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Harris Corporation HRS
Q4 2012 Earnings Call Transcript

Transcript Call Date 07/31/2012

Operator: Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2012 Harris Earnings Conference Call. My name is Juanita and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded.

I'd now like to turn the conference over to Ms. Pamela Padgett, Vice President of Investor Relations. Please proceed.

Pamela Padgett - VP, IR: Good morning, everyone, and welcome to our fourth quarter fiscal 2012 earnings call. I am Pamela Padgett and on the call with me today is Bill Brown, President and CEO; Gary McArthur, Senior Vice President and Chief Financial Officer; and Dan Pearson, Executive Vice President and Chief Operating Officer.

Before we get started, a few words on about forward-looking statements. In the course of this teleconference, management may make forward-looking statements. Forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information and a discussion of such assumptions, risks and uncertainties please see the press release and filings made by Harris with the SEC.

In addition, in our press release and on this teleconference and the related presentation, we will discuss certain financial measures and information that are non-GAAP financial measures. A reconciliation to the comparable GAAP measures is included in the tables of our press release and on the Investor Relations section of our website, which is www.harris.com. A replay of this call will also be available on the Investor Relations section of our website.

With that, Bill, I'll turn the call over to you.

William M. Brown - President and CEO: Thank you, Pam, and welcome to our fourth quarter fiscal 2012 earnings call. I'll begin today’s call by turning to Slides 3 and 4 in the presentation. Harris fourth quarter results represented a solid finish to fiscal 2012. Revenue was $1.4 billion. Non-GAAP income was $162 million an increase of 4% over the prior year, even though revenue declined by 6%. Operating income was higher in all three segments as a result of our productivity and cost reduction initiatives non-GAAP EPS of $1.42 was up a strong 15% compared to $1.24 in the prior-year reflecting higher operating income and share repurchases.

In addition, cash flow was particularly strong in the quarter and resulted in record free cash flow for the year. Our new wins in orders in the quarter were encouraging as we enter fiscal 2013. Total orders in the quarter were higher than revenue and increased in all three segments. Although total revenue declined as expected due to lower revenue in tactical communications and IT Services, we are gaining traction in each of our growth initiatives. Public Safety and Professional Communications continued along its strong growth trajectory and was up 12% in the quarter. In CapRock, demand was strong for satellite communications solutions with revenue up 8% and orders up solidly double-digit over the prior year and also significantly higher than revenue.

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