01—Abstract
Summary
Summary of the 10-K filed August 22, 2019. Cited figures are marked; the original filing is the authoritative source.
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%a 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.
02—Key points
Key Highlights
- Revenue for fiscal year 2019 increased by 10% to $6.8 billion compared to fiscal year 2018.
- Income 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.
- The company's operations are heavily weighted towards U.S. Government customers, representing approximately 77% of total revenue in fiscal year 2019.
- L3Harris 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.
- The company is planning to sell its Night Vision business for $350 million, with proceeds intended for pension plans and shareholder returns.
- The 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.
- Funded 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, L3HARRIS Technologies, Inc. kept $0.14.
- Revenue$6.80B100.0%
- Cost of revenue−$4.47B65.7%
- Gross profit$2.33B34.3%
- Operating costs−$888.0M13.1%
- Operating income$1.45B21.3%
- Interest, other & tax−$497.0M7.3%
- Net income$949.0M14.0%
04—Financials
Financial Highlights
Figures from 10-KFY2019filed August 22, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $6.80B$6.18B | +10.0% |
| Cost of Revenue | $4.47B$2.10B | +112.2% |
| Gross Profit | $2.33B$4.08B | −42.8% |
| SG&A Expenses | $1.24B$583.00M | +113.0% |
| Operating Expenses | $1.24B$1.18B | +5.1% |
| Operating Income | $1.45B$1.12B | +28.9% |
| Interest Expense | $169.00M$170.00M | −0.6% |
| Net Income | $949.00M$700.00M | +35.6% |
| EPS (Basic) | $8.03$3.71 | +116.4% |
| EPS (Diluted) | $7.86$3.64 | +115.9% |
| Shares Outstanding (Basic) | 118.00M117.80M | +0.2% |
| Shares Outstanding (Diluted) | 120.50M120.30M | +0.2% |
05—Questions
Frequently Asked Questions
What was the most significant event for L3Harris during fiscal year 2019?
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.
How reliant is L3Harris on U.S. Government contracts?
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.
What are L3Harris's primary business segments?
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.
How did the company perform financially in fiscal year 2019?
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.
What is the company's strategy regarding its Night Vision business?
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.
06—Continue