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 from continuing operations and income from continuing operations per diluted common share, net cash provided by operating activities and segment operating income, 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:
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Table 5 HARRIS CORPORATION FY '17 Fourth Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Income from Continuing Operations and Income from Continuing Operations per Diluted Common Share (Unaudited) |
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| Quarter Ended | Fiscal Year Ended | ||||||||||||||||||
| June 30, 2017 | June 30, 2017 | ||||||||||||||||||
| As Reported | Adjustment (A) | Non-GAAP | As Reported | Adjustment (A) | Non-GAAP | ||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||
| Income from continuing operations | $ | 166 | $ | 17 | $ | 183 | $ | 638 | $ | 51 | $ | 689 | |||||||
| Income from continuing operations per diluted common share | $ | 1.35 | $ | 0.14 | $ | 1.49 | $ | 5.12 | $ | 0.41 | $ | 5.53 | |||||||
| Quarter Ended | Fiscal Year Ended | ||||||||||||||||||
| July 1, 2016 | July 1, 2016 | ||||||||||||||||||
| As Reported | Adjustment (A) | Non-GAAP | As Reported | Adjustment (A) | Non-GAAP | ||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||
| Income from continuing operations | $ | 142 | $ | 21 | $ | 163 | $ | 611 | $ | 34 | $ | 645 | |||||||
| Income from continuing operations per diluted common share | $ | 1.13 | $ | 0.17 | $ | 1.30 | $ | 4.87 | $ | 0.27 | $ | 5.14 | |||||||
| (A) Adjustment for Exelis Inc. acquisition-related and other items, net of income taxes |
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Table 6 HARRIS CORPORATION FY '17 Fourth Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Net Cash Provided by Operating Activities and Adjusted Free Cash Flow (Unaudited) |
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| Fiscal Year Ended | Fiscal Year 2018 | |||||
| June 30, 2017 | (Guidance) | |||||
| (In millions) | ||||||
| Net cash provided by operating activities | $ | 569 | $980 to $1,030 | |||
| Adjustment for voluntary contribution to qualified pension plans | 400 | — | ||||
| Adjusted net cash provided by operating activities | 969 | 980 to 1,030 | ||||
| Less net capital expenditures (A) | (119 | ) | (130) | |||
| Adjusted free cash flow | $ | 850 | $850 to $900 | |||
| (A) Reflects additions of property, plant and equipment, net of proceeds from the sale of property, plant and equipment |
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Table 7 HARRIS CORPORATION FY '17 Fourth Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Segment Operating Income (Unaudited) |
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| Quarter Ended | |||||||||
| July 1, 2016 | |||||||||
| As Reported | Adjustment (A) | Non-GAAP | |||||||
| (In millions) | |||||||||
| Segment Operating Income | |||||||||
| Communication Systems | $ | 117 | $ | 3 | $ | 120 | |||
| Electronic Systems | 119 | 3 | 122 | ||||||
| (A) Adjustments for restructuring and other charges | |||||||||
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Table 8 HARRIS CORPORATION FY '17 Fourth Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Free Cash Flow as a Percentage of Income from Continuing Operations (Unaudited) |
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| Fiscal Year Ended | ||||
| June 30, 2017 | ||||
| (In millions) | ||||
| Adjusted free cash flow (A) | $ | 850 | ||
| GAAP income from continuing operations | $ | 638 | ||
| Adjusted free cash flow as a percentage of GAAP income from continuing operations | 133 | % | ||
| Adjustment for Exelis Inc. acquisition-related and other items, net of income taxes | $ | 51 | ||
| Non-GAAP income from continuing operations | $ | 689 | ||
| Adjusted free cash flow as a percentage of non-GAAP income from continuing operations | 123 | % | ||
| (A) Refer to Table 6 for a reconciliation between net cash provided by operating activities and adjusted free cash flow | ||||
