MELBOURNE, Fla., Jan. 27 /PRNewswire-FirstCall/ -- Harris
Corporation (NYSE:HRS) reported GAAP income from continuing
operations for the second quarter of fiscal 2010 of $140 million,
or $1.06 per diluted share, compared with $141 million, or $1.06
per diluted share, in the prior-year quarter. Excluding
acquisition-related costs, non-GAAP income from continuing
operations in the second quarter of fiscal 2010 was $142 million,
or $1.08 per diluted share, compared with $141 million, or $1.05
per diluted share, in the prior-year quarter. Revenue for the
second quarter of fiscal 2010 was $1.22 billion, compared with
$1.33 billion for the second quarter of fiscal 2009. Orders in the
second quarter were $1.4 billion, compared with $1.0 billion in the
prior-year quarter. A reconciliation of GAAP to non-GAAP financial
measures is provided in Tables 5 through 8, along with the
accompanying notes. "Excellent operating performance in RF
Communications and Government Communications Systems resulted in
strong second quarter earnings," said Howard L. Lance, chairman,
president and chief executive officer. "Demand for the market's
most advanced tactical radios resulted in significantly higher new
orders. Continued investments in new technologies and applications
allow us to provide some of the most sophisticated communication
capabilities available - such as high data rates and video - to
meet the demanding mission requirements of today and the future. In
addition, we are investing in growth initiatives, such as
healthcare and cyber solutions, as well as in new media initiatives
such as mobile TV, digital signage and full-motion video asset
management solutions for government ISR applications. "The
company's strong orders in both the first and second quarters are
expected to drive double-digit, year-over-year revenue growth in
the third and fourth quarters. As a result, we have increased our
fiscal 2010 guidance for revenue and earnings." Increased Earnings
Guidance The company has revised its guidance for non-GAAP income
from continuing operations for fiscal 2010 to a range of $4.25 to
$4.35 per diluted share ($4.13 to $4.23 per diluted share on a GAAP
basis). This increase compares with a previous range of $3.85 to
$3.95 per diluted share ($3.74 to $3.84 per diluted share on a GAAP
basis). Revenue in fiscal 2010 is now expected to be in a range of
$5.2 billion to $5.3 billion. Fiscal 2010 non-GAAP earnings
guidance excludes acquisition-related costs. RF Communications
Second quarter orders for the RF Communications segment totaled
$626 million, including $554 million in the Tactical Radio
Communications business. At the end of the second quarter, total
backlog in RF Communications was $1.4 billion, including $953
million in the Tactical Radio Communications business and $443
million in the Public Safety and Professional Communications
business. New orders for tactical radio communication systems were
driven by both accelerating customer adoption of the company's
Falcon III® radios and increased demand for equipping the
military's new M-ATVs (Mine Resistant Ambush Protected All-Terrain
Vehicles) being shipped to Afghanistan. Orders in the second
quarter included a $119 million order for JTRS-approved Falcon III
AN/PRC-152(C) handheld radio systems with vehicular adapters to
equip M-ATVs. This major order represents another significant step
forward in the widespread fielding of Harris Falcon III radios.
Other major orders in the quarter included a $228 million order for
Falcon II® AN/VRC-104 high-frequency radio systems, making total
orders-to-date for M-ATVs $555 million. Harris is supplying the
vast majority of the tactical radios for the 6,644 M-ATVs being
procured by the U.S. military. Also in the quarter, international
tactical radio orders were received from customers in Pakistan,
Saudi Arabia, Mexico and Sweden. In the Public Safety and
Professional Communications business, Harris was awarded a
four-year, IDIQ contract by General Dynamics C4 Systems with a
potential value of $130 million to provide the land-mobile radio
infrastructure for the first two regions of the Department of
Justice Integrated Wireless Network (IWN) program. Under the
contract, Harris received an initial order of $10 million to begin
work in the Mid-Atlantic region. The IWN initiative envisions a
nationwide system uniting the communications of Federal first
responders throughout its six regions. Other new orders were
received for upgrading the current radio systems with new
infrastructure and network products for the Florida Department of
Corrections and Volusia County, Florida, as well as for providing a
wireless shipboard communications system to manage the safe
take-off and landing of Navy jets on an aircraft carrier. Revenue
for RF Communications in the second quarter was $463 million,
compared with $438 million in the prior-year quarter. Revenue
included $355 million in Tactical Radio Communications and $108
million in Public Safety and Professional Communications. Tactical
Radio revenue was driven primarily by deliveries to the U.S. Army,
Marine Corps and Air Force. Operating income for RF Communications
was $169 million in the second quarter, compared with $144 million
in the prior-year quarter. Non-GAAP operating income, which
excludes acquisition-related costs, was $171 million. Non-GAAP
operating margin was exceptionally strong at 37 percent due to
favorable product mix, cost-reduction actions implemented in the
second half of fiscal 2009, and operational efficiencies.
Government Communications Systems Second quarter revenue for the
Government Communications Systems segment was $647 million,
compared with $748 million in the prior-year quarter. Operating
income was $87 million in the second quarter, compared with $85
million in the prior-year quarter. Operating margin was strong at
13.4 percent, reflecting excellent award fees and program
performance across the segment. Revenue in the prior year benefited
from a large handheld computer equipment delivery for the Field
Data Collection Automation (FDCA) program for the U.S. Census
Bureau's 2010 census. Adjusting for the impact of the acquisitions
and excluding the FDCA program, revenue growth was 9 percent in the
first half of fiscal 2010. Government Communications Systems is
experiencing good momentum across a broad range of programs.
Revenue increased in the second quarter compared with the prior
year for the GOES-R GS (Geostationary Operational Environmental
Satellite-Series R Ground Segment) weather program for NOAA
(National Oceanic and Atmospheric Administration), the
Modernization of Enterprise Terminals (MET) program for the U. S.
Army, and the NETCENTS IT program for the U.S. Air Force. Revenue
for the U.S. Navy Commercial Broadband Satellite Program decreased
in the quarter with the successful completion of the first phase.
In the second quarter, the IT Services business was awarded a $37
million task order over 20 months under the Information Technology
Enterprise Solutions-2 Services (ITES-2S) contract for the U.S.
Southern Command (USSOUTHCOM). Harris will migrate and consolidate
the communications systems for nine USSOUTHCOM buildings into a new
headquarters complex. Also during the quarter, Harris secured new
international air traffic control communications contracts and
contract extensions stemming from its recent acquisition of SolaCom
ATC. Under the contracts, Harris will provide critical
air-to-ground and ground-to-ground digital communications services
for a new Manila area control center in the Philippines, the
Turkish Air Force's mobile radar approach control shelters, and air
traffic control sites in Angola. Broadcast Communications Orders in
the Broadcast Communications segment were $139 million in the
second quarter, significantly higher compared with sequential first
quarter orders of $124 million. The rebound in orders in the second
quarter was an encouraging sign that the market has begun to
improve. Revenue in the second quarter was $117 million, comparable
with the prior quarter of $119 million. Revenue was $163 million in
the prior-year second quarter. Operating loss in the second quarter
was $5 million for the segment, compared with operating income of
$12 million in the prior-year quarter. During the quarter, Harris
successfully deployed several FAME(TM) (Full-Motion Video Asset
Management Engine) solutions for government applications. The
solutions, which were developed for the military, have broad
applications in both government ISR and commercial markets. FAME
increases visibility into the vast amounts of real-time and
archived video collected from manned and unmanned aircraft and
ground-based sensors. This cross-over application offers more
opportunities for Broadcast Communications to partner with the
company's Government Communications Systems business and reach a
broader, more diverse base of customers. Harris secured new
projects in the quarter with two large sports arenas and continued
implementing the first-of-its-kind, advanced media workflow
solution in the NBA's Orlando Magic Amway Arena scheduled to open
in October. Harris also delivered solutions for a variety of
broadcasters to support their coverage of the Winter Games in
Vancouver next month. For example, the company is providing an
end-to-end HD broadcast solution to support Canada's Olympic
Broadcast Media Consortium's unprecedented coverage of the games.
The Harris ONE(TM) solution brings together highly integrated
products that enable advanced media workflows and provides the
Consortium with the highest quality broadcast technology for
delivery of games coverage. Harris will host a conference call
today, January 27, at 4:30 p.m. Eastern Time (ET) to discuss its
second quarter fiscal 2010 financial results. The dial-in number
for the teleconference is (719) 325-4824. The access code is
1446168. 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
http://www.harris.com/conference-call. A replay of the
teleconference will be available beginning at 8:30 p.m. ET on
January 27, and will run until midnight ET on Wednesday, February
3. To access the replay, please call (719) 457-0820, access code
1446168. A recording of the call also will be available on the
Harris website beginning at 7 p.m. ET on January 27. 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
http://www.harris.com/. Non-GAAP Financial Measures This press
release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the SEC, including income from
continuing operations and income from continuing operations per
diluted share for the second 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, 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 (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 2010; 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 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 Second Quarter Summary
CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) Quarter
Ended Two Quarters Ended ------------- ------------------ January
1, January 2, January 1, January 2, 2010 2009 2010 2009 ---------
--------- --------- --------- (In millions, except per share
amounts) Revenue from product sales and services $1,217.7 $1,333.2
$2,420.7 $2,505.8 Cost of product sales and services (778.6)
(925.3) (1,590.7) (1,717.2) Engineering, selling and administrative
expenses (215.7) (191.8) (427.8) (381.4) Non- operating loss (0.3)
(0.7) (0.5) (8.8) Interest income 0.3 0.9 0.7 1.9 Interest expense
(18.2) (13.8) (36.4) (26.2) ----- ----- ----- ----- Income from
continuing operations before income taxes 205.2 202.5 366.0 374.1
Income taxes (65.7) (61.9) (122.0) (114.1) ----- ----- ------
------ Income from continuing operations 139.5 140.6 244.0 260.0
Discontinued operations, net of income taxes --- (179.2) ---
(179.9) ----- ------ ----- ------ Net income (loss) $139.5 $(38.6)
$244.0 $80.1 ====== ====== ====== ===== Net income (loss) per
common share Basic Continuing operations $1.07 $1.06 $1.86 $1.95
Discontinued operations --- (1.35) --- (1.35) ----- ----- -----
----- $1.07 $(0.29) $1.86 $0.60 ===== ====== ===== ===== Diluted
Continuing operations $1.06 $1.06 $1.85 $1.94 Discontinued
operations --- (1.35) --- (1.34) ----- ----- ----- ----- $1.06
$(0.29) $1.85 $0.60 ===== ====== ===== ===== Cash dividends paid
per common share $.22 $.20 $.44 $.40 Basic weighted average shares
outstanding 130.9 133.3 131.3 133.6 Diluted weighted average shares
outstanding 131.3 133.3 131.6 134.2 Table 2 HARRIS CORPORATION FY
'10 Second Quarter Summary BUSINESS SEGMENT INFORMATION (Unaudited)
Quarter Ended Two Quarters Ended ------------- ------------------
January 1, January 2, January 1, January 2, 2010 2009 2010 2009
---- ---- ---- ---- (In millions) Revenue RF Communications $462.9
$438.2 $886.6 $853.4 Government Communications Systems 647.3 748.0
1,315.0 1,357.1 Broadcast Communications 116.8 163.0 235.5 321.2
Corporate eliminations (9.3) (16.0) (16.4) (25.9) ---- ----- -----
----- $1,217.7 $1,333.2 $2,420.7 $2,505.8 ======== ========
======== ======== Income From Continuing Operations Before Income
Taxes Segment Operating Income (Loss): RF Communications $168.6
$144.1 $282.6 $286.2 Government Communications Systems 87.0 85.2
172.7 151.5 Broadcast Communications (4.8) 12.0 (4.5) 17.3
Unallocated corporate expense (24.8) (19.1) (44.0) (38.0) Corporate
eliminations (2.6) (6.1) (4.6) (9.8) Non-operating loss (0.3) (0.7)
(0.5) (8.8) Net interest expense (17.9) (12.9) (35.7) (24.3) -----
----- ----- ----- $205.2 $202.5 $366.0 $374.1 ====== ====== ======
====== Table 3 HARRIS CORPORATION FY '10 Second Quarter Summary
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Two
Quarters Ended ------------------ January 1, January 2, 2010 2009
---- ---- (In millions) Operating Activities Net income $244.0
$80.1 Adjustments to reconcile net income to net cash provided by
(used in) operating activities: Depreciation and amortization 80.8
85.7 Share-based compensation 21.2 18.4 Non-current deferred income
taxes 1.1 (2.0) 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 --- (138.4) (Increase) decrease in: Accounts and notes
receivable 97.6 (53.8) Inventories (72.0) (90.7) Increase
(decrease) in: Accounts payable and accrued expenses (130.1) (5.6)
Advance payments and unearned income 73.7 6.8 Income taxes 7.9
(16.6) Other (2.8) (3.2) ---- ---- Net cash provided by operating
activities 321.4 189.3 ----- ----- Investing Activities Cash paid
for acquired businesses (33.7) --- Additions of property, plant and
equipment (38.5) (59.9) Additions of capitalized software (3.9)
(6.8) Cash paid for short-term investments available-for-sale ---
(1.2) Proceeds from the sale of short-term investments
available-for-sale --- 2.7 ----- --- Net cash used in investing
activities (76.1) (65.2) ----- ----- Financing Activities Proceeds
from borrowings --- 78.7 Repayments of borrowings (61.4) (79.4)
Proceeds from exercises of employee stock options 6.0 7.3
Repurchases of common stock (105.5) (82.1) Cash dividends (57.8)
(53.9) ----- ----- Net cash used in financing activities (218.7)
(129.4) ------ ------ Effect of exchange rate changes on cash and
cash equivalents 2.4 (12.0) --- ----- Net increase (decrease) in
cash and cash equivalents 29.0 (17.3) Cash and cash equivalents,
beginning of year 281.2 370.0 ----- ----- Cash and cash
equivalents, end of quarter 310.2 352.7 Less cash and cash
equivalents of discontinued operations --- (97.7) ----- ----- Cash
and cash equivalents of continuing operations, end of quarter
$310.2 $255.0 ====== ====== Table 4 HARRIS CORPORATION FY '10
Second Quarter Summary CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited) January 1, July 3, 2010 2009 ---------- ------ (In
millions) Assets Cash and cash equivalents $310.2 $281.2
Receivables 679.5 770.8 Inventories 672.2 607.2 Income taxes
receivable 3.9 21.0 Current deferred income taxes 142.7 117.2 Other
current assets 66.1 62.0 Property, plant and equipment 521.5 543.2
Goodwill 1,576.8 1,507.1 Intangible assets 315.4 335.6 Non-current
deferred income taxes 92.7 85.3 Other non-current assets 148.7
134.5 $4,529.7 $4,465.1 ======= ======= Liabilities and
Shareholders' Equity Short-term debt $45.0 $105.7 Accounts payable
284.4 368.0 Compensation and benefits 172.6 224.9 Other accrued
items 312.5 288.7 Advance payments and unearned income 195.5 121.7
Current portion of long-term debt 0.7 0.7 Long-term debt 1,176.9
1,177.3 Long-term contract liability 139.0 145.6 Other long-term
liabilities 189.6 163.4 Shareholders' equity 2,013.5 1,869.1 - -
$4,529.7 $4,465.1 ======= ======= HARRIS CORPORATION FY '10 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 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 Second Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Condensed
Consolidated Statement of Income (Unaudited) Quarter Ended Quarter
Ended January 1, 2010 January 2, 2009 ---------------------------
--------------------------- As Adjust- Non- As Adjust- Non-
Reported ment GAAP Reported ment GAAP -------- ------- ----
-------- ------- ---- (In millions, except per share amounts)
Revenue from product sales and services $1,217.7 $ --- $1,217.7
$1,333.2 $ --- $1,333.2 Cost of product sales and services (A)
(778.6) 0.4 (778.2) (925.3) --- (925.3) Engineering, selling and
administrative expenses (B) (215.7) 3.1 (212.6) (191.8) --- (191.8)
Non-operating loss (0.3) --- (0.3) (0.7) --- (0.7) Interest income
0.3 --- 0.3 0.9 --- 0.9 Interest expense (18.2) --- (18.2) (13.8)
--- (13.8) ----- ----- ----- ----- ----- ----- Income from
continuing operations before income taxes 205.2 3.5 208.7 202.5 ---
202.5 Income taxes (65.7) (1.2) (66.9) (61.9) --- (61.9) ----- ----
----- ----- ----- ----- Income from continuing operations $139.5
$2.3 $141.8 $140.6 $ --- $140.6 ===== === ===== ===== ==== =====
Income from continuing operations per diluted common share (C)
$1.06 $.02 $1.08 $1.06 $(.01) $1.05 Two Quarters Ended Two Quarters
Ended January 1, 2010 January 2, 2009 ---------------------------
--------------------------- As Adjust- Non- As Adjust- Non-
Reported ment GAAP Reported ment GAAP -------- ------- ----
-------- ------- ---- (In millions, except per share amounts)
Revenue from product sales and services $2,420.7 $ --- $2,420.7
$2,505.8 $ --- $2,505.8 Cost of product sales and services (A)
(1,590.7) 4.0 (1,586.7) (1,717.2) --- (1,717.2) Engineering,
selling and administrative expenses (B) (427.8) 6.7 (421.1) (381.4)
--- (381.4) Non-operating loss (0.5) --- (0.5) (8.8) --- (8.8)
Interest income 0.7 --- 0.7 1.9 --- 1.9 Interest expense (36.4) ---
(36.4) (26.2) --- (26.2) ----- ----- ----- ----- ----- ----- Income
from continuing operations before income taxes 366.0 10.7 376.7
374.1 --- 374.1 Income taxes (122.0) (3.9) (125.9) (114.1) ---
(114.1) ------ ---- ------ ------ ----- ------ Income from
continuing operations $244.0 $6.8 $250.8 $260.0 $ --- $260.0 =====
=== ===== ===== ==== ===== Income from continuing operations per
diluted common share $1.85 $.06 $1.91 $1.94 $ --- $1.94 Table 6
HARRIS CORPORATION FY '10 Second Quarter Summary RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES Business Segment Information
(Unaudited) Quarter Ended Quarter Ended January 1, 2010 January 2,
2009 --------------------------- --------------------------- As
Adjust- Non- As Adjust- Non- Reported ment GAAP Reported ment GAAP
-------- ------- ---- -------- ------- ---- (In millions) Revenue
RF Communications $462.9 $ --- $462.9 $438.2 $ --- $438.2
Government Communications 647.3 --- 647.3 748.0 --- 748.0 Systems
Broadcast Communications 116.8 --- 116.8 163.0 --- 163.0 Corporate
eliminations (9.3) --- (9.3) (16.0) --- (16.0) ---- ----- ----
----- ----- ----- $1,217.7 $ --- $1,217.7 $1,333.2 $ --- $1,333.2
======== ==== ======== ======== ==== ======= Income From Continuing
Operations Before Income Taxes Segment Operating Income (Loss): RF
Communi- cations (D) $168.6 $2.7 $171.3 $144.1 $ --- $144.1
Government Communications Systems (E) 87.0 0.8 87.8 85.2 --- 85.2
Broadcast Communications (4.8) --- (4.8) 12.0 --- 12.0 Unallocated
corporate expense (24.8) --- (24.8) (19.1) --- (19.1) Corporate
eliminations (2.6) --- (2.6) (6.1) --- (6.1) Non-operating loss
(0.3) --- (0.3) (0.7) --- (0.7) Net interest expense (17.9) ---
(17.9) (12.9) --- (12.9) ----- ----- ----- ----- ----- ----- $205.2
$3.5 $208.7 $202.5 $ --- $202.5 ====== ==== ====== ====== ====
===== Two Quarters Ended Two Quarters Ended January 1, 2010 January
2, 2009 --------------------------- --------------------------- As
Adjust- Non- As Adjust- Non- Reported ment GAAP Reported ment GAAP
-------- ------- ---- -------- ------- ---- (In millions) Revenue
RF Communi- cations $886.6 $ --- $886.6 $853.4 $ --- $853.4
Government Communi- cations 1,315.0 --- 1,315.0 1,357.1 --- 1,357.1
Systems Broadcast Communi- cations 235.5 --- 235.5 321.2 --- 321.2
Corporate eliminations (16.4) --- (16.4) (25.9) --- (25.9) -----
----- ----- ----- ----- ----- $2,420.7 $ --- $2,420.7 $2,505.8 $
--- $2,505.8 ======== ==== ======== ======== ==== ======= Income
From Continuing Operations Before Income Taxes Segment Operating
Income (Loss): RF Communi- cations (D) $282.6 $9.2 $291.8 $286.2 $
--- $286.2 Government Communi- cations 172.7 1.5 174.2 151.5 ---
151.5 Systems (E) Broadcast Communi- cations (4.5) --- (4.5) 17.3
--- 17.3 Unallocated corporate expense (44.0) --- (44.0) (38.0) ---
(38.0) Corporate eliminations (4.6) --- (4.6) (9.8) --- (9.8)
Non-operating loss (0.5) --- (0.5) (8.8) --- (8.8) Net interest
expense (35.7) --- (35.7) (24.3) --- (24.3) ----- ----- ----- -----
--- ---- $366.0 $10.7 $376.7 $374.1 $ --- $374.1 ====== =====
====== ====== ==== ====== Table 7 HARRIS CORPORATION FY '10 Second
Quarter Summary Reconciliation of FY '10 GAAP Income from
Continuing Operations per Diluted Share Guidance to FY '09 GAAP
Income from Continuing Operations per Diluted Share and FY '10
Non-GAAP Income from Continuing Operations per Diluted Share
Guidance (Unaudited) Fiscal Year Fiscal Year 2009 2010 ------------
------------ Percent (Actual) (Guidance) Change -------- ----------
-------- GAAP income from continuing operations per diluted share
$2.34 $4.13 to $4.23 76% to 81% Impairment of our Broadcast
Communications segment goodwill and other long-lived assets (F)
$1.48 $--- Charges associated with the acquisition of Tyco
Electronics Wireless Systems (G) $0.04 $0.10 Charges associated
with the acquisitions of Crucial Security, Inc., the ATC Business
Unit of SolaCom Technologies Inc. and Patriot Technologies, LLC(H)
$--- $0.02 ----- ---- Non-GAAP income from continuing operations
per diluted share $3.86 $4.25 to $4.35 10% to 13% =====
============== Table 8 HARRIS CORPORATION FY '10 Second Quarter
Summary Government Communications Systems Segment Revenue Growth
Calculation, Adjusted for the Impact of Acquisitions and the FDCA
program, for the First Two Quarters of FY '10 First Two Quarters
Ended ------------------------ January 2, 2009 January 1, 2010
Percent Change --------------- --------------- -------------- GAAP
Revenue $1,357.1 $1,315.0 (3.1%) Impact of Field Data Collection
Automation ("FDCA") program (228.9) (64.3) Impact of acquisitions
(I) 22.9 ---- --- Organic Revenue $1,151.1 $$1,250.7 8.7% ====
========= HARRIS CORPORATION FY '10 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")
from Tyco Electronics Ltd. ($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 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 ATC 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 - Due to the
as-reported net loss, including discontinued operations, for the
quarter ended January 2, 2009, basic weighted average shares were
used in calculating as-reported income from continuing operations
per diluted share because the use of diluted weighted average
shares would have been anti-dilutive. However, on a non-GAAP basis,
we reported net income for the quarter ended January 2, 2009;
therefore, diluted weighted average shares were used in calculating
non-GAAP income from continuing operations per diluted share. 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 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 $255.5 million
($1.48 per diluted share) for impairment of goodwill and other
long-lived assets in our Broadcast Communications segment. Note G -
Adjustment for pre-tax charges of $9.5 million ($.04 per diluted
share) for fiscal 2009 and estimated pre-tax charges of $20.0
million ($.10 per diluted share) for fiscal 2010, related to
integration and other costs associated with our acquisition of
Wireless Systems. Note H - 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. Note I - Adjustment related to
the revenue of Crucial, SolaCom ATC and Patriot for the first two
quarters ended January 2, 2009. DATASOURCE: Harris Corporation
CONTACT: Investor Relations inquiries: Pamela Padgett,
+1-321-727-9383, or , or Media inquiries: Jim Burke, +1-
321-727-9131, or , For additional information, contact Harris
Corporation at . Web Site: http://www.harris.com/
Copyright