10-QPeriod: Q3 FY2008

L3HARRIS TECHNOLOGIES, INC. /DE/ Quarterly Report for Q3 Ended Dec 28, 2007

Filed February 5, 2008For Securities:LHX

Summary

L3Harris Technologies (LHX) reported a strong second quarter for fiscal year 2008, with revenue increasing by 29.7% to $1.32 billion and net income rising 21.6% to $114.3 million, or $0.83 per diluted share. This growth was driven by robust performance across all four business segments, notably the Government Communications Systems and Defense Communications and Electronics segments, bolstered by strategic acquisitions and organic growth. The company's financial health appears solid, with net cash provided by operating activities increasing to $188.8 million for the first two quarters of the fiscal year. Management expressed confidence in the company's liquidity, stating that existing cash, operational cash flow, and access to capital markets are sufficient to meet its needs for the foreseeable future. The company also continues its commitment to shareholder returns through a consistent dividend policy and ongoing share repurchase program.

Key Highlights

  • 1Revenue for the quarter increased by 29.7% year-over-year to $1.32 billion.
  • 2Net income grew by 21.6% to $114.3 million, resulting in diluted EPS of $0.83, up from $0.67 in the prior year.
  • 3The Government Communications Systems segment saw significant growth with revenue up 37.5% and operating income up 60.9%, largely due to the acquisition of Multimax.
  • 4Defense Communications and Electronics segment also performed well, with revenue up 18.4% and operating income up 18.3%, driven by strong sales of tactical radio systems.
  • 5Net cash provided by operating activities increased to $188.8 million for the first two quarters of fiscal 2008.
  • 6The company declared a quarterly dividend of $0.15 per share, marking its sixth consecutive annual increase.
  • 7L3Harris continues to execute its share repurchase program, having spent $100 million in the first two quarters of fiscal 2008.

Frequently Asked Questions

Revenue growth was primarily driven by strong performance across all four business segments. The Government Communications Systems segment saw substantial growth, aided by the acquisition of Multimax, while the Defense Communications and Electronics segment benefited from increased sales of tactical radio systems. The Harris Stratex Networks segment also experienced significant revenue increases due to the combination with Stratex.

Profitability improved significantly. Net income increased by 21.6% to $114.3 million, and diluted earnings per share rose to $0.83 from $0.67 in the prior year's quarter. This improvement was supported by higher revenues and, in some segments, improved operating income margins, despite integration costs in certain segments.

L3Harris maintains a strong liquidity position. Net cash provided by operating activities increased in the first two quarters of fiscal 2008. Management believes that current cash, operational cash flow, and access to capital markets are sufficient to cover anticipated working capital, capital expenditures, and share repurchase needs for the next 12 months and the foreseeable future.

Yes, the company incurred integration and transaction-related costs. The Harris Stratex Networks segment reported $12.1 million in integration costs in the second quarter of fiscal 2008 related to the Stratex combination. The Broadcast Communications segment also incurred $1.8 million in acquisition-related costs for Zandar Technologies. The Government Communications Systems segment included costs associated with the acquisition of Multimax.