Harris Corp. [HRS] on Tuesday reported lower sales and earnings in its third quarter and said the Justice Department has requested more information from the company for anti-trust reviews related to its pending acquisition of defense contractor Exelis [XLS], although it still expects the $4.8 billion deal to close next month as scheduled.

Sales of tactical communications products were up in Harris Corp.'s third quarter. Photo: Harris.
Sales of tactical communications products were up in Harris Corp.’s third quarter. Photo: Harris.

Net income fell 11 percent to $125.7 million, $1.20 earnings per share (EPS), from $141.4 million ($1.31 EPS) a year ago. Excluding $13 million (12 cents EPS) in costs associated with the pending Exelis acquisition, results beat consensus estimates by 7 cents per share. Last  year’s results included $4.1 million (4 cents EPS) from discontinued operations.

Harris’ operating income declined slightly primarily due to the wind down of the Navy-Marine Corps Intranet contract in its IT Services business.

Sales in the quarter slipped 6 percent to just under $1.2 billion from nearly $1.3 billion a year ago.

Sales were off in all three of the company’s operating segments due to lower revenue on space programs and NASA’s GOES-R weather program, less public safety revenue, and the wind down of two information technology services programs.

Harris left its earnings guidance intact for the year but now expects even lower revenue than previously forecast, with sales projected to be down 4 percent this fiscal year. The prior outlook was for a 1 to 3 percent decline in sales.

Orders totaled a tad over $1.2 billion in the quarter for a book-to-bill ratio above one and free cash flow was a robust $149.8 million.