Attachments: Financial statements (8 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 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, revenue and free cash flow guidance for fiscal 2018; potential contract opportunities and awards; the potential value of contract awards; statements regarding returning to growth in fiscal 2018 and being well positioned for fiscal 2018 and accelerating growth in the medium term; 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 and realize expected benefits and the 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; significant indebtedness and 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; 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; or 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.
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Table 1 HARRIS CORPORATION FY '17 Fourth Quarter Summary CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) |
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| Quarter Ended | Fiscal Year Ended | |||||||||||||||
| June 30, 2017 | July 1, 2016 (A) | June 30, 2017 | July 1, 2016 (A) | |||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||
| Revenue from product sales and services | $ | 1,542 | $ | 1,533 | $ | 5,900 | $ | 5,992 | ||||||||
| Cost of product sales and services | (1,019 | ) | (1,005 | ) | (3,811 | ) | (3,900 | ) | ||||||||
| Engineering, selling and administrative expenses | (248 | ) | (278 | ) | (1,016 | ) | (1,037 | ) | ||||||||
| Non-operating income | — | 10 | 2 | 10 | ||||||||||||
| Interest income | 1 | 1 | 2 | 2 | ||||||||||||
| Interest expense | (42 | ) | (44 | ) | (172 | ) | (183 | ) | ||||||||
| Income from continuing operations before income taxes | 234 | 217 | 905 | 884 | ||||||||||||
| Income taxes | (68 | ) | (75 | ) | (267 | ) | (273 | ) | ||||||||
| Income from continuing operations | 166 | 142 | 638 | 611 | ||||||||||||
| Discontinued operations, net of income taxes | (35 | ) | 18 | (85 | ) | (287 | ) | |||||||||
| Net income | $ | 131 | $ | 160 | $ | 553 | $ | 324 | ||||||||
| Net income per common share | ||||||||||||||||
| Basic | ||||||||||||||||
| Continuing operations | $ | 1.37 | $ | 1.14 | $ | 5.19 | $ | 4.91 | ||||||||
| Discontinued operations | (0.28 | ) | 0.15 | (0.69 | ) | (2.30 | ) | |||||||||
| $ | 1.09 | $ | 1.29 | $ | 4.50 | $ | 2.61 | |||||||||
| Diluted | ||||||||||||||||
| Continuing operations | $ | 1.35 | $ | 1.13 | $ | 5.12 | $ | 4.87 | ||||||||
| Discontinued operations | (0.28 | ) | 0.15 | (0.68 | ) | (2.28 | ) | |||||||||
| $ | 1.07 | $ | 1.28 | $ | 4.44 | $ | 2.59 | |||||||||
| Cash dividends paid per common share | $ | 0.53 | $ | 0.50 | $ | 2.12 | $ | 2.00 | ||||||||
| Basic weighted average common shares outstanding | 120.3 | 124.1 | 122.6 | 123.8 | ||||||||||||
| Diluted weighted average common shares outstanding | 122.2 | 125.3 | 124.3 | 125.0 | ||||||||||||
| (A) Certain amounts reclassified to conform with current period presentation of Harris CapRock Communications and government IT services businesses as discontinued operations |
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Table 2 HARRIS CORPORATION FY '17 Fourth Quarter Summary BUSINESS SEGMENT INFORMATION (Unaudited) |
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| Quarter Ended | Fiscal Year Ended | |||||||||||||||
| June 30, 2017 | July 1, 2016 (A) | June 30, 2017 | July 1, 2016 (A) | |||||||||||||
| (In millions) | ||||||||||||||||
| Revenue | ||||||||||||||||
| Communication Systems | $ | 449 | $ | 436 | $ | 1,753 | $ | 1,864 | ||||||||
| Electronic Systems | 591 | 571 | 2,251 | 2,233 | ||||||||||||
| Space and Intelligence Systems | 506 | 529 | 1,902 | 1,899 | ||||||||||||
| Corporate eliminations | (4 | ) | (3 | ) | (6 | ) | (4 | ) | ||||||||
| $ | 1,542 | $ | 1,533 | $ | 5,900 | $ | 5,992 | |||||||||
| Income From Continuing Operations Before Income Taxes | ||||||||||||||||
| Segment Operating Income: | ||||||||||||||||
| Communication Systems | $ | 146 | $ | 117 | $ | 524 | $ | 522 | ||||||||
| Electronic Systems | 104 | 119 | 464 | 430 | ||||||||||||
| Space and Intelligence Systems | 80 | 80 | 311 | 288 | ||||||||||||
| Unallocated corporate expense | (55 | ) | (65 | ) | (223 | ) | (180 | ) | ||||||||
| Corporate eliminations | — | (1 | ) | (3 | ) | (5 | ) | |||||||||
| Non-operating income | — | 10 | 2 | 10 | ||||||||||||
| Net interest expense | (41 | ) | (43 | ) | (170 | ) | (181 | ) | ||||||||
| $ | 234 | $ | 217 | $ | 905 | $ | 884 | |||||||||
| (A) Certain amounts reclassified to conform with current period presentation of Harris CapRock Communications and government IT services businesses as discontinued operations |
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Table 3 HARRIS CORPORATION FY '17 Fourth Quarter Summary CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) |
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| Fiscal Year Ended | ||||||||
| June 30, 2017 | July 1, 2016 (A) | |||||||
| (In millions) | ||||||||
| Operating Activities | ||||||||
| Net income | $ | 553 | $ | 324 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 183 | 229 | ||||||
| Amortization of intangible assets from Exelis Inc. acquisition | 128 | 132 | ||||||
| Share-based compensation | 42 | 39 | ||||||
| Qualified pension plan contributions | (589 | ) | (174 | ) | ||||
| Pension income | (97 | ) | (26 | ) | ||||
| Net liability reduction for certain post-employment benefit plans | — | (101 | ) | |||||
| Impairment of goodwill and other assets | 240 | 367 | ||||||
| (Gain) loss on sales of businesses, net | 14 | (10 | ) | |||||
| Adjustment to loss on sales of businesses, net | — | 20 | ||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | 111 | 192 | ||||||
| Inventories | 28 | (28 | ) | |||||
| Increase (decrease) in: | ||||||||
| Accounts payable | 18 | (10 | ) | |||||
| Advance payments and unearned income | (42 | ) | (96 | ) | ||||
| Other | (20 | ) | 66 | |||||
| Net cash provided by operating activities | 569 | 924 | ||||||
| Investing Activities | ||||||||
| Cash paid for fixed income securities | — | (19 | ) | |||||
| Net additions of property, plant and equipment | (119 | ) | (152 | ) | ||||
| Proceeds from sales of businesses, net | 1,014 | 181 | ||||||
| Adjustment to proceeds from sales of businesses, net | (25 | ) | (11 | ) | ||||
| Net cash provided by (used in) investing activities | 870 | (1 | ) | |||||
| Financing Activities | ||||||||
| Proceeds from borrowings | 85 | 61 | ||||||
| Repayments of borrowings | (584 | ) | (730 | ) | ||||
| Proceeds from exercises of employee stock options | 54 | 44 | ||||||
| Repurchases of common stock | (710 | ) | — | |||||
| Cash dividends | (262 | ) | (252 | ) | ||||
| Other financing activities | (21 | ) | (16 | ) | ||||
| Net cash used in financing activities | (1,438 | ) | (893 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (4 | ) | (24 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (3 | ) | 6 | |||||
| Cash and cash equivalents, beginning of year | 487 | 481 | ||||||
| Cash and cash equivalents, end of year | $ | 484 | $ | 487 | ||||
| (A) Certain amounts reclassified to conform with current period presentation |
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Table 4 HARRIS CORPORATION FY '17 Fourth Quarter Summary CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) |
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| June 30, 2017 | July 1, 2016 (A) | |||||
| (In millions) | ||||||
| Assets | ||||||
| Cash and cash equivalents | $ | 484 | $ | 487 | ||
| Receivables | 623 | 674 | ||||
| Inventories | 841 | 867 | ||||
| Property, plant and equipment | 904 | 924 | ||||
| Goodwill | 5,366 | 5,352 | ||||
| Other intangible assets | 1,104 | 1,231 | ||||
| Other assets | 766 | 2,474 | ||||
| $ | 10,088 | $ | 12,009 | |||
| Liabilities and Equity | ||||||
| Short-term debt | $ | 80 | $ | 15 | ||
| Accounts payable | 540 | 494 | ||||
| Compensation and benefits | 140 | 165 | ||||
| Advance payments and unearned income | 252 | 294 | ||||
| Current portion of long-term debt | 554 | 382 | ||||
| Defined benefit plans | 1,278 | 2,296 | ||||
| Long-term debt, net | 3,396 | 4,120 | ||||
| Other liabilities | 920 | 1,186 | ||||
| Equity | 2,928 | 3,057 | ||||
| $ | 10,088 | $ | 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
