16 Apr 03. Harris Corporation (NYSE:HRS – News) reported that third quarter fiscal 2003 revenue climbed 12 percent to $538.9m, compared to $483.3m in the third quarter of the prior year. Net income was $22.6 million compared to $22.5m in the prior-year quarter. Although net income was flat, more of the income was generated by the operating divisions and less from non-operating income. Non-operating income was $4.8m less in the quarter compared to the prior year. Earnings per share were $.34.
“The Government Communications Systems and the RF Communications businesses are delivering very strong revenue and operating performance, allowing Harris to report solid results in a very difficult economic climate,” said Howard L. Lance, president and chief executive officer.
Third quarter revenue in the company’s Government Communications Systems segment climbed 24 percent to $296.0m, (2002: $239.0m). Operating income increased 24 percent to $26.6m. Growth was all organic and resulted from a broad spectrum of defense and non-defense federal government contract wins and add-ons to previous awards. The U.S. Department of Defense transformation toward integrated communications and network-centric warfare continues and has significantly expanded opportunities for Harris technology, services, and systems integration.
During the third fiscal quarter, Harris won a three-year contract from the U.S. Air Force to develop and demonstrate a prototype radar payload for Space-Based Radar, a critical national defense program. Initial value with options is $88m and could have a value to Harris of more than $1bn if the company wins a three-way competition at the end of three years. Harris also received a 20-month, $21m development contract from the FAA for the Next Generation Air/Ground Communications (NEXCOM) program. Harris is leading one of two NEXCOM teams vying for a potential $400m contract. Also during the quarter, Harris received a 10-year, $750m indefinite delivery/indefinite quantity production contract from the National Imagery and Mapping Agency to supply geospatial and imagery-derived products for the Global Geospatial Intelligence program. The company also won additional contracts for on-going programs, including telemetry modules supporting the U.S. Air Force Advanced Medium-Range Air-to-Air Missile. During the quarter Harris completed its first hardware deliveries for the Joint Strike Fighter program as part of a $68m advanced avionics design contract. In addition, Harris was awarded a 30-month, $55m development contract for avionics supporting the U.S. Army’s RAH-66 Comanche helicopter.
The RF Communications segment reported record revenue of $87.6m in the third quarter, an increase of 30 percent compared to the prior-year quarter. Segment operating income was also a record, increasing 79 percent to $23.8m. Continuing strong growth was driven by requirements for current products and next-generation tactical radio programs. Margin improvement reflected increased sales volume and manufacturing efficiencies.
During the quarter, Harris won contracts for its industry-leading Falcon® II radios from Romania, Macedonia, Uzbekistan, Tunisia, and the U.K. MoD. Development programs are well underway on next-generation tactical radio programms for both the U.K. and U.S. military. Harris has begun shipping initial production quantities of high-frequency radio systems for integration into the U.K. Bowman Tactical Radio Program and, during the third quarter, was awarded a $10m contract for cryptographic software development in support of the U.S. radio of the future – the Joint Tactical Radio System (JTRS).
Revenue in the Microwave Communications segment was $72.2m during the third quarter. The business reported a small loss of $0.8m. Microwave revenue grew approximately 20 percent in North America as a result of capacity upgrades by cellular and PCS providers. Harris continues to benefit from a strong p