01—Abstract
Summary
Summary of the 10-K filed August 30, 2010. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. (LHX) reported solid performance for the fiscal year ended July 2, 2010, demonstrating resilience amidst a dynamic market.
The company's revenue saw a modest increase, driven by growth in its RF Communications segment, which benefited from the acquisition of Wireless Systems and strong demand for its next-generation Falcon III radios. The Government Communications Systems segment maintained stable revenue, supported by ongoing programs, despite the winding down of certain projects. The Broadcast Communications segment experienced a revenue decline, impacted by market softness, but showed improved operating performance due to cost management and a significant reduction in impairment charges compared to the prior year.
Financially, LHX demonstrated improved profitability, with income from continuing operations significantly increasing year-over-year, largely due to the absence of substantial impairment charges recorded in the prior fiscal year and strong operational execution across its key segments. The company also managed its liquidity effectively, generating positive cash flow from operations and maintaining a strong capital position.
Strategic acquisitions, including Patriot Technologies and SignaCert, were completed to bolster the company's capabilities in healthcare IT and cyber solutions, respectively. The subsequent acquisition of CapRock, a satellite communications provider, further expanded LHX's reach into new markets and capabilities, positioning it for future growth.
02—Key points
Key Highlights
- Revenue increased by 4.0% to $5.2 billion, driven by a 17.4% increase in the RF Communications segment.
- Income from continuing operations surged by 79.8% to $561.6 million, significantly improved from the prior year, which included substantial impairment charges.
- Gross margin percentage improved to 36.0% from 31.7% in the prior year, reflecting favorable product mix and operational efficiencies.
- The company completed strategic acquisitions, including Patriot Technologies and SignaCert, to enhance its IT and cyber security offerings within the Government Communications Systems segment.
- Net cash provided by operating activities increased to $802.7 million, showcasing strong operational cash generation.
- The company maintained a strong liquidity position, ending the fiscal year with $455.2 million in cash and cash equivalents and a $750 million revolving credit facility.
- A significant post-year-end event was the acquisition of CapRock Holdings for $525 million, expanding the company's satellite communications capabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, L3HARRIS Technologies, Inc. kept $0.12.
- Revenue$4.72B100.0%
- Cost of revenue−$2.85B60.4%
- Gross profit$1.87B39.6%
- Operating costs−$1.29B27.3%
- Operating income$581.0M12.3%
- Interest, other & tax−$19.4M0.4%
- Net income$561.6M11.9%
Where FY2010 revenue went
$4.72B- Cost of revenue: $3.05B, 65% of revenue
- Operating costs: $1.09B, 23% of revenue
- Net income: $561.6M, 12% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed August 30, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $4.72B$5.00B | −5.6% |
| Cost of Revenue | $3.05B$3.42B | −10.7% |
| Gross Profit | $1.87B$1.58B | +18.1% |
| Operating Expenses | $723.20M$791.30M | −8.6% |
| Operating Income | $581.00M$312.40M | +86.0% |
| Interest Expense | $72.10M$52.80M | +36.6% |
| Net Income | $561.60M$37.90M | +1381.8% |
| EPS (Basic) | $4.31$0.28 | +1439.3% |
| EPS (Diluted) | $4.28$0.28 | +1428.6% |
| Shares Outstanding (Basic) | 126.30M133.60M | −5.5% |
| Shares Outstanding (Diluted) | 130.00M133.00M | −2.3% |
05—Questions
Frequently Asked Questions
What were the main drivers of L3Harris's revenue growth in fiscal year 2010?
The primary drivers for revenue growth were the RF Communications segment, which saw a 17.4% increase due to the acquisition of Wireless Systems and strong demand for its Falcon III radios, and stable performance in the Government Communications Systems segment. The Broadcast Communications segment experienced a revenue decline.
How did L3Harris's profitability improve year-over-year?
Profitability significantly improved due to a substantial increase in income from continuing operations, rising 79.8% to $561.6 million. This improvement was largely driven by the absence of significant impairment charges that negatively impacted the prior year's results, combined with strong operating performance in the RF Communications and Government Communications Systems segments.
What strategic acquisitions did L3Harris make during or shortly after fiscal year 2010?
During fiscal 2010, L3Harris acquired Patriot Technologies, LLC, a healthcare IT provider for the U.S. Government, and SignaCert, Inc., a provider of IT compliance and cyber security solutions. Subsequent to the fiscal year end, on July 30, 2010, the company acquired CapRock Holdings, Inc., a global provider of managed satellite communications services.
What is the company's outlook regarding government contracts, and what are the associated risks?
A significant portion of L3Harris's revenue (76% in fiscal 2010) is derived from U.S. Government customers. The company relies on continued government funding and may be adversely affected by shifts in spending priorities or budget reductions. Risks include contract terminations, audits, and reliance on appropriations. Despite these risks, the company believes its offerings remain a long-term funding priority.
06—Continue