harris corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of July 1, 2011, there was $11.9 million of total unrecognized compensation cost related to performance
share and performance share unit awards under our SIPs. This cost is expected to be recognized over a weightedaverage
period of 1.04 years. The weighted-average grant date price per share of performance shares and per unit of
performance share units granted during fiscal 2011, 2010 and 2009 was $44.12, $36.43 and $48.82, respectively.
The total fair value of performance shares and performance share units that vested during fiscal 2011, 2010 and
2009 was approximately $14.0 million, $13.0 million and $10.7 million, respectively.
NOTE 15: INCOME FROM CONTINUING OPERATIONS PER SHARE
The computations of income from continuing operations per share are as follows (in this Note 15, “income
from continuing operations” refers to income from continuing operations attributable to Harris Corporation common
shareholders):
2011 2010 2009
(In millions, except per share
amounts)
Income from continuing operations. ............................... $588.0 $561.6 $312.4
Adjustments for participating securities outstanding ...................
Income from continuing operations used in basic and diluted common share
(7.2) (5.9) (2.1)
calculations (A) ............................................ $580.8 $555.7 $310.3
Basic weighted average common shares outstanding (B) ................ 125.3 129.0 132.3
Impact of dilutive stock options .................................. 1.0 1.0 0.7
Diluted weighted average common shares outstanding (C). .............. 126.3 130.0 133.0
Income from continuing operations per basic common share (A)/(B) ....... $ 4.63 $ 4.31 $ 2.35
Income from continuing operations per diluted common share (A)/(C). ..... $ 4.60 $ 4.28 $ 2.33
Potential dilutive common shares primarily consist of employee stock options. Employee stock options to
purchase approximately 3,274,962, 3,300,641 and 3,270,318 shares of our common stock were outstanding at the
end of fiscal 2011, 2010 and 2009, respectively, but were not included as dilutive stock options in the computations
of income from continuing operations per diluted common share because the effect would have been antidilutive as
the options’ exercise prices exceeded the average market price of our common stock.
NOTE 16: RESEARCH AND DEVELOPMENT
Company-sponsored research and product development costs are expensed as incurred. These costs were
$335.6 million, $325.8 million and $243.5 million in fiscal 2011, 2010 and 2009, respectively, and are included in
the “Engineering, selling and administrative expenses” line item in our Consolidated Statement of Income.
Customer-sponsored research and development costs are incurred pursuant to contractual arrangements and are
accounted for principally by the cost-to-cost percentage-of-completion method. Customer-sponsored research and
development costs incurred under U.S. Government-sponsored contracts require us to provide a product or service
meeting certain defined performance or other specifications (such as designs). Customer-sponsored research and
development was $647.3 million, $720.9 million and $759.2 million in fiscal 2011, 2010 and 2009, respectively.
Customer-sponsored research and development is included in our revenue and cost of product sales and services.
NOTE 17: INTEREST EXPENSE
Total interest expense was $90.4 million, $72.1 million and $52.8 million in fiscal 2011, 2010 and 2009,
respectively. Interest paid was $90.1 million, $69.8 million and $49.0 million in fiscal 2011, 2010 and 2009,
respectively.
NOTE 18: LEASE COMMITMENTS
Total rental expense amounted to $52.7 million, $46.3 million and $31.5 million in fiscal 2011, 2010 and 2009,
respectively. Future minimum rental commitments under leases with an initial lease term in excess of one year,
primarily for land and buildings, amounted to approximately $223.2 million at July 1, 2011. These commitments for
the five years following fiscal 2011 and, in total, thereafter are: fiscal 2012 — $51.0 million; fiscal 2013 —
$39.1 million; fiscal 2014 — $32.2 million; fiscal 2015 — $25.1 million; fiscal 2016 — $18.2 million; and
$57.6 million thereafter. These commitments do not contain any material rent escalations, rent holidays, contingent
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