10-KPeriod: FY2002

L3HARRIS TECHNOLOGIES, INC. /DE/ Annual Report, Year Ended Jun 28, 2002

Filed September 3, 2002For Securities:LHX

Summary

L3Harris Technologies, Inc. (formerly Harris Corporation) reported revenue of $1.88 billion for the fiscal year ended June 28, 2002, a slight decrease from the prior year. However, net income significantly improved, reaching $82.6 million compared to $21.4 million in fiscal year 2001. This turnaround was driven by strong performance in the Government Communications Systems and RF Communications segments, bolstered by increased defense spending and a focus on homeland security. The company's strategic repositioning in fiscal year 2000, divesting non-core assets like Lanier Worldwide and its semiconductor business, appears to be yielding positive financial results. While the Microwave Communications and Network Support segments faced challenges due to the telecommunications industry slowdown and weak international markets, overall profitability improved. The company also highlighted significant contract wins, including a major FAA contract, demonstrating continued demand for its advanced communication and information processing solutions in both government and commercial sectors.

Key Highlights

  • 1Significant net income improvement to $82.6 million in FY2002, up from $21.4 million in FY2001, indicating enhanced profitability.
  • 2Government Communications Systems segment revenue grew by 9.0% and income before taxes by 20.6%, driven by major contract awards like the FAA's Telecommunications Infrastructure modernization.
  • 3RF Communications segment revenue increased by 15.8% and income before taxes by 58.8%, benefiting from demand for tactical radios in support of the War on Terrorism.
  • 4Overall revenue slightly decreased by 4.1% to $1.88 billion, primarily due to a substantial decline in the Microwave Communications and Network Support segments.
  • 5The company has strategically reduced its total debt by $110.5 million, improving its financial leverage.
  • 6Acquisition of Hirschmann Multimedia Communications Network in the Broadcast segment to bolster European market presence.
  • 7Research, development, and engineering expenditures remained substantial, totaling $516 million in FY2002, reflecting continued investment in innovation.

Frequently Asked Questions

The significant increase in net income was primarily driven by the strong performance of the Government Communications Systems and RF Communications segments, which benefited from increased defense spending and key contract wins. Additionally, the discontinuation of goodwill amortization under the new Statement 142 accounting standard and improved operational efficiencies contributed to the improved profitability.

The telecommunications industry slowdown adversely impacted the Microwave Communications and Network Support segments, leading to decreased revenues and increased losses or reduced profitability. The Microwave Communications segment saw revenues drop 32.8%, while Network Support revenues fell 53.1%. The company is focused on cost reductions and adapting to these market conditions.

L3Harris's government-related businesses performed exceptionally well in FY2002, securing major contracts like the FAA's infrastructure modernization. The company views current defense policies and homeland security initiatives favorably for its government segments. Despite dependence on government funding and the inherent risks of contract termination or appropriation changes, the outlook for these segments appears positive due to strong customer confidence and strategic alignment with government priorities.

In fiscal year 2002, L3Harris reduced its total debt by $110.5 million, improving its debt-to-capital ratio. They also completed the private placement of $150 million in convertible debentures. These actions, along with continued operational improvements and strategic divestitures in prior years, have contributed to a stronger financial position and improved net income.