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Harris Corp to sell Broadcast Comms division

2 May 2012
Harris Corp to sell Broadcast Comms division

Harris Broadcast President Harris Morris said last night, “Today, Harris announced its decision to divest the Broadcast Communications business. I fully support this decision and believe that the timing is right for both Harris and Broadcast Communications. “Harris has supported us by investing in our business, allowing us to develop some of the market’s most innovative, solution-based technologies,” said Morris. “However, over time Broadcast Communications has become less aligned with the Harris core businesses and long term strategy. “Operating independently or as part of a broadcast or media-focused enterprise will provide us with strategic investment, increased competitive flexibility, and customer focus to lead the continuing transformation in this competitive marketplace. “The decision to divest in no way reflects the quality of the work Broadcast Communications performed in support of our customers and our company,” said Morris.  “Harris simply determined that Broadcast Communications could provide higher value and operate more effectively under a different ownership model. “In the interim, Broadcast Communications will continue to be a part of Harris Corporation and operate business as usual. Our valued relationships, both longstanding and new, remain our top priority. The global team will continue to work diligently to ensure our commitment to our customers and partners remains steadfast, our execution to fulfill commitments is flawless, and our progress against strategic objectives remains focused,” he said. The statement released yesterday by company President and CEO William M Brown said Harris Corporation (NYSE:HRS) reported revenue in the third quarter of fiscal 2012 of $1.48 billion compared with $1.41 billion in the prior-year quarter. GAAP loss from continuing operations in the third quarter was $255 million, or $2.27 per diluted share. GAAP income from continuing operations in the prior year was $142 million, or $1.11 per diluted share. In connection with the process of evaluating strategic alternatives for Broadcast Communications, the company recorded in the third quarter a non-cash charge of $407 million after-tax, or $3.62 per diluted share, to write down a significant portion of the goodwill and other long-lived assets in Broadcast Communications, resulting in the GAAP loss from continuing operations. Following the close of the quarter, the company approved a plan to divest Broadcast Communications. As a result, current and prior period financial results for Broadcast Communications will be reported as discontinued operations beginning with the fourth quarter of fiscal 2012. Non-GAAP income from continuing operations in the third quarter was $159 million, or $1.39 per diluted share, compared with $151 million, or $1.18 per diluted share, in the prior year.  Non-GAAP income from continuing operations excludes acquisition-related costs in both quarters, as well as the non-cash charge recorded in the third quarter related to Broadcast Communications. “Orders, revenue, and non-GAAP earnings per share from continuing operations were all higher compared to the prior year,” said Brown. “The company continues to generate strong cash flow, and as a result, in the third quarter we increased the dividend by 18 percent and the target payout ratio from 20 to 25 percent.” “Operating performance in both RF Communications and Government Communications Systems was excellent and drove higher non-GAAP operating income. In Integrated Network Solutions, we are exiting the Cyber Integrated Solutions business and selling the underutilized facility in Virginia, as previously announced in the quarter. “In addition, we are announcing plans to divest Broadcast Communications. The decision to divest Broadcast Communications resulted from a thorough review of our business portfolio, which determined that the business is no longer aligned with the company’s long-term strategy. The plan to sell these assets supports our disciplined approach to capital allocation, and we intend to use the proceeds to return cash to shareholders and invest in growing our core businesses.”

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