10-KPeriod: FY2014

L3HARRIS TECHNOLOGIES, INC. /DE/ Annual Report, Year Ended Jun 27, 2014

Filed August 25, 2014For Securities:LHX

Summary

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% 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.

Financial Highlights

28 data points
Beta

Revenue

$5.01B

34.0% Gross Margin

Net Income

$535.00M

10.7% Net Margin

EPS (Diluted)

$4.95

Free Cash Flow

$648.00M

Financial Statements
Beta
Revenue$5.01B
Cost of Revenue$3.31B
Gross Profit$1.70B
Operating Expenses$820.00M
Operating Income$540.00M
Interest Expense$94.00M
Net Income$535.00M
EPS (Basic)$5.00
EPS (Diluted)$4.95
Shares Outstanding (Diluted)107.30M

Key Highlights

  • 1Revenue 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.
  • 2Income from continuing operations increased by 15.7% to $539.8 million, with diluted earnings per share rising by 20.2% to $5.00.
  • 3The company's reliance on U.S. government customers remains high, accounting for approximately 67% of total revenue.
  • 4The RF Communications segment saw a slight revenue decrease of 1.1%, with Tactical Communications revenue up but Public Safety and Professional Communications revenue down.
  • 5Integrated Network Solutions revenue decreased by 7.2%, largely due to lower revenue from U.S. government customers.
  • 6Government Communications Systems revenue saw a modest increase of 1.0%, benefiting from higher revenue from classified customers and specific FAA programs.
  • 7The company's commitment to shareholder returns is evident with a 13th consecutive annual increase in its quarterly cash dividend rate.
  • 8Harris continued its share repurchase program, buying back approximately 4.56 million shares in fiscal 2014.

Frequently Asked Questions

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.

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.

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).

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.