Harris Corporation Reports Fiscal 2017 Third Quarter Results


Table 1
HARRIS CORPORATION
FY '17 Third Quarter Summary
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)

	Quarter Ended						Three Quarters Ended
	March 31, 2017			April 1, 2016 (A)			March 31, 2017			April 1, 2016 (A)

	(In millions, except per share amounts)
Revenue from product sales and services	$	1,489		$	1,550		$	4,358		$	4,459
Cost of product sales and services	(964		)	(1,009		)	(2,792		)	(2,895		)
Engineering, selling and administrative expenses	(250		)	(273		)	(768		)	(759		)
Non-operating income (loss)	—			(1		)	2			—
Interest income	—			—			1			1
Interest expense	(42		)	(46		)	(130		)	(139		)
Income from continuing operations before income taxes	233			221			671			667
Income taxes	(69		)	(62		)	(199		)	(198		)
Income from continuing operations	164			159			472			469
Discontinued operations, net of income taxes	(79		)	9			(50		)	(305		)
Net income	$	85		$	168		$	422		$	164

Net income per common share
Basic
Continuing operations	$	1.33		$	1.27		$	3.82		$	3.78
Discontinued operations	(0.63		)	0.08			(0.41		)	(2.46		)
	$	0.70		$	1.35		$	3.41		$	1.32
Diluted
Continuing operations	$	1.31		$	1.26		$	3.77		$	3.74
Discontinued operations	(0.62		)	0.08			(0.40		)	(2.43		)
	$	0.69		$	1.34		$	3.37		$	1.31

Cash dividends paid per common share	$	0.53		$	0.50		$	1.59		$	1.50
Basic weighted average common shares outstanding	122.6			124.0			123.3			123.7
Diluted weighted average common shares outstanding	124.5			125.1			125.0			124.8

(A) Certain amounts reclassified to conform with current period presentation of Harris CapRock Communications and government IT services businesses as discontinued operations


Table 2
HARRIS CORPORATION
FY '17 Third Quarter Summary
BUSINESS SEGMENT INFORMATION
(Unaudited)

	Quarter Ended						Three Quarters Ended
	March 31, 2017			April 1, 2016			March 31, 2017			April 1, 2016

	(In millions)
Revenue
Communication Systems	$	461		$	485		$	1,304		$	1,428
Space and Intelligence Systems	475			489			1,396			1,370
Electronic Systems	553			575			1,660			1,662
Corporate eliminations, net	—			1			(2		)	(1		)
	$	1,489		$	1,550		$	4,358		$	4,459
Income From Continuing Operations Before Income Taxes
Segment Operating Income:
Communication Systems	$	140		$	151		$	379		$	405
Space and Intelligence Systems	76			75			231			208
Electronic Systems	115			111			360			311
Unallocated corporate expense	(55		)	(68		)	(169		)	(116		)
Corporate eliminations	(1		)	(1		)	(3		)	(3		)
Non-operating income (loss)	—			(1		)	2			—
Net interest expense	(42		)	(46		)	(129		)	(138		)
	$	233		$	221		$	671		$	667

(A) Certain amounts reclassified to conform with current period presentation of Harris CapRock Communications and government IT services businesses as discontinued operations


Table 3
HARRIS CORPORATION
FY '17 Third Quarter Summary
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

	Three Quarters Ended
	March 31, 2017			April 1, 2016 (A)

	(In millions)
Operating Activities
Net income	$	422		$	164
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	140			163
Amortization of intangible assets from Exelis Inc. acquisition	99			99
Share-based compensation	33			29
Gain on sale of CapRock commercial business	(23		)	—
Qualified pension plan contributions	(143		)	(134		)
Pension income	(73		)	(17		)
Net liability reduction for certain post-employment benefit plans	—			(101		)
Impairment of goodwill and other assets	240			367
Adjustment to loss on sales of businesses, net	—			20
(Increase) decrease in:
Accounts receivable	14			102
Inventories	(26		)	(22		)
Increase (decrease) in:
Accounts payable and accrued expenses	(113		)	(175		)
Advance payments and unearned income	(62		)	(87		)
Other	(19		)	99
Net cash provided by operating activities	489			507
Investing Activities
Cash paid for fixed income securities	—			(19		)
Net additions of property, plant and equipment	(79		)	(84		)
Proceeds from sale of property, plant and equipment	—			2
Net proceeds from sale of CapRock commercial business	375			—
Adjustment to proceeds from sale of business	(25		)	(11		)
Net cash provided by (used in) investing activities	271			(112		)
Financing Activities
Proceeds from borrowings	235			118
Repayments of borrowings	(548		)	(510		)
Proceeds from exercises of employee stock options	50			36
Repurchases of common stock	(460		)	—
Cash dividends	(199		)	(189		)
Other financing activities	(20		)	(15		)
Net cash used in financing activities	(942		)	(560		)
Effect of exchange rate changes on cash and cash equivalents	(3		)	(14		)
Net decrease in cash and cash equivalents	(185		)	(179		)
Cash and cash equivalents, beginning of year	487			481
Cash and cash equivalents, end of quarter	$	302		$	302

(A) Certain amounts reclassified to conform with current period presentation


Table 4
HARRIS CORPORATION
FY '17 Third Quarter Summary
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

	March 31, 2017		July 1, 2016 (A)

	(In millions)
Assets
Cash and cash equivalents	$	302	$	487
Receivables	714		674
Inventories	894		867
Property, plant and equipment	895		924
Goodwill	5,367		5,352
Other intangible assets	1,136		1,231
Other assets	1,799		2,474
	$	11,107	$	12,009
Liabilities and Equity
Short-term debt	$	233	$	15
Accounts payable	428		494
Compensation and benefits	179		165
Advance payments and unearned income	231		294
Current portion of long-term debt	121		382
Defined benefit plans	2,069		2,296
Long-term debt, net	3,859		4,120
Other liabilities	1,073		1,186
Equity	2,914		3,057
	$	11,107	$	12,009

(A) Certain balances reclassified to conform with current period presentation of Harris CapRock Communications and government IT services businesses as discontinued operations, which are included in the "Other assets" and "Other liabilities" line items above

HARRIS CORPORATION

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