About Harris Corporation
Harris Corp. keeps customers communicating on the battlefield, in the air and space, and just about everywhere else. The company develops communications products for government and commercial customers in more than 100 countries. It makes radio-frequency (RF) and satellite communications and other wireless network transmission equipment; air traffic control systems; and digital network management systems. About three-quarter of Harris' revenue comes from US government agencies particularly the Department of Defense. Its commercial clients come from the construction, energy, health care, maritime, oil, transportation, and utilities industries. In 2018, Harris agreed to merge with L3 Technologies to form what would be the sixth biggest defense contracting firm in the US.
Change in Company Type
Harris agreed in 2018 to merge with L3 Technologies to form L3 Harris Technologies, a company that would have $16 billion in revenue. The combined company would have complementary products and services and deeper resources that would enable it to bid on large-scale Department of Defense projects. The all-stock deal would result in Harris shareholders owning 54% of the company and L3 shareholders owning the rest. The company would fall in line behind Lockheed Martin, Boeing, General Dynamics, and Northrop Grumman as one of the biggest defense contractors in the US and in the top 10 internationally. The companies expect the deal to close in mid-2019.
Harris Corp. has reorganized its divisions following divestitures and to better reflect its operations.
Its Communication Systems segment, about 30% of revenue, develops and makes tactical communications and defense products, including tactical ground and airborne radio communications equipment and night vision technology, and equipment for public safety networks.
The Electronic Systems, 40% of revenue, provides electronic warfare, avionics, and command, control, communications, computers, intelligence, surveillance and reconnaissance equipment for the defense industry. It also makes air traffic management systems for civil aviation.
Space and Intelligence Systems, 30% of revenue, provides intelligence, space protection, geospatial, complete Earth observation, universe exploration, positioning, navigation, and timing, and environmental equipment for national security, defense, civil and commercial customers. Among its products are advanced sensors, antennas, and payloads, as well as ground processing and information analytics.
Harris Corp. operates some 170 locations in Canada, Europe, the Middle East, Central and South America, Africa, Asia, Caribbean, Latin American, and the US. Exports account for about 20% of revenue; no foreign customer accounts for more than 5% of revenue.
Sales and Marketing
Harris Corp.’s primary customers are US government agencies, including prime contractors and supported foreign defense organizations, accounting for about 75% of sales.
Harris Corp.’s revenue fell is 2017 (ended June) no matter how it’s figured. The company has made divestitures and made its past financials reflect current operations. Without that refiguring, revenue fell 21% in 2017 from 2016. With the company’s recalculation, revenue dropped just 2%. The rest of this report will use Harris’ recalculated numbers.
The decrease company attributed the revenue drop to lower Tactical Communications revenue in the Communication Systems segment and lower revenue due to the impact of the divestiture of the Aerostructures business in the fourth quarter of 2016. Other factors were environmental and commercial space programs in the Space and Intelligence Systems segment that moved from build-out to sustainment. Bringing in more revenue were the ramp up of the United Arab Emirates integrated battle management system program, electronic warfare in the Electronic Systems segment, and a $36 million revenue increase from classified customers in the Space and Intelligence Systems segment.
Harris reported a 70% jump in net income to $553 million in 2017 from 2016. The big difference was a lower loss from discontinued operations in 2017, $85 million compared to loss of $287 million in 2016.
Cash flow from operations fell to $569 million in 207 from $924 million in 2016 because of a $415 million payment to the company pension plan and $127 million less of impairment of goodwill and other assets.
Harris Corp. has reconfigured its operations through a series of five divestitures in the past four years. That has provided the company with the resources to focus on what it considers growth opportunities: managed satellite communications, public safety and professional communications, health care IT, and emerging national markets, particularly in the energy, maritime, and government sectors.
The company has rolled out several products that reflect the new focus. They include an HF manpack radio that provides soldiers with 10 times faster data rates than other equipment, an advanced, wideband phased-array antenna with improved anti-jamming electronic warfare capabilities, and an environmental sensor that more precisely detects greenhouse gas emissions and a robotic system with human-like dexterity for ease of use in bomb disposal and other applications.
Harris’ changes have increased its sales to and dependence on government, and particularly defense-related customers. Sales to federal agencies account for about three-quarters of revenue, up from about two-thirds in 2015. Not all of it is defense, however. Some government work is related to civil agencies in law enforcement and aviation.
Mergers and Acquisitions
While most of Harris Corp.’s focus has been on divesting operations that no longer fit into its product mix, it has made one significant acquisition. In 2015 it bought Exelis, provider of communications products catering to the government, in a transaction worth $4.7 billion. The deal beefed up Harris' presence in the government sector.
1025 W NASA BLVD
Melbourne, FL 32919-0001
Phone: 1 (321) 727-9100
Employer Type: Publicly Owned
Stock Symbol: HRS
Stock Exchange: , NYSE
Chairman, President, and CEO: William M. Brown
CIO: Henry Debnam
SVP and CFO: Rahul Ghai
Employees (This Location): 269
Employees (All Locations): 17,500
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