Summary
L3Harris Technologies, Inc. (formerly Harris Corporation) filed an 8-K on February 27, 2012, detailing significant operational and financial updates. The company's Board of Directors approved a plan to exit its cyber integrated solutions operation that provided remote cloud hosting. This strategic shift is attributed to customer preference for on-premises hosting of mission-critical information. The exit is expected to incur pre-tax charges between $113 million and $129 million, with most of these costs to be recognized in the third quarter of fiscal year 2012. These charges primarily consist of asset impairments and employee termination costs, with a smaller portion expected to result in future cash expenditures. In addition to the operational changes, the company also announced a positive development for shareholders: an increase in its quarterly cash dividend from $0.28 to $0.33 per share, effective as of February 27, 2012. This dividend increase signals management's confidence in the company's financial health and its commitment to returning value to shareholders. Investors should note that the cyber integrated solutions operation being exited was part of the Integrated Network Solutions business segment, and the related assets are now classified as held for sale. The company explicitly states that other cyber capabilities, such as software applications and solutions as a service, will continue to be offered.
Key Highlights
- 1Harris Corporation is exiting its remote cloud hosting cyber integrated solutions operation due to customer preference for on-premises solutions.
- 2The company expects to incur pre-tax charges of $113 million to $129 million related to this exit, with most recognized in Q3 FY2012.
- 3These charges primarily include an estimated $109 million to $125 million in impairment of long-lived assets.
- 4The exit impacts only the remote cloud hosting operation; other cyber capabilities remain unaffected.
- 5The company increased its quarterly cash dividend from $0.28 to $0.33 per share, effective February 27, 2012.
- 6The assets related to the exited operation, including a facility in Harrisonburg, Virginia, are being disposed of or held for sale.
- 7Supplemental operational data for the cyber integrated solutions segment for fiscal years 2011 and 2012 (first two quarters) is provided.