harris corporation

Key Indicators
We believe our value drivers, when implemented, will improve our key indicators of value, such as: income
from continuing operations and income from continuing operations per diluted common share; revenue; income
from continuing operations as a percentage of revenue; net cash provided by operating activities; return on average
assets; and return on average equity. The measure of our success is reflected in our results of operations and
liquidity and capital resources key indicators as discussed below:
Fiscal 2011 Results of Operations Key Indicators: Income from continuing operations, income from
continuing operations per diluted common share, revenue, and income from continuing operations as a percentage of
revenue represent key measurements of our value drivers:
• Income from continuing operations increased 4.7 percent to $588.0 million in fiscal 2011 from
$561.6 million in fiscal 2010;
• Income from continuing operations per diluted common share increased 7.5 percent to $4.60 in fiscal 2011
from $4.28 in fiscal 2010;
• Revenue increased 13.8 percent to $5.9 billion in fiscal 2011 from $5.2 billion in fiscal 2010; and
• Income from continuing operations as a percentage of revenue decreased to 9.9 percent in fiscal 2011 from
10.8 percent in fiscal 2010.
Refer to MD&A heading “Operations Review” below in this Report for more information.
Liquidity and Capital Resources Key Indicators: Net cash provided by operating activities, return on average
assets and return on average equity also represent key measurements of our value drivers:
• Net cash provided by operating activities increased to $833.1 million in fiscal 2011 from $802.7 million in
fiscal 2010;
• Return on average assets (defined as income from continuing operations divided by the two-point average of
total assets at the beginning and ending of the fiscal year) decreased to 10.8 percent in fiscal 2011 from
12.2 percent in fiscal 2010; and
• Return on average equity (defined as income from continuing operations divided by the two-point average of
equity at the beginning and ending of the fiscal year) decreased to 25.0 percent in fiscal 2011 from
27.7 percent in fiscal 2010.
Refer to MD&A heading “Liquidity, Capital Resources and Financial Strategies” below in this Report for more
information.
Industry-Wide Opportunities, Challenges and Risks
Department of Defense: The DoD’s U.S. Government Fiscal Year (“GFY”) 2012 budget proposal reflects
continued investment in national security priorities (including cyber security) and continues efforts to rebalance
military forces to focus on both today’s wars as well as potential future conflicts. Building on efforts begun in GFY
2010, the DoD will continue to implement its acquisition reforms and modernize key weapons systems to provide
service members with the best technology to meet battlefield needs. We expect the U.S. Government to remain
committed to funding intelligence, information superiority, special operations, warfighter support and cyber security,
although there can be no assurance it will do so.
The DoD’s $671 billion GFY 2012 budget request is approximately 3.1% less than GFY 2010 enacted levels of
$692 billion and approximately 5.3% less than the $708 billion GFY 2011 budget request. The GFY 2012 budget
request includes $553 billion for base defense programs compared with $549 billion for base defense programs in
the GFY 2011 budget request, and includes $118 billion for overseas contingency operations (“OCO”) compared
with $159 billion for OCO in the GFY 2011 budget request, reflecting the winding down of military operations in
Iraq and Afghanistan. Of the $118 billion GFY 2012 budget request for OCO, $107 billion is to support activities in
Afghanistan and $11 billion is to support activities in Iraq.
The level of budget amounts allocated to DoD procurement accounts (“Procurement”), along with research,
development, test and evaluation (“RDT&E”) components of the DoD budget, also are an important indicator of
spending. The GFY 2012 budget requests for Procurement and RDT&E of $113 billion and $75 billion, respectively,
are comparable to the GFY 2011 budget requests of $113 billion and $76 billion, respectively. Additionally, the
DoD Operations and Maintenance account (“O&M”), which contains the bulk of funding for training, logistics,
services and other logistical support, is an account of major importance. The DoD O&M budget request for GFY
2012 is $204 billion compared with the GFY 2011 budget request of $200 billion.
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