01—Abstract
Summary
Summary of the 10-K filed August 27, 2012. Cited figures are marked; the original filing is the authoritative source.
Harris Corporation's 2012 10-K filing reveals a company with a strong presence in defense and government communications, alongside growing commercial segments.
The company reported total revenue of $5.45 billiona, a slight increase from the previous year, driven by growth in Integrated Network Solutions and Government Communications Systems, though partially offset by a decline in RF Communications revenue. Income from continuing operations saw a decrease of 6.8% to $558.7 million, impacted by changes in the defense market and acquisition-related integration costs.
Despite these challenges, Harris demonstrated robust operating cash flow and continued its commitment to shareholder returns through dividends and share repurchases, increasing its quarterly dividend for the eleventh consecutive year. The company is actively managing its business portfolio, including plans for divesting certain operations, and continues to invest in research and development to maintain its competitive edge in rapidly evolving technology markets.
02—Key points
Key Highlights
- Total revenue for fiscal year 2012 was $5.45 billion, a 0.6% increase year-over-year, primarily driven by acquisitions in the Integrated Network Solutions segment and growth in Government Communications Systems.
- Income from continuing operations decreased by 6.8% to $558.7 million, with income from continuing operations per diluted share increasing slightly to $4.80, reflecting impacts from market transitions and integration costs.
- The RF Communications segment experienced a revenue decline of 6.3% to $2.14 billion, attributed to market shifts in defense spending and a less favorable product mix compared to the prior year.
- The Integrated Network Solutions segment saw revenue growth of 8.7% to $1.57 billion, boosted by acquisitions and growth in Harris CapRock Communications and Healthcare Solutions, though operating income decreased due to integration costs and losses in Healthcare Solutions.
- Government Communications Systems reported a 3.2% revenue increase to $1.83 billion and a 12.9% rise in operating income, driven by favorable product mix and program performance.
- Harris returned a record amount of cash to shareholders in fiscal 2012 through dividends ($1.22 per share) and share repurchases ($473.5 million), continuing its eleventh consecutive annual dividend increase.
- The company's backlog at fiscal year-end 2012 was $3.06 billion in funded backlog and $3.93 billion in unfunded backlog, indicating a significant pipeline of future business.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, L3HARRIS Technologies, Inc. kept $0.01.
- Revenue$5.45B100.0%
- Cost of revenue−$3.57B65.5%
- Gross profit$1.88B34.5%
- Operating costs−$1.32B24.3%
- Operating income$558.7M10.2%
- Interest, other & tax−$528.1M9.7%
- Net income$30.6M0.6%
Where FY2012 revenue went
$5.45B- Cost of revenue: $3.57B, 65% of revenue
- Operating costs: $1.32B, 24% of revenue
- Net income: $30.6M, 0.6% of revenue
- Interest, other & tax: $528.1M, 9.7% of revenue
Kept 0.6% as net incomeNet income $30.6M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed August 27, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $5.45B$5.42B | +0.6% |
| Cost of Revenue | $3.57B$3.53B | +1.0% |
| Gross Profit | $1.88B$1.89B | −0.2% |
| Operating Expenses | $940.90M$890.90M | +5.6% |
| Operating Income | $558.70M$599.60M | −6.8% |
| Interest Expense | $113.20M$90.40M | +25.2% |
| Net Income | $30.60M$588.00M | −94.8% |
| EPS (Basic) | $0.26$4.63 | −94.4% |
| EPS (Diluted) | $0.26$4.60 | −94.3% |
| Shares Outstanding (Basic) | 112.10M116.10M | −3.4% |
| Shares Outstanding (Diluted) | 114.80M126.30M | −9.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of Harris Corporation's revenue growth in fiscal year 2012?
Revenue growth was primarily driven by the Integrated Network Solutions segment, benefiting from acquisitions of CapRock, Schlumberger GCS, and Carefx, and the Government Communications Systems segment, which saw increased revenue from programs like GOES-R and NASA's SGSS. These increases were partially offset by lower revenue in the RF Communications segment.
How did the company's profitability change in fiscal year 2012 compared to fiscal year 2011?
Income from continuing operations decreased by 6.8% to $558.7 million. This was mainly due to a less favorable product mix in RF Communications, a decrease in operating income in Integrated Network Solutions (partly due to acquisition integration costs), and higher interest expenses. These factors were partially offset by stronger operating results in Government Communications Systems.
What is Harris Corporation's strategy for future growth?
Harris aims to grow by sustaining and expanding its core businesses (tactical radio, government communications, IT services), accelerating performance in key growth markets (managed satellite communications, public safety, healthcare IT, international markets), driving operational excellence, and optimizing capital deployment through dividends, share repurchases, and accretive acquisitions.
How is the company managing its exposure to U.S. Government spending and potential budget cuts?
Harris acknowledges its significant dependence on U.S. Government revenue (70% in fiscal 2012) and is closely monitoring the defense budget, including the potential impact of sequestration. The company believes its mission-critical products and services position it favorably, but recognizes the risks associated with unpredictable government funding and policy shifts.
06—Continue