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 attributable to Harris Corporation, income (loss) from continuing operations per diluted common share attributable to Harris Corporation common shareholders, segment operating income (loss) and net cash provided by operating activities, 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 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 '15 Fourth Quarter Summary | |||||||||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||||
|
Income (Loss) from Continuing Operations Attributable to Harris
Corporation and Income (Loss)
|
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| (Unaudited) | |||||||||||||||||||||||
| Quarter Ended | Fiscal Year Ended | ||||||||||||||||||||||
| July 3, 2015 | July 3, 2015 | ||||||||||||||||||||||
| As | Diluted | As | Diluted | ||||||||||||||||||||
| Reported | EPS | Reported | EPS | ||||||||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||||||
|
GAAP income (loss) from continuing operations attributable to Harris Corporation and related diluted earnings per share |
$ | (56.2 | ) | $ | (0.51 | ) | $ | 334.1 | $ | 3.11 | |||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Costs related to our acquisition of Exelis Inc. (A) | 262.7 | 281.5 | |||||||||||||||||||||
| Charges for restructuring and other items | 31.7 | 31.7 | |||||||||||||||||||||
| Total pre-tax adjustments | 294.4 | 313.2 | |||||||||||||||||||||
| Income taxes on above adjustments | (90.1 | ) | (95.9 | ) | |||||||||||||||||||
| Total adjustments after-tax | 204.3 | 1.83 | 217.3 | 2.03 | |||||||||||||||||||
| Non-GAAP income from continuing operations attributable to | |||||||||||||||||||||||
| Harris Corporation and related diluted earnings per share | $ | 148.1 | $ | 1.32 | $ | 551.4 | $ | 5.14 | |||||||||||||||
| (A)Adjustment includes transaction, financing, integration and other costs. | |||||||||||||||||||||||
| Table 6 | ||||||||||||||||
| HARRIS CORPORATION | ||||||||||||||||
| FY '15 Fourth Quarter Summary | ||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| Free Cash Flow | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Quarter Ended | Fiscal Year Ended | |||||||||||||||
| July 3, | June 27, | July 3, | ||||||||||||||
| 2015 | 2014 | 2015 | ||||||||||||||
| (In millions) | ||||||||||||||||
| Harris Corporation | ||||||||||||||||
| Net cash provided by operating activities | $ | 458.8 | $ | 395.2 | $ | 854.0 | ||||||||||
| Less net capital expenditures (A) | (46.1 | ) | (61.6 | ) | (141.4 | ) | ||||||||||
| Free cash flow | $ | 412.7 | $ | 333.6 | $ | 712.6 | ||||||||||
| Exelis | ||||||||||||||||
| Net cash provided by operating activities | $ | 82.8 | $ | ― | $ | 82.8 | ||||||||||
| Less capital expenditures | (4.0 | ) | ― | (4.0 | ) | |||||||||||
| Free cash flow | $ | 78.8 | $ | ― | $ | 78.8 | ||||||||||
| (A)Reflects additions of property, plant and equipment, net of proceeds from the sale of property, plant and equipment. | ||||||||||||||||
| Table 7 | |||||||||||||||||||
| HARRIS CORPORATION | |||||||||||||||||||
| FY '15 Fourth Quarter Summary | |||||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||
| Segment Operating Income | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Quarter Ended | |||||||||||||||||||
| July 3, 2015 | |||||||||||||||||||
| As Reported | Adjustment | Non-GAAP | |||||||||||||||||
| (In millions) | |||||||||||||||||||
| Segment Operating Income (Loss) | |||||||||||||||||||
| RF Communications (A) | $ | 156.6 | $ | 2.8 | $ | 159.4 | |||||||||||||
| Integrated Network Solutions (B) | (21.3 | ) | 37.1 | 15.8 | |||||||||||||||
| (A)Adjustment for restructuring charges. | |||||||||||||||||||
| (B)Adjustment for charges related to restructuring and other items. | |||||||||||||||||||
| Table 8 | ||||
| HARRIS CORPORATION | ||||
| FY '15 Fourth Quarter Summary | ||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||
|
Reconciliation of Guidance for FY '16 Net Income per Diluted
Share Attributable to
|
||||
| (Unaudited) | ||||
| 2016 | ||||
| (Guidance) | ||||
| GAAP net income per diluted share attributable to Harris Corporation | ||||
| common shareholders | $5.25 to $5.45 | |||
| Estimated integration and other Exelis Inc. acquisition-related charges | $.35 | |||
| Non-GAAP net income per diluted share attributable to Harris Corporation | ||||
| common shareholders | $5.60 to $5.80 | |||
