) reported mixed financial results for the second quarter of
fiscal 2013. GAAP net income from continuing operations was
$138.5 million or $1.25 per share compared with a net income of
$134.8 million or $1.19 per share in the year-ago quarter.
Quarterly earnings per share of $1.25 easily outpaced the Zacks
Consensus Estimate of $1.20.
However, consolidated revenue in the reported quarter stood at
$1,286.9 million, down 1.8% year over year, missing the Zacks
Consensus Estimate of $1,307 million. Harris currently carries a
Zacks Rank #4 (Sell).
Cost of sales in the reported quarter was $845.4 million
against $856 million in the prior-year quarter. Gross margin was
34.3% compared with 34.7% in the prior-year quarter. Engineering,
selling & administrative expenses were $213.1 million versus
$222.3 million in the year-ago quarter.
Quarterly operating margin was 15.6% compared with 15.7% in
the year-ago quarter. Total new orders in the second quarter were
$1.36 billion against $1.04 billion in the prior-year
In the first half of fiscal 2013, Harris generated $279.5
million in cash from operations compared with $278 million in the
prior-year period. Free cash flow (cash flow from operations
excluding capital expenditures) for the reported period was
$199.6 million compared with $166.7 million in the year-ago
At the end of the reported quarter, Harris had cash and cash
equivalents of $328.1 million compared with $356.0 million at the
end of fiscal 2012. Total debt at the end of the second quarter
was $1,929.9 million compared with $1,883.0 million at the end of
fiscal 2012. Debt-to-capitalization ratio was 0.51 compared with
0.49 at the end of fiscal 2012.
Government Communications System Segment
Quarterly revenue for the segment improved 4% year over year
to $438.8 million. Operating income in the quarter was $65.5
million versus $62.9 million in the prior-year quarter. Quarterly
operating margin was 14.9%, remaining the same year over
During the quarter, Harris received $242 million of orders.
Harris was one of twenty prime contractors, chosen to complete
the work of a 5-year Global Tactical Advanced Communication
Systems IDIQ contract, worth $10 billion.
RF Communications Segment
Revenue in the quarter was $486 million, down 7.6% year over
year. "Tactical Radio Communications" and "Public Safety and
Professional Communications" contributed roughly 69.3% and 30.7%,
respectively. Operating income was $151 million compared with
$172.4 million in the year-ago quarter. Quarterly operating
margin was 31.1% against 32.8% in the year-ago quarter.
In the reported quarter, the segment generated new orders
worth $402 million with $287 million in the Tactical Radio
Communications business and $115 million in the Public Safety and
Professional Communications business. Total order backlog in the
Tactical Radio Communications segment was $561 million and $581
million in Public Safety and Professional Communications.
Integrated Network Solutions
The segment generated revenues of $396.3 million, up 3% year
over year. Operating income in the quarter was $32.4 million
compared with $19.5 million in the year-ago quarter. Quarterly
operating margin was 8.2% compared with 5.1% in the prior-year
Due to significant reduction in government spending, Harris
now declared that its fiscal 2013 revenue will decline 2-4% year
over year against its previous guidance of a yearly decline of
0-2%. For fiscal 2013 earnings per share from continuing
operations are now projected to be in the range of $5.00-$5.20
compared with the prior guidance of $5.10-$5.30.
Other Stocks to Consider
Other stocks to consider in the defense sector and public
General Dynamics Corp.
The Boeing Co.
Motorola Solutions Inc.
). While net earnings of General Dynamics missed the Zacks
Consensus Estimate in the most recent quarter, Motorola Solutions
handily beat the Zacks Consensus Estimate. The Boeing will
release its earnings results tomorrow.
General Dynamics currently has a Zacks Rank #5 (Strong Sell),
while both Motorola Solutions and Boeing currently have a Zacks
Rank #3 (Hold).
BOEING CO (BA): Free Stock Analysis Report
GENL DYNAMICS (GD): Free Stock Analysis
HARRIS CORP (HRS): Free Stock Analysis Report
MOTOROLA SOLUTN (MSI): Free Stock Analysis
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