Table 1 HARRIS CORPORATION FY '19 First Quarter Summary CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited)

Transcription

1 Table 1 CONDENSED CONSOLIDATED STATEMENT OF INCOME September 28, September 29, (In millions, except per share amounts) Revenue from product sales and services $ 1,542 $ 1,410 Cost of product sales and services (1,010) (919) Engineering, selling and administrative expenses (279) (268) Non-operating income Interest income 1 Interest expense (44) (41) Income from continuing operations before income taxes Income taxes (41) (63) Income from continuing operations Discontinued operations, net of income taxes (3) (6) Net income $ 213 $ 159 Net income per common share Basic Continuing operations $ 1.82 $ 1.39 Discontinued operations (0.01) (0.06) $ 1.81 $ 1.33 Diluted Continuing operations $ 1.78 $ 1.36 Discontinued operations (0.01) (0.05) $ 1.77 $ 1.31 Cash dividends paid per common share $ 0.69 $ 0.57 Basic weighted average common shares outstanding Diluted weighted average common shares outstanding

2 Table 2 BUSINESS SEGMENT INFORMATION September 28, September 29, Revenue Communication Systems $ 469 $ 406 Electronic Systems Space and Intelligence Systems Corporate eliminations (4) (3) $ 1,542 $ 1,410 Income From Continuing Operations Before Income Taxes Segment Operating Income: Communication Systems $ 140 $ 115 Electronic Systems Space and Intelligence Systems Unallocated corporate expense and corporate eliminations (41) (42) Pension adjustment (47) (46) Non-operating income Net interest expense (43) (41) $ 257 $ 228

3 Table 3 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS September 28, September 29, Operating Activities Net income $ 213 $ 159 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of acquisition-related intangibles Other depreciation and amortization Pension income and share-based compensation (23) (Increase) decrease in: Accounts receivable 34 (54) Contract assets (88) (59) Inventories (3) (24) Increase (decrease) in: Accounts payable (141) (88) Contract liabilities Other (1) 101 Net cash provided by operating activities Investing Activities Net additions of property, plant and equipment (31) (23) Net cash used in investing activities (31) (23) Financing Activities Proceeds from borrowings 216 Repayments of borrowings (35) Proceeds from exercises of employee stock options Repurchases of common stock (200 ) (75) Cash dividends (82 ) (69) Other financing activities (18 ) (9) Net cash used in financing activities (69 ) (174) Effect of exchange rate changes on cash and cash equivalents 6 Net increase (decrease) in cash and cash equivalents 17 (96) Cash and cash equivalents, beginning of year Cash and cash equivalents, end of quarter $ 305 $ 388

4 Table 4 SELECTED BALANCE SHEET INFORMATION September 28, June 29, Assets Cash and cash equivalents $ 305 $ 288 Receivables Contract assets Inventories Property, plant and equipment Goodwill 5,373 5,372 Other intangible assets Liabilities Short-term debt $ 294 $ 78 Accounts payable Contract liabilities Compensation and benefits Current portion of long-term debt, net Defined benefit plans Long-term debt, net 3,410 3,408

5 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G DISCLOSURE To supplement our condensed consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we provide additional measures of income from continuing operations per diluted common share, net income, net income margin and net cash provided by operating activities, adjusted to exclude certain costs, charges, expenses and losses or other amounts. Harris management believes that these non-gaap financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Harris management also believes that these non-gaap financial measures enhance the ability of investors to analyze Harris business trends and to understand Harris performance. In addition, Harris may utilize non- GAAP financial measures as guides in its forecasting, budgeting, and long-term planning processes and to measure operating performance for some management compensation purposes. Any analysis of non-gaap financial measures should be used only in conjunction with results presented in accordance with GAAP. A reconciliation of these non-gaap financial measures with the most directly comparable financial measures calculated in accordance with GAAP follows:

6 Table 5 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES EBIT and EBIT Margin September 28, September 29, Revenue from product sales and services (B) $ 1,542 $ 1,410 Net income $ 213 $ 159 Adjustments: Net interest expense Income taxes Discontinued operations, net of income taxes 3 6 Total adjustments EBIT (A) $ 300 $ 269 EBIT margin percentage (A) / (B) 19.5% 19.1 %

7 Table 6 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Net Cash Provided by Operating Activities and Free Cash Flow September 28, September 29, Fiscal Year 2019 (Guidance) Net cash provided by operating activities $ 117 $ 95 >$1,170 Less capital expenditures (31) (23) (170) Free cash flow $ 86 $ 72 >$1,000

8 Table 7 UNAUDITED SELECTED FY '18 and FY '17 SEGMENT FINANCIAL INFORMATION UNDER NEW REVENUE RECOGNITION STANDARD Effective fiscal 2019, Harris adopted the new revenue recognition standard, Accounting Standards Codification 606, Revenue from Contracts with Customers, using the full retrospective method. The following unaudited selected prior period segment financial information on the basis of the new revenue recognition standard is presented as supplemental information for comparability purposes and has been revised from the unaudited selected preliminary segment financial information furnished with our results for the fourth quarter of fiscal. September 29, December 29, March 30, AS RECAST June 29, June 29, Fiscal Year Ended June 30, % Inc/(Dec) Revenue Communication Systems $ 406 $ 492 $ 479 $ 527 $ 1,904 $ 1, % Electronic Systems ,365 2, % Space and Intelligence Systems ,913 1, % Corporate eliminations (3) (1) (5) (5) (14) (6) *** $ 1,410 $ 1,535 $ 1,562 $ 1,661 $ 6,168 $ 5, % Segment Income Communication Systems $ 115 $ 145 $ 144 $ 162 $ 566 $ 514 Electronic Systems Space and Intelligence Systems $ 311 $ 322 $ 335 $ 361 $ 1,329 $ 1,285 Segment Margin Communication Systems 28.3 % 29.5 % 30.1 % 30.7 % 29.7 % 29.3 % Electronic Systems 20.1 % 16.7 % 17.8 % 18.6 % 18.3 % 20.4 % Space and Intelligence Systems 18.7 % 17.3 % 17.2 % 16.1 % 17.3 % 16.5 % September 29, December 29, March 30, AS REPORTED June 29, June 29, Fiscal Year Ended June 30, % Inc/(Dec) Revenue Communication Systems $ 410 $ 489 $ 481 $ 523 $ 1,903 $ 1, % Electronic Systems ,373 2, % Space and Intelligence Systems ,921 1, % Corporate eliminations (3) (3) (4) (5) (15) (6) *** $ 1,413 $ 1,535 $ 1,568 $ 1,666 $ 6,182 $ 5, % Segment Income Communication Systems $ 118 $ 144 $ 147 $ 162 $ 571 $ 524 Electronic Systems Space and Intelligence Systems $ 314 $ 326 $ 341 $ 367 $ 1,348 $ 1,299 Segment Margin Communication Systems 28.8 % 29.4 % 30.6 % 31.0 % 30.0 % 29.9 % Electronic Systems 20.2 % 17.3 % 18.4 % 18.6 % 18.6 % 20.6 % Space and Intelligence Systems 18.7 % 17.4 % 17.0 % 16.9 % 17.5 % 16.4 % *** Not meaningful