10-KPeriod: FY2019

L3HARRIS TECHNOLOGIES, INC. /DE/ Annual Report, Year Ended Jun 28, 2019

Filed August 22, 2019For Securities:LHX

Summary

L3Harris Technologies, Inc. (LHX) filed its 10-K for the fiscal year ending June 27, 2019, detailing its performance as Harris Corporation prior to the significant L3Harris Merger that closed on June 29, 2019. The company operates across three key segments: Communication Systems, Electronic Systems, and Space and Intelligence Systems, with a strong reliance on U.S. government contracts, accounting for approximately 77% of its revenue. The report highlights a transformative fiscal year for Harris Corporation, marked by robust revenue growth of 10% and a significant increase in income from continuing operations, up 36%. This growth was driven by strong demand in tactical communications, avionics, electronic warfare, and classified space and intelligence programs. The most critical development disclosed is the completion of the merger with L3 Technologies, creating a larger, more diversified aerospace and defense entity. The company is focused on integrating L3 and capitalizing on the combined scale and technological capabilities. Proceeds from the planned divestiture of the Night Vision business are earmarked for pre-funding pension plans and returning cash to shareholders. Despite the significant merger activity, the company maintained strong financial discipline, including increased dividends and share repurchases, positioning it for future growth and operational efficiency.

Financial Statements
Beta
Revenue$6.80B
Cost of Revenue$4.47B
Gross Profit$2.33B
SG&A Expenses$1.24B
Operating Expenses$1.24B
Operating Income$1.45B
Interest Expense$169.00M
Net Income$949.00M
EPS (Basic)$8.03
EPS (Diluted)$7.86
Shares Outstanding (Basic)118.00M
Shares Outstanding (Diluted)120.50M

Key Highlights

  • 1Revenue for fiscal year 2019 increased by 10% to $6.8 billion compared to fiscal year 2018.
  • 2Income from continuing operations surged by 36% to $953 million in fiscal year 2019, with a corresponding increase in income from continuing operations per diluted common share to $7.89.
  • 3The company's operations are heavily weighted towards U.S. Government customers, representing approximately 77% of total revenue in fiscal year 2019.
  • 4L3Harris Technologies, Inc. was formed by the merger of Harris Corporation and L3 Technologies, which closed on June 29, 2019, after the end of the fiscal year.
  • 5The company is planning to sell its Night Vision business for $350 million, with proceeds intended for pension plans and shareholder returns.
  • 6The company demonstrated a commitment to shareholder returns by increasing its quarterly cash dividend rate to $0.75 per share, an annualized rate of $3.00 per share.
  • 7Funded backlog stood at $5.8 billion at the end of fiscal 2019, with expectations to recognize revenue for approximately half within the next twelve months.

Frequently Asked Questions

The most significant event was the completion of the merger with L3 Technologies on June 29, 2019, which created the combined entity, L3Harris Technologies, Inc. The reported financial results primarily reflect Harris Corporation's performance prior to the merger.

L3Harris is highly reliant on U.S. Government contracts. In fiscal year 2019, approximately 77% of the company's revenue was derived from sales to U.S. Government customers, including foreign military sales funded through the U.S. Government, whether directly or through prime contractors.

The company's operations are structured around three reportable segments: Communication Systems, Electronic Systems, and Space and Intelligence Systems. Following the merger, the segment structure has been adjusted to four segments: Integrated Mission Systems, Space and Airborne Systems, Communication Systems, and Aviation Systems.

L3Harris (as Harris Corporation) reported a 10% increase in revenue to $6.8 billion and a 36% increase in income from continuing operations to $953 million in fiscal year 2019. Earnings per diluted share also rose to $7.89.

L3Harris entered into an agreement to sell its Night Vision business for $350 million. The proceeds from this sale are intended to be used to pre-fund L3Harris pension plans and return cash to shareholders.