L3Harris (LHX) 10-Q 29 Apr 10 2010 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
	9 Months Ended Apr. 02, 2010	Apr. 23, 2010	Jan. 02, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	HARRIS CORP /DE/
Entity Central Index Key	0000202058
Document Type	10-Q
Document Period End Date	2010-04-02
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--07-02
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$5,416,808,799
Entity Common Stock, Shares Outstanding (actual number)		129,834,657

Condensed Consolidated Statemen

Condensed Consolidated Statement of Income (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Apr. 02, 2010	3 Months Ended Apr. 03, 2009	9 Months Ended Apr. 02, 2010	9 Months Ended Apr. 03, 2009
Condensed Consolidated Statement of Income (Unaudited) [Abstract]
Revenue from product sales and services	1329.5	1205.1	3750.2	3710.9
Cost of product sales and services	(820)	-813.3	-2410.7	-2530.5
Engineering, selling and administrative expenses	(245)	-188.4	-672.8	-569.8
Non-operating income (loss)	-0.5	6.6	(1)	-2.2
Interest income	0.4	0.7	1.1	2.6
Interest expense	-18.1	-12.6	-54.5	-38.8
Income from continuing operations before income taxes	246.3	198.1	612.3	572.2
Income taxes	-80.1	-62.2	-202.1	-176.3
Income from continuing operations	166.2	135.9	410.2	395.9
Discontinued operations, net of income taxes	0	-38.4	0	-356.7
Net income	166.2	97.5	410.2	39.2
Noncontrolling interest in discontinued operations, net of income taxes	0	16.7	0	155.1
Net income attributable to Harris Corporation	166.2	114.2	410.2	194.3
Amounts attributable to Harris Corporation common shareholders
Income from continuing operations	166.2	135.9	410.2	395.9
Discontinued operations, net of income taxes	0	-21.7	0	-201.6
Net income	166.2	114.2	410.2	194.3
Basic net income per common share attributable to Harris Corporation common shareholders
Continuing operations	1.27	1.02	3.13	2.97
Discontinued operations	$0	-0.16	$0	-1.51
Net income	1.27	0.86	3.13	1.46
Diluted net income per common share attributable to Harris Corporation common shareholders
Continuing operations	1.27	1.02	3.12	2.96
Discontinued operations	$0	-0.16	$0	-1.51
Net income	1.27	0.86	3.12	1.45
Cash dividends paid per common share	0.22	0.2	0.66	0.6
Basic weighted average shares outstanding	130.4	132.7	131	133.3
Diluted weighted average shares outstanding	130.7	133.1	131.3	133.8

Condensed Consolidated Balance

Condensed Consolidated Balance Sheet (Unaudited) (USD $)
In Millions	Apr. 02, 2010	Jul. 03, 2009
Current Assets
Cash and cash equivalents	405.7	281.2
Receivables	656.6	770.8
Inventories	647.2	607.2
Income taxes receivable	0	21
Current deferred income taxes	144.3	117.2
Other current assets	58.1	62
Total current assets	1911.9	1859.4
Non-current Assets
Property, plant and equipment	584.3	543.2
Goodwill	1576.8	1507.1
Intangible assets	306.4	335.6
Non-current deferred income taxes	93.7	85.3
Other non-current assets	154.6	134.5
Total non-current assets	2715.8	2605.7
Total assets	4627.7	4465.1
Current Liabilities
Short-term debt	0	105.7
Accounts payable	341.5	368
Compensation and benefits	191.6	224.9
Other accrued items	302.6	288.7
Advance payments and unearned income	160.6	121.7
Income taxes payable	16	0
Current portion of long-term debt	0.8	0.7
Total current liabilities	1013.1	1109.7
Non-current Liabilities
Long-term debt	1176.7	1177.3
Long-term contract liability	135.7	145.6
Other long-term liabilities	185.3	163.4
Total non-current liabilities	1497.7	1486.3
Shareholders' Equity
Preferred stock, without par value; 1,000,000 shares authorized; none issued	0	0
Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 128,299,638 shares at April 2, 2010 and 131,370,702 shares at July 3, 2009	128.3	131.4
Other capital	463.3	466.3
Retained earnings	1537.3	1322.8
Accumulated other comprehensive loss	(12)	-51.4
Total shareholders' equity	2116.9	1869.1
Total liabilities and shareholders' equity	4627.7	4465.1

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheet (Unaudited) (Parenthetical)
	Apr. 02, 2010	Jul. 03, 2009
Shareholders' Equity
Preferred shares, par value	0	0
Preferred shares, authorized	1,000,000	1,000,000
Preferred shares, issued	0	0
Common shares, par value	1	1
Common shares, authorized	500,000,000	500,000,000
Common shares, issued	128,299,638	131,370,702
Common shares, outstanding	128,299,638	131,370,702

2_Condensed Consolidated Statem

Condensed Consolidated Statement of Cash Flows (Unaudited) (USD $)
In Millions	9 Months Ended Apr. 02, 2010	9 Months Ended Apr. 03, 2009
Operating Activities
Net income	410.2	194.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	121	127.5
Purchased in-process research and development write-off	0	2.4
Share-based compensation	28.8	27.5
Non-current deferred income taxes	-0.6	-7.6
Impairment of securities available-for-sale	0	7.6
Impairment of goodwill and other long-lived assets	0	301
Noncontrolling interest in discontinued operations, net of income taxes	0	-155.1
(Increase) decrease in:
Accounts and notes receivable	119.7	(30)
Inventories	-46.9	(48)
Increase (decrease) in:
Accounts payable and accrued expenses	-65.2	-66.2
Advance payments and unearned income	38.9	24
Income taxes	24.5	-3.6
Other	4.9	30.7
Net cash provided by operating activities	635.3	404.5
Investing Activities
Cash paid for acquired businesses	-40.2	-9.1
Additions of property, plant and equipment	-129.9	-86.8
Additions of capitalized software	-6.3	-10.1
Cash paid for short-term investments available-for-sale	0	-1.2
Proceeds from the sale of short-term investments available-for-sale	0	3.7
Net cash used in investing activities	-176.4	-103.5
Financing Activities
Proceeds from borrowings	0	78.5
Repayments of borrowings	-106.6	-80.5
Proceeds from exercises of employee stock options	12.1	7.6
Repurchases of common stock	-155.7	-132.2
Cash dividends	-86.4	-80.1
Net cash used in financing activities	-336.6	-206.7
Effect of exchange rate changes on cash and cash equivalents	2.2	-12.3
Net increase in cash and cash equivalents	124.5	82
Cash and cash equivalents, beginning of year	281.2	370
Cash and cash equivalents, end of quarter	405.7	452
Less cash and cash equivalents of discontinued operations	0	-115.6
Cash and cash equivalents of continuing operations, end of quarter	405.7	336.4

Significant Accounting Policies

Significant Accounting Policies and Recent Accounting Standards
	9 Months Ended Apr. 02, 2010
Significant Accounting Policies and Recent Accounting Standards [Abstract]
Significant Accounting Policies and Recent Accounting Standards	Note A Significant Accounting Policies and Recent Accounting Standards Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Harris Corporation and its subsidiaries. As used in these Notes to Condensed Consolidated Financial Statements (Unaudited) (these Notes), the terms Harris, Company, we, our, and us refer to Harris Corporation and its consolidated subsidiaries. Significant intercompany transactions and accounts have been eliminated. The accompanying condensed consolidated financial statements have been prepared by Harris, without an audit, in accordance with U.S. generally accepted accounting principles for interim financial information and with the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles. In the opinion of management, such interim financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows for such periods. The results for the quarter and three quarters ended April2, 2010 are not necessarily indicative of the results that may be expected for the full fiscal year or any subsequent period. The balance sheet at July3, 2009 has been derived from the audited financial statements but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for annual financial statements. We provide complete financial statements in our Annual Report on Form 10-K, which includes information and footnotes required by the rules and regulations of the SEC. The information included in this Quarterly Report on Form 10-Q (this Report) should be read in conjunction with the Managements Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended July3, 2009 (the Fiscal 2009 Form 10-K). In the fourth quarter of fiscal 2009, in connection with the May27, 2009 spin-off (the Spin-off) in the form of a taxable pro rata dividend to our shareholders of all the shares of Harris Stratex Networks, Inc. (HSTX) common stock owned by us (which constituted a controlling interest in HSTX), we eliminated as a reporting segment our former HSTX segment, which is reported as discontinued operations in this Report. As a result, our historical financial results have been restated to account for HSTX as discontinued operations for all periods presented in this Report. See Note B Discontinued Operations in these Notes for additional information regarding discontinued operations. Unless otherwise specified, disclosures in these Notes relate solely to our continuing operations. The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires us to make es

Discontinued Operations

Discontinued Operations
	9 Months Ended Apr. 02, 2010
Discontinued Operations [Abstract]
Discontinued Operations	Note B Discontinued Operations In the fourth quarter of fiscal 2009, in connection with the Spin-off in the form of a taxable pro rata dividend to our shareholders of all the shares of HSTX common stock owned by us (which constituted a controlling interest in HSTX), we eliminated as a reporting segment our former HSTX segment, which is reported as discontinued operations in this Report. As a result, our historical financial results have been restated to account for HSTX as discontinued operations for all periods presented in this Report. Summarized financial information for our discontinued operations in the quarter and three quarters ended April3, 2009 is as follows: Quarter Ended Three Quarters Ended April 3, April 3, 2009 2009 (In millions) Revenue from product sales and services $ 158.1 $ 544.8 Loss before income taxes and noncontrolling interest $ (34.8 ) $ (318.8 ) Income taxes (3.6 ) (37.9 ) Discontinued operations, net of income taxes (38.4 ) (356.7 ) Noncontrolling interest in discontinued operations, net of income taxes 16.7 155.1 Discontinued operations attributable to Harris Corporation, net of income taxes $ (21.7 ) $ (201.6 ) Unless otherwise specified, the information set forth in these Notes, other than this Note B Discontinued Operations, relates solely to our continuing operations.

Stock Options and Other Share-B

Stock Options and Other Share-Based Compensation
	9 Months Ended Apr. 02, 2010
Stock Options and Other Share-Based Compensation [Abstract]
Stock Options and Other Share-Based Compensation	Note C Stock Options and Other Share-Based Compensation As of April2, 2010, we had three shareholder-approved employee stock incentive plans (SIPs) under which options or other share-based compensation was outstanding, and we had the following types of share-based awards outstanding under our SIPs: stock options, performance share awards, performance share unit awards, restricted stock awards and restricted stock unit awards. We believe that such awards more closely align the interests of employees receiving such awards with those of shareholders. Certain share-based awards provide for accelerated vesting if there is a change in control (as defined under our SIPs). The compensation cost related to our share-based awards that was charged against income for the quarter and three quarters ended April2, 2010 was $7.6million and $28.8million, respectively. The compensation cost related to our share-based awards that was charged against income for the quarter and three quarters ended April3, 2009 was $8.6million and $25.9million, respectively. Grants to employees under our SIPs during the quarter ended April2, 2010 consisted of 12,750 stock options, 26,024 performance share awards and 17,600 restricted stock awards. Grants to employees under our SIPs during the three quarters ended April2, 2010 consisted of 2,021,490 stock options, 532,109 performance share awards and 370,250 restricted stock awards. The fair value of each option grant was estimated on the date of grant using the Black-Scholes-Merton option-pricing model which used the following assumptions: expected volatility of 38.24percent; expected dividend yield of 2.15percent; and expected life in years of 4.71.

Comprehensive Income and Accumu

Comprehensive Income and Accumulated Other Comprehensive Loss
	9 Months Ended Apr. 02, 2010
Comprehensive Income and Accumulated Other Comprehensive Loss [Abstract]
Comprehensive Income and Accumulated Other Comprehensive Loss	Note D Comprehensive Income and Accumulated Other Comprehensive Loss Comprehensive income for the quarter and three quarters ended April2, 2010 and April3, 2009 was comprised of the following: Quarter Ended Three Quarters Ended April 2, April 3, April 2, April 3, 2010 2009 2010 2009 (In millions) Net income $ 166.2 $ 97.5 $ 410.2 $ 39.2 Other comprehensive income (loss): Foreign currency translation 0.5 (9.8 ) 34.8 (110.4 ) Net unrealized gain (loss)on securities available-for-sale, net of income taxes (0.1 ) (0.1 ) 0.4 (5.1 ) Net unrealized gain (loss)on hedging derivatives, net of income taxes 0.3 2.0 (0.3 ) (0.2 ) Amortization of loss on treasury lock, net of income taxes 0.1 0.2 0.4 0.5 Recognition of pension actuarial losses in net income, net of income taxes 1.9 0.5 4.1 4.7 Total comprehensive income (loss) 168.9 90.3 449.6 (71.3 ) Comprehensive loss attributable to noncontrolling interest 16.3 161.3 Comprehensive income attributable to Harris Corporation $ 168.9 $ 106.6 $ 449.6 $ 90.0 The components of accumulated other comprehensive loss at April2, 2010 and July3, 2009 were as follows: April 2, July 3, 2010 2009 (In millions) Foreign currency translation $ 17.3 $ (17.5 ) Net unrealized gain (loss)on securities available-for-sale, net of income taxes 0.2 (0.2 ) Net unrealized gain on hedging derivatives, net of income taxes 0.9 1.2 Unamortized loss on treasury lock, net of income taxes (4.2 ) (4.6 ) Unrecognized pension obligations, net of income taxes (26.2 ) (30.3 ) $ (12.0 ) $ (51.4 )

Receivables

Receivables
	9 Months Ended Apr. 02, 2010
Receivables [Abstract]
Receivables	Note E Receivables Receivables are summarized below: April 2, July 3, 2010 2009 (In millions) Accounts receivable $ 525.0 $ 630.4 Unbilled costs on cost-plus contracts 136.1 149.1 Notes receivable due within one year, net 4.6 4.5 665.7 784.0 Less allowances for collection losses (9.1 ) (13.2 ) $ 656.6 $ 770.8

Inventories

Inventories
	9 Months Ended Apr. 02, 2010
Inventories [Abstract]
Inventories	Note F Inventories Inventories are summarized below: April 2, July 3, 2010 2009 (In millions) Unbilled costs and accrued earnings on fixed-price contracts $ 314.6 $ 305.0 Finished products 150.3 146.7 Work in process 65.6 64.1 Raw materials and supplies 116.7 91.4 $ 647.2 $ 607.2 Unbilled costs and accrued earnings on fixed-price contracts were net of progress payments of $29.3million at April2, 2010 and $16.1million at July3, 2009.

Property, Plant and Equipment

Property, Plant and Equipment
	9 Months Ended Apr. 02, 2010
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment	Note G Property, Plant and Equipment Property, plant and equipment are summarized below: April 2, July 3, 2010 2009 (In millions) Land $ 15.8 $ 10.9 Software capitalized for internal use 84.7 79.9 Buildings 379.1 351.7 Machinery and equipment 847.6 802.1 1,327.2 1,244.6 Less allowances for depreciation and amortization (742.9 ) (701.4 ) $ 584.3 $ 543.2 Depreciation and amortization expense related to property, plant and equipment for the quarter and three quarters ended April2, 2010 was $26.8million and $78.9million, respectively. Depreciation and amortization expense related to property, plant and equipment for the quarter and three quarters ended April3, 2009 was $22.7million and $65.5million, respectively.

Accrued Warranties

Accrued Warranties
	9 Months Ended Apr. 02, 2010
Accrued Warranties [Abstract]
Accrued Warranties	Note H Accrued Warranties Changes in our warranty liability, which is included as a component of the Other accrued items and Other long-term liabilities line items in the accompanying Condensed Consolidated Balance Sheet (Unaudited), during the three quarters ended April2, 2010 were as follows: (In millions) Balance at July3, 2009 $ 65.5 Warranty provision for sales made during the three quarters ended April2, 2010 38.2 Settlements made during the three quarters ended April2, 2010 (26.5 ) Other adjustments to the warranty liability, including those for foreign currency translation, during the three quarters ended April2, 2010 0.4 Balance at April2, 2010 $ 77.6

Income From Continuing Operatio

Income From Continuing Operations Per Share
	9 Months Ended Apr. 02, 2010
Income From Continuing Operations Per Share [Abstract]
Income From Continuing Operations Per Share	Note I Income From Continuing Operations Per Share In the quarter ended October2, 2009, we adopted an accounting standard requiring that unvested share-based payment awards that contain rights to receive nonforfeitable dividends or dividend equivalents (whether paid or unpaid) be treated as participating securities and that such awards be included in the calculations of income per basic and diluted share. Our performance share awards and restricted stock awards meet the definition of participating securities and are included in the calculations of income from continuing operations per basic and diluted share below, including restatement of prior period amounts, which was not material. Also, income per diluted share should be calculated using the more dilutive of the treasury stock or two-class methods. We performed the calculations of income from continuing operations per diluted share using both the treasury stock and two-class methods for the current and prior periods. The difference between the two methods was not material. As a result, we are reporting income from continuing operations per diluted share using the treasury stock method. The calculations of income from continuing operations per share are as follows: Quarter Ended Three Quarters Ended April 2, April 3, April 2, April 3, 2010 2009 2010 2009 (In millions, except per share amounts) Income from continuing operations used in basic and diluted share calculations (A) $ 166.2 $ 135.9 $ 410.2 $ 395.9 Weighted average common shares outstanding 128.8 132.0 129.8 132.5 Weighted average participating securities outstanding 1.6 0.7 1.2 0.8 Basic weighted average shares outstanding (B) 130.4 132.7 131.0 133.3 Income from continuing operations per basic share (A)/(B) $ 1.27 $ 1.02 $ 3.13 $ 2.97 Weighted average common shares outstanding 128.8 132.0 129.8 132.5 Impact of dilutive stock options and participating securities outstanding 1.9 1.1 1.5 1.3 Diluted weighted average shares outstanding (C) 130.7 133.1 131.3 133.8 Income from continuing operations per diluted share (A)/(C) $ 1.27 $ 1.02 $ 3.12 $ 2.96 Employee stock options to purchase approximately 2,183,347 and 3,927,362 shares of our stock were outstanding at April2, 2010 and April3, 2009, respectively, but were not included in the calculations of income from continuing operations per diluted share because the effect would have been antidilutive as the options exercise prices exceeded the average market price.

Non-Operating Income

Non-Operating Income (Loss)
	9 Months Ended Apr. 02, 2010
Non-Operating Income (Loss) [Abstract]
Non-Operating Income (Loss)	Note J Non-Operating Income (Loss) The components of non-operating income (loss)were as follows: Quarter Ended Three Quarters Ended April 2, April 3, April 2, April 3, 2010 2009 2010 2009 (In millions) Gain (loss)on the sale of investments $ $ (0.1 ) $ $ 0.4 Impairment of investments (0.3 ) (0.3 ) Impairment of securities available-for-sale (7.6 ) Equity income 0.4 0.3 0.4 0.5 Net royalty income (expense) (0.6 ) 6.4 (1.1 ) 4.5 $ (0.5 ) $ 6.6 $ (1.0 ) $ (2.2 )

Income Taxes

Income Taxes
	9 Months Ended Apr. 02, 2010
Income Taxes [Abstract]
Income Taxes	Note K Income Taxes Our effective tax rate (income taxes as a percentage of income from continuing operations before income taxes) was 32.5percent in the third quarter of fiscal 2010 compared with 31.4 percent in the third quarter of fiscal 2009. In the third quarter of fiscal 2010, our effective tax rate benefited from several minor discrete items. In the third quarter of fiscal 2009, we recorded a $6.5million favorable impact from the settlement of the U.S. Federal income tax audit of fiscal 2007. Our effective tax rate was 33.0percent in the first three quarters of fiscal 2010 compared with 30.8percent in the first three quarters of fiscal 2009. In the first three quarters of fiscal 2010, the major discrete item was a $3.5million state income tax benefit associated with the filing of our fiscal 2008 income tax returns, which we recorded in the second quarter of fiscal 2010. In the first three quarters of fiscal 2009, the major discrete items were primarily as follows: as noted above for the third quarter of fiscal 2009, we recorded a $6.5million favorable impact from the settlement of the U.S. Federal income tax audit of fiscal 2007; in the second quarter of fiscal 2009, we recorded a $5.0million tax benefit relating to prior periods associated with legislative action during the second quarter of fiscal 2009 that restored the U.S. Federal income tax credit for research and development expenses, and a $3.7million state income tax benefit associated with the filing of our fiscal 2007 income tax returns; and in the first quarter of fiscal 2009, we recognized state income tax credits resulting from growth in our RF Communications segment.

Fair Value Measurements

Fair Value Measurements
	9 Months Ended Apr. 02, 2010
Fair Value Measurements [Abstract]
Fair Value Measurements	Note L Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal market (or most advantageous market, in the absence of a principal market) for the asset or liability in an orderly transaction between market participants at the measurement date. Further, entities are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value, and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices included within Level 1, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are observable or are derived principally from, or corroborated by, observable market data by correlation or other means. Level 3 Unobservable inputs that are supported by little or no market activity, are significant to the fair value of the assets or liabilities, and reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The following table represents the fair value hierarchy of our financial assets and financial liabilities measured at fair value on a recurring basis (at least annually) as of April2, 2010: Level 1 Level 2 Level 3 Total (In millions) Financial Assets Marketable equity securities (1) $ 4.1 $ $ $ 4.1 Deferred compensation plan investments: (2) Money market fund 26.0 26.0 Stock fund 35.0 35.0 Equity security 17.4 17.4 Foreign currency forward contracts (3) 5.5 5.5 Financial Liabilities Deferred compensation plans (4) 77.4 77.4 Foreign currency forward contracts (5) 3.5 3.5 (1) Represents investments classified as securities available-for-sale, which we include in the Other current assets line item in the accompanying Condensed Consolidated Balance Sheet (Unaudited). (2) Represents investments held in a Rabbi Trust associated with our non-qualified deferred compensation plans, which we include in the Other current assets and Other non-current assets line items in the accompanying Condensed Consolidated Balance Sheet (Unaudited). (3) Includes derivatives designated as hedging instruments, which we include in the Other current assets line item in the accompanying Condensed Consolidated Balance Sheet (Unaudited). The fair value of these contracts was measured using a market approach based on quoted foreign currency forward exch

Derivative Instruments and Hedg

Derivative Instruments and Hedging Activities
	9 Months Ended Apr. 02, 2010
Derivative Instruments and Hedging Activities [Abstract]
Derivative Instruments and Hedging Activities	Note M Derivative Instruments and Hedging Activities In the normal course of doing business, we are exposed to global market risks, including the effect of changes in foreign currency exchange rates. We use derivative instruments to manage our exposure to such risks and formally document all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking hedge transactions. We recognize all derivatives in the accompanying Condensed Consolidated Balance Sheet (Unaudited) at fair value. We do not hold or issue derivatives for trading purposes. At April2, 2010, we had open foreign currency forward contracts with a notional amount of $81.7million, of which $43.0million were classified as cash flow hedges and $38.7million were classified as fair value hedges. This compares with open foreign currency forward contracts with a notional amount of $47.6million at July3, 2009, of which $20.2million were classified as cash flow hedges and $27.4million were classified as fair value hedges. At April2, 2010, contract expiration dates ranged from less than 1month to 14months with a weighted average contract life of 2months. Balance Sheet Hedges To manage the exposure in our balance sheet to risks from changes in foreign currency exchange rates, we implement fair value hedges. More specifically, we use foreign currency forward contracts and options to hedge certain balance sheet items, including foreign currency denominated accounts receivable and inventory. Changes in the value of the derivatives and the related hedged items are reflected in earnings, in the Cost of product sales and services line item in the accompanying Condensed Consolidated Statement of Income (Unaudited). As of April2, 2010, we had outstanding foreign currency forward contracts denominated in the Euro, British Pound, Canadian Dollar and Australian Dollar to hedge certain balance sheet items. The net gains on foreign currency forward contracts designated as fair value hedges for the quarter and three quarters ended April2, 2010 were not material. In addition, no amounts were recognized in earnings in the quarter and three quarters ended April2, 2010 related to hedged firm commitments that no longer qualify as fair value hedges. Cash Flow Hedges To manage our exposure to currency risk and market fluctuation risk associated with anticipated cash flows that are probable of occurring in the future, we implement cash flow hedges. More specifically, we use foreign currency forward contracts and options to hedge off-balance sheet future foreign currency commitments, including purchase commitments from suppliers, future committed sales to customers and intercompany transactions. These derivatives are primarily being used to hedge currency exposures from cash flows anticipated in our RF Communications segment related to programs in the U.K., the Netherlands, Ireland, Canada and China. We also have hedged U.S. dollar payments to suppliers to maintain our anticipated profit margins in our international operations. As of April2, 2010, we had outstanding foreign currency forward contracts denominated in the Euro

Business Segments

Business Segments
	9 Months Ended Apr. 02, 2010
Business Segments [Abstract]
Business Segments	Note N Business Segments We structure our operations primarily around the products and services we sell and the markets we serve, and we report the financial results of our continuing operations in the following three business segments RF Communications, Government Communications Systems and Broadcast Communications. Our RF Communications segment is a global supplier of secure tactical radio communications and embedded high-grade encryption solutions for military and government organizations and also of secured communications systems and equipment for public safety, utility and transportation markets. Our Government Communications Systems segment conducts advanced research studies and produces, integrates and supports highly reliable, net-centric communications and information technology that solve the mission-critical challenges of our defense, intelligence and civilian U.S. Government customers. Our Broadcast Communications segment serves the global digital and analog media markets, providing infrastructure and networking products and solutions, media and workflow solutions, and television and radio transmission equipment and systems. Within each of our business segments, there are multiple program areas and product lines that aggregate into our three business segments described above. The accounting policies of our business segments are the same as those described in Note 1: Significant Accounting Policies in our Fiscal 2009 Form 10-K. We evaluate each segments performance based on its operating income (loss), which we define as profit or loss from operations before income taxes excluding interest income and expense, royalties and related intellectual property expenses, equity income and gains or losses from securities and other investments. Intersegment sales among our segments are transferred at cost to the buying segment and the sourcing segment recognizes a normal profit that is eliminated. The Corporate eliminations line item in the tables below represents the elimination of intersegment sales and their related profits. The Unallocated corporate expense line item in the tables below represents the portion of corporate expenses not allocated to the business segments. Total assets by business segment are summarized below: April 2, July 3, 2010 2009 (In millions) Total Assets RF Communications $ 1,400.4 $ 1,473.0 Government Communications Systems 1,534.2 1,421.4 Broadcast Communications 1,057.3 1,042.4 Corporate 635.8 528.3 $ 4,627.7 $ 4,465.1 Segment revenue, segment operating income (loss)and a reconciliation of segment operating income (loss)to total income from continuing operations before income taxes follow: Quarter Ended Three Quarters Ended April 2, April 3, April 2, April 3, 2010 2009 2010 2009 (In millions) Revenue RF Communications $ 550.7 $ 439.1 $ 1,437.3 $ 1,292.5 Government Communications Systems 665.7 648.7