06 Feb 15. Harris Corporation (NYSE:HRS) reported revenue in the second quarter of fiscal 2015 of $1.21bn and income from continuing
operations of $140m, or $1.32 per diluted share. In the prior year,
revenue was $1.22bn and income from continuing operations was $137m, or $1.27 per diluted share. Orders in the quarter were $1.11bn.
RF Communications
RF Communications segment revenue in the second quarter was $432m compared with $455m in the prior year. Tactical Communications revenue was $316m, decreasing 1 percent, and Public Safety revenue was $116m, decreasing 14 percent. Segment operating income was $125m compared with $142m in the prior year.
Orders for the segment totaled $356m, including $263m in Tactical
Communications and $93m in Public Safety. Book-to-bill for the segment
was 0.82 and funded backlog was $523m in Tactical Communications and $507m in Public Safety.
Tactical radio orders included $50m and $14m from two countries in the Middle East, $38m from Australia and $15m from the U.S. Marine
Corps. Public Safety orders included $13m from a local government partnership in central Virginia.
Government Communications Systems
Government Communications Systems segment revenue in the second quarter was $454m, increasing 5 percent compared with $433m in the prior year.
Major drivers included higher revenue from the F-35 program, classified programs and wireless products, partially offset by lower revenue from NASA’s Space Network Ground Segment Sustainment program. Segment operating income was $78m compared with $66m in the prior year. Operating margin was 17.1 percent, reflecting continued strong program performance and favorable product mix.
During the quarter, Harris was awarded a 10-year (3-year base, 7 option years), $98m follow-on contract from the Federal Aviation Administration (FAA) for the Operational and Supportability Implementation System II (OASIS II) that integrates real-time weather and flight planning data for Alaska air travel; a $60m follow-on contract for the F-35 program; a 2-year, $16m follow-on contract from ViaSat Inc. to provide Multifunctional Information Distribution System (MIDS) terminals for military aircraft, bringing total contract awards to-date to $250m; and awards totaling $46m from classified customers. Following the close of the quarter, Harris was awarded a 3-year, $23m contract from a classified customer for space situational awareness and a 5-year, $300m, single-award Indefinite Delivery Indefinite Quantity (IDIQ) contract from a classified customer to integrate various intelligence systems.
Integrated Network Solutions
Integrated Network Solutions segment revenue in the second quarter was $340m, decreasing 7 percent compared with $366m in the prior year.
Revenue growth in CapRock was more than offset by the previously reported wind-down of two IT Services programs. Segment operating income was $28 m compared with $33m in the prior year. During the quarter, IT Services received a $27m order to upgrade the Wi-Fi infrastructure at 65 medical centers across the country for the Department of Veterans Affairs and was awarded a 5-year, $25m contract from a classified customer. CapRock orders included $29m from OceanRig for 3 new drill ships and an extension of existing service.
Earnings Guidance
Harris increased its fiscal 2015 guidance for income from continuing operations from a range of $4.75 to $5.00 per diluted share to a range of $4.95 to $5.05 per diluted share. Fiscal 2015 revenue guidance is unchanged and expected to decline 1 to 3 percent compared with the prior year. Fiscal 2015 guidance does not include the impact of Harris’ pending acquisition of Exelis. (Source: Yahoo!/BUSINESS WIRE)
Takeover of Exelis
Harris Corporation (NYSE:HRS) and Exelis, Inc. (NYSE:XLS) announced a definitive agreement under which Harris will acquire Exelis in a cash and stock transaction valued at $23.75 per share, or an approximately $4.75bn enterprise value. Th