Oct. 27, 2009 (PR Newswire) --
MELBOURNE, Fla., Oct. 27 /PRNewswire-FirstCall/ -- Harris Corporation (NYSE: HRS) revenue for the first quarter of fiscal 2010 ended October 2, 2009, was $1.20 billion, compared with $1.17 billion for the first quarter of fiscal 2009. Net income in the first quarter was $105 million, or $.79 per diluted share, compared with $119 million, or $.89 per diluted share, in the prior-year quarter. Excluding acquisition-related charges, non-GAAP income from continuing operations in the first quarter of fiscal 2010 was $109 million, or $.83 per diluted share. New orders in the first quarter of fiscal 2010 were a strong $1.5 billion. A reconciliation of GAAP to non-GAAP financial measures is provided in Tables 5 through 7, along with the accompanying notes.
"New orders, revenue and earnings exceeded our expectations in the first quarter as a result of strong performance in both the RF Communications and Government Communications Systems segments," said Howard L. Lance, chairman, president and chief executive officer.
"During the quarter, Harris received $220 million in orders for the new Falcon III® AN/PRC-117G multiband manpack radio, marking a significant milestone toward widespread customer adoption. The 117G is being deployed to the U.S. Army in Afghanistan, becoming the first JTRS-approved ground tactical radio to be used in a wideband networking battlefield application," Lance said. "We also received orders associated with the MRAP-ATV (mine resistant ambush protected all-terrain vehicle) program and are expecting significant additional orders in the second quarter.
"We have significantly increased our full-year fiscal 2010 guidance to reflect much higher than expected tactical radio orders from the U.S. Department of Defense and the positive impact on expected revenue and earnings," Lance said.
Increased Earnings Guidance
The company has revised its guidance for non-GAAP income from continuing operations for fiscal 2010 to a range of $3.85 to $3.95 per diluted share ($3.74 to $3.84 per diluted share on a GAAP basis), compared with a previous range of $3.40 to $3.50 per diluted share ($3.25 to $3.40 per diluted share on a GAAP basis). Revenue in fiscal 2010 is now expected to be in a range of $5.1 billion to $5.2 billion. Fiscal 2010 non-GAAP earnings guidance excludes acquisition-related costs.
RF Communications
RF Communications segment orders in the first quarter were $709 million, including $586 million in the Tactical Radio Communications business. The significant increase in tactical radio orders was driven primarily by the rebound in U.S. DoD procurements that began in the fourth quarter of fiscal 2009 and by accelerating customer adoption of the JTRS-approved Falcon lll AN/PRC-117G multiband manpack tactical radio.
During the quarter, Harris received a $165 million order from the U.S. Army as part of a $419 million Basic Purchasing Agreement (BPA) to provide 117G radios and vehicular power-amplifier systems. Additional first quarter 117G orders were received from a broad base of other customers. The 117G is being used in a wide variety of ground, vehicular and airborne applications, including ISR (intelligence, surveillance and reconnaissance).
Also in the first quarter, Harris received $180 million in radio orders for the military's new MRAP-ATVs being shipped to Afghanistan to counter increased use of IEDs (improvised explosive devices). International orders included radios for military forces in Mexico, Yemen, Ethiopia, Pakistan and Australia.
Orders in the new Public Safety and Professional Communications business were $123 million. New orders were driven by continuing trends for frequency re-banding, new systems, and system upgrades requiring both infrastructure systems and radio equipment. Customers included the State of Florida, Ericsson Australia, and the Royal Canadian Mounted Police. Also in the quarter, Harris received orders for more than 1,000 of its new Unity(TM) XG-100 radios from a variety of customers. The software-defined, multiband, handheld radio provides full-spectrum interoperability among federal, state, and local agencies.
Total backlog in RF Communications at the end of the first quarter was $1.23 billion, including $760 million in Tactical Radio Communications and $470 million in Public Safety and Professional Communications. RF Communications backlog at the end of fiscal 2009 was $920 million, including $470 million in Tactical Radio Communications and $450 million in Public Safety and Professional Communications.
Revenue for the RF Communications segment in the first quarter was $424 million, including $303 million in the Tactical Radio Communications business and $121 million in the Public Safety and Professional Communications business. As expected, revenue in the Tactical Radio Communications business declined compared with first-quarter prior-year revenue of $415 million as a result of procurement delays by the U.S. government and the Iraq Ministry of Defense.
Operating income for RF Communications was $114 million in the first quarter compared with $142 million in the prior-year quarter. Excluding $7 million in charges for acquisition-related expenses, non-GAAP operating income in the first quarter was $121 million. Non-GAAP operating income declined compared with the prior-year quarter as a result of reduced tactical radio revenue. Non-GAAP operating margin was a strong 28 percent for the segment due to favorable product mix and cost-reduction actions implemented in the second half of fiscal 2009.
Government Communications Systems
First quarter revenue for the Government Communications Systems segment was $668 million, a 10-percent increase compared with $609 million in the prior-year quarter. Operating income was $86 million in the first quarter compared with $66 million in the prior-year quarter. Operating margin was a strong 12.8 percent, reflecting excellent performance and favorable award fees for the FAA Telecommunications Infrastructure (FTI) program. The FTI program has completed its equipment build-out phase and now is transitioning to its telecommunication services and maintenance phase.
Segment revenue growth was driven by a broad base of programs including the FTI program, the WIN-T (Warfighter Information Network-Tactical) program, the Commercial Broadband Satellite program for the Navy, several classified programs for national intelligence customers, the Patriot IT services program for the NRO (National Reconnaissance Office), and the NETCENTS IT services program for the U.S. Air Force.
Revenue benefited from the start-up of new programs including the 10-year, potential $736 million GOES-R GS (Geostationary Operational Environmental Satellite-Series R Ground Segment) program for NOAA (National Oceanic and Atmospheric Administration) and the 10-year, potential $600 million MET (Modernization of Enterprise Terminals) program for the U.S. Army.
Also contributing to higher revenue was growth in the Harris Healthcare Solutions business and the recent acquisitions of Crucial Security and SolaCom ATC. New contract wins in the quarter included several IT Services programs with a combined potential value of more than $400 million and new national intelligence programs with a potential value of $120 million.
Broadcast Communications
First quarter orders in the Broadcast Communications segment were $124 million and were greater than revenue and about even with orders in the fourth quarter of the prior year. First quarter revenue in the segment was $119 million, compared with $130 million in the prior-year fourth quarter and $158 million in the prior-year first quarter. Continued weakness in the first quarter was expected and reflects the global economy and delayed capital spending by broadcast and media customers, as well as seasonally slow spending, primarily in Europe and the Middle East.
Operating income in the first quarter of fiscal 2010 was $.3 million and was achieved on substantially lower revenue as a result of significant cost-reduction actions implemented during fiscal 2009.
Key program wins in the quarter included transmitters for the rollout of DTV networks in Rwanda and Mexico; complete Harris ONE(TM) solutions for Meredith Corporation's central-casting hub in Phoenix and the Home Shopping Channel in South Korea; and multiple orders for China Central Television (CCTV).
Also during the quarter, Harris was awarded a contract from Lockheed Martin to provide systems for the U.S. Joint Forces Command, which will use highly advanced broadcast technologies to help collect, manage, process, exploit and disseminate full-motion video. The system provides increased visibility into the vast amounts of real-time and archived video that is collected from manned and unmanned aircraft and ground-based sensors. The Harris system incorporates its proprietary FAME(TM) (Full-Motion Video Asset Management Engine) technology, which has broad applications in government and commercial markets.
Harris will host a conference call today at 4:30 p.m. Eastern Time (ET) to discuss its first quarter fiscal 2010 financial results. The dial-in number for the teleconference is (816) 581-1736. The access code is 7224156. Please allow at least 10 minutes prior to the scheduled start time to connect to the teleconference. Participants are encouraged to listen via webcast, which will be broadcast live at www.harris.com/conference-call. A replay of the teleconference will be available beginning at 8:30 p.m. ET on October 27, and will run until midnight ET on Tuesday, November 3. To access the replay, please call (719) 457-0820, access code 7224156. A recording of the call also will be available on the Harris website beginning at 7:00 p.m. ET on October 27.
About Harris Corporation
Harris is an international communications and information technology company serving government and commercial markets in more than 150 countries. Headquartered in Melbourne, Florida, the company has approximately $5 billion of annual revenue and more than 15,000 employees -- including nearly 7,000 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 www.harris.com.
