What was the impact of the CapRock divestiture on the financial results?

The sale of the CapRock business was treated as a discontinued operation. While the financial results of CapRock are presented separately, its divestiture in January 2017 is a strategic move intended to streamline operations. The proceeds from the sale were used to repay debt.

How did the company's different business segments perform?

Communication Systems saw a revenue decrease of 16%, while Space and Intelligence Systems revenue increased by 5%, and Electronic Systems revenue rose slightly by 1%. Critical Networks revenue saw a 2% increase. Operating income varied across segments, with Communication Systems flat year-over-year, Space and Intelligence Systems up 13%, Electronic Systems up 25%, and Critical Networks up 19%.

What is the outlook for cash flow and liquidity?

The company reported a decrease in cash from operations but stated that existing cash, projected operational cash flows, and its credit facility are expected to be sufficient to meet working capital needs, capital expenditures, dividends, and debt repayments for the next 12 months and beyond. The company has a $1 billion revolving credit facility available.

What are the significant changes in the company's structure or reporting?

L3Harris is transitioning from four to three reporting segments starting in the third quarter of fiscal 2017. The Critical Networks segment will effectively be dissolved, with its remaining operations integrated into the Electronic Systems segment, following the divestiture of its IT services business.

LHX 10-Q Filed Feb 3, 2017

01—Abstract

Summary

Summary of the 10-Q filed February 3, 2017. Cited figures are marked; the original filing is the authoritative source.

L3Harris Technologies, Inc. (LHX) reported its financial results for the quarter and year-to-date period ending December 30, 2016.

For the quarter, revenue was $1.70 billion^a, a decrease from $1.75 billion in the prior year's comparable quarter. Income from continuing operations was $168 million, down from $197 million year-over-year, resulting in diluted earnings per share of $1.33, a decrease from $1.58. The company continues to execute on its divestiture strategy, having completed the sale of its CapRock Communications commercial business in January 2017, shortly after the reporting period.

This strategic move is part of a broader effort to streamline operations and focus on core businesses. For the two quarters ended December 30, 2016, revenue was $3.38 billion^b, a slight decrease from $3.46 billion in the prior year. Income from continuing operations stood at $324 million, down from $343 million, with diluted earnings per share of $2.57, compared to $2.75 in the prior year.

The company generated $295 million^c in cash from operations during the first two quarters of fiscal 2017, a decrease from $387 million in the comparable period of fiscal 2016, impacted by lower collections of accounts receivable. L3Harris also highlighted its ongoing share repurchase program and its commitment to returning capital to shareholders through dividends.

02—Key points

Key Highlights

Revenue for the quarter decreased by 3% to $1.70 billion compared to the prior year's second quarter.
Income from continuing operations for the quarter decreased by 15% to $168 million, leading to a 16% decrease in diluted EPS to $1.33.
The company completed the sale of its CapRock Communications commercial business in January 2017, which was previously reported under discontinued operations.
Net cash provided by operating activities for the first two quarters of fiscal 2017 was $295 million, down from $387 million in the same period last year.
Total debt remained significant at $4.2 billion at quarter-end, though the company maintained compliance with its debt covenants.
The company announced a new $1 billion share repurchase program in January 2017, in addition to its existing program.
L3Harris is realigning its business segments, planning to reduce the number of reportable segments from four to three starting in fiscal Q3 2017.

03—Questions

Frequently Asked Questions

What was the impact of the CapRock divestiture on the financial results?
The sale of the CapRock business was treated as a discontinued operation. While the financial results of CapRock are presented separately, its divestiture in January 2017 is a strategic move intended to streamline operations. The proceeds from the sale were used to repay debt.
How did the company's different business segments perform?
Communication Systems saw a revenue decrease of 16%, while Space and Intelligence Systems revenue increased by 5%, and Electronic Systems revenue rose slightly by 1%. Critical Networks revenue saw a 2% increase. Operating income varied across segments, with Communication Systems flat year-over-year, Space and Intelligence Systems up 13%, Electronic Systems up 25%, and Critical Networks up 19%.
What is the outlook for cash flow and liquidity?
The company reported a decrease in cash from operations but stated that existing cash, projected operational cash flows, and its credit facility are expected to be sufficient to meet working capital needs, capital expenditures, dividends, and debt repayments for the next 12 months and beyond. The company has a $1 billion revolving credit facility available.
What are the significant changes in the company's structure or reporting?
L3Harris is transitioning from four to three reporting segments starting in the third quarter of fiscal 2017. The Critical Networks segment will effectively be dissolved, with its remaining operations integrated into the Electronic Systems segment, following the divestiture of its IT services business.

04—Continue

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