Harris Corporation 2014 Annual Report Financial Highlights
Total Page:16
File Type:pdf, Size:1020Kb
HARRIS CORPORATION 2014 ANNUAL REPORT FINANCIAL HIGHLIGHTS fiscal YEARS ENDED REVENUE DOLLARS IN BILLIONS Dollars IN MILLIONS, 2014 2013 2012 EXCEPT PER SHARE amounts JUNE 27 JUNE 28 JUNE 29 2012 $5.5 Revenue $5,012.0 $5,111.7 $5,451.3 2013 $5.1 2014 $5.0 GAAP Income from $539.8 $466.4 $558.7 Continuing Operations Non-GAAP Income from $539.8 $549.4 $605.0 Continuing Operations* NON-Gaap EARNINGS PER SHARE* IN dollars GAAP Income Per Diluted Share $5.00 $4.16 $4.80 $ from Continuing Operations 2014 5.00 Non-GAAP Income Per Diluted Share $5.00 $4.90 $5.20 form Continuing Operations* $4.90 2013 $5.20 2012 GAAP Return on Invested Capital 20.4% 17.1% 15.8% DIVIDENDS paID PER COMMON SHARE IN dollars Diluted Weighted Average Common Shares Outstanding (Millions) 107.3 111.2 114.8 Worldwide Employment $ 14,000 14,000 15,200 1.68 2014 $1.48 2013 $1.22 2012 Harris is an international communications HARRIS and information technology company CorporatION serving government and commercial markets FREE CASH FLOW* DOLLARS IN MILLIONS in more than 125 countries. Headquartered in Melbourne, Florida, the company has NYSE:HRS approximately $5 billion of annual revenue 2012 $619 and about 14,000 employees—including 6,000 engineers and scientists. Harris is dedicated to developing best-in-class assured communications® 2013 $655 products, systems and services. Additional information about Harris Corporation is available at harris.com. 2014 $648 *Amounts used in this Annual Report that are considered non-GAAP financial measures are defined and reconciled to the most directly comparable GAAP financial measures on page 4 of this Annual Report. GAAP refers to U.S. generally accepted accounting principles. HARRIS CORPORATION 2014 ANNUAL REPORT InforMatION for SHAREHOLDERS CORPORATE HEADQUARTERS Harris Corporation 1025 West NASA Boulevard Melbourne, Florida 32919-0001 TELL US what YOU THINK! 1-321-727-9100 harris.com Share your Annual Report feedback: harris.com/annual_report HARRIS STOCK EXCHANGE CorporatION Harris common stock is listed and traded on the New York Stock Exchange. Ticker Symbol: HRS FORWARD-LOOKING STATEMENTS NYSE:HRS This report, including the letter to shareholders, contains forward-looking statements that are based TRANSFER AGENT AND REGISTRAR on the views of management regarding future Computershare events at the time of publication of this report. These 211 Quality Circle, Suite 210 forward-looking statements, which include, but are College Station, TX 77845 not limited to: our plans, strategies, and objectives 1-888-261-6777 | Outside the U.S., please dial 1-201-680-6578 for future operations; new products, services, www.computershare.com/investor or developments; future economic conditions; SHAREHOLDER SERVICES outlook; the value of contract and program awards; Computershare maintains the records for our registered shareholders and the effect of our acquisitions on our business; our can assist you with a variety of shareholder-related services at no charge. growth potential; and the potential of the industries The Computershare automated telephone voice response system, at and markets we serve, are subject to known and 1-888-261-6777, is available 24 hours a day, 7 days a week, to conduct a unknown risks, uncertainties, and other factors wide variety of secure transactions. that may cause our actual results to be materially different from those expressed in or implied by Electronic access to your financial statements and shareholder each forward-looking statement. These risks, communications is available 24 hours a day, 7 days a week, via uncertainties, and other factors are discussed in our Computershare’s website, computershare.com/investor. Visit this website Form l0-K for the fiscal year ended June 27, 2014. to view and print Investment Plan Statements, Investor Activity Reports, 1099 tax documents, notification of ACH transmissions, transaction ANNUAL CERTIFICATIONS activities, annual meeting materials and other selected correspondence. The most recent certifications by our Chief Executive Officer and Chief Financial Officer pursuant to You also can send mail to Computershare at: sections 302 and 906 of the Sarbanes-Oxley Act of 2002 were filed as exhibits to our Form l0-K Computershare Computershare for the fiscal year ended June 27, 2014. Our most P.O. Box 30170 211 Quality Circle, Suite 210 recent annual CEO certification regarding Harris College Station, TX 77842-3170 College Station, TX 77845 (overnight delivery only) compliance with corporate governance listing (U.S. mail only) standards was submitted to the New York Stock ANNUAL MEETING Exchange on October 30, 2013. The 2014 annual meeting of shareholders will be held on October 24 at the Customer Briefing Center on the Harris Corporate Headquarters campus, Melbourne, Florida, starting at 1:00 p.m. Eastern Time. The meeting will be webcast and can be accessed from a link on the Investor Relations page on the Harris website: harris.com. INDEPENDENT ACCOUNTANTS Ernst & Young LLP | Orlando, Florida DESIGN: MTN ADVERTISING, INC. PRINTING: RR DONNELLEY—Orlando Plant HARRIS CORPORATION 2014 ANNUAL REPORT letter to shareholders In the 1960s, satellite manufacturers struggled to create excellence lightweight antennas that could be tucked away for launch, but also unfurl in space to provide the full reflection needed to transmit We continued to expand the scope and scale of our harris back to earth. after dozens of trials and errors, harris engineers Business excellence (hBX) program—the core operating system discovered a flexible mesh material—similar to pantyhose—that fit for our companywide commitment to excellence. The program all those parameters when encased in a thin layer of gold. This provides the framework and tools that empower every employee novel solution resulted in a line of antennas that still provide vital to drive continuous improvement in business performance and communications that millions of people depend upon every day. customer satisfaction. one tool we’re widely deploying is Value engineering to reduce cost and improve quality and performance for products already in production. For example, we currently use die cast aluminum for many key mechanical parts inside our highly successful Falcon III® radios. While die cast aluminum offers significant cost savings over traditional machined parts, we’re investigating an even more cost effective This example highlights two core principles that have driven the solution with injection-molded magnesium technology. We expect to company’s success since its founding in 1895—excellence and cut over to this new process in fiscal 2015. innovation. They are part of the company’s fabric, our dNa, and have provided harris the resilience not only to weather the many challenges we have faced during the past 119 years, but to prosper. In 2014 these same principles enabled us to adapt to U.s. government budget constraints as we continued our focus on improving operational efficiency and increasing our r&d We’re also rigorously applying Value stream Mapping (VsM) investment to speed the introduction of new solutions. This throughout the company. In our space structures business, we used strategy is already generating results for our customers and VsM to eliminate downtime and coordinate production builds to shareholders and—more importantly—positions us for long- reduce the cost of a complex boom-and-hinge mechanical assembly. term success. leveraging ideas from internal and external sources, we altered the project work flow and parts delivery schedule to drive a 35 percent Financials cost reduction and more than 20 percent improvement in part lead Fiscal 2014 was another year of solid overall financial results for time—illustrating how good ideas can emanate from collaboration harris. despite a challenging market, we continued to invest in our across the value stream. future while delivering shareholder value. Under hBX, we’re actively addressing every area of spend across Financial highlights include: the company—challenging our cost assumptions, removing waste and driving improvements using every lever available. and we have • Revenue of $5 billion—with 30 percent coming from increased our focus on areas traditionally considered largely un- international markets addressable. savings from these and other hBX initiatives enable us to increase our investments in company-funded r&d to spur further • GAAP income from continuing operations of $540 million innovation and growth. • GAAP EPS of $5.00 per diluted share Innovation • Free cash flow of $648 million—120 percent of income from research and development represents the foundation of our continuing operations technical innovation. In fiscal 2014 we increased our r&d invest- ment by 12 percent to $264 million—representing a significant 5.3 We also continued our balanced capital deployment strategy, percent of company revenue.* our investments are focused on adding using $300 million to repurchase shares and increasing our new features to existing products, tailoring offerings for international dividend by 14 percent. over the past three years, our dividend markets, and creating totally new-to-the-world solutions to has increased at a 19 percent compound annual growth rate. address our customers’ toughest communications challenges. HARRIS CORPORATION 2014 ANNUAL REPORT 1 76952 Harris_Narrative R3.indd 1 8/27/14 11:57 AM letter to shareholders, Cont. oFFICers & dIreCTors Value-added services represent another possible market- board oF dIreCtors changing opportunity for harris, and we’re researching potential new applications in markets such as weather and geospatial William M. Brown Vyomesh I. Joshi James C. Stoffel, Ph.D. 2, 3 information where we have well-established technology and domain expertise. These applications—from ship tracking to ▶ Chairman, President and CEO, ▶ Former Executive Vice President, ▶ General Partner, harris Corporation Hewlett-Packard Co. Trillium International crop planting to 3D mapping—are evolving rapidly and are less significant product introductions this past year included multiple susceptible to the ebb and flow of government funding. ▶ Former Senior Vice President additions to our popular Falcon® family of tactical radios, such as Peter W.