Monday, communications and information technology company Harris Corp. (HRS) said that it has completed corporate actions including the spin-off of a majority-owned subsidiary and a major acquisition. The company also announced the starting of company-wide cost-reduction initiatives, and the decision to record impairment of goodwill and other intangible assets in its Broadcast Communications segment. In addition, the company raised its earnings guidance for fiscal 2010 due to lower amortization expense in Broadcast Communications and reduced its fiscal 2009 earnings guidance to reflect charges and share-based compensation expense.
Spin-off
Harris distributed about 56% of the outstanding shares of Harris Stratex Networks, Inc., the company which was spun-off. As a result of the transaction, Harris shareholders received 0.248418 of a share of Harris Stratex Class A common stock for each share of Harris common stock held.
The spin-off will result in $60 million to $70 million after-tax charge in the fourth quarter of fiscal 2009. This will be included in discontinued operations in the company's financial statements and is related to the write-down of Harris Stratex net assets to the fair value of the Harris Stratex shares distributed to Harris shareholders and other spin-off related charges.
Further, Harris said that it will incur a non-cash share-based compensation charge of about $4 million related to the adjustment of outstanding employee stock options to reflect the spin-off and that will be included the fourth quarter fiscal 2009 results from continuing operations.
Acquisition
The company completed acquisition of the Tyco Electronics Wireless Systems business, which provides wireless communications systems for law enforcement, fire and rescue, and public service organizations. The acquisition is expected to be neutral to non-GAAP earnings for Harris in fiscal 2009 and slightly accretive in fiscal 2010, both excluding acquisition-related charges. But it is expected to be a significant contributor to earnings in fiscal 2011 and fiscal 2012.
"The combination of the Wireless Systems business with our very successful RF Communications business creates a powerful supplier in the growing $9 billion global land mobile radio systems market," said Howard Lance, CEO of Harris.
Cost Reduction
The various cost reduction actions announced by Harris spans across its business segments and its corporate headquarters. These actions are expected to result in charges of about $24 million to $28 million in the fourth quarter of fiscal 2009. However, the measures can produce annualized cost savings of about $70 million to $75 million.
Asset Impairment
The company decided to record a non-cash charge of $250 million to $275 million in the fourth quarter of fiscal 2009 to write down a significant impairment of the current carrying value of goodwill and other intangible assets related to the Broadcast Communications segment. Harris expects to finalize the estimate by the end of fiscal 2009. The write-down will result in lower amortization expense in fiscal 2010 of about $20 million, compared with fiscal 2009.
Guidance Update
Due to the lower amortization expense expected in the Broadcast Communications segment, the company increased its fiscal 2010 guidance for non-GAAP earnings from continuing operations to a range of $3.20 to $3.50 per share and GAAP earnings to a range of $3.05 to $3.40 per share. Previously, the company expected non-GAAP earnings in range of $3.10 to $3.40 per share and GAAP earnings in the range of $2.95 to $3.30 per share. However, revenue from continuing operations for fiscal 2010 is still expected to be in the range of $4.9 billion to $5.1 billion.
Further, to reflect the impact of charges for cost-cutting actions and share-based compensation related to the spin-off, the company reduced its fiscal 2009 guidance for non-GAAP earnings from continuing operations to a range of $3.77 to $3.79 per share and GAAP earnings to a range of $2.07 to $2.29 per share from the previous non-GAAP earnings range of $3.93 to $4.03 per share and GAAP earnings in the range of $3.88 to $3.98 per share. However, Harris continues to expect a 7% increase in revenue from continuing operations for fiscal 2009 over the previous year.
Stock Movement
HRS is currently trading at $31.53, up $0.45 or 1.45% on the NYSE. In the past 52-week period, the stock has traded in the range of $27.22 - $66.71, with an average 3-month volume of 0.67 million shares.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.