MELBOURNE, Florida, July 30, 2013 — Harris Corporation (NYSE:HRS) reported revenue in the fourth quarter of fiscal 2013 of $1.36 billion compared with $1.44 billion in the prior year. GAAP income from continuing operations was $71 million, or $0.65 per diluted share, compared with $137 million, or $1.20 per diluted share, in the prior year. Non-GAAP income from continuing operations was $154 million, or $1.41 per diluted share, compared with $162 million, or $1.42 per diluted share, in the prior year. Non-GAAP amounts for fiscal 2013 exclude charges of $127 million related to restructuring and other actions in the fourth quarter and for fiscal 2012 exclude acquisition-related costs. A reconciliation of GAAP to non-GAAP financial measures is provided in the tables. Orders in the fourth quarter were $1.43 billion compared with $1.48 billion in the prior year.
"Fourth quarter results were solid in a tough government spending environment," said William M. Brown, president and chief executive officer. "Performance benefited from our commitment to operational excellence and ongoing cost-reduction efforts, including restructuring actions announced in April that were executed faster than expected and generated fourth quarter cost savings. As we enter fiscal 2014, we now expect that restructuring and other actions will generate net annualized cost savings of approximately $60 million."
"We were particularly encouraged by the strong new orders momentum in the international tactical radio market. With a tactical book-to-bill of 1.49 and greater than one in both international and U.S. markets, tactical backlog increased substantially in the fourth quarter."
For full fiscal year 2013, revenue was $5.11 billion compared with $5.45 billion in the prior year. GAAP income from continuing operations was $466 million, or $4.16 per diluted share, compared with $559 million, or $4.80 per diluted share, in the prior year. Non-GAAP income from continuing operations was $549 million, or $4.90 per diluted share, compared with $605 million, or $5.20 per diluted share, in the prior year. Free cash flow was strong at $655 million compared with $619 million in the prior year.
Revenue in the fourth quarter for the RF Communications segment was $501 million compared with $584 million in the prior year. Tactical Communications revenue was $336 million, decreasing 18 percent, and Public Safety revenue was $165 million, decreasing 6 percent. For the quarter, segment operating income was $176 million, and non-GAAP operating income was $185 million. Operating income was $196 million in the prior year. Non-GAAP operating margin for the quarter was 36.9 percent and reflected a favorable product mix, lower costs through ongoing cost-reduction and operational excellence initiatives, and a $7 million benefit from the cumulative effect of a change in the timing of cost recognition on tactical radio programs.
Orders for the segment totaled $646 million, including $498 million in Tactical Communications and $148 million in Public Safety. Book-to-bill was 1.29 for the segment. At the end of the fourth quarter, backlog was $743 million in Tactical Communications and $598 million in Public Safety.
International tactical radio orders in the quarter included $79 million from a country in the Middle East for an integrated command, control and communications system utilizing wideband tactical radios and 4G tactical cellular capabilities, $61 million from Poland, $55 million from a country in Africa and $39 million from several customers in Brazil. U.S tactical radio orders included $38 million from the U.S. Air Force, $36 million from the U.S. Special Operations Command, and $20 million from the U.S. Marine Corps.
Public Safety orders in the quarter included $17 million from Los Angeles County, $13 million from the United Arab Emirates, and a $15 million follow-on order from the San Francisco Municipal Transportation Authority, bringing orders to-date to $47 million under an $85 million contract.
Integrated Network Solutions
Revenue in the fourth quarter for the Integrated Network Solutions segment was $402 million, a 6 percent increase compared with $379 million in the prior year, driven by growth across the segment in CapRock Communications, Healthcare Solutions and IT Services. Operating loss for the segment was $18 million compared with operating income of $6 million in the prior year. Non-GAAP operating income was $35 million compared with $34 million in the prior year.
Government Communications Systems
Revenue in the fourth quarter for the Government Communications Systems segment was $481 million, a 3 percent decline compared with $497 million in the prior year, primarily due to the transition of the GOES-R weather program to the integration and test phase. For the quarter, segment operating income was $55 million, and non-GAAP operating income was $66 million. Operating income was $66 million in the prior year. Non-GAAP operating margin in the fourth quarter was solid at 13.6 percent, resulting from strong program performance, and contributed to a record non-GAAP operating margin of 14.5 percent for the year.
Following the close of the quarter, Harris was awarded a 7-year, $150 million contract from the FAA to provide the Data Communication Network Services (DCNS) component of the NextGen Data Communications and Integrated Services (DCIS) program, bringing total contract value on the program to $481 million.
Initial guidance for GAAP income from continuing operations for fiscal 2014 is a range of $4.65 to $4.85 per diluted share. Revenue for fiscal 2014 is expected to be about 1 to 3 percent lower compared with fiscal 2013.
Harris will host a conference call today, July 30, at 8:30 a.m. Eastern Time (ET) to discuss its fourth quarter fiscal 2013 financial results. The dial-in numbers for the teleconference are (877) 299-4454 (U.S.) and (617) 597-5447 (International), using participant code 84790152. Please allow at least 10 minutes before the scheduled start time to connect to the teleconference. Participants are encouraged to listen via live webcast and view management's supporting slide presentation at www.harris.com/conference-call. A recording of the call will be available on the Harris website beginning at approximately 12 p.m. ET on July 30.
About Harris Corporation
Harris is an international communications and information technology company serving government and commercial markets in more than 125 countries. Headquartered in Melbourne, Florida, the company has approximately $5 billion of annual revenue and about 14,000 employees — including 6,000 engineers and scientists. Harris is dedicated to developing best-in-class assured communications® products, systems, and services. Additional information about Harris Corporation is available at harris.com.
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Non-GAAP Financial Measures
Attachments: Financial Statements (nine tables).
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