Harris Corporation Reports Fiscal 06 Second Quarter Results

Harris Corporation Reports Fiscal 2016 Second Quarter Results MELBOURNE, Fla., Feb. 2, 2016 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. Weve 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 cod

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