Harris Plans for Broadcast Segment Impairment
Harris said today that a review of intangibles in its broadcast segment determined that values are impaired.
“The timing of the review coincides with the fourth-quarter strategic planning cycle,” the Harris announcement stated. “The review indicated that the fair value of goodwill and other intangible assets has been reduced below its carrying value because the current market conditions have resulted in reduced levels of capital expenditures related to broadcast infrastructure systems. As of the fiscal third quarter ended April 3, 2009, the book value of the goodwill and other intangible assets in the Broadcast Communications segment was $928 million. Harris expects to record a $250 million to $275 million non-cash charge in the fourth quarter of fiscal 2009 to write down a significant portion of these assets. The company expects to finalize this estimate by the end of fiscal 2009. This will result in lower amortization expense in fiscal 2010 of approximately $20 million, compared with fiscal 2009.”
Harris also completed the spin-off of Stratex Networks, which will result in a $60 million to $70 million after-tax charge fiscal 4Q09. It’s acquisition of Tyco Electronic Wireless Systems is also done, though it’s not expected to impact earnings until 2010. Cost-reduction measures are expected to generate a fiscal 4Q09 charge of $24 million to $28 million, ultimately resulting in annual savings of $70 million to $75 million.
Harris (NYSE: HRS) revised its 2009 and 2010 guidance in conjunction with the expected charges. Earnings for 2009 are now pegged at $3.77 to $3.79 per share. Previous guidance was $3.93 to $4.03 per share for the fiscal year ending June 30, 2009. Fiscal 2010 earnings are projected at $3.20 to $3.50 per share on revenues of $4.9 billion to $5.1 billion. Previous guidance was for fiscal 2010 was $3.10 to $3.40 per share.
— Deborah D. McAdams