harris corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
• The accounting standard that clarifies which revenue allocation and measurement guidance should be used
for arrangements that contain both tangible products and software, in cases where the software is more than
incidental to the tangible product as a whole. More specifically, if the software sold with or embedded within
the tangible product is essential to the functionality of the tangible product, then this software, as well as
undelivered software elements that relate to this software, are excluded from the scope of existing software
revenue guidance.
Accounting Standards Issued But Not Yet Effective
In May 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update that
generally aligns the principles for fair value measurements and related disclosure requirements under U.S. GAAP
and International Financial Reporting Standards (“IFRS”). The amendments in this update include clarifications of
the FASB’s intent about the application of existing fair value measurements and disclosure requirements and
changes to particular principles or requirements for measuring fair value or for disclosing information about fair
value measurements. Expanded disclosure requirements include disclosures of all transfers between Levels 1 and 2
of the fair value hierarchy, disclosure of the hierarchy classification for items whose fair value is not recorded on
the balance sheet but is disclosed in the notes, and various quantitative and qualitative disclosures pertaining to
Level 3 measurements. This update is to be applied prospectively and is effective for interim and annual reporting
periods beginning after December 15, 2011, which for us is our third quarter of fiscal 2012. We do not currently
anticipate that the adoption of this update will materially impact our financial position, results of operations or cash
flows.
In June 2011, the FASB issued an accounting standards update that requires entities to present components of
net income, components of other comprehensive income (“OCI”) and total comprehensive income in one continuous
statement or two separate but consecutive statements. Entities will no longer be allowed to present OCI in the
statement of equity. Additionally, this update requires entities to present on the face of the financial statements
reclassification adjustments for items that are reclassified from OCI to net income in the statement(s) where the
components of net income and OCI are presented. This update is to be applied retrospectively and is effective for
fiscal years, and interim reporting periods within those years, beginning after December 15, 2011, which for us is
our fiscal 2013. The adoption of this update will not impact our financial position, results of operations or cash
flows.
NOTE 3: DISCONTINUED OPERATIONS
On March 31, 2009, we announced that our Board of Directors approved the Spin-off of all the shares of
HSTX owned by us to our shareholders. On May 27, 2009, we completed the Spin-off through the distribution of
our ownership of approximately 56 percent of the outstanding shares of HSTX in the form of a taxable pro rata
dividend to our shareholders. Each of our shareholders received approximately 0.248418 of a share of HSTX
Class A common stock for each share of our common stock such shareholder held as of 5:30 p.m. Eastern Time on
May 13, 2009, the record date for the Spin-off. The distribution ratio was based on the number of shares of HSTX
Class B common stock owned by us, which we exchanged for an equal number of shares of HSTX Class A
common stock prior to the distribution in order to effect the Spin-off, divided by the number of shares of our
common stock and common stock equivalents outstanding on the record date. Our shareholders of record on the
record date received cash in lieu of any fraction of a HSTX share that they would have otherwise received in the
Spin-off. In aggregate, we distributed 32,913,377 shares of HSTX Class A common stock to our shareholders. Based
upon the $5.26 per share closing price for the HSTX Class A common stock on the NASDAQ Global Market on
May 26, 2009, the day prior to the date of the distribution, the aggregate market value of the shares distributed was
$173.1 million. Our historical financial results have been restated to account for HSTX as discontinued operations
for all periods presented in this Report.
Prior to the Spin-off of HSTX, as of the end of the second quarter of fiscal 2009, based on the current global
economic environment and the decline of the market capitalization of HSTX, we performed an interim review for
impairment of HSTX’s goodwill and its other indefinite-lived intangible assets, consisting solely of the Stratex trade
name. To test for potential impairment of HSTX’s goodwill, we determined the fair value of HSTX based on
projected discounted cash flows and market-based multiples applied to sales and earnings. The results indicated an
impairment of goodwill because the current carrying value of the reporting unit exceeded its fair value. We then
allocated this fair value to HSTX’s underlying assets and liabilities to determine the implied fair value of goodwill,
resulting in a $279.0 million charge to write down all of HSTX’s goodwill. We determined the fair value of the
Stratex trade name by performing a projected discounted cash flow analysis based on the relief-from-royalty
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