) reported mixed financial results for the third quarter of
fiscal 2013. GAAP net income from continuing operations was
$124.6 million or $1.12 per share compared with a net income of
$154.4 million or $1.38 per share in the year-ago quarter.
Quarterly earnings per share of $1.12 were in line with the Zacks
However, consolidated revenues in the reported quarter stood
at $1,203.7 million, down 12.1% year over year, missing the Zacks
Consensus Estimate of $1,209 million. Harris currently carries a
Zacks Rank #4 (Sell).
Cost of sales in the reported quarter was $803.5 million
against $879.8 million in the prior-year quarter. Gross margin
was 33.2% compared with 35.7% in the prior-year quarter.
Engineering, selling & administrative expenses were $202.5
million versus $242 million in the year-ago quarter. Quarterly
operating margin was 16.4% compared with 18% in the year-ago
quarter. The third quarter saw total new orders of $1.13 billion
against $1.48 billion in the prior-year quarter.
In the first nine months of fiscal 2013, Harris generated
$513.2 million in cash from operations compared with $483.2
million in the prior-year period. Free cash flow (cash flow from
operations excluding capital expenditures) for the reported
period was $388.3 million compared with $325.8 million in the
At the end of the reported quarter, Harris had cash and cash
equivalents of $459 million compared with $356 million at the end
of fiscal 2012. Total debt at the end of the third quarter was
$1,576.1 million compared with $1,883.0 million at the end of
fiscal 2012. The debt-to-capitalization ratio was 0.48 compared
with 0.49 at the end of fiscal 2012.
Government Communications System Segment
Quarterly revenues for the segment fell 6% year over year to
$442.4 million. Operating income in the quarter was $67.1 million
versus $64.1 million in the prior-year quarter. Quarterly
operating margin was 15.2%, remaining same year over year.
RF Communications Segment
Revenues in the quarter were $417.7 million, down 22.3% year
over year. "Tactical Radio Communications" and "Public Safety and
Professional Communications" contributed roughly 66% and 34%,
respectively. Operating income was $116.1 million compared with
$181.6 million in the year-ago quarter. Quarterly operating
margin was 27.8% against 33.8% in the year-ago quarter.
In the reported quarter, the segment generated new orders
worth $486 million, $297 million from the Tactical Radio
Communications business and $189 million from the Public Safety
and Professional Communications business. Total order backlog in
the Tactical Radio Communications segment was $582 million and
$619 million in Public Safety and Professional
Integrated Network Solutions
The segment generated revenues of $364.5 million, down 6.1%
year over year. Operating income in the quarter was $30.3 million
compared with $22.3 million in the year-ago quarter. Quarterly
operating margin was 8.3% compared with 5.7% in the prior-year
For fiscal 2013, Harris expects earnings per share from
continuing operations of $4.60-$4.70 compared with the prior
guidance of $5.00-$5.20 while on a GAAP basis earnings per share
from continuing operations are expected to be $3.95-$4.33.
Other Stocks to Consider
Other stocks to consider in the defense sector and public
General Dynamics Corp.
The Boeing Co.
Motorola Solutions Inc.
). Both General Dynamics and Boeing surpassed the Zacks Consensus
Estimate in the most recent quarter but the net earnings of
Motorola Solutions missed the Zacks Consensus Estimate.
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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