01—Abstract
Summary
Summary of the 10-K filed August 25, 2014. Cited figures are marked; the original filing is the authoritative source.
Harris Corporation's fiscal year 2014 10-K report showcases a company with a strong presence in government and commercial communications and information technology markets.
Despite a slight year-over-year revenue decline, the company demonstrated improved profitability, with income from continuing operations increasing by 15.7%a and earnings per diluted share rising by 20.2%. This performance was driven by operational excellence initiatives, effective cost management, and a focus on innovation across its three segments: RF Communications, Integrated Network Solutions, and Government Communications Systems. The company's significant reliance on U.S. government contracts, representing approximately 67% of revenue, remains a key factor influencing its business.
While government budgets were constrained, the company benefited from the Bipartisan Budget Act of 2013 which provided some spending relief. Harris continues to invest in research and development, focusing on new product development and technological advancements to maintain its competitive edge in dynamic markets.
02—Key points
Key Highlights
- Revenue declined slightly by 2.0% to $5.0 billion in fiscal 2014 compared to fiscal 2013, primarily driven by lower revenue in the Integrated Network Solutions segment.
- Income from continuing operations increased by 15.7% to $539.8 million, with diluted earnings per share rising by 20.2% to $5.00.
- The company's reliance on U.S. government customers remains high, accounting for approximately 67% of total revenue.
- The RF Communications segment saw a slight revenue decrease of 1.1%, with Tactical Communications revenue up but Public Safety and Professional Communications revenue down.
- Integrated Network Solutions revenue decreased by 7.2%, largely due to lower revenue from U.S. government customers.
- Government Communications Systems revenue saw a modest increase of 1.0%, benefiting from higher revenue from classified customers and specific FAA programs.
- The company's commitment to shareholder returns is evident with a 13th consecutive annual increase in its quarterly cash dividend rate.
- Harris continued its share repurchase program, buying back approximately 4.56 million shares in fiscal 2014.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, L3HARRIS Technologies, Inc. kept $0.11.
- Revenue$5.01B100.0%
- Cost of revenue−$3.31B66.0%
- Gross profit$1.70B34.0%
- Operating costs−$1.16B23.2%
- Operating income$540.0M10.8%
- Interest, other & tax−$5.0M0.1%
- Net income$535.0M10.7%
Where FY2014 revenue went
$5.01B- Cost of revenue: $3.31B, 66% of revenue
- Operating costs: $1.16B, 23% of revenue
- Net income: $535.0M, 11% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed August 25, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $5.01B$5.11B | −2.0% |
| Cost of Revenue | $3.31B$3.38B | −2.2% |
| Gross Profit | $1.70B$1.73B | −1.4% |
| Operating Expenses | $820.00M$914.00M | −10.3% |
| Operating Income | $540.00M$466.00M | +15.9% |
| Interest Expense | $94.00M$109.00M | −13.8% |
| Net Income | $535.00M$113.00M | +373.5% |
| EPS (Basic) | $5.00$1.01 | +395.0% |
| EPS (Diluted) | $4.95$1.01 | +390.1% |
| Shares Outstanding (Diluted) | 107.30M111.20M | −3.5% |
05—Questions
Frequently Asked Questions
What is the company's primary source of revenue?
Harris Corporation generates a significant portion of its revenue from U.S. government customers, including the Department of Defense and intelligence and civilian agencies. In fiscal year 2014, approximately 67% of its revenue came from these sources.
How did Harris Corporation perform financially in fiscal year 2014?
In fiscal year 2014, Harris Corporation experienced a slight decrease in overall revenue (down 2.0% to $5.0 billion). However, profitability improved significantly, with income from continuing operations increasing by 15.7% to $539.8 million, and diluted earnings per share rising by 20.2% to $5.00, reflecting effective cost management and operational efficiencies.
What are the company's main business segments?
Harris Corporation operates through three primary business segments: RF Communications (focused on tactical and public safety communications), Integrated Network Solutions (offering IT services, managed satellite and terrestrial communications, and commercial healthcare solutions), and Government Communications Systems (providing advanced communications and information systems for government customers).
What are the key risks facing the company?
A primary risk is the company's significant dependence on U.S. government contracts, which are subject to budget constraints, appropriations, and potential shifts in spending priorities. Other risks include competition, cyber security threats, potential contract terminations, and international business risks such as currency fluctuations.
06—Continue