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Harris Corp. (HRS - Analyst Report) reported mixed financial results for the fourth quarter of fiscal 2013. GAAP net income from continuing operations was $70.5 million or 65 cents per share compared with a net income of $136.1 million or $1.20 per share in the year-ago quarter. However, adjusted earnings per share of $1.41 were in line with the Zacks Consensus Estimate.

Consolidated revenues in the reported quarter stood at $1,359.6 million, down 5.3% year over year, surpassing the Zacks Consensus Estimate of $1,330 million. Harris currently carries a Zacks Rank #4 (Sell).

Cost of sales in the reported quarter was $887.8 million against $939.6 million in the prior-year quarter. Gross margin was 34.7% compared with 34.6% in the prior-year quarter. Engineering, selling & administrative expenses were $300.7 million versus $253.2 million in the year-ago quarter. Quarterly operating margin was 12.6% compared with 16.9% in the year-ago quarter. The fourth quarter saw new orders of $1.43 billion against $1.48 billion in the prior-year quarter.

At the end of fiscal 2013, Harris generated $833 million in cash from operations compared with $852.9 million in the prior-year period. Free cash flow (cash flow from operations excluding capital expenditures) for the reported period was $668.2 million compared with $643 million in the year-ago period.

At the end of the reported quarter, Harris had cash and cash equivalents of $321 million compared with $356 million at the end of fiscal 2012. Total debt at the end of fiscal 2013 was $1,577.1 million compared with $1,883 million at the end of fiscal 2012. The debt-to-capitalization ratio was 0.50 compared with 0.49 at the end of fiscal 2012.

Government Communications System Segment

Quarterly revenues for the segment fell 3.2% year over year to $481.4 million. Operating income in the quarter was $55 million versus $66.1 million in the prior-year quarter. Quarterly operating margin was 11.4% against 13.3% in the year-ago quarter..

RF Communications Segment

Revenues in the quarter were $500.6 million, down 14.2% year over year. “Tactical Radio Communications” and “Public Safety and Professional Communications” contributed roughly 67% and 33%, respectively. Operating income was $175.7 million compared with $195.7 million in the year-ago quarter. Quarterly operating margin was 35.1% against 33.5% in the year-ago quarter.

In the reported quarter, the segment generated orders worth $646 million, $498 million from the Tactical Radio Communications business and $148 million from the Public Safety and Professional Communications business. Total order backlog in the Tactical Radio Communications segment was $743 million and $598 million in Public Safety and Professional Communications.

Integrated Network Solutions

The segment generated revenues of $402.1 million, up 6.1% year over year. Operating loss in the quarter was $17.6 million compared with an operating profit of $6.3 million in the year-ago quarter.

Financial Outlook

For fiscal 2013, Harris expects GAAP earnings per share from continuing operations of $4.65 - $4.85. However, the company lowered its revenue growth for fiscal 2014 by 1 to 3% as compared with fiscal 2013.

Other Stocks to Consider

The stocks which are performing better in the defense sector and public safety are General Dynamics Corp. (GD - Analyst Report), The Boeing Co. (BA - Analyst Report) and Motorola Solutions Inc. (MSI - Analyst Report). All three surpassed the Zacks Consensus Estimate in the most recent quarter.

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