10-KPeriod: FY2004

L3HARRIS TECHNOLOGIES, INC. /DE/ Annual Report, Year Ended Jul 2, 2004

Filed September 1, 2004For Securities:LHX

Summary

L3Harris Technologies, Inc. (formerly Harris Corporation) reported a strong fiscal year ended July 2, 2004, with revenues increasing by 22.2% to $2.52 billion. This growth was primarily driven by robust performance in its Government Communications Systems and RF Communications segments, which benefited from increased defense spending and ongoing global security initiatives. Net income from continuing operations saw a significant surge of 78.8%, reaching $125.7 million, or $1.88 per diluted share, up from $70.3 million, or $1.06 per diluted share, in the prior year. The company also demonstrated improved operational efficiency, with Engineering, Selling, and Administrative expenses decreasing as a percentage of revenue. L3Harris continues to invest in product development and strategic acquisitions, as evidenced by the acquisition of The Orkand Corporation, enhancing its service capabilities in the government sector. The company also returned capital to shareholders through dividends and share repurchases, signaling confidence in its future performance.

Key Highlights

  • 1Revenue increased by 22.2% to $2.52 billion, driven by strong performance in Government Communications Systems and RF Communications.
  • 2Net income from continuing operations grew by 78.8% to $125.7 million ($1.88 per diluted share), showcasing improved profitability.
  • 3Engineering, Selling, and Administrative expenses as a percentage of revenue decreased from 20.1% to 16.7%, indicating enhanced operational efficiency.
  • 4The company acquired The Orkand Corporation for $66 million, strengthening its technical services and IT capabilities for government agencies.
  • 5Strong demand for tactical radios and government communication systems fueled growth in the RF Communications and Government Communications Systems segments.
  • 6The company continued its commitment to shareholder returns with an increase in its quarterly dividend and ongoing share repurchases.
  • 7The sale of the Tools and Test Systems (TTS) product line resulted in an $18.9 million pre-tax gain, reported as a discontinued operation.

Frequently Asked Questions

The primary drivers of Harris Corporation's revenue growth in fiscal year 2004 were strong demand from the U.S. Government, particularly in defense and intelligence sectors, and increased international sales of tactical radio systems. The Government Communications Systems and RF Communications segments saw significant increases due to these factors.

Harris Corporation focused on cost management, leading to a decrease in Engineering, Selling, and Administrative expenses as a percentage of revenue from 20.1% to 16.7%. This improved efficiency, combined with strong revenue growth, significantly boosted profitability, with net income from continuing operations increasing by 78.8%.

The acquisition of The Orkand Corporation for $66 million in cash shortly after fiscal year-end is significant as it bolsters Harris Corporation's capabilities in technical services and information technology for U.S. Government agencies. This acquisition is expected to be accretive to earnings and adds scale to its mission-critical services business.

Harris Corporation acknowledges the significant reliance on U.S. Government contracts, which are subject to Congressional appropriations, potential termination, and extensive regulation. The company mitigates these risks through diversification of its customer base and programs, and by adhering to stringent compliance with procurement regulations. However, the report notes that disruptions or shifts in U.S. Government funding could still adversely impact the business.