What is an Accelerated Share Repurchase (ASR) agreement?

An Accelerated Share Repurchase (ASR) is a transaction where a company buys back its own shares from a financial institution, such as Morgan Stanley. The company pays a lump sum upfront, and the financial institution delivers shares. The final number of shares repurchased is determined later based on the average market price over a specified period, often with a discount applied.

Why is L3Harris engaging in share repurchases?

Companies typically engage in share repurchases to return capital to shareholders, reduce the number of outstanding shares (which can increase earnings per share), and signal confidence in the company's financial health and future prospects. This specific ASR is part of L3Harris's common stock repurchase program.

How will the final number of repurchased shares be determined?

The final number of shares will be based on the average of the daily volume-weighted average prices of L3Harris's common stock during the term of the ASR transaction, minus a discount. The exact number is also subject to adjustments as outlined in the agreement.

Is this the only share repurchase activity L3Harris is undertaking?

No, this new $250 million ASR agreement is in addition to a prior $350 million ASR agreement that L3Harris entered into with Morgan Stanley on February 6, 2017.

LHX 8-K SEC Disclosure

Summary

L3Harris Technologies, Inc. (formerly Harris Corporation) announced on May 5, 2017, its entry into a new $250 million accelerated share repurchase (ASR) agreement with Morgan Stanley. This transaction is a component of the company's ongoing share repurchase program and signifies a commitment to returning capital to shareholders. The initial delivery of shares is expected to be approximately 1.9 million, representing about 85% of the total anticipated repurchase based on the prior day's closing price. The final number of shares repurchased will be determined by the average volume-weighted average price during the ASR period, subject to adjustments. This new ASR complements an existing $350 million ASR program initiated in February 2017, further demonstrating L3Harris's proactive capital allocation strategy. The company anticipates the final settlement of this new ASR to occur before the end of its first fiscal quarter of 2018. Investors should note that these buybacks can impact earnings per share by reducing the outstanding share count, potentially boosting share price performance.

Key Highlights

1L3Harris Technologies entered into a new $250 million accelerated share repurchase (ASR) agreement with Morgan Stanley.
2The ASR is part of the company's ongoing common stock repurchase program.
3An initial delivery of approximately 1,931,818 shares is expected on May 5, 2017.
4The final number of repurchased shares will be based on the average daily volume-weighted average price during the transaction term, less a discount.
5The ASR agreement is separate from a previously announced $350 million ASR from February 2017.
6Final settlement of the new ASR is anticipated before the end of L3Harris's first fiscal quarter of 2018.

L3HARRIS TECHNOLOGIES, INC. /DE/ 8-K Report, Corporate Update (May 5, 2017)

Summary

Key Highlights

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