Summary
L3Harris Technologies, Inc. (formerly Harris Corporation) filed an 8-K on February 2, 2016, to report on its second quarter fiscal year 2016 results and to update its financial guidance. The company announced a significant non-cash goodwill impairment charge of $367 million ($2.63 per diluted share) related to its Harris CapRock Communications segment, primarily due to the downturn in the energy market affecting its customers. Additionally, a loss of $17 million ($0.14 per diluted share) from discontinued operations was recognized related to a post-closing working capital adjustment for the previously sold Broadcast Communications business.
Key Highlights
- 1Reported Q2 FY16 results, including a $367 million goodwill impairment charge for Harris CapRock Communications due to energy market downturn.
- 2Recognized a $17 million loss from discontinued operations related to a working capital adjustment for the former Broadcast Communications business.
- 3Increased its previous guidance range for non-GAAP income from continuing operations per diluted share for fiscal year 2016.
- 4Revised its previous guidance range for GAAP income from continuing operations per diluted share for fiscal year 2016.
- 5Updated its previous guidance range for expected revenue for fiscal year 2016.
- 6The filing includes a press release and financial tables as Exhibit 99.1.
- 7The company emphasizes the use of non-GAAP financial measures to provide a clearer view of operational trends and performance, excluding certain charges.
Frequently Asked Questions
The primary reason for the $367 million non-cash impairment charge is the downturn in the energy market, which has negatively impacted the operations of Harris CapRock Communications' customers.
The $17 million loss from discontinued operations stems from a dispute over a post-closing working capital adjustment related to the sale of Harris' former Broadcast Communications business in 2013. The loss is based on the final determination by an appointed accounting firm regarding this dispute.
Harris is increasing its previous guidance for expected non-GAAP income from continuing operations per diluted share, while revising its guidance for GAAP income from continuing operations per diluted share and updating its expected revenue guidance for fiscal year 2016.
Harris presents non-GAAP financial measures to provide investors with a clearer understanding of operational results, separating them from items that might disproportionately impact performance in a given period. Management believes these measures enhance the ability to analyze trends and understand the company's performance.