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Harris Corporation First Quarter Revenue Increases 11%; Net Income Increases 18%
By: PR Newswire
Oct. 29, 2008 04:03 PM
"Our strong momentum continued in the first quarter, with double-digit
organic revenue and earnings growth," said "In addition, our financial position remains very strong. We ended the
first quarter with RF Communications First quarter revenue in the RF Communications segment was Revenue was higher in both U.S. and international markets. International
revenue growth accelerated and represented over 35 percent of total revenue in
the first quarter, compared to 27 percent of revenue for all of fiscal 2008.
International revenue in the first quarter was driven by major deliveries to
Good orders momentum in the segment continued in the first quarter. Orders are expected to accelerate in the second quarter and be above revenue for fiscal 2009. Strong worldwide demand for tactical radio systems continues to be driven by on-going modernization programs, force restructuring and expansion, increased interoperability requirements, and requirements for more versatile and adaptable communication systems. New orders reflected success in penetrating an increasingly diverse
customer base with a wide variety of products. Customer demand is building for the new Falcon III(R) multiband manpack radio (AN/PRC-117G), the first JTRS-approved wideband/narrowband tactical radio. Orders for the 117G were received from a number of new and repeat customers including the U.S. Special Operations Command, U.S. Air Force, U.S. Marine Corps, and U.S. Coast Guard. During the quarter, the Falcon III 117G manpack received a number of additional technical certifications and achieved "JTRS-approved" status. Customers are using the 117G for a broad range of ground, airborne and
SATCOM applications. New applications include surveillance sensor reception,
air defense systems, and use in Unmanned Aerial Vehicles and other light
reconnaissance aircraft. Based on customer feedback regarding the increased
power, flexibility, small footprint, and networking capabilities of the Falcon
III multiband manpack, Work continues on further enhancements to the Falcon III product family.
At the recent annual meeting of the Association of the U.S. Army (AUSA),
In another new product launch, Government Communications Systems The Government Communications Systems segment - including the Defense
Programs, National Intelligence Programs, Civil Programs, and IT Services
businesses - reported first quarter revenue of Segment programs that contributed to higher revenue in the first quarter included the FDCA (Field Data Collection Automation) program for the U.S. Census Bureau, several classified programs, the Global Geospatial Intelligence (GGI) program for the National Geospatial-Intelligence Agency (NGA), avionics shipments for the F-35 Joint Strike Fighter program, and the NETCENTS IT services program for the U.S. Air Force. Other revenue decreases resulted from the successful completion of the FAA Voice Switching and Control Systems (VSCS) refurbishment phase and completion of the MAF/TIGER program for the Census Bureau. During the quarter, In a new business area, Following the close of the quarter, the Harris National Intelligence
Programs business was awarded more than Broadcast Communications First quarter revenue in the Broadcast Communications segment was Operating income in the first quarter of fiscal 2009 was The Harris ONE(TM) solution for interoperable workflow is having excellent
success in international markets. Other significant orders in the quarter included systems for major U.S.
broadcast and telecommunication companies. In addition, Harris Stratex Networks, Inc. Harris Stratex Networks revenue for the first quarter of fiscal 2009 was
The company reported good year-over-year growth in Outlook About Harris Corporation Non-GAAP Financial Measures This press release contains non-GAAP financial measures within the meaning
of Regulation G promulgated by the SEC, including earnings per share for
fiscal 2008, excluding the impact of costs associated with our acquisitions
and integration costs associated with the formation of Harris Stratex
Networks. Attachments: Financial Statements (eight 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 guidance for fiscal 2009; 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: our participation in markets that are often
subject to uncertain economic conditions which makes it difficult to estimate
growth in our markets and, as a result, future income and expenditures; our
dependence on the U.S. government for a significant portion of our revenue, as
the loss of this relationship or a shift in U.S. government funding could have
adverse consequences on our future business; potential changes in U.S.
government or customer priorities due to program reviews or revisions to
strategic objectives, including termination of or potential failure to fund
U.S. government contracts; 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, including fluctuations in foreign currency exchange rates and the
effectiveness of our currency hedging program; our ability to continue to
develop new products that achieve market acceptance; the consequences of
future geo-political events, which may affect adversely the markets in which
we operate, our ability to insure against risks, our operations or our
profitability; strategic acquisitions and the risks and uncertainties related
thereto, including our ability to manage and integrate acquired businesses;
the inability of our subcontractors to perform, or our key suppliers to
deliver components or parts; 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; the fair values of our
portfolio of passive investments, which values are subject to significant
price volatility or erosion; risks inherent in developing new technologies;
changes in our effective tax rate that may have an adverse effect on our
results of operations; the impact of the results of Harris Stratex Networks,
which may vary significantly and may be difficult to forecast; the potential
impact of natural disasters on our significant operations in
Table 1
HARRIS CORPORATION
FY'09 First Quarter Summary
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Quarter Ended
September 26, September 28,
2008 2007
(In millions, except per share amounts)
Revenue from product sales
and services $1,367.7 $1,230.5
Cost of product sales and services (928.4) (849.6)
Engineering, selling and
administrative expenses (240.3) (216.9)
Non-operating income (loss) (8.1) 1.7
Interest income 1.7 2.0
Interest expense (13.1) (15.1)
Income before income taxes
and minority interest 179.5 152.6
Income taxes (61.4) (52.8)
Minority interest in Harris Stratex
Networks, Inc., net of tax 0.6 0.4
Net income $118.7 $100.2
Net income per common share
Basic $.89 $.76
Diluted $.88 $.73
Cash dividends paid per common share $.20 $.15
Basic weighted average shares
outstanding 133.1 132.6
Diluted weighted average shares
outstanding 134.4 137.9
Table 2
HARRIS CORPORATION
FY'09 First Quarter Summary
BUSINESS SEGMENT INFORMATION
(Unaudited)
Quarter Ended
September 26, September 28,
2008 2007
(In millions)
Revenue
RF Communications $415.2 $316.5
Government Communications Systems 609.1 603.9
Broadcast Communications 158.2 146.7
Harris Stratex Networks 195.8 172.3
Corporate eliminations (10.6) (8.9)
$1,367.7 $1,230.5
Income Before Income Taxes and
Minority Interest
Segment Operating Income (Loss):
RF Communications $142.1 $110.8
Government Communications Systems 66.3 63.8
Broadcast Communications 5.3 10.4
Harris Stratex Networks 7.9 (1.0)
Unallocated Corporate expense (18.9) (18.6)
Corporate eliminations (3.7) (1.4)
Non-operating income (loss) (8.1) 1.7
Net interest (11.4) (13.1)
$179.5 $152.6
Table 3
HARRIS CORPORATION
FY'09 First Quarter Summary
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Quarter Ended
September 26, September 28,
2008 2007
(In millions)
Operating Activities
Net income $118.7 $100.2
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 42.5 41.9
Share-based compensation 9.0 10.2
Non-current deferred income taxes (3.1) 7.0
Impairment of securities
available-for-sale 7.6 ---
Gain on the sale of securities
available-for-sale --- (2.1)
Minority interest in Harris Stratex
Networks, Inc., net of tax (0.6) (0.4)
(Increase) decrease in:
Accounts and notes receivable (121.4) (8.7)
Inventories (66.8) (55.4)
Increase (decrease) in:
Accounts payable and accrued
expenses 33.4 (52.1)
Advance payments and unearned
income (14.4) (4.6)
Income taxes 35.9 18.2
Other (3.3) 12.6
Net cash provided by operating
activities 37.5 66.8
Investing Activities
Cash paid for acquired businesses --- (1.5)
Additions of property, plant and
equipment (24.8) (22.2)
Additions of capitalized software (6.9) (10.3)
Cash paid for short-term investments
available-for-sale (1.2) (4.0)
Proceeds from the sale of short-term
investments available-for-sale 1.8 9.3
Proceeds from the sale of securities
available-for-sale --- 3.1
Net cash used in investing activities (31.1) (25.6)
Financing Activities
Proceeds from borrowings 78.5 2.2
Repayment of borrowings (9.2) (5.9)
Proceeds from exercise of employee
stock options 5.3 16.5
Repurchases of common stock (81.6) (57.4)
Cash dividends (26.9) (20.6)
Net cash used in financing activities (33.9) (65.2)
Effect of exchange rate changes on
cash and cash equivalents (0.3) (0.7)
Net decrease in cash and cash
equivalents (27.8) (24.7)
Cash and cash equivalents,
beginning of year 370.0 368.3
Cash and cash equivalents,
end of quarter $342.2 $343.6
Supplemental disclosure of noncash
investing and financing activities
Common stock issued in exchange for
3.5% convertible debentures,
due fiscal 2023 $--- $163.5
Table 4
HARRIS CORPORATION
FY'09 First Quarter Summary
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
September 26, June 27,
2008 2008
(In millions)
Assets
Cash and cash equivalents $342.2 $370.0
Short-term investments 2.5 3.1
Marketable equity securities 3.8 19.3
Receivables 981.5 859.0
Inventories 677.2 610.4
Current deferred income taxes 121.0 117.2
Other current assets 73.1 67.7
Property, plant and equipment 482.9 482.2
Goodwill 1,538.2 1,547.3
Identifiable intangible assets 351.8 367.0
Other non-current assets 109.3 115.4
$4,683.5 $4,558.6
Liabilities and Shareholders'
Equity
Short-term debt $88.2 $8.5
Accounts payable 409.8 390.8
Compensation and benefits 172.8 181.6
Other accrued items 263.4 239.1
Advance payments and unearned
income 131.9 146.4
Income taxes payable 60.9 22.9
Current portion of long-term debt 0.7 5.7
Non-current deferred income taxes 27.2 29.8
Long-term debt 827.9 831.8
Other long-term liabilities 96.5 97.7
Minority interest in Harris
Stratex Networks, Inc. 330.7 330.3
Shareholders' equity 2,273.5 2,274.0
$4,683.5 $4,558.6
HARRIS CORPORATION
FY'09 First 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 and minority interest; income taxes; minority
interest; net income; and net income per diluted share adjusted to exclude
certain costs, expenses, gains and losses.
Table 5
HARRIS CORPORATION
FY'09 First Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Condensed Consolidated Statement of Income
(Unaudited)
Quarter Ended Quarter Ended
September 26, 2008 September 28, 2007
As Adjust- Non- As Adjust- Non-
Reported ment GAAP Reported ment GAAP
(In millions, except per share amounts)
Revenue from
product sales
and services $1,367.7 $--- $1,367.7 $1,230.5 $--- $1,230.5
Cost of product
sales and
services(A) (928.4) --- (928.4) (849.6) 0.8 (848.8)
Engineering,
selling and
administrative
expenses(B) (240.3) --- (240.3) (216.9) 8.1 (208.8)
Non-operating
income (loss) (8.1) --- (8.1) 1.7 --- 1.7
Interest income 1.7 --- 1.7 2.0 --- 2.0
Interest expense (13.1) --- (13.1) (15.1) --- (15.1)
Income before
income taxes
and minority
interest 179.5 --- 179.5 152.6 8.9 161.5
Income taxes (61.4) --- (61.4) (52.8) (2.2) (55.0)
Minority interest
in Harris Stratex
Networks, Inc.,
net of tax 0.6 --- 0.6 0.4 (2.8) (2.4)
Net income $118.7 $--- $118.7 $100.2 $3.9 $104.1
Net income per
diluted common
share $.88 $--- $.88 $.73 $.03 $.76
Table 6
HARRIS CORPORATION
FY'09 First Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Business Segment Information
(Unaudited)
Quarter Ended Quarter Ended
September 26, 2008 September 28, 2007
As Adjust- Non- As Adjust- Non-
Reported ment GAAP Reported ment GAAP
(In millions)
Revenue
RF Communi-
cations $415.2 $--- $415.2 $316.5 $--- $316.5
Government
Communications
Systems 609.1 --- 609.1 603.9 --- 603.9
Broadcast
Communi-
cations 158.2 --- 158.2 146.7 --- 146.7
Harris Stratex
Networks 195.8 --- 195.8 172.3 --- 172.3
Corporate
eliminations (10.6) --- (10.6) (8.9) --- (8.9)
$1,367.7 $--- $1,367.7 $1,230.5 $--- $1,230.5
Income Before
Income Taxes
and Minority
Interest
Segment Operating
Income (Loss):
RF Communi-
cations $142.1 $--- $142.1 $110.8 $--- $110.8
Government
Communications
Systems(C) 66.3 --- 66.3 63.8 0.6 64.4
Broadcast
Communi-
cations 5.3 --- 5.3 10.4 --- 10.4
Harris Stratex
Networks(D) 7.9 --- 7.9 (1.0) 8.3 7.3
Unallocated
Corporate
expense (18.9) --- (18.9) (18.6) --- (18.6)
Corporate
eliminations (3.7) --- (3.7) (1.4) --- (1.4)
Non-operating
income (loss) (8.1) --- (8.1) 1.7 --- 1.7
Net interest (11.4) --- (11.4) (13.1) --- (13.1)
$179.5 $--- $179.5 $152.6 $8.9 $161.5
Table 7
HARRIS CORPORATION
Reconciliation of FY'08 GAAP EPS to Non-GAAP EPS
and
Reconciliation of FY'09 GAAP EPS Guidance to FY'08 GAAP and Non-GAAP EPS
(Unaudited)
Guidance for
Fiscal Year Fiscal Year Percent
2008 2009 Growth
GAAP Earnings Per
Diluted Share $3.26 $4.05 to $4.15 24% to 27%
Charges associated with
the combination with
Stratex Networks, Inc. (E) $0.11
Charges associated with the
acquisition of Multimax
Incorporated (F) $0.01
Charges associated with the
acquisition of Zandar
Technologies plc (G) $0.01
Non-GAAP Earnings Per
Diluted Share $3.39 $4.05 to $4.15 19% to 22%
Table 8
HARRIS CORPORATION
FY'09 First Quarter Summary
Comparison of Harris Stratex Networks Segment GAAP and Non-GAAP Operating
Income to that Reported by Harris Stratex Networks, Inc.
(Unaudited)
Quarter Ended Quarter Ended
September 26, 2008 September 28, 2007
As Reported by As Reported by
Harris Harris
Stratex Stratex
Harris Networks Harris Networks
(In millions)
Operating Income(Loss)
-- As Reported(H) $7.9 $6.8 $(1.0) $---
Adjustments:
Stratex combination-
related costs --- 0.6 8.3 8.3
Restructuring --- 3.3 --- ---
FAS 123R expense --- 1.1 --- 2.4
Other identifiable
intangible
amortization --- 3.2 --- 3.6
Operating Income --
Non-GAAP $7.9 $15.0 $7.3 $14.3
HARRIS CORPORATION
FY'09 First 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 Note B -- Adjustments to engineering, selling and administrative expenses
for the quarter ended Note C -- Adjustments to our Government Communications Systems segment
operating income for the quarter ended Note D -- Adjustments to our Harris Stratex Networks segment operating
income (loss) for the quarter ended Note E -- Adjustment for the Note F -- Adjustment for the Note G -- Adjustment for the Note H -- The difference between the GAAP operating income (loss) recorded
during the quarter ended SOURCE Harris Corporation
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