8-KFinancial Events

L3HARRIS TECHNOLOGIES, INC. /DE/ 8-K Report, Material Impairment (Jan 7, 2009)

Filed January 7, 2009For Securities:LHX

Summary

This Form 8-K filing from Harris Corporation (filed January 7, 2009) primarily announces a significant event within its majority-owned subsidiary, Harris Stratex Networks, Inc. The company has determined that it is likely to record a substantial non-cash impairment charge related to goodwill and other indefinite-lived assets on the balance sheet of Harris Stratex Networks. This determination is driven by the current challenging global economic environment and a decline in the market capitalization of Harris Stratex Networks. The impairment review is focused on assets acquired in the January 2007 combination of Stratex Networks, Inc. and the Company's Microwave Communications Division, which held approximately $316 million in goodwill and other indefinite-lived intangible assets as of September 28, 2008. While the exact amount of the charge has not yet been determined as the review is ongoing, management expects a significant portion of these assets to be written down. This non-cash charge will impact the company's consolidated financial results for the fiscal quarter ended January 2, 2009.

Key Highlights

  • 1Harris Corporation anticipates a significant non-cash impairment charge related to goodwill and other indefinite-lived assets at its Harris Stratex Networks subsidiary.
  • 2The impairment is a result of the current global economic downturn and a decline in Harris Stratex Networks' market capitalization.
  • 3Goodwill and other indefinite-lived intangible assets on Harris Stratex Networks' balance sheet totaled $316 million as of September 28, 2008.
  • 4The impairment relates primarily to assets from the January 2007 combination of Stratex Networks and Harris's Microwave Communications Division.
  • 5The impairment review is ongoing, and the exact amount of the charge has not yet been determined.
  • 6The charge will be recorded in the consolidated financial results for the fiscal quarter ended January 2, 2009.
  • 7The impairment is a non-cash event and will not require current or future cash expenditures.

Frequently Asked Questions

The primary reasons are the current challenging global economic environment and a significant decline in the market capitalization of Harris Stratex Networks, Inc., a majority-owned subsidiary. These factors suggest that the fair value of certain reporting units within Harris Stratex Networks has fallen below their carrying value.

As of September 28, 2008, Harris Stratex Networks had approximately $316 million in goodwill and other indefinite-lived intangible assets on its balance sheet. Management believes a significant portion of this amount will be impaired.

No, this is expected to be a non-cash charge. Neither Harris Corporation nor Harris Stratex Networks will be required to make any current or future cash expenditures as a result of these impairments.

The company is still in the process of completing its impairment review. The exact amount or range of the impairment charge has not yet been determined. Harris Corporation will disclose this estimate in a future filing with the Securities and Exchange Commission.