Harris Corporation (NYSE:HRS) reported revenue in the second quarter of
fiscal 2016 of $1.84 billion, compared with $1.21 billion in the prior
year. GAAP loss from continuing operations was $135 million, or $1.09
per diluted share, compared with GAAP income from continuing operations
of $139 million, or $1.32 per diluted share, in the prior year. Second
quarter results benefited from the acquisition of Exelis, but the
company recorded a non-cash after-tax charge of $328 million, or $2.63
per diluted share, to write down goodwill and other assets of the
CapRock business due to the downturn in the energy market and its impact
on customer operations.
Non-GAAP income from continuing operations was $187 million, or $1.49
per diluted share, excluding the non-cash charge related to CapRock,
acquisition-related items, restructuring and other charges. A
reconciliation of GAAP to non-GAAP financial measures is provided in the
tables.
Free cash flow (net cash provided by operating activities less capital
expenditures) in the second quarter was $298 million compared with $104
million in the prior year.
“Second quarter non-GAAP earnings were solid, benefiting from
integration savings as well as the recently re-enacted R&D tax credit,”
said William M. Brown, chairman, president and chief executive officer.
“We’ve made excellent progress in both achieving anticipated synergy
savings and identifying additional opportunities. As a result, we now
expect to exit fiscal 2017 with annual run-rate savings in a range of
$140 to $150 million, significantly higher than our previous expectation
of about $120 million. Separately, we launched additional restructuring
and other actions in the quarter as part of our ongoing strategy to
lower costs and improve operating performance.”
Communication Systems
Communication Systems segment revenue in the second quarter was $489
million. Segment operating income was $121 million, and non-GAAP
operating income was $138 million, excluding restructuring and other
charges.
Tactical radio orders included $66 million from a Middle East nation and
$10 million from an Eastern European country. Public Safety orders
included $20 million from the Arizona Public Service Company for a
state-wide P25 communication system and $18 million from the U.S. Air
National Guard for land mobile radios.
Space and Intelligence Systems
Space and Intelligence Systems segment revenue in the second quarter was
$446 million and operating income was $67 million.
Harris was awarded a 3-year, $23 million contract from a classified
customer to support space superiority missions; a 3-year, $23 million
follow-on contract from NASA for Advanced Baseline Imager weather sensor
modules; and a 1-year, $14 million follow-on contract from the U.S. Air
Force for the System Engineering and Sustainment Integrator (SENSOR)
program. Harris also received orders totaling $172 million from
classified customers.
Following the close of the quarter, Harris was awarded a $316 million
follow-on contract from NASA for payloads on the third and fourth
weather satellites on the Joint Polar Satellite System.
Electronic Systems
Electronic Systems segment revenue in the second quarter was $382
million. Segment operating income was $63 million, and non-GAAP
operating income was $69 million, excluding restructuring and other
charges.
Orders included $19 million from the U.S. Air Force for B-1B electronic
warfare self-protection subsystems. Harris also was awarded a 5-year
(2-year base, three 1-year options), $28 million, single-award IDIQ
contract from the U.S. Navy for repair services for the Integrated
Defensive Electronic Countermeasures (IDECM) program and $46 million in
follow-on contracts for the F-35 program.
Critical Networks
Critical Networks segment revenue in the second quarter was $541
million. Segment operating loss was $308 million, reflecting the
non-cash charge related to CapRock, restructuring and other charges.
Non-GAAP operating income was $71 million, excluding these charges.
Orders included $62 million from the Defense Information Systems Agency
(DISA) and $40 million under the Future Commercial SATCOM Acquisition
(FCSA) program for terrestrial and satellite communications services.
Harris also was awarded a 5-year, $5 billion, multi-award Cyber Security
and Information Systems Technical Area Tasks IDIQ contract from the U.S.
Air Force; a 10-year, $4.3 billion, multi-award Global Network Services
IDIQ contract from DISA to provide telecommunications services; a
2.5-year (8-month base, two 11-month options), $42 million contract from
the U.S. Air Force for wide-area-network high-speed transport and data
storage services; and a 5-year contract extension from Royal Caribbean
for advanced maritime communications solutions.
Earnings Guidance
Harris increased its guidance for fiscal 2016 non-GAAP income from
continuing operations from a range of $5.60-$5.80 per diluted share to a
range of $5.70-$5.80 per diluted share, excluding the non-cash charge
related to CapRock, acquisition-related items, restructuring and other
charges. Harris revised its guidance for fiscal 2016 GAAP income from
continuing operations from a range of $5.25-$5.45 per diluted share to a
range of $2.80-$2.90 per diluted share. GAAP income from continuing
operations guidance could change as a result of any further integration
actions related to the Exelis acquisition. Guidance for fiscal 2016
revenue is updated from a range of $7.67-$7.83 billion to a range of
$7.60-$7.68 billion. Harris will host a conference call today, February
2, at 8:30 a.m. Eastern Time (ET) to discuss its second quarter fiscal
2016 financial results. The dial-in numbers for the teleconference are
(877) 303-9481 (U.S.) and (760) 666-3582 (International), using
participant code 32487722. Please allow at least 10 minutes before the
scheduled start time to connect to the teleconference. Participants are
encouraged to listen via live webcast and view management’s supporting
slide presentation at www.harris.com/webcast/quarterly/2016Q2.
A recording of the call will be available on the Harris website
beginning at approximately 12 p.m. ET on February 2.
About Harris Corporation
Harris Corporation is a leading technology innovator, solving our
customers’ toughest mission-critical challenges by providing solutions
that connect, inform and protect. Harris supports customers in over 125
countries. The company has approximately $8 billion in annual revenue
and 22,000 employees and is organized into four business segments:
Communication Systems, Space and Intelligence Systems, Electronic
Systems, and Critical Networks. Learn more at harris.com.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures within the
meaning of Regulation G promulgated by the Securities and Exchange
Commission (“SEC”), including income from continuing operations and
income from continuing operations per diluted share for the second
quarter of fiscal 2016, in each case excluding an impairment charge,
acquisition-related items, restructuring and other charges; free cash
flow for the second quarter of fiscal 2016 and fiscal 2015, excluding
cash flow for capital expenditures; segment operating income for the
second quarter of fiscal 2016 for the Communication Systems and
Electronic Systems segments, in each case excluding restructuring and
other charges; segment operating income for the second quarter of fiscal
2016 for the Critical Networks segment, excluding impairment,
restructuring and other charges; and the guidance range for expected
income from continuing operations per diluted share for fiscal 2016,
excluding an impairment charge, acquisition-related items, restructuring
and other charges. A “non-GAAP financial measure” is generally defined
as a numerical measure of a company’s historical or future performance
that excludes or includes amounts, or is subject to adjustments, so as
to be different from the most directly comparable measure calculated and
presented in accordance with generally accepted accounting principles
(“GAAP”). 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 charges
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 guides in forecasting, budgeting and long-term planning processes and
to measure operating performance for some management compensation
purposes. Non-GAAP financial measures should be considered in addition
to, and not as a substitute for, or superior to, financial measures
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 on 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 2016; expectations related to Exelis
integration savings and cost synergies and restructuring savings;
potential contract opportunities and awards; the potential value of
contract awards; and other statements regarding outlook or that are not
historical facts. 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, future trends and
forward-looking statements could be affected by many factors, risks and
uncertainties, including but not limited to: the loss of the company's
relationship with the U.S. Government or a change or reduction 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, sequestration and cost-cutting initiatives);
a security breach, through cyber attack or otherwise, or other
significant disruptions of the company's IT networks and systems or
those the company operates for customers; the level of returns on
defined benefit plan assets and changes in interest rates; risks
inherent with large long-term fixed-price contracts, particularly the
ability to contain cost overruns; changes in estimates used in
accounting for the company’s programs; financial and government and
regulatory risks relating to international sales and operations; effects
of any non-compliance with laws; the continued effects of the general
weakness in the global economy and U.S. Government's budget deficits and
national debt and sequestration; the company's ability to continue to
develop new products that achieve market acceptance; the consequences of
uncertain economic conditions and future geo-political events; strategic
acquisitions and divestitures and the risks and uncertainties related
thereto, including the company's ability to manage and integrate
acquired businesses (including achieve estimated synergy savings and
realize other expected benefits), the actual amount and timing of
integration and other acquisition-related items and potential disruption
to relationships with employees, suppliers and customers, including the
U.S. Government, and to the company's business generally; performance of
the company's subcontractors and suppliers; potential claims related to
infringement of intellectual property rights or environmental
remediation or other contingencies, litigation and legal matters and the
ultimate outcome thereof; risks inherent in developing new and complex
technologies and/or that may not be covered adequately by insurance or
indemnity; changes in the company's effective tax rate; increased
indebtedness and significant unfunded pension liability and potential
downgrades in the company's credit ratings; unforeseen environmental
issues; natural disasters or other disruptions affecting the company's
operations; sustained weakness or volatility in oil or natural gas
prices or negative expectations about future prices or volatility;
changes in the regulatory framework that applies to, or of satellite
bandwidth constraints on, the company's managed satellite and
terrestrial communications solutions; changes in future business or
other market conditions that could cause business investments and/or
recorded goodwill or other long-term assets to become impaired; the
company's ability to attract and retain key employees, maintain
reasonable relationships with unionized employees and manage escalating
costs of providing employee health care; and potential tax,
indemnification and other liabilities and exposures related to Exelis'
spin-off of Vectrus, Inc. and Exelis' spin-off from ITT Corporation.
Further information relating to these and other factors that may impact
the company's results, future trends 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.
For additional information, contact Harris Corporation at webmaster@harris.com.
|
|
|
|
|
Table 1
|
HARRIS CORPORATION
|
FY '16 Second Quarter Summary
|
CONDENSED CONSOLIDATED STATEMENT OF INCOME
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Two Quarters Ended
|
|
|
January 1,
|
|
January 2,
|
|
January 1,
|
|
January 2,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts)
|
Revenue from product sales and services
|
|
$
|
1,843
|
|
|
$
|
1,206
|
|
|
$
|
3,654
|
|
|
$
|
2,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales and services
|
|
|
(1,281
|
)
|
|
|
(808
|
)
|
|
|
(2,501
|
)
|
|
|
(1,570
|
)
|
Engineering, selling and administrative expenses
|
|
|
(239
|
)
|
|
|
(188
|
)
|
|
|
(568
|
)
|
|
|
(383
|
)
|
Impairment of goodwill and other assets
|
|
|
(367
|
)
|
|
|
―
|
|
|
|
(367
|
)
|
|
|
―
|
|
Non-operating income
|
|
|
―
|
|
|
|
―
|
|
|
|
1
|
|
|
|
―
|
|
Interest income
|
|
|
―
|
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
Interest expense
|
|
|
(45
|
)
|
|
|
(22
|
)
|
|
|
(93
|
)
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(89
|
)
|
|
|
189
|
|
|
|
127
|
|
|
|
365
|
|
Income taxes
|
|
|
(46
|
)
|
|
|
(50
|
)
|
|
|
(114
|
)
|
|
|
(101
|
)
|
Income (loss) from continuing operations
|
|
|
(135
|
)
|
|
|
139
|
|
|
|
13
|
|
|
|
264
|
|
Discontinued operations, net of income taxes
|
|
|
(17
|
)
|
|
|
―
|
|
|
|
(17
|
)
|
|
|
―
|
|
Net income (loss)
|
|
$
|
(152
|
)
|
|
$
|
139
|
|
|
$
|
(4
|
)
|
|
$
|
264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(1.09
|
)
|
|
$
|
1.34
|
|
|
$
|
0.10
|
|
|
$
|
2.52
|
|
Discontinued operations
|
|
|
(0.14
|
)
|
|
|
―
|
|
|
|
(0.14
|
)
|
|
|
―
|
|
|
|
$
|
(1.23
|
)
|
|
$
|
1.34
|
|
|
$
|
(0.04
|
)
|
|
$
|
2.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(1.09
|
)
|
|
$
|
1.32
|
|
|
$
|
0.10
|
|
|
$
|
2.50
|
|
Discontinued operations
|
|
|
(0.14
|
)
|
|
|
―
|
|
|
|
(0.13
|
)
|
|
|
―
|
|
|
|
$
|
(1.23
|
)
|
|
$
|
1.32
|
|
|
$
|
(0.03
|
)
|
|
$
|
2.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per common share
|
|
$
|
0.50
|
|
|
$
|
0.47
|
|
|
$
|
1.00
|
|
|
$
|
0.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding
|
|
|
123.8
|
|
|
|
103.9
|
|
|
|
123.6
|
|
|
|
104.3
|
|
Diluted weighted average common shares outstanding
|
|
|
123.8
|
|
|
|
104.9
|
|
|
|
124.7
|
|
|
|
105.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2
|
HARRIS CORPORATION
|
FY '16 Second Quarter Summary
|
BUSINESS SEGMENT INFORMATION
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Two Quarters Ended
|
|
|
January 1,
|
|
January 2,
|
|
January 1,
|
|
January 2,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communication Systems
|
|
$
|
489
|
|
|
$
|
435
|
|
|
$
|
943
|
|
|
$
|
824
|
|
Space and Intelligence Systems
|
|
|
446
|
|
|
|
221
|
|
|
|
881
|
|
|
|
474
|
|
Electronic Systems
|
|
|
382
|
|
|
|
128
|
|
|
|
756
|
|
|
|
237
|
|
Critical Networks
|
|
|
541
|
|
|
|
423
|
|
|
|
1,107
|
|
|
|
830
|
|
Corporate eliminations
|
|
|
(15
|
)
|
|
|
(1
|
)
|
|
|
(33
|
)
|
|
|
(4
|
)
|
|
|
$
|
1,843
|
|
|
$
|
1,206
|
|
|
$
|
3,654
|
|
|
$
|
2,361
|
|
Income (Loss) From Continuing Operations Before Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communication Systems
|
|
$
|
121
|
|
|
$
|
126
|
|
|
$
|
259
|
|
|
$
|
242
|
|
Space and Intelligence Systems
|
|
|
67
|
|
|
|
34
|
|
|
|
135
|
|
|
|
71
|
|
Electronic Systems
|
|
|
63
|
|
|
|
24
|
|
|
|
132
|
|
|
|
46
|
|
Critical Networks (A)
|
|
|
(308
|
)
|
|
|
50
|
|
|
|
(245
|
)
|
|
|
92
|
|
Unallocated corporate income (expense) (B)
|
|
|
47
|
|
|
|
(21
|
)
|
|
|
5
|
|
|
|
(38
|
)
|
Amortization of intangible assets from Exelis Inc. acquisition
|
|
|
(33
|
)
|
|
|
―
|
|
|
|
(66
|
)
|
|
|
―
|
|
Corporate eliminations
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
(5
|
)
|
Non-operating income
|
|
|
―
|
|
|
|
―
|
|
|
|
1
|
|
|
|
―
|
|
Net interest expense
|
|
|
(45
|
)
|
|
|
(21
|
)
|
|
|
(92
|
)
|
|
|
(43
|
)
|
|
|
$
|
(89
|
)
|
|
$
|
189
|
|
|
$
|
127
|
|
|
$
|
365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Reflects impairment of goodwill and other assets related to
Harris CapRock Communications of $367 million
|
in the quarter and two quarters ended January 1, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(B) Reflects impact of net liability reduction of $101 million for
certain post-employment benefit plans in
|
the quarter and two quarters ended January 1, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3
|
HARRIS CORPORATION
|
FY '16 Second Quarter Summary
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters Ended
|
|
|
January 1,
|
|
January 2,
|
|
|
2016
|
|
2015
|
|
|
(In millions)
|
Operating Activities
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(4
|
)
|
|
$
|
264
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
114
|
|
|
|
104
|
|
Amortization of intangible assets from Exelis Inc. acquisition
|
|
|
66
|
|
|
|
―
|
|
Share-based compensation
|
|
|
19
|
|
|
|
17
|
|
Pension contributions
|
|
|
(97
|
)
|
|
|
―
|
|
Pension income
|
|
|
(12
|
)
|
|
|
―
|
|
Net liability reduction for certain post-employment benefit plans
|
|
|
(101
|
)
|
|
|
―
|
|
Impairment of goodwill and other assets
|
|
|
367
|
|
|
|
―
|
|
Loss on sale of discontinued operations
|
|
|
21
|
|
|
|
―
|
|
(Increase) decrease in:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
220
|
|
|
|
(16
|
)
|
Inventories
|
|
|
(91
|
)
|
|
|
(31
|
)
|
Increase (decrease) in:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
(128
|
)
|
|
|
(120
|
)
|
Advance payments and unearned income
|
|
|
(59
|
)
|
|
|
(12
|
)
|
Income taxes
|
|
|
31
|
|
|
|
8
|
|
Other
|
|
|
41
|
|
|
|
8
|
|
Net cash provided by operating activities
|
|
|
387
|
|
|
|
222
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
Additions of property, plant and equipment
|
|
|
(51
|
)
|
|
|
(79
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
2
|
|
|
|
―
|
|
Proceeds from sale of Cyber Integration Center
|
|
|
―
|
|
|
|
7
|
|
Net cash used in investing activities
|
|
|
(49
|
)
|
|
|
(72
|
)
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
|
|
209
|
|
|
|
33
|
|
Repayments of borrowings
|
|
|
(395
|
)
|
|
|
(17
|
)
|
Proceeds from exercises of employee stock options
|
|
|
33
|
|
|
|
28
|
|
Repurchases of common stock
|
|
|
―
|
|
|
|
(150
|
)
|
Cash dividends
|
|
|
(127
|
)
|
|
|
(99
|
)
|
Other financing activities
|
|
|
(15
|
)
|
|
|
(14
|
)
|
Net cash used in financing activities
|
|
|
(295
|
)
|
|
|
(219
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(13
|
)
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
30
|
|
|
|
(91
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year
|
|
|
481
|
|
|
|
561
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of quarter
|
|
$
|
511
|
|
|
$
|
470
|
|
|
|
|
|
|
|
|
|
|
|
Table 4
|
HARRIS CORPORATION
|
FY '16 Second Quarter Summary
|
CONDENSED CONSOLIDATED BALANCE SHEET
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
|
|
July 3,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
511
|
|
$
|
|
|
481
|
Receivables
|
|
|
935
|
|
|
|
|
1,168
|
Inventories
|
|
|
1,070
|
|
|
|
|
1,015
|
Income taxes receivable
|
|
|
156
|
|
|
|
|
87
|
Deferred compensation plan investments
|
|
|
41
|
|
|
|
|
267
|
Other current assets
|
|
|
122
|
|
|
|
|
165
|
Property, plant and equipment
|
|
|
1,102
|
|
|
|
|
1,165
|
Goodwill
|
|
|
5,989
|
|
|
|
|
6,348
|
Other intangible assets
|
|
|
1,643
|
|
|
|
|
1,775
|
Non-current deferred income taxes
|
|
|
376
|
|
|
|
|
502
|
Other non-current assets
|
|
|
152
|
|
|
|
|
154
|
|
|
$
|
12,097
|
|
$
|
|
|
13,127
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
198
|
|
$
|
|
|
33
|
Accounts payable
|
|
|
558
|
|
|
|
|
581
|
Compensation and benefits
|
|
|
159
|
|
|
|
|
255
|
Other accrued items
|
|
|
422
|
|
|
|
|
518
|
Advance payments and unearned income
|
|
|
353
|
|
|
|
|
433
|
Income taxes payable
|
|
|
8
|
|
|
|
|
57
|
Deferred compensation plan liabilities
|
|
|
13
|
|
|
|
|
267
|
Current portion of long-term debt
|
|
|
385
|
|
|
|
|
130
|
Current liabilities of discontinued operations
|
|
|
43
|
|
|
|
|
―
|
Defined benefit plans
|
|
|
1,739
|
|
|
|
|
1,943
|
Long-term debt
|
|
|
4,443
|
|
|
|
|
5,053
|
Long-term contract liability
|
|
|
64
|
|
|
|
|
71
|
Non-current deferred income taxes
|
|
|
11
|
|
|
|
|
12
|
Other long-term liabilities
|
|
|
449
|
|
|
|
|
372
|
Equity
|
|
|
3,252
|
|
|
|
|
3,402
|
|
|
$
|
12,097
|
|
$
|
|
|
13,127
|
|
|
|
|
|
|
|
|
|
HARRIS CORPORATION
FY '16 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 income (loss) from continuing
operations, income (loss) from continuing operations per diluted common
share, net cash provided by operating activities and segment operating
income (loss), adjusted to exclude certain costs, charges, expenses and
losses or other amounts. 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 guides in its forecasting, budgeting, and long-term planning
processes 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 '16 Second Quarter Summary
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
Income (Loss) from Continuing Operations and Net Income (Loss)
from Continuing Operations per Diluted Common Share
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
January 1, 2016
|
|
|
|
|
|
Net Income (Loss)
|
|
|
Net
|
|
per Diluted
|
|
|
Income (Loss)
|
|
Common Share
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts)
|
GAAP loss from continuing operations and related diluted earnings
per share
|
|
$
|
(135
|
)
|
|
$
|
(1.09
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
Impairment of goodwill and other assets ($367 million pre-tax)
|
|
|
328
|
|
|
|
|
Net liability reduction for certain post-employment benefit plans
($101 million pre-tax)
|
|
|
(63
|
)
|
|
|
|
Integration and other Exelis Inc. acquisition-related costs ($46
million pre-tax)
|
|
|
33
|
|
|
|
|
Charges for restructuring and other items ($35 million pre-tax)
|
|
|
24
|
|
|
|
|
Total adjustments
|
|
|
322
|
|
|
|
2.58
|
|
|
|
|
|
|
|
|
Non-GAAP income from continuing operations and related diluted
earnings per share
|
|
$
|
187
|
|
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
Table 6
|
HARRIS CORPORATION
|
FY '16 Second Quarter Summary
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
Free Cash Flow
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|
January 1,
|
|
January 2,
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Net cash provided by operating activities
|
|
|
|
|
$
|
323
|
|
|
$
|
142
|
|
Less net capital expenditures
|
|
|
|
|
|
(25
|
)
|
|
|
(38
|
)
|
Free cash flow
|
|
|
|
|
$
|
298
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7
|
HARRIS CORPORATION
|
FY '16 Second Quarter Summary
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
Segment Operating Income (Loss)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
January 1, 2016
|
|
|
|
As Reported
|
|
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Segment Operating Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communication Systems (A)
|
|
|
$
|
121
|
|
|
|
|
$
|
17
|
|
|
|
$
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Systems (A)
|
|
|
$
|
63
|
|
|
|
|
$
|
6
|
|
|
|
$
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Critical Networks (B)
|
|
|
$
|
(308
|
)
|
|
|
|
$
|
379
|
|
|
|
$
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
Adjustment for restructuring and other charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(B)
|
Adjustments of $367 million for impairment of goodwill and other
assets and $12 million for restructuring and other charges.
|
|
|
|
|
Table 8
|
HARRIS CORPORATION
|
FY '16 Second Quarter Summary
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
Reconciliation of Guidance for FY '16 Income from Continuing
Operations per Diluted Common Share to
|
FY '16 Non-GAAP Income from Continuing Operations per Diluted
Common Share
|
(Unaudited)
|
|
|
|
|
|
|
2016
|
|
|
(Guidance)
|
GAAP income from continuing operations per diluted common share
|
|
$2.80 to $2.90*
|
Impairment of goodwill and other assets
|
|
$2.63
|
Estimated net impact of acquisition-related items, restructuring and
other charges
|
|
$.27*
|
Non-GAAP income from continuing operations per diluted common share
|
|
$5.70 to $5.80
|
|
|
|
___________
|
|
|
* Amounts could change as a result of any further integration
actions related to the Exelis Inc. acquisition.
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160202005442/en/
Copyright Business Wire 2016