harris corporation

devices; and a transition from the traditional linear broadcast TV advertising model to out-of-home networks. In the
energy market, we believe oil exploration must accelerate to meet rising global demand for oil and that drivers of
industry demand, including commodity prices, drilling rig counts and well completions and workover activity,
should remain favorable in most geographic market areas, with the exception of the Gulf of Mexico. In the
healthcare market, we believe there are significant opportunities for growth as we capitalize on trends towards
accelerating electronic health record adoption and sharing; accountable care driving hospital consolidation and
enterprise solutions; and increased penalties for healthcare data security violations fueling cyber solutions.
Our management believes that our experience and capabilities are well aligned with, and that we are positioned
to capitalize on, the market trends noted above in this Report. While we believe that some of these developments
may temper near-term growth, we also expect they generally will have a longer-term positive impact on us.
However, we remain subject to general economic conditions that could adversely affect us and our suppliers and
customers. We also remain subject to other risks associated with these markets, including technological
uncertainties, adoption of our new products and other risks which are discussed below under “Forward-Looking
Statements and Factors that May Affect Future Results” and in “Item 1A. Risk Factors” of this Report.
OPERATIONS REVIEW
Revenue and Income From Continuing Operations
2011 2010
2011/2010
Percent
Increase/
(Decrease) 2009
2010/2009
Percent
Increase/
(Decrease)
(Dollars in millions, except per share amounts)
Revenue ............................. $5,924.6 $5,206.1 13.8% $5,005.0 4.0%
Income from continuing operations ......... $ 588.0 $ 561.6 4.7% $ 312.4 79.8%
% of revenue ....................... 9.9% 10.8% 6.2%
Income from continuing operations per diluted
common share ...................... $ 4.60 $ 4.28 7.5% $ 2.33 83.7%
Fiscal 2011 Compared With Fiscal 2010: The increase in revenue in fiscal 2011 compared with fiscal 2010
was primarily due to revenue from CapRock, which we acquired in the first quarter of fiscal 2011, and strength in
international sales in Tactical Communications in our RF Communications segment. The increase in income from
continuing operations in fiscal 2011 compared with fiscal 2010 was primarily due to higher operating income in our
RF Communications segment resulting from higher international sales in Tactical Communications, partially offset
by lower operating income in our Integrated Network Solutions segment, primarily due to integration and other costs
associated with our acquisitions of CapRock, Schlumberger GCS and Carefx, and higher interest expense, primarily
due to borrowings associated with these acquisitions. The decrease in income from continuing operations as a
percentage of revenue in fiscal 2011 compared with fiscal 2010 was primarily due to lower operating income as a
percentage of revenue in our Integrated Network Solutions segment, primarily the result of integration and other
costs associated with the acquisitions mentioned above. See the “Interest Income and Interest Expense” and
“Discussion of Business Segments” discussions below in this MD&A for further information.
Fiscal 2010 Compared With Fiscal 2009: Revenue increased in fiscal 2010 compared with fiscal 2009,
primarily due to increases in revenue in our RF Communications and Integrated Network Solutions segments,
partially offset by a decrease in revenue in our Government Communications Systems segment. Fiscal 2010 revenue
increased by 17.4 percent and 0.6 percent, respectively, in our RF Communications and Integrated Network
Solutions segments, and decreased 6.3 percent in our Government Communications Systems segment. Our RF
Communications segment revenue benefited from our acquisition of Wireless Systems in the fourth quarter of fiscal
2009, partially offset by a decline in our Tactical Communications business in fiscal 2010. Government
Communications Systems segment revenue reflected the winding down of the Field Data Collection Automation
(“FDCA”) program for the 2010 U.S. Census that was mostly offset by growth from several new programs and
growth initiatives. Fiscal 2010 income from continuing operations increased from fiscal 2009, primarily due to a
$255.5 million ($196.7 million after-tax) non-cash charge recorded in fiscal 2009 for impairment of goodwill and
other long-lived assets in our Integrated Network Solutions segment related to Broadcast and New Media Solutions
and strong operating results in fiscal 2010 in our RF Communications and Government Communications Systems
segments. Additionally, operating income in fiscal 2009 included an $18.0 million charge for schedule and cost
overruns on commercial satellite reflector programs; interest expense increased to $72.1 million in fiscal 2010 from
interest expense of $52.8 million in fiscal 2009, primarily due to increased borrowings related to our acquisition of
Wireless Systems; and in fiscal 2010, our effective tax rate (income taxes as a percentage of income from
continuing operations before income taxes) was 33.2 percent compared with an effective tax rate of 35.6 percent in
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