second Quarter
Summary FY '12 Second Quarter Year-Over-Year Organic Revenue
Growth Calculations (Unaudited)
Quarter Ended December 30, December 31,
Percent 2011 2010 Change (In
millions) Integrated Network Solutions Segment GAAP
revenue $ 526.4 $ 495.9 6.2 % Impact of acquisitions (E)
51.5 Organic revenue $ 526.4 $ 547.4 -3.8 %
HARRIS CORPORATION
FY '12 Second Quarter Summary
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES
(Unaudited)
Notes to tables 5 through 8:
Note A – Adjustments to engineering, selling and
administrative expenses for the quarter ended December 30, 2011 are
due to integration and other costs associated with our acquisitions
of CapRock Communications (“CapRock”) and the Global Connectivity
Services business of the Schlumberger group (“Schlumberger GCS”)
($9.7 million combined). Adjustments to engineering, selling and
administrative expenses for the two quarters ended December 30,
2011 are due to integration and other costs associated with our
acquisitions of CapRock, Schlumberger GCS ($17.0 million combined)
and Carefx Corporation (“Carefx”) ($2.3 million). 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 ($4.2
million and $6.2 million, respectively).
Note B – Adjustments to our income taxes are based on the
applicable tax rate in the jurisdiction to which the item
applies.
Note C – Adjustments to our Integrated Network Solutions
segment operating income for the quarter ended December 30, 2011
are due to integration and other costs associated with our
acquisitions of CapRock and Schlumberger GCS ($9.7 million
combined). Adjustments to our Integrated Network Solutions segment
operating income for the two quarters ended December 30, 2011 are
due to integration and other costs associated with our acquisitions
of CapRock, Schlumberger GCS ($17.0 million combined) and Carefx
($2.3 million). Adjustments to our Integrated Network Solutions
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).
Note D – Adjustments are for pre-tax charges of $46.6
million ($.29 per diluted common share) for fiscal 2011 related to
integration and other costs associated with our acquisitions of
CapRock, Schlumberger GCS, the terrestrial network infrastructure
assets of the government business of Core180, Inc. and Carefx; and
estimated pre-tax charges of $29 million ($.18 per diluted common
share) for fiscal 2012 related to integration and other costs
associated with our acquisitions of CapRock, Schlumberger GCS and
Carefx.
Note E – Adjustments relate to the revenue of
Schlumberger GCS and Carefx for the quarter ended December 31,
2010.
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