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UNITED STATES

FORM 10-K

Commission File Number 1-3863

HARRIS CORPORATION

Registrant’s telephone number, including area code: (321) 727-9100

Securities Registered Pursuant to Section 12(b) of the Act:

Securities Registered Pursuant to Section 12(g) of the Act:

None

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x    No   

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

      The aggregate market value (based upon the closing price on the New York Stock Exchange) of the voting stock held by non-affiliates of the registrant as of August 24, 2001 was $1,947,849,673. For purposes of this calculation, the registrant has assumed that its directors and executive officers are affiliates.

      The number of outstanding shares of the registrant’s Common Stock on August 24, 2001 was 65,878,669.

      Documents Incorporated by Reference:

      Portions of the registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on October 26, 2001 are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent described therein.

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HARRIS CORPORATION AND SUBSIDIARY COMPANIES

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 29, 2001

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Forward-Looking Statements

      The Business section and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Harris Corporation and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements of the plans, strategies, and objectives of management for future operations; any statements concerning new products, services, or developments; any statements regarding future economic conditions, performance, or outlook; statements of belief or expectation; and any statement of assumptions underlying any of the foregoing. Factors that might cause such difference include, but are not limited to, those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.

PART  I

THE COMPANY

      Harris Corporation, along with its subsidiaries, is an international company focused on the worldwide market for voice, data, and video communications equipment for wireless, broadcast, network support, and government markets. Harris was incorporated in Delaware in 1926 as the successor to three companies founded in the 1890’s. The principal executive offices of Harris Corporation (hereinafter called “Harris” or the “Company”) are located at 1025 West NASA Boulevard, Melbourne, Florida 32919, and the telephone number is (321) 727-9100.

Recent Development of Business

      During fiscal 2001 Harris undertook several acquisitions and dispositions designed to strengthen its position in the communications markets.

      Acquisition of WavTrace, Inc. In August 2000, Harris acquired WavTrace, Inc., a developer of broadband microwave radio systems for high-speed wireless access to the Internet and other data, voice, and video services. Prior to the acquisition, Harris owned slightly less than 20 percent of WavTrace. The purchase price for the remaining 80 percent was valued at $144.0 million. For a discussion of WavTrace and its technology, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.

      Acquisition of Exigent International, Inc. In May 2001, Harris acquired Exigent International, Inc., a provider of professional services and software support to government agencies for the management of satellite command and control, telecommunications and information technology programs. The purchase price was $34.7 million.

      Acquisition of Hirschmann Multimedia Communications Network Business. In fiscal 2001, Harris entered into agreements to acquire the Hirschmann Multimedia Communications Network Business, a leader in European-standard digital video television and digital audio broadcast radio transmitters and digital cable systems with annual sales of $26.0 million. The transaction was completed at the start of the first quarter of fiscal 2002.

      Sale of Joint Venture Interests. In the fourth quarter of fiscal 2001, Harris sold its minority interest in GE-Harris Railway Electronics to General Electric for $50.0 million.

      Additionally, in the first quarter of fiscal 2002, Harris sold its minority interest in GE-Harris Energy Controls Systems to General Electric. This sale and related transactions resulted in proceeds to Harris of approximately $29.0 million.

      During fiscal 2000, Harris completed its repositioning as a company focused on communications and communications equipment. During fiscal 2000, Harris completed the spin-off of its Lanier Worldwide, Inc. subsidiary and the sale of Harris’ semiconductor business and also exited from the telephone switching and alarm management product lines. As a result of these actions, Harris’ consolidated financial statements and

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General

      Harris structures its operations around two segments: (1) the Government Communications segment, which is comprised of the Government Communications Systems Division, and (2) the Commercial Communications segment, which is comprised of four divisions. Each of Harris’ five divisions have been organized on the basis of specific communications markets. For the most part, each operating division has its own marketing, engineering, manufacturing, and product service and maintenance organization. Harris produces most of the products it sells, except for certain broadcast products sold by the Broadcast Communications Division, which products are sourced from a variety of manufacturers. Reference is made to the Note Business Segments in the Notes to Financial Statements for further information with respect to business segments.

      Total revenues in fiscal 2001 increased to approximately $1.96 billion from approximately $1.81 billion a year earlier. Total sales in the United States increased approximately 5 percent from a year earlier while international sales, which amounted to approximately 29 percent of the total from continuing operations, increased approximately 18 percent. Net income from continuing operations for fiscal 2001 decreased to $21.4 million from $25.0 million in fiscal 2000.

      The markets served and principal products of the Company’s business segments are as follows:

Commercial Communications Segment

      The Commercial Communications segment serves four primary markets: (1) broadcast communications, (2) microwave communications, (3) network support, and (4) tactical radios. The Commercial Communications segment produces a comprehensive line of communications equipment, systems, and application solutions for television and radio broadcast, radio-communication, wireless access, and telecommunication. Products include:

Government Communications Segment

      The Government Communications segment conducts advanced research studies, develops prototypes, and designs, develops, and produces state-of-the-art airborne, spaceborne, and terrestrial communications,

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Financial Information About Business Segments

      The financial results shown in the following table are presented to comply with current financial accounting standards relating to Harris’ business segment reporting. Information concerning the identifiable assets of Harris’ business segments is contained in the Note Business Segments in the Notes to Financial Statements. In calculating operating income, allocation of certain expenses among the business segments involves the exercise of business judgment. Intersegment sales, which are insignificant, are accounted for at prices comparable to those paid by unaffiliated customers.

REVENUE AND OPERATING INCOME BY BUSINESS SEGMENT*

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Description of Business

Commercial Communications Segment

      The Commercial Communications segment designs, manufactures, and sells products characterized by three principal communication technologies:

      Sales in fiscal 2001 for the Commercial Communications segment increased 11.6 percent over fiscal 2000. Excluding sales from the exited telephone switching product line, the Commercial Communications segment sales increased from $918.0 million in fiscal 2000 to $1,106.8 million in fiscal 2001 or 20.6 percent. Segment operating loss was $14.1 million in fiscal 2001, compared to an operating loss of $33.3 million in fiscal 2000. The fiscal 2001 operating loss was impacted by a $73.5 million write-off of in-process research and development related to the acquisition of WavTrace. Fiscal 2000 was impacted by the $41.0 million restructuring charge and $12.0 million write-down of inventory related to the exited telephone switching and alarm management product lines as well as a $10.7 million write-off of purchased in-process research and development related to the acquisition of Louth Automation.

      The Commercial Communications segment contributed 57 percent of Harris’ total sales from continuing operations in fiscal 2001, 55 percent in fiscal 2000, and 53 percent in fiscal 1999.

Broadcast Communications Division

      The Broadcast Communications Division is a leading manufacturer and supplier of (1) digital and analog radio and television broadcast encoding and transmission equipment, systems, and services, (2) radio and television studio equipment, systems, and services, and (3) automation solutions enabling television stations, groups, and networks to monitor and control hardware, software, and related elements from a central location and to otherwise automate systems for television, over-the-air broadcast, and cable and industrial applications. This division provided the nation’s first advanced television transmitter to broadcast digital television as well as the first commercial digital television application. The division is also expanding its efforts in the digital radio area and is developing the next wave of radio-broadcasting including In-Band/On Channel digital radio.

      The Broadcast Communications Division has expanded its presence in international digital broadcast markets. At the start of fiscal 2002, Harris acquired the Hirschmann Multimedia Communications Network business, a leader in European-standard digital video television and digital audio broadcast radio transmitters and digital cable systems.

      Major products, systems, and services offered by the Broadcast Communications Division include:

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Microwave Communications Division

      The Microwave Communications Division is a leading producer of digital and analog microwave communication products and systems in North America and is expanding its international presence in such markets, particularly in Latin America and Europe. This division focuses on two primary applications for microwave: (1) links to connect cellular and PCS sites, and (2) private network and competitive network applications. Private network applications include electric utilities, railroads, local governments, and emergency service operations where the public telephone network is not reliable, does not exist, or is not sufficiently secure. This division also focuses on high-frequency communications and provides broadband wireless access to the latest Internet, voice, data, and video applications, including millimeter wave technology. The division’s broadband wireless access products have dynamic bandwith-on-demand allocation capabilities which allow a single wireless link to serve many subscribers. The division’s broadband wireless access products include both point-to-point and point-to-multipoint platforms.

      Major products, systems, and services offered by the Microwave Communications Division include:

      The division is an industry leader in microwave systems and service capabilities. The division designs and implements total network solutions to include integration, site surveys, RF planning, and training.

      The division is also developing a high-frequency, point-to-multipoint product, the ClearBurst™ GB, which is intended to deliver broadband wireless service to businesses requiring a large number of access channels for data and voice traffic.

Network Support Division

      The Network Support Division provides a complete range of products and systems to test, manage, and enhance communications network infrastructures. The division supplies telecommunication products and systems, including automated line and telephone test systems and tools (including portable and remote test units), operational support systems to manage telephone subscriber loops, and integrated communication network management systems. The division provides network management systems and services for large, multimedia communications networks.

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      Major products, systems, and services offered by the Network Support Division include:

      The division is also offering a new Enterprise Solution with MetaSolv Software and Telesoft Corp., which is an integrated software solution designed to help medium to large businesses reduce costs and more efficiently manage their communications networks. The Enterprise Solution enables IT managers to rapidly configure services from a central location.

RF Communications Division

      The RF Communications Division is a leading supplier of radio communication products, systems, and services. The division offers a comprehensive line of radios and products for commercial, military, and government applications. This division is a leader in lightweight, man-portable, and mobile radios for tactical radio product and services worldwide.

      Major products and services offered by the RF Communications Division include:

Commercial Communications Segment Customers, Sales Channels, and Backlog

      Principal customers for products of the Commercial Communications segment include foreign and domestic commercial and industrial firms, radio and television broadcasters, communication companies, telephone companies, governmental and military agencies, law enforcement agencies, utilities, railroads, construction companies, and oil producers.

      In general, the segment’s domestic products are sold and serviced directly to customers through the sales organizations of the operating divisions and through established distribution channels. Internationally, the segment markets and sells its products and services through regional sales offices and established distribution channels and has increased its focus in South America and other promising international markets, particularly in the microwave radio area. See “International Business.”

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      The backlog of unfilled orders for this segment of Harris’ business was $370 million at July 27, 2001, substantially all of which is expected to be filled during the 2002 fiscal year, compared with approximately $367 million a year earlier.

Government Communications Segment

      The Government Communications segment of Harris is engaged in advanced research, design, development, and production of communication, information processing, and electronic products, services, systems, and sub-systems for government and commercial organizations in the United States and internationally, and for Harris’ Commercial Communications segment. The Government Communications segment specializes in airborne, spaceborne, shipboard, and ground communications for military and government agencies and their prime contractors. Applications of the segment’s state-of-the-art technologies include:

      The Government Communications segment is a major supplier of advanced-technology communications and information processing systems to the United States Department of Defense, Federal Aviation Administration, National Aeronautics and Space Administration, and other federal and local government agencies, and aircraft manufacturers.

      Sales in fiscal 2001 for this business segment increased 4 percent to $848.3 million from $815.9 million in fiscal 2000. Operating income increased 22 percent. This segment contributed 43 percent of Harris’ total sales from continuing operations in fiscal 2001, 45 percent in fiscal 2000, and 47 percent in fiscal 1999.

      The Government Communications segment is a leading supplier of air-traffic control communication systems and is also a major supplier of custom aircraft and spaceborne communication and information processing systems, cockpit digital moving maps, controls and display processors, a leading supplier of terrestrial and satellite communication systems, including large deployable satellite antenna systems and flat panel, phased-array and single-mission antennas, and is a preeminent supplier of super-high-frequency military satellite ground terminals for the Department of Defense. The segment is also diversifying into the commercial satellite business and has been awarded contracts to provide antennas for commercial programs such as the Asian Cellular System.

      The division is a major supplier of custom ground-based systems and software designed to collect, store, retrieve, process, analyze, display, and distribute information for government, defense, and law enforcement applications, including meteorological data processing systems and range management information systems. The segment also provides computer controlled electronic maintenance, logistic, simulation, and test systems

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      Specific examples of technology developed by the division include the development of a family of wideband digital links to support the transmission of radar, imagery, and video from reconnaissance aircraft, unmanned aerial vehicles, and satellites and the development of a digital map that electronically displays real-time terrain, flight paths, and target locations for fighter helicopters. The division also has extensive expertise in microelectronics, microelectronic machines, and advanced wireless tracking technology and is developing secure wireless LAN products for battlefield applications and advanced modems for use in high-bandwidth efficient systems.

      While classified projects are not discussed in this report, the operating results relating to classified projects are included in Harris’ consolidated financial statements, and the business risks associated with such projects do not differ materially from those of other projects for the United States government.

      The Government Communications segment is also expanding its capabilities and offerings in the government services business. During fiscal 2001, Harris acquired Exigent International, Inc., a provider of professional services and software support to government agencies for the management of satellite command and control, telecommunications, and information technology programs.

      Harris recently concluded the sale of its minority interest in two joint ventures with the General Electric Company. Harris sold its interest in GE-Harris Railway Electronics to General Electric in the fourth quarter of fiscal 2001 and concluded the sale of its interest in GE-Harris Energy Controls Systems to General Electric in the first quarter of fiscal 2002. In fiscal 2001, General Electric and Harris also terminated the GE-Harris Aviation Information Solutions joint venture.

      In August 2001, Harris also completed the sale of 90 percent of its interest in its Harris Publishing Systems and Baseview Products subsidiaries. The sale price of $8.5 million is subject to adjustment. These subsidiaries had revenues of approximately $21 million in fiscal 2001.

      Most of the sales of the Government Communications segment are made directly or indirectly to the United States government under contracts or subcontracts containing standard government contract clauses providing for redetermination of profits, if applicable, and for termination for the convenience of the government or for default of the contractor. These sales consist of a variety of contracts and programs with various governmental agencies, with no single program accounting for 10 percent or more of total Harris sales. The segments contracts and backlog include both cost reimbursement and fixed priced contracts.

      The backlog of unfilled orders for this segment of Harris’ business was $405 million at July 27, 2001, a substantial portion of which is expected to be filled during the 2002 fiscal year, compared with $360 million a year earlier.

International Business

      Revenues in fiscal 2001 from products exported from the United States or manufactured abroad were $572.8 million or 29 percent of the Company’s total sales, compared with $487.3 million or 27 percent of the Company’s total sales from continuing operations in fiscal 2000 and $448.5 million or 26 percent in fiscal 1999. The Company’s international sales include both direct exports from the United States and sales from foreign subsidiaries. Most of the international sales are derived from the Commercial Communications segment. Direct export sales are primarily denominated in U.S. dollars, whereas sales from foreign subsidiaries are generally denominated in the local currency of the subsidiary. Exports from the United States, principally to Europe, Latin America, and Asia, totaled $227.1 million or 40 percent of the international sales in fiscal 2001, $229.7 million or 47 percent of the international sales from continuing operations in fiscal 2000 and $242.2 million or 54 percent of the international sales from continuing operations in fiscal 1999.

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      Foreign operations represented 18 percent of revenues and 12 percent of long-lived assets as of June 29, 2001. Government communication systems are produced principally in the United States. International revenues are derived primarily from exports. International manufacturing facilities for commercial products are located in Brazil, Canada, China, and the United Kingdom.

      International marketing activities are conducted through subsidiaries which operate in Canada, Europe, Central and South America, and Asia. Harris has also established an international marketing organization and several regional sales offices. Reference is made to Exhibit 21 “Subsidiaries of the Registrant” for further information regarding foreign subsidiaries.

      Harris utilizes indirect sales channels, including dealers, distributors, and sales representatives, in the marketing and sale of some lines of products and equipment, both domestically and internationally. These independent representatives may buy for resale or, in some cases, solicit orders from commercial or governmental customers for direct sales by Harris. Prices to the ultimate customer in many instances may be recommended or established by the independent representative and may be on a basis which is above or below the Company’s list prices. These independent representatives generally receive a discount from the Company’s list prices and may mark-up those prices in setting the final sales prices paid by the customer. During the 2001 fiscal year, sales from indirect sales channels represented 9 percent of Harris’ total sales and 27 percent of Harris’ international sales.

      Fiscal year 2001 orders came from a large number of foreign countries, no one of which accounted for five percent or more of the Company’s total orders.

      Certain of Harris’ exports are paid for by letters of credit, with the balance carried either on an open account or installment note basis. Advance payments, progress payments, or other similar payments received prior to or upon shipment often cover most of the related costs incurred. Performance guarantees by the Company are generally required on significant foreign government contracts. In order to stay competitive in international markets, the Company also enters into recourse and vendor financing to facilitate sales to certain customers.

      The particular economic, social, and political conditions for business conducted outside the United States differ from those encountered by domestic businesses. Management believes that the overall business risk for the international business as a whole is somewhat greater than that faced by its domestic operations as a whole. International business may subject the Company to risks such as:

      Nevertheless, in the opinion of management, these risks are offset by the diversification of the international business and the protection provided by letters of credit and advance payments.

      Except for inconsequential matters, such as matters involving road and utility rights-of-way, Harris has never been subjected to threat of government expropriation, either within the United States or abroad.

      Financial information regarding the Company’s domestic and international operations is contained in the Note Business Segments in the Notes to Financial Statements.

Competition

      Harris operates in highly competitive businesses that are sensitive to technological advances. Although successful product and systems development is not necessarily dependent on substantial financial resources, some of Harris’ competitors in each of its businesses are larger and can maintain higher levels of expenditures

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Principal Customers

      Sales to the U.S. government, which is the Company’s only customer accounting for 10 percent or more of total sales, were 42 percent, 41 percent and 42 percent of the Company’s total sales from continuing operations in fiscal 2001, 2000, and 1999, respectively. All U.S. government contracts are terminable at the convenience of the U.S. government, as well as for default. Under contracts terminable at the convenience of the U.S. government, a contractor is entitled to receive payments for its allowable costs and, in general, the proportionate share of fees or earnings for the work done. Contracts which are terminable for default generally provide that the U.S. government only pays for the work it has accepted and may require the contractor to pay for the incremental cost of reprocurement and may hold the contractor liable for damages.

      Companies engaged in supplying goods and services to the U.S. government are dependent on congressional appropriations and administrative allotment of funds and may be affected by changes in U.S. government policies resulting from various military and political developments. In many cases, there is also additional uncertainty relating to the complexity of designs, necessity for design improvements, and difficulty in forecasting costs and schedules when bidding on developmental and highly sophisticated technical work. For further discussion of risks relating to U.S. government contracts see “Legal Proceedings.” It is not expected that changes to the Department of Defense budget will have a material effect on the profitability of Harris in fiscal 2002.

Backlog

      Harris’ backlog of unfilled orders from continuing operations was approximately:

      Substantially all of the backlog orders at July 27, 2001 are expected to be filled during fiscal 2002. The determination of backlog involves substantial estimating, particularly with respect to customer requirements contracts and long-term contracts of a cost-reimbursement or incentive nature.

Research, Development, and Engineering

      Research, development, and engineering expenditures by Harris for its continuing operations totaled approximately:

      Company-sponsored research and product development costs for its continuing operations were approximately:

      The portion of total research, development, and engineering expenditures not Company-sponsored was funded by government and commercial customers. Company-funded research is directed to the development

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      Harris currently employs about 4,000 engineers and scientists and is making efforts to make the technologies developed in any of our divisions available for all other divisions.

Patents and Intellectual Property

      Harris holds numerous patents which it considers, in the aggregate, to constitute an important asset. However, Harris does not consider its business or any business segment to be materially dependent upon any single patent or any group of related patents. Harris is engaged in a pro-active patent licensing program, especially in the Commercial Communications segment, and has entered into a number of unilateral license and cross-license agreements, many of which generate royalty income. Although existing license agreements have generated income in past years and will do so in the future, there can be no assurances Harris will enter into additional income producing license agreements. With regard to patents relating to the Government Communications segment, the U.S. government often has an irrevocable, non-exclusive, royalty-free license, pursuant to which the government may use or authorize others to use the inventions covered by such patents. Pursuant to similar arrangements, the government may consent to Harris’ use of inventions covered by patents owned by other persons.

      Numerous trademarks used on or in connection with Harris products are considered to be a valuable asset of Harris.

Environmental and Other Regulations

      The manufacturing facilities of Harris, in common with those of industry generally, are subject to numerous laws and regulations designed to protect the environment, particularly with regard to wastes and emissions. Harris believes that it has materially complied with these requirements and that such compliance has not had a material adverse effect on its business or financial condition. Expenditures to protect the environment and to comply with current environmental laws and regulations over the next several years are not expected to have a material impact on the Company’s competitive or financial position. If future laws and regulations contain more stringent requirements than presently anticipated, actual expenditures may be higher than the Company’s present estimates of those expenditures.

      Waste treatment facilities and pollution control equipment have been installed to satisfy legal requirements and to achieve the Company’s waste minimization and prevention goals. An estimated $0.1 million was spent on environmental capital projects in each of fiscal 2001 and fiscal 2000, and $0.3 million was spent in fiscal 1999. A significant portion of these expenditures related to discontinued operations; however, the Company has retained certain environmental liabilities with respect to some of its discontinued operations. The Company currently forecasts authorization for environmental-related capital projects totaling $0.1 million in fiscal 2002. These amounts may increase in future years.

      Additional information regarding environmental matters is set forth in “Legal Proceedings” and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Raw Materials and Supplies

      Because of the diversity of the Company’s products and services, as well as the wide geographic dispersion of its facilities, the Company uses numerous sources for the wide array of raw materials needed for its operations and for products that it sells. The Company is dependent upon suppliers and subcontractors for a large number of components and the ability of its suppliers and subcontractors to meet performance and quality specifications and delivery schedules. In some instances, the Company is dependent upon one or a few sources, either because of the specialized nature of a particular item or because of domestic preference requirements pursuant to which it operates on a given project. To date, the Company has not been materially adversely affected by the inability to obtain raw materials or products.

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Employees

      As of June 29, 2001, Harris had approximately 10,100 employees, of whom approximately 8,800 were located in the United States. Approximately 4,000 employees were employed in the Commercial Communications segment and 5,400 were employed in the Government Communications segment, with the remainder employed in headquarters or other support or service functions. In general, Harris believes that its relations with its employees are good.

ITEM  2.  PROPERTIES.

      Harris operates approximately 18 plants and approximately 55 offices in the United States, Canada, Europe, Central and South America, and Asia, consisting of about 3.9 million square feet of manufacturing, administrative, warehousing, engineering, and office facilities that are owned and about 1.2 million square feet of sales, office, and manufacturing facilities that are leased. The leased facilities are for the most part occupied under leases for terms ranging from one year to 30 years, a majority of which can be terminated or renewed at no longer than five-year intervals at Harris’ option. The Company’s corporate headquarters are owned and located in Melbourne, Florida. The location of the principal manufacturing plants owned by the Company in the United States, and the business segments which utilize such plants are as follows: Government Communications segment — Malabar, Melbourne, and Palm Bay, Florida; and Commercial Communications segment — Camarillo, Redwood Shores, and Sunnyvale, California; Quincy, Illinois; Littleton, Massachusetts; Cincinnati, Ohio; San Antonio, Texas; and Rochester, New York. The Commercial Communications segment also has principal manufacturing plants that are owned by Harris and located outside the United States, including plants in Sao Paulo, Brazil; Montreal, Canada; and Cambridge, U.K.

      In the opinion of management, Harris’ facilities are suitable and adequate for their intended purposes and have capacities adequate for current and projected needs. Unused or under-utilized facilities are not considered significant.

      As of June 29, 2001, the following facilities were in productive use by Harris in its operations:

ITEM  3.  LEGAL PROCEEDINGS.

      From time to time, as a normal incident of the nature and kind of business in which the Company is engaged, various claims or charges are asserted and litigation commenced against the Company arising from or related to: product liability; patents, trademarks, or trade secrets; labor and employee disputes; breach of warranty; antitrust; distribution; or contractual relations. Claimed amounts may be substantial but may not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court awards. While it is not feasible to predict the outcome of these matters with certainty, in the opinion of management, settlements and final judgments, if any, which might be rendered against the Company in existing litigation are reserved against, covered by insurance, or would not have a material adverse effect on the financial condition or the business of the Company as a whole.

      Government contractors, such as the Company, engaged in supplying goods and services to the U.S. government and its various agencies are dependent on congressional appropriations and administrative allotment of funds and may be affected by changes in U.S. government policies. U.S. government contracts typically involve long lead times for design and development and are subject to significant changes in contract scheduling and may be unilaterally modified or cancelled by the government. Often these contracts call for

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      From time to time, the Company, either individually or in conjunction with other U.S. government contractors, may be the subject of U.S. government investigations for alleged criminal or civil violations of procurement or other federal laws. These investigations may be conducted without the Company’s knowledge. The Company is unable to predict the outcome of such investigations or to estimate the amounts of resulting claims or other actions that could be instituted against it, its officers or employees. Under present government procurement regulations, if indicted or adjudged in violation of procurement or other federal civil laws a contractor, such as the Company, or one or more of its operating divisions, could be suspended or debarred from eligibility for awards of new government contracts for up to three years. In addition, a government contractor’s foreign export control licenses could be suspended or revoked. As an international company, Harris is, from time to time, the subject of investigations relating to its international operations, including under the Foreign Corrupt Practices Act and similar laws. The Company is currently cooperating with certain government representatives in investigations relating to potential violations of federal procurement, foreign corrupt practices and other laws. Management does not believe that the outcome of these current disputes or investigations will have a material adverse effect on the financial condition or the business of the Company as a whole.

      In addition, the Company is subject to numerous federal and state environmental laws and regulatory requirements and is involved from time to time in investigations or litigation of various potential environmental issues concerning ongoing activities at its facilities or remediation as a result of past activities. The Company from time to time receives notices from the United States Environmental Protection Agency and equivalent state environmental agencies that it is a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the “Superfund Act”) and/or equivalent state legislation. Such notices assert potential liability for cleanup costs at various sites, which include Company-owned sites, previously owned sites, and non-Company owned treatment or disposal sites, allegedly containing hazardous substances attributable to the Company from past operations. The Company has been named as a PRP at twelve such sites, excluding sites as to which the Company’s records disclose no involvement or as to which the Company’s liability has been finally determined. While it is not feasible to predict the outcome of many of these proceedings, in the opinion of management, any payments the Company may be required to make as a result of currently existing claims will not have a material adverse effect on the financial condition or the business of the Company as a whole.

      Additional information regarding environmental matters is set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM  4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      No matters were submitted to a vote of security holders of Harris during the fourth quarter of fiscal 2001.

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EXECUTIVE OFFICERS OF THE REGISTRANT (As of August 31, 2001).

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      There is no family relationship between any of the Company’s executive officers or directors, and there are no arrangements or understandings between any of the Company’s executive officers or directors and any other person pursuant to which any of them was elected as an officer or director, other than arrangements or understandings with directors or officers of the Company acting solely in their capacities as such.

      All of the Company’s executive officers are elected annually and serve at the pleasure of the board of directors.

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PART II

      Harris Corporation Common Stock, par value $1 per share, is listed and traded on the New York Stock Exchange, Inc. (“NYSE”), under the ticker symbol “HRS,” and is also traded on the Boston, Chicago, Pacific and Philadelphia Stock Exchanges and through the Intermarket Trading System. As of August 24, 2001, there were approximately 9,220 holders of record of the Common Stock.

      The high and low sales prices as reported in the consolidated transaction reporting system and the dividends paid on the Common Stock for each quarterly period in the last two fiscal years are reported below:

      On August 24, 2001, the last sale price of the Harris Common Stock as reported in the consolidated transaction reporting system was $29.80 per share.

      On August 25, 2001, the board declared a quarterly cash dividend of $0.05 per share, which will be paid on September 21, 2001 to holders of record on September 7, 2001. The Company has paid cash dividends every year since 1941 and currently expects that cash dividends will continue to be paid in the future; however, there can be no assurances that this will be the case. Following the spin-off of Lanier Worldwide, Inc. in November 1999, Harris reduced its annual dividend rate from $0.96 per share to its current annual level of $0.20 per share. The declaration of dividends and the amount thereof will depend on a number of factors, including Harris’ financial condition, capital requirements, results of operations, future business prospects and other factors the board of directors may deem relevant.

      On October 22, 1999, the board authorized the Company to repurchase up to 15 million shares of its Common Stock periodically in the open-market, in negotiated or block transactions or pursuant to tender offers. During fiscal year 2001, the Company repurchased approximately 3.2 million of its shares in open-market transactions. In fiscal year 2000, the Company repurchased approximately 10.7 million of its shares in open-market transactions. Harris has a remaining authorization to purchase an additional 1.7 million shares under its repurchase program.

      On August 23, 1997, the board of directors of Harris approved a two-for-one stock split to shareholders of record at the close of business on September 4, 1997. All share information in this Annual Report on Form 10-K has been restated to reflect the stock split.

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ITEM  6.  SELECTED FINANCIAL DATA.

      The following table summarizes selected historical financial information of Harris Corporation and its subsidiaries for each of the last five fiscal years. All amounts presented have been restated on a continuing operations basis. Discontinued operations and the restructuring charges are more fully discussed in the Notes to Financial Statements. The selected financial information shown below has been derived from Harris’ audited consolidated financial statements. This table should be read in conjunction with other financial information of Harris, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements included elsewhere in this Annual Report on Form 10-K.

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      The following discussion and analysis provides information that management believes is useful in understanding Harris’ operating results, cash flows, and financial condition. The discussion is based on Harris’ continuing operations and should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements and related notes appearing elsewhere in this Annual Report on Form 10-K. Except for the historical information contained here, the discussions in this document contain forward-looking statements that involve risks and uncertainties. Harris’ actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under “Forward-Looking Statements” below.

Results of Operations

      On November 5, 1999, Harris completed the spin-off of its Lanier Worldwide, Inc. subsidiary as an independent, publicly owned company. Additionally, on August 13, 1999, Harris completed the sale of substantially all of its semiconductor business. As a result of these actions, the Lanier and semiconductor businesses are presented as discontinued operations for all periods presented. Continuing operations are reported under two segments: the Government Communications segment and the Commercial Communications segment. The following discussion is on a continuing operations basis.

Fiscal 2001 Compared with Fiscal 2000

      Net revenue for fiscal 2001 was $1,955.1 million, an increase of 8.2 percent compared to the prior year. Operating income in fiscal 2001 was $93.9 million versus $36.3 million for the prior year.

      Segment revenue and operating income were as follows:

      Government Communications Segment: Government Communications segment revenue in fiscal 2001 increased 4.0 percent from the prior year and operating income increased 22.0 percent as Harris had outstanding technical and management performance on defense and other government contracts that resulted

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      During the fourth quarter of fiscal 2001, Harris concluded its acquisition of Exigent International, Inc., a provider of software and services for satellite command and control, telecommunications, and information technology.

      Commercial Communications Segment: Commercial Communications segment revenue in fiscal 2001 increased 11.6 percent over fiscal 2000. Excluding sales from the telephone switching product line that was exited in fiscal 2000, the Commercial Communications segment’s sales increased from $918.0 million to $1,106.8 million or 20.6 percent. This segment experienced significant sales growth in its microwave communications and broadcast communications markets of 39 percent and 31 percent, respectively, over the prior fiscal year. These revenue increases were partially offset by a decline of 11 percent for the segment’s network support products.

      The segment’s operating loss for fiscal 2001 included a $73.5 million write-off of purchased in-process research and development related to the acquisition of WavTrace, Inc. and goodwill amortization of $22.2 million. The segment’s operating loss for fiscal 2000 included a $41.0 million restructuring charge, a $10.7 million purchased in-process research and development write-off related to its Louth acquisition, goodwill amortization of $10.5 million, and $47.4 million of losses and write-downs related to the exited telephone switching and alarm management product lines.

      Excluding the items mentioned above in both fiscal 2001 and fiscal 2000, the Commercial Communications segment’s operating income increased from $76.3 million in fiscal 2000 to $81.6 million in fiscal 2001, or 6.9 percent. The increase in operating income was driven mainly by improved margins and sales growth in its broadcast communications business. The segment also experienced modest margin improvements in its tactical radio and microwave communications businesses, which was partially offset by poor performance in the segment’s network support business.

      The segment reported a 31 percent increase in revenues for its broadcast communication products as the transition to digital technology and the sale of digital television transmitters gained pace during fiscal 2001. This acceleration was boosted in part by positive rulings from the FCC affirming the mandated transition to digital technology. The broadcast communications business has also become a leading supplier of studio and automation solutions in the U.S. with the help of the Louth acquisition made in fiscal 2000.

      Following the close of fiscal 2001, Harris acquired the Hirschmann Multimedia Communications Network business, an Austrian-based leader in European-standard digital television and radio transmitters, and digital cable systems with annual sales of approximately $26 million.

      Revenues increased 39 percent for microwave communications products during fiscal 2001 as markets strengthened in North America and demand remained high for digital microwave radios used in cellular, PCS, and private telecom infrastructure systems. Harris is a leading provider of point-to-point microwave products and its Megastar™ and Constellation™ family of products exhibited strong customer acceptance.

      In August 2000, Harris completed the acquisition of WavTrace, a developer of broadband wireless access (“BWA”) systems for high-speed wireless access to the Internet and other data, voice, and video services. The microwave communications business invested in BWA technology during the year on its ClearBurst™ GB product. In addition, Harris is planning further cost reduction actions in our Microwave Communications business to improve margins and to better position the business for the expected resumption in market growth. These actions will include a facility closing and headcount reductions in several locations and will result in a one-time charge of approximately $10.0 million in fiscal 2002.

      The revenue from tactical radio products increased 2 percent in fiscal 2001 versus record revenue levels in fiscal 2000. This business continues to benefit from the market’s enthusiasm for its Falcon II™ high data rate, multiband, secure radios that were introduced in fiscal 2000 to meet the growing bandwidth requirement in the networked digital on-the-move battlefield being embraced by military groups in both the U.S. and internationally.

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      Demand for the segment’s network support products declined 11 percent during fiscal 2001 when compared to the prior year. This market was impacted by the abrupt slowdown in the domestic DSL services market. Harris has taken actions to reduce costs in the line test business and began to concentrate more on its core business of tools and network management products.

  Comparative Statement of Income

      Harris’ comparative statement of income is as follows:

      Gross Margin: Gross margin as a percent of revenue was 26.8 percent in fiscal 2001 compared to 25.2 percent in fiscal 2000. The fiscal 2000 gross margin was impacted by a $12.0 million write-down of inventory and lower gross margins related to the telephone switching product line that was exited in fiscal 2000. Excluding the impact of this exited product line, gross margin as a percent of revenue was 26.2 percent in fiscal 2000. The increase from 26.2 percent gross margin in fiscal 2000 to 26.8 percent gross margin in fiscal 2001 is primarily due to improved gross margins in the Commercial Communication segment’s broadcast and tactical radio products as well as in the Government Communications segment.

      Engineering, Selling and Administrative Expenses: Engineering, selling, and administrative expenses as a percent of revenue were 21.2 percent in fiscal 2001 versus 22.4 percent in fiscal 2000. Engineering, selling, and administrative expenses in fiscal 2000 were impacted by $16.5 million of transition costs associated with exiting the telephone switching product line and by administrative and general, marketing and sales, and research and development expenses in the telephone switching product line in the first half of fiscal 2000. Excluding the impact of the exited product line, engineering, selling, and administrative expenses as a percent of revenue were 20.6 percent in fiscal 2000. The increase from 20.6 percent in fiscal 2000 to 21.2 percent in fiscal 2001 was due to increased spending in research and development related to the ClearBurst™ GB microwave radio product in fiscal 2001.

      Goodwill Amortization: Goodwill amortization increased from $10.5 million in fiscal 2000 to $22.2 million in fiscal 2001. The increase was due to the WavTrace acquisition made in fiscal 2001 and the Louth and TRT Lucent Technologies acquisitions made during the second half of fiscal 2000. Intangibles resulting from acquisitions are being amortized by the straight-line method principally over 8 to 15 years. In establishing the amortization period of intangibles resulting from acquisitions Harris considered such factors as future expected cash flows, technological life spans, customer relationships, and distribution channels. Harris

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      In June 2001, the FASB issued Statements of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“Statement 142”). Under Statement 142, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives (but with no maximum life). Harris will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of fiscal 2002. Application of the nonamortization provisions of Statement 142 is expected to result in an increase in net income of $15.6 million ($0.24 per diluted share) per year. During fiscal 2002, Harris will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets as of July 1, 2001, and has not yet determined what the effect of these tests will be on Harris’ operations or financial position.

      Other Income (net): Other income increased from $48.2 million in fiscal 2000 to $80.0 million in fiscal 2001. Other income in fiscal 2001 includes a $33.4 million gain from the sale of Harris’ minority interest in its GE-Harris Railway Electronics, LLC joint venture which is partially offset by a $20.1 million write-down of marketable securities available for sale due to a decline in market value. The remaining increase in other income is primarily a result of gains from the sale of shares in Intersil Holding Corporation which were acquired in August 1999 in connection with the sale of Harris’ semiconductor operations. These gains were partially offset by investments made in marketing and technology products and lower levels of royalty income in fiscal 2001 when compared to the prior year.

      Interest Income and Interest Expense: Interest income decreased from $27.4 million in fiscal 2000 to $13.3 million in fiscal 2001 due to reduced cash balances that resulted from cash paid for acquired businesses and the repurchase of Common Stock during fiscal 2000 and fiscal 2001. Interest expense increased from $25.2 million in 2000 to $34.8 million in fiscal 2001 due to an allocation of interest expense to the results of discontinued operation in fiscal 2000. Total interest expense from both continuing and discontinued operations in fiscal 2000 was $41.7 million versus $34.8 million in fiscal 2001. The decrease was largely due to a reduction of total debt from $491.0 million at June 30, 2000 to $419.4 million at June 29, 2001.

      Income Taxes: The provision for income taxes as a percentage of pretax income was 70.4 percent in fiscal 2001 versus 35.0 percent in the prior year. The increase is a result of the non-deductibility of the write-off of purchased in-process research and development. Excluding the impact of the write-off of purchased in-process research and development, the provision for income taxes as a percentage of pretax income was 35.0 percent in fiscal 2001. Both fiscal 2001 and 2000 benefited from tax rates on foreign source income and export sales, which offset the additional provision needed for state income taxes. Fiscal 2001 also benefited from stock sales that had a higher tax basis than the basis used in calculating gains for financial accounting purposes.

      Return on Revenue: Income from continuing operations as a percentage of revenue was 1.1 percent in fiscal 2001 versus 1.4 percent in fiscal 2000. The reduction was primarily due to the reasons previously discussed.

      Selected financial information relating to geographical regions and export sales is set forth in the Note Business Segments in the Notes to Financial Statements.

Fiscal 2000 Compared with Fiscal 1999

  Revenue and Operating Income by Segment

      Revenue for fiscal 2000 was $1,807.4 million, an increase of 3.7 percent compared to the prior year. Operating income in fiscal 2000 was $36.3 million versus $74.5 million for the prior year.

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      Segment revenue and operating income were as follows:

      Government Communications Segment: Government Communications segment revenue in fiscal 2000 increased 0.3 percent from the prior year and operating income increased 11.5 percent. These results were impacted by an $18.0 million write-off in fiscal 1999 for the settlement of claims and unrecoverable contract development costs on two contracts. Excluding this write-off, revenues declined 1.0 percent and operating income declined 17.1 percent from fiscal 1999. Despite improved operating margins on more recent contract wins in fiscal 2000, operating income has been impacted by margin pressure from poorer-performing older contracts. Revenue growth and operating income improved significantly in the fourth quarter compared to the third quarter of fiscal 2000. Backlog continued to build, reflecting a robust win rate percentage and increased spending by the U.S. government for defense.

      Commercial Communications Segment: Commercial Communications segment revenue in fiscal 2000 increased 6.6 percent over fiscal 1999. Excluding sales from the recently exited telephone switching product line, the Commercial Communications segment’s sales increased from $803.7 million to $918.0 million or 14.2 percent. This segment experienced double-digit growth in all four of the segment’s major continuing commercial product lines: microwave, network support, broadcast, and tactical radio. These revenue increases were partially offset by a 41.9 percent decrease in revenue from the recently exited telephone switching and alarm management product lines.

      The segment’s operating loss for fiscal 2000 was impacted by the $41.0 million restructuring charge and the $10.7 million purchased in-process research and development write-off mentioned previously, as well as a $12.0 million write-down of inventory related to the telephone switching and alarm management product lines that were exited. These product lines also incurred an additional $18.9 million in operating losses in fiscal 2000 compared to a loss of $3.6 million in fiscal 1999. The segment’s fiscal 2000 operating loss also includes transition costs of $16.5 million associated with exiting these product lines. Such costs included relocation of the network support business unit’s headquarters from Marin County, California to Melbourne, Florida; collection losses on accounts receivable; and excess manufacturing costs related to idle capacity in Marin County. Harris ceased all marketing, sales, and research and development for the telephone switching and alarm management product lines as of February 2000. The operating losses through February 2000 included a significant amount of marketing and sales expenses as well as research and development costs in the telephone switching product line.

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      Excluding the items mentioned above in both the current and prior year, as well as a $20.6 million special charge for a patent litigation settlement in the prior year, the Commercial Communications segment’s operating income increased from $58.3 million in fiscal 1999 to $65.8 million in fiscal 2000, or 12.9 percent. The increase in operating income was driven mainly by the 14.2 percent sales growth in the Commercial Communications segment’s continuing commercial product lines.

      Orders and revenues increased for microwave radios during the year as markets continued to rebound in North America, Latin America, and China. In June 2000, Harris completed the acquisition of the point-to-point microwave business of TRT Lucent Technologies. The acquisition provides for a five-year preferred supplier agreement to serve the worldwide point-to-point microwave needs of Lucent’s wireless divisions.

      In the first quarter of fiscal 2001, Harris also completed the acquisition of WavTrace, Inc., a privately-held, leading developer of broadband wireless access systems. The acquisition supports Harris’ initiative to lead the world in the delivery of point-to-point and point-to-multipoint broadband wireless access solutions for microwave and millimeter wave frequencies.

      The broadcast communications business reported a strong increase in revenues due primarily to its new studio automation business, which was bolstered by the purchase of Louth Automation, the leading supplier of advanced automation systems for digital television, over-the-air broadcast, and cable and industrial applications. The acquisition of Louth Automation brings competencies in automation and control to complement Harris’ leadership position in broadcast transmission and digital encoding. This acquisition further broadens Harris’ global position in the broadcast markets.

      The tactical radio product line experienced a significant increase in sales as it continues to benefit from the market’s enthusiasm for its high data rate, multiband, secure radios, which were introduced in fiscal 2000 to meet the growing bandwidth requirement as the digital technology is embraced by the military.

      Orders and revenues also increased substantially for the network support business. This increase was aided by increased demand for the telecom line test systems used by competitive local exchange carriers (CLEC’s) to deploy digital subscriber lines (DSLs) for applications such as high-speed Internet service and the other broadband communication services for voice, data, and video.

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  Comparative Statement of Income

      Harris’ comparative statement of income is as follows: