Harris Corporation Reports Fiscal 2017 Second Quarter Results

To supplement our condensed consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), we provide additional measures of income from continuing operations and income from continuing operations per diluted common share and net cash provided by operating activities, adjusted to exclude certain costs, charges, expenses and losses or other amounts. Harris management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Harris management also believes that these non-GAAP financial measures enhance the ability of investors to analyze Harris’ business trends and to understand Harris’ performance. In addition, Harris may utilize non-GAAP financial measures as guides in its forecasting, budgeting, and long-term planning processes and to measure operating performance for some management compensation purposes. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP follows:


Table 5 HARRIS CORPORATION FY '17 Second Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Income from Continuing Operations and Income from Continuing Operations per Diluted Common Share (Unaudited)

	Quarter Ended
	December 30, 2016
	Amount			Diluted Per Share Amount

	(In millions, except per share amounts)
GAAP income from continuing operations and related diluted earnings per share	$	168		$	1.33
Non-GAAP adjustments:
Integration and other Exelis Inc. acquisition-related costs ($13 million pre-tax)	10			0.09
Non-GAAP income from continuing operations and related diluted earnings per share	$	178		$	1.42

	Quarter Ended
	January 1, 2016
	Amount			Diluted Per Share Amount

	(In millions, except per share amounts)
GAAP income from continuing operations and related diluted earnings per share	$	197		$	1.58
Non-GAAP adjustments:
Net liability reduction for certain post-employment benefit plans	(101		)
Integration and other Exelis Inc. acquisition-related costs	46
Charges for restructuring and other items	26
Total pre-tax adjustments	(29		)
Income tax on above adjustments	16
Total adjustments	(13		)	(0.11		)
Non-GAAP income from continuing operations and related diluted earnings per share	$	184		$	1.47


Table 6 HARRIS CORPORATION FY '17 Second Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Free Cash Flow (Unaudited)

	Quarter Ended
	December 30, 2016

	(In millions)
Net cash provided by operating activities	$	252
Less net capital expenditures (A)	(28		)
Free cash flow	$	224

(A) Reflects additions of property, plant and equipment, net of proceeds from the sale of property, plant and equipment


Table 7 HARRIS CORPORATION FY '17 Second Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Segment Operating Income (Unaudited)

	Quarter Ended
	January 1, 2016
	As Reported		Adjustment (A)		Non-GAAP

	(In millions)
Segment Operating Income
Communication Systems	$	121	$	17	$	138
Electronic Systems	63		6		69
Critical Networks	63		3		66

(A) Adjustments for restructuring and other charges


Table 8 HARRIS CORPORATION FY '17 Second Quarter Summary RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Reconciliation of Guidance for FY '17 Income from Continuing Operations per Diluted Common Share to FY '17 Non-GAAP Income from Continuing Operations per Diluted Common Share (Unaudited)

			2017
			(Guidance)
GAAP income from continuing operations per diluted common share			$5.21 to $5.41
Estimated net impact of acquisition-related items			$.19
Non-GAAP income from continuing operations per diluted common share			$5.40 to $5.60

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