Harris Corporation Reports Fiscal 06 Four Quarter and Full Fiscal Year Results

4Q16 EPS from continuing operations - $1.29 GAAP; $1.45 non-GAAP

FY16 EPS from continuing operations - $2.75 GAAP; $5.70 non-GAAP

Achieved FY16 synergy target of $85 million

Generated strong FY16 cash flow: $924 million net cash provided by operating activities;

$772 million free cash flow

Initiated FY17 EPS guidance - $5.53 - $5.73 GAAP; $5.70 - $5.90 non-GAAP

Harris Corporation (NYSE:HRS) reported revenue in the fourth quarter of fiscal 2016 of $1.90 billion compared with $1.53 billion in the prior year. GAAP income from continuing operations was $162 million, or $1.29 per diluted share, and non-GAAP income from continuing operations was $183 million, or $1.45 per diluted share, excluding acquisition-related costs and restructuring and other charges. In the prior year quarter, GAAP loss from continuing operations was $56 million, or $0.51 per diluted share, and non-GAAP income from continuing operations was $148 million, or $1.32 per diluted share, excluding acquisition-related costs and restructuring and other charges.

For full fiscal year 2016, revenue was $7.47 billion, compared with $5.08 billion in the prior year. GAAP income from continuing operations was $345 million, or $2.75 per diluted share, and non-GAAP income from continuing operations was $715 million, or $5.70 per diluted share, excluding acquisition-related items, asset impairments and restructuring and other charges. In the prior year, GAAP income from continuing operations was $334 million, or $3.11 per diluted share, and non-GAAP income from continuing operations was $551 million, or $5.14 per diluted share, excluding acquisition-related costs and restructuring and other charges. Fiscal 2016 orders were $7.51 billion, bringing book-to-bill for the year to greater than one. Net cash provided by operating activities was $924 million and free cash flow was $772 million. Fourth quarter and full fiscal year 2015 results included results of Exelis operations only for the partial period following the May 29, 2015 acquisition closing date. A reconciliation of GAAP to non-GAAP financial measures is provided in the tables.

Our results reflect our continued success in integrating Exelis and achieving our targets for synergy savings and earnings accretion, said William M. Brown, chairman, president and chief executive officer. We delivered on our earnings goals and ended the year with a book-to-bill of greater than one. This performance demonstrates the benefits of the Exelis acquisition, which has added scale, technology, and greater operating resilience against the backdrop of lower tactical revenue. Our company-wide operational excellence initiatives continued to lower costs, drive strong cash flow and improve execution and customer satisfaction. We also met our fiscal 2016 deleveraging goals and continued to reshape our portfolio with the April sale of Aerostructures.

Combining the capabilities of Harris and Exelis enables our company to address the most compelling opportunities in the marketplace, Brown continued. While we continue to face top-line pressure in certain markets in fiscal 2017, the long-term trends driving demand are positive. We will capitalize on these opportunities through commitment to innovation and creation of product and systems-based solutions that leverage extensive capabilities across our businesses. In the near-term, we expect the synergies we are achieving through the Exelis transaction, as well as our focus on operational excellence, to continue to positively impact our results. Overall, we are committed to driving sustainable long-term growth and creating significant value for our shareholders.

Communication Systems

Communication Systems segment revenue in the fourth quarter was $436 million. Segment operating income was $117 million, and non-GAAP operating income was $120 million, excluding restructuring and other charges.

Harris was awarded two, 5-year single-award follow-on IDIQs from U.S. Army Communications-Electronics Command (CECOM) for $1.77 billion and $405 million in support of foreign military sales in the international market.

Space and Intelligence Systems

Space and Intelligence Systems segment revenue in the fourth quarter was $529 million. Segment operating income was $83 million.

Harris was awarded $81 million and $25 million in follow-on contracts with orders of $49 million from the U.S. Air Force in support of U.S. missile warning, missile defense and space surveillance missions under the System Engineering and Sustainment Integrator (SENSOR) program; a 3-year, $38 million contract for Advanced Baseline Imager (ABI) spare modules used for weather monitoring on NOAA's GOES-R satellite program; and a contract from Airbus for a 12-meter folded rib reflector for the European Space Agency's Biomass satellite.

Electronic Systems

Electronic Systems segment revenue in the fourth quarter was $381 million. Segment operating income was $70 million, and non-GAAP operating income was $73 million, excluding restructuring and other charges.

Orders included $30 million for Sonobuoy Launching Systems for the U.S. Navy's P8 antisubmarine aircraft; $27 million from the U.S. Naval Research Laboratory (NRL) for the Advanced Decoy Architecture Project (ADAP) program; $24 million from the U.S. Naval Sea Systems Command (NAVSEA) to upgrade long-range 3-D defense radar systems; and $22 million from the U.S. Air Force for B-1B aircraft electronic warfare self-protection subsystems. Harris was also awarded an 8-year, $96 million ceiling, single-award IDIQ contract from the U.S. Naval Air Systems Command (NAVAIR) to supply precision approach radars (PAR) to the U.S. Navy, Air Force and Army.

Following the close of the quarter, Harris was awarded a 2-year, $189 million contract from a country in the Middle East to provide an integrated battle mana

LINK:	https://www.harris.com/press-releases/2016/08/harris-corporation-repor...
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