Infrastructure systems for

h i g h - s p e e dI n t e rnet access

2000 Annual Report

C l e a r B u rst™ 1000 Broadband W i reless Access Solution

P R O F O R M A F I N A N C I A L H I G H L I G H T S *

C o m m e rcial Communications vs. G overnment Communications Business*C o nt i nu i ng Opera t io ns (Pe rc e nt of Revenu e s )

G ove r n m e n t4 7 %

C o m m e rc i a l5 3 %

D o m e s t i c7 3 %

I n t e r n a t i o n a l2 7 %

International vs. Domestic Business*C o nt i nu i ng Opera t io ns (Pe rc e nt of Revenu e s )

C ove r : Harris inc reased its stake in the fa s t - g ro w i ng bro a d b a nd wireless access( B WA ) ma r ket with the acquisition of Wa v t ra c e, Inc., on August 31, 2000. TheClearBurst™ 1000 B WA hub outdoor unit (left), which uses Wa v t race techno l o g y,has been tested successfully in Europe and pre c e des the planned int ro duc t io nnext spring of ClearBurst 2000 ( r ig ht), which will deliver the Int e r net and othe rmu l t i me d ia services at speeds up to 180 Mbps per user. Pic t u red are (L-R) BobF o s t e r, Wa v t race fo u nder and c h ief scie ntist; Steve Wa r w ick, director of pro duc ts t rategy; and Rick Bernhe i m , d i rector of LMDS (Local Mu l t i p o i nt Distributio nSystem) de v e l o p me nt .

1 9 9 9 C h a n g eDollars in millions except per share amounts 2 0 0 0Revenues $1,733.9 1,616.9 +7%

Income from Continuing OperationsBefore Extraordinary Item 75.3 68.7 +10%

Per Share Income from Continuing OperationsBefore Extraordinary Item (diluted) 1.03 .86 +20%

Return on Revenues 4.3% 4.2% –

Return on Equity 5.1% 4.3% –

Diluted Average Shares Outstanding (Millions) 73.4 79.7 -8%

Number of Record Shareholders 9,857 10,393 -5%

Number of Employees from Continuing Operations 10,000 10,500 -5%

* Re sults exclude revenues from an exi ted tel ephone swi tching business of $73.5 million in FY’2000 and $126.6 million in FY’1999; after-tax re s tru ctu ring ch a rges of $26.7 million inF Y’2000 and $3.3 million in FY’1999; after-tax pu rch a sed in-pro cess re se a rch and devel opm ent wri te - of fof $7.0 million in FY’2000; after-tax opera ting losses and tra n s i tion co s t srel a ted to Ha rri s’ exi ted tel ephone swi tching business of $30.8 million in FY’2000 and $2.4 million in FY’1999; an after-tax $14.2 million gain in FY’2000 from the sale of In ters i lHolding Co rpo ra tion sto ck rel a ted to In tersil Holding Co rpo ra ti o n’s initial pu blic of fering; and an after-tax spe cial ch a rge for liti ga tion costs of $13.1 million in FY’ 1 9 9 9 . Retu rn onrevenues and equity are co m pu ted on a pro fo rma basis excluding these item s .

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In fiscal 2000, Ha rris set a bold new co u rse that po s i ti ons this lon g - s t a n d i n g

company as a major player in the new era of communications, driven by

cellular networks, the Internet, and other advanced digital services. The

plan was to reshape Harris from a diversified manufacturer to a focused

provi der of com mu n i c a ti ons equ i pm ent for new and trad i ti onal ch a n n el s

of communications around the world. The makeover was accomplished

in full and on time during fiscal 2000.

The new Harris has emerged in fiscal 2001 as a leading provider of

wi reless infra s tru ctu re soluti on s , d i gital TV and radio sys tem s , m a n a gem en t

and test equ i pm ent for soph i s ti c a ted com mu n i c a ti ons net work s , and sec u re

d i gital com mu n i c a ti ons sys tems for defen s e . The out l ook for your com p a ny

is for exc i ting business opportu n i ties and improved financial perform a n ce .

T O O U R S H A R E H O L D E R S

A new era ofcommunications

dominated by the Internet and advanced digital services.

co n ti nu ed on pa ge 2

Disposition of Non-Strategic Businesses: In clu ded in the repo s i-

ti oning was the dispo s i ti on of t h ree non - s tra tegic bu s i n e s s e s . In

the first half of the ye a r, Ha rri s’ form er sem i con du ctor bu s i n e s s

was sold, and the Lanier of f i ce produ cts business was spun-of f

to shareh o l ders as a tax-free divi den d . At the end of the ye a r, we

com p l eted the sale of an unprof i t a bl e , n on - s tra tegic tel eph on e

s wi tching sys tems bu s i n e s s . The repo s i ti oning also inclu ded many

or ga n i z a ti onal ch a n ges to help the com p a ny ef f i c i en t ly em brace

n ew markets and to redu ce ad m i n i s tra tive ex pen s e s . Those ch a n ge s

i n clu de the establ i s h m ent of an intern a ti onal sales or ga n i z a ti on wi t h

four Regi onal Sales Opera ti ons around the gl obe ; the implem en t a ti on

of com m on inform a ti on sys tem s ; and the cen tra l i z a ti on of f i n a n ce ,

R & D, human re s o u rce s ,l ega l , and other ad m i n i s tra tive servi ce s .

A Strong Balance Sheet: The proceeds from the disposition of

businesses, combined with successful investments, have provided

your company with a solid balance sheet and an unprecedented

position of strength in cash and marketable securities. Cash and

marketable securities were approximately $800 million at the end

of the year, versus approximately $100 million at the end of fiscal

1999. On the liability side of the balance sheet, the ratio of total-

debt-to-total-capital was 26.3 percent in fiscal 2000 versus 34.5

percent in the previous year. The combination of a strong cash

position and the ability to access additional lines of credit gives

Harris ample resources to expand our presence in high-growth

communications markets through internal product developments

and strategic acquisitions.

Acquisition of Wa v t ra c e, Inc.: In the first quarter of fiscal 2001,

Ha rris acqu i red Wav trace , In c . , a pion eer and leading devel oper of

broadband wireless access systems. Harris, which had previously

acquired 20 percent of Wavtrace, purchased the remainder of the

company for approximately $134 million. This move helps Harris

to secure a leadership position in the market for broadband wire-

less access. Wavtrace has developed key technology for delivering

Internet and other high-speed data services over wireless millime-

ter-wave transmissions to provide “last mile” access to business

end-users. The technology, called TDD (time division duplexing),

enables the system to transport high-speed bursts of data in a

spectrum-efficient manner. Harris’ high-bandwidth products will

deliver data, voice,and video communications to large and small

office buildings,and eventually to homes.

Phillip W. FarmerChairman of the Board,President and Chief Executive Officer

A M E S S A G E T O S H A R E H O L D E R S

The outlook is forexciting business

opportunitiesand improved financial

performance.

P u rchase of TRT Lucent Te c h n o l o g i e s ’M i c rowa ve Business: At the end of the

fiscal year, we acquired Lucent Technologies’

point-to-point microwave radio business for

approximately $30 million. The transaction

includes a five-year preferred supplier agreement

to provide the worldwide point-to-point microwave needs

of Lucent’s wireless divisions. The business, which is located near

Paris, provides Harris with a broader presence in Europe, Africa,

and the Middle East. The acquisition and related agreements are

expected to add over $100 million in annual sales volume.

B roadcast Acquisitions: Harris acquired two technology-rich

companies during the year to support the expansion of our

i n du s try - l e ading Broadcast Com mu n i c a ti ons bu s i n e s s . In Ja nu a ry

2 0 0 0 , Ha rris acqu i red Lo uth Autom a ti on for approx i m a tely $87

million. Louth is a provider of broadcast automation solutions

that help owners manage multiple stations,signals, and product

of feri n gs ,i n cluding the del ivery of In tern et servi ce s . The acqu i s i ti on

also positions Harris to expand from over-the-air broadcasting

into cable and satellite delivered programming.

In September 1999, we acquired Pacific Research and

Engineering Corporation for $6 million. PR&E is a recognized

industry leader in the design, development,and integration of

analog and digital radio studio products.

C o m m e rcial Communications Segment Highlights: Microwave

Communications: Harris’ Microwave Communications business

is the number one independent provider of microwave radio

products in the world. This business experienced strong growth

in the second half of fiscal 2000 as worl dwi de markets rebo u n ded ,

particularly in China,Latin America, and North

America. Orders in the second half rose almost

40 percent, as the business was driven by the

expansion of cellular, PCS,and private net-

works around the world. Harris has the

broadest product line in the industry,

and recent acquisitions have expanded its

distribution channels and technology base.

Broadcast Communications: Harris is the number

one provi der of tel evi s i on and radio tra n s m i s s i on and

rel a ted equ i pm ent in the worl d . The business is lead i n g

the indu s try in the convers i on to digital tel evi s i on with

a n approximate 60 percent share of the DTV transmitters

delivered. The pace of conversion in fiscal 2000 was disap-

pointing, as a continuing debate over the U.S. standards for

digital television delayed the projected DTV buildout. However,

the ex pect a ti ons for market opportu n i ties remain unch a n ged , a n d

we anticipate that the roll-out will accelerate once the standard

i s sues are re s o lved . Ha rris also is at the foref ront of the convers i on

to digital radio with a potential market that includes 12,000 U.S.

radio stations.

Netwo rk Su ppo rt: Ha rris provi des produ cts and sys tems to hel p

telecom service providers manage their networks more effectively.

Ha rri s’ h i gh - growth line test sys tems bu s i n e s s , wh i ch is being driven

primarily by the roll-out of DSL (digital subscriber line) services,

gives service providers the ability to rapidly deploy and maintain

DSL services. Harris continues to be the leading supplier of test

sets and tools for repair and testing of telephone lines,and also

provides solutions to manage continually evolving, integrated,

communications networks. The company’s NetBoss™ network

m a n a gem ent soluti on simplifies the daily ch a ll en ges of keeping

the network up and running efficiently.

Our Network Support business is serving a very

robust market as service providers continue to add

features and new networks in the U.S. and the rest of

the world.Orders in this business grew 35 percent

last year and revenues increased 24 percent. We

believe this type of growth is sustainable over

the next several years.

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Samuel D. WymanPresident,Microwave Communications

Daniel R. PearsonPresident,Network Support

Robert K. HenryPresident,GovernmentCommunications Systems

RF Communications: Harris is a world leader in secure,

long-range HF, VHF, and UHF radios used for wireless commu-

nications, primarily by government and defense forces around the

world. The radios provide voice, data,and limited video capabili-

ties for both point-to-point and network applications. Harris pro-

vides global peacekeeping forces with secure, reliable communi-

cations for thousands of miles. These “tactical” radios operate

independent of infrastructure, a key attribute in times of conflict

and instability. In fiscal 2000, the business produced excellent

results, with revenues increasing 18 percent.

G overnment Communications Segment Highlights: The technol-

ogy developed and applied in our Government Communications

Systems business underpins development in our commercial

businesses. This business is a technology powerhouse for Harris

with 3,200 engineers and scientists working on sophisticated

defense communications platforms that also have relevance to

the com m ercial marketp l ace . The govern m ent market has tu rn ed

po s i tive as bu d geted spending by the Dep a rtm ent of Defense for

proc u rem ent and for R&D, te s t , and en gi n eering is now tren d i n g

up, particularly in communications, where Harris excels. The

business showed improvem ent in revenue and opera ting incom e

for fiscal 2000, with a significant uptu rn in orders and sales in the

fourth quarter.

Harris People: In Ja nu a ry 2000, Sa mu el D. Wyman joi n ed Ha rris as

pre s i dent of Mi c row ave Com mu n i c a ti on s .M r. Wyman previ o u s ly

was with Di gital Mi c row ave Corpora ti on and has had a disti n g u i s h ed

c a reer in both com m ercial and govern m ent com mu n i c a ti ons

m a rket s . He is leading Ha rri s’ d rive to be the dominant player in

m i c row ave sys tem s . Also in Ja nu a ry, D a n i el R. Pe a rs on was

a ppoi n ted pre s i dent of Ha rri s’ Net work Su pport bu s i n e s s .

M r. Pe a rs on is a 23-year veteran of Ha rris with a broad

b ack ground in program managem ent of com p l ex

govern m ent com mu n i c a ti ons and aero s p ace pro-

gra m s . He is spe a rh e ading ef forts to ex p a n d

our po s i ti on in the fast-growing area of n et-

work su pport for tel ecom servi ce provi ders .

Robert Cizik retired from the Harris Board

of Directors in October 1999. We are grateful

for his 11 years of dedicated service to the Ha rri s

Boa rd . In Decem ber 1999, S teph en P. Kaufman,

chairman of Arrow Electronic, Inc., was el ected

to the Boa rd ; and in Febru a ry 2000, Gregory T.

Swienton, president and COO of Ryder System,

Inc., was elected to the Board. The Ha rris Boa rd

n ow consists of ten mem bers , nine of which are

outside directors.

We were saddened during the year by the death of Richard

B. Tullis, chairman emeritus of Harris. Mr. Tullis served Harris

for almost 30 ye a rs and was CEO from 1968 to 1978. He led the

early stages of Harris’ transition from a printing equipment com-

pany to a successful multi-billion-dollar, high-technology enter-

prise. We will miss his wise counsel.

Fiscal 2000 Results: For fiscal 2000, Harris reported pro forma

revenues from con ti nuing opera ti ons of $1.734 bi ll i on versus $1.617

bi ll i on for fiscal 1999. Pro forma net income from con ti nuing opera-

ti on s for fiscal 2000 was $75.3 mill i on , com p a red to $68.7 mill i on

in the previous year. Pro forma results for fiscal 2000 exclude

three items: a gain on the sale of Intersil Holding Corporation

s tock du ring its IPO, a ch a r ge for in-process re s e a rch and devel op-

ment related to an acquisition,and revenue and costs related to

the exit of the telephone switch business.

Outlook: The outlook for fiscal 2001 is for strong growth in sales

and earnings, building on the momentum established during the

past year. The major repositioning actions have been completed,

yi elding redu cti ons in overh e ad costs and mu ch ti gh ter integra ti on

of the com p a ny. Profit margi n s , wh i ch are low by historical standard s

as we end the repositioning period, are expected to continue

i m provi n g, qu a rter by qu a rter, du ring fiscal 2001. We also ex pect

to accomplish ad d i ti onal acqu i s i ti ons to furt h er stren g t h en Ha rri s’

position in communications markets.

Sincerely,

:04

Phillip W. FarmerChairman of the Board,President and Chief Executive Officer

Chester A. MassariPresident,RF Communications

Bruce M. AllanPresident,Broadcast Communications

Harris Microwave Communicationsis the largest supplier of microwave communications systems in North America and is positioned to be theglobal leader in Broadband WirelessAccess solutions. Its product line –t he bro a dest in the indu s t ry – p ro v ide swireless transmission and access for cellular, PCS, and private telecom networks, and provides broadbandwireless access to the Internet andother high-speed data services.

Harris Government CommunicationsSystems conducts advanced researchstudies, develops prototypes, andproduces state-of-the-art airborne,spaceborne, and terrestrial communi-cations and information processingsystems for military and governmenta ge nc ie s, their prime cont ra c t o r s, andfor t he company’s own comme rc ia lb u s i ne s s e s.

Harris is the leading p ro ducer of a nalog and digital bro a dcast equipme nta nd systems for tra ns m i s s ion, s t ud io ,a u t o ma t ion, and network ma na ge me nta p p l ic a t io ns. The company serves cus-tomers in 125 countries and is at t hefo re f ro nt of the bro a dcast indu s t r y ’ st ra ns i t ion to digital services for botht e l e v i s ion and ra d io .

Harris Network Support delivers test,ma na ge me nt and ma i nt e na nce solutio nsto public and private communicationsservice providers around the world. Thedivision’s solutions focus on the needsof operations, maintenance, and instal-lation professionals in deregulated markets worldwide, by providing nextlevel digital subscriber line (DSL) testsystems, integrated network manage-ment systems, and technician test sets and tools.

Harris RF Communications is a leadings u p p l ier of secure ra d io commu n ic a t io nsproducts, systems and networks forvoice and data to military, government,and commercial organizations world-wide. Its Falcon II radio products arebecoming the standard of NATO andPartnership for Peace countries.

G o v e rn m e n tC o m m u n i c a t i o n s

N e t w o r kS u p p o rt

B ro a d c a s tC o m m u n i c a t i o n s

R FC o m m u n i c a t i o n s

M i crowav eC o m m u n i c a t i o n s

B roadband Wireless Ac c e s sUsers worldw ide are clamo r i ng fo rh ig h - s p e e d, cost-effic ie nt accessto voic e, data, and video servic e s.B ro a d b a nd Wireless Access (BWA )t e c h nology offers commu n ic a t io nss e r v ice pro v iders the capability tosatisfy escalating de ma nds with ah igh-capacity wireless alterna t i v eto tra d i tio nal wire l i ne servic e s.Harris i nc reased its stake in thefa s t - g ro w i ng B WA ma r ket with there c e nt acquisition of Wa v t ra c e, Inc. ,a pio neer in B WA de v e l o p me nt .Over the past year, Harris andWa v t race have been de v e l o p i ngB WA s o l u t io ns for today’s hig h -

s p e e d, da t a - r ich commu n ic a t io nsa p p l ic a t io ns. Wa v t race was thefirst to develop a broadbandp o i nt - t o - mu l t i p o i nt ( P M P ) s y s t e mfor millimeter wave based on T D D( t i me division du p l ex i ng) techno l-o g y, which effic ie ntly tra ns p o r t sh igh-speed bursts of data tra f f ic.

T he acquisition ex p a nds Ha r r i s ’ex i s t i ng, low-fre q u e ncy ClearBurstp ro duct family (shown below) toi nc l ude hig h - f re q u e ncy s o l u t io ns.ClearBurst is a P M P system thatp ro v ides digital, two-way voic e,data, Int e r net and v ideo servic e s.

E a r l ier this year, Harris completedf ield trials of the new hig h - f re q u e nc yClearBurst 1000 B WA m ic ro w a v era d io in Euro p e. In the Spring of2001, Harris plans to int ro duce theClearBurst 2000, w h ich will ena b l et he delivery of mu l t i me d ia services atspeeds up to 1 8 0Mbps per user– fo u rt i mes as fast as competing systems.

“ClearBurst offers massive systemcapacity in a mo dular de s ign thati nc reases over time, giving servic ep ro v iders the largest capacity pro-v ided by any wireless system on thema r ket,” said Sam Wyman, pre s ide nt ,Harris Mic rowave Commu n ic a t io ns.

We will lead the global marketplace in

m i c rowave radio solutions.Myriam Beauchemin and Alain Bourque areproduct managers for Harris’ ClearBurstTM

low-frequency (2.5 to 10 GHz) BWA products,which will bring high-speed Internet serviceto businesses and individual consumers.

C l e a r B u rst™ 200 B roadband Wireless Access Solution

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M I C R O W A V E C O M M U N I C A T I O N S

(L to R)

B roadband Wireless Ac c e s s : G e o rge Ha r b a c hu k ,c u s t o mer service re p re s e nt a t i v e, holds the new ClearBurst re mo t e, outdoor unit for BWAa p p l ic a t io ns.

M u l t i m e d i a : Harris bro a d b a nd wireless accessra d ios will deliver hig h - s p e e d, hig h - b a ndw idt hs e r v ices to da t a - hu ngry small firms, such as this gra p h ic arts busine s s.

MegaStar™ and Constellation™: S a ndy Mo o re, ma na ger of Harris’ Customer Brie f i ng Cent e r, p re s e nts the benefits of Harris’ hig h - c a p a c i t yMegaStar (left) and compact, me d i u m - c a p a c i t yC o ns t e l l a t ion (rig ht) mic rowave ra d ios to mo rethan 400 customer groups annua l l y.

W i reless Solutions: Ha rris is the largest provi der of m i c row ave radio sys tems in North Am erica andof fers the broadest produ ct line in the indu s try,i n cluding poi n t - to - point and poi n t - to - mu l ti poi n tprodu cts that cover f requ ency bands up to 40 G H z.The com p a ny provi de s equ i pm ent and servi ces to cellu l a r, P C S, priva te net work , and com peti tive n et work opera tors .

S t rategically Positioned: Two recent stra tegi cacqu i s i ti ons in Ha rri s’ m i c row ave radio business h ave po s i ti on ed the com p a ny to become the nu m berone su pp l i er of broadband wi reless access ( BWA )

s o luti ons and to lead the world in the del ivery ofm i c row ave radio soluti on s .

B roadband Wireless Access: In the first qu a rter offiscal 2001, Ha rris acqu i red Wav trace , In c . , a ven tu re -capital-backed developer and pioneer of point-to-mu l ti point ( P M P ) broadband wi reless access sys tem sfor high - s peed In tern et ,d a t a , vi deo, and voi ce servi ce s( s ee oppo s i te page ) .

The Wav trace produ ct , wh i ch uses the high - f re-qu ency (20-40 GHz) b a n d s , is an excell ent com p l em en tto Ha rri s’ i n ternal devel opm ent of P M P produ cts inthe lower- f requ ency (2.5 to 10 GHz) b a n d s .

Ha rri s’ m i c row ave soluti ons also inclu de a familyof poi n t - to - point ( P T P ) produ cts in the 18-38 G H z

b a n d s ,c a ll ed Galaxy™, wh i ch was introdu ced in thes econd half of fiscal 2000. The Galaxy 23 G H z produ ctwas selected in July 2000 as part of a $25 millioncon tract to su pp ly and install microw ave radios forBra z i l ’s Global Vi ll a ge Tel ecom net work provi d i n gs ervi ce for 24 citi e s . Galaxy is ideal for high-capacitytransmissions in areas where the i n s t a ll a ti on of n ewf i ber optic cable is impracti c a l .

Harris Ac q u i res TRT Lucent Technologies’ PTPM i c rowa ve Business: In the fo u rth qu a rter of f i s c a l2 0 0 0 , Ha rri s acqu i red T RT Lu cent Tech n o l ogi e s’poi n t - to - point m i c row ave radio business unit inFra n ce , giving Ha rri s a gre a ter pre s en ce in Eu rope ,Af ri c a , and the Mi d dle East. In con n ecti on with thep u rch a s e , Ha rris and Lu cent also have en tered into a five - year preferred su pp l i er agreem ent in wh i chHa rris wi ll su pp ly P T P m i c row ave produ cts worl d-wi de for Lu cen t’s wi reless divi s i on s . The acqu i s i ti onand rel a ted agreem ents are ex pected to add over $100 mill i on in annual sales vo lu m e .

C o n t racts Worldwide: In ad d i ti on to the preferredsu pp l i er agreem ent with Lu cen t , Ha rris sign ed as tra tegic agreem ent with a worl dwi de provi der oftel ecom mu n i c a ti ons infra s tru ctu re equ i pm ent va lu edat $90 mill i on over three ye a rs . Du ring fiscal 2000,Harris also received a $20 million order from US

Cellular, the eleventh-largest wireless telecommu-n i c a ti on s provi der; a $22 mill i on order from Ch i n aUn i ted Tel ecom mu n i c a ti ons Corp. ; and an $11 mil-l i on con tract f rom the Chilean Govern m ent to su pp lyand build out the worl d ’s lon gest microw ave net work ,en compassing 4,500 kilom eters .

Fe r rari Selects Harris: In one of the “rac i er ”a pp l i c a-ti ons of m i c row ave tech n o l ogy, a utom a ker Ferra ris el ected Ha rri s’ n ew Au rora™ radio for tra n s m i t ti n gon boa rd sys tems and perform a n ce data du ring pre -race te s ting and actual com peti ti on in Grand Pri xFormula One race s .

:08

B R O A D C A S T C O M M U N I C A T I O N S

(L to R)

N e t work Au t o m a t i o n : Harris automation systems provide HBO and its Vice Presidentof Broadcast Engineering, E l mer Mu s s e r, J r., real time, 24-ho u r - a - da y control andmanagement of the cable giant’s multiple program transmissions.

Theater at Home: DTV will deliver a cine ma -like experience to the nation’s living rooms.

Radio Studio Pro d u c t s : Harris products a re in use at tho u s a nds of ra d io statio ns acro s st he U.S., such as WLTW Lite FM 106.7 in Ne wYork City – t he most listened to station in t he count r y.

A New Age of Digital Sight and Sound: The world is going digi t a l , and nowh ere is this more app a ren tthan in tel evi s i on and radio market s . U. S . n et work TV

a f f i l i a tes in large cities are alre ady on the air with ad i gital tel evi s i on ( D TV) s i gn a l . Remaining comm er-cial stati ons are requ i red to com p l ete their upgrade toD TV by 2002; n on - com m ercial stati ons by 2003. O nthe radio side , broadc a s ters are devel oping a digi t a ls t a n d a rd to re s pond to com peti ti on from satell i te ,In tern et and other em er ging audio servi ce s . Ha rris iswell - po s i ti on ed to reap the ben efits of this on goi n ggl obal tra n s i ti on .

Digital Te l ev i s i o n : Ha rris has su pp l i ed approx i m a tely60 percent of D TV tra n s m i t ters curren t ly opera ting inthe marketp l ace . The com p a ny this year introdu ceda nu m ber of n ew broadcast soluti ons including a d a t ac a s ting app l i c a ti on that lets broadc a s ters use thei rD TV ch a n n el to del iver large data files, h i gh - re s o lu-ti on vi deo, C D- qu a l i ty audio, and other inform a ti ond i rect ly to a P C.

Ha rris also has shipped more than 30 of its newC D Eye™ integra ted D TV tra n s m i t ter mon i toring sys-tems to U. S . TV s t a ti on s . This sof t w a re - b a s ed produ ctredu ces the costs of s i gnal perform a n ce mon i toring by 90 percent over trad i ti onal hardw a re sys tem s .

Ha rris D TV en coding sys tems have become t h e encoders of choice among broadcasters acrossthe U. S . , and were sel ected in fiscal 2000 by the CBSTel evi s i on Stati ons Divi s i on of Vi acom for its 35 coa s t -to - coast stati ons and its U P N Tel evi s i on Net work .

International Marke t s : In ad d i ti on to its leaders h i ppo s i ti on in U. S . broadcast market s , Ha rris also ex pect sto reap the benefits of the global transition to digitalwith adva n ced digital modu l a ti on tech n o l ogies devel -oped by its Eu ropean broadcast opera ti on s .

In analog market s , Ha rri s’ h i gh - power U H F tel e-vi s i on tra n s m i t ters were sel ected du ring fiscal 2000 byCrown Castle U K L td . to broadcast to the 13 mill i onvi ewers of the B B C One and B B C in Gre a ter Lon don .

Digital Radio: Ha rris is the world leader in A M a n dFM radio transmitters and is helping to speed thei m p l em en t a ti on of the next wave of radio broadc a s t-i n g, c a ll ed In - Ba n d / O n - Ch a n n el ( I BOC ) d i gital rad i o.I BOC s ys tems wi ll all ow broadc a s ters to convert froma n a l og to digital wi t h o ut any ch a n ges or disru pti on sin servi ce .

Ha rris broaden ed its pre s en ce in the radio marketwith the acqu i s i ti on of Pacific Re s e a rch and Engi n eeri n gCorpora ti on , a manu f actu rer of h i gh - qu a l i ty broadc a s ts tudio produ ct s ; and Audio Broadcast Gro u p, a lead i n gd i s tri butor of radio produ ct s .

Ha rris this year del ivered the large s t ,d i gi t a l ,s o l i d - s t a te FM tra n s m i t ter in its history to W U OT-

F M, a Na ti onal Pu blic Radio affiliate in Ten n e s s ee .

N e t work Automation and Monitoring: The U. S .

broadcast market is under going wi de s pre ad own er-ship ch a n ges that requ i re adva n ced capabi l i ties toi n tegra te , con trol and manage mu l tiple stati on s ,s i gn a l s , and produ ct s , i n cluding the In tern et . With the acqu i s i ti on of Lo uth Autom a ti on – n ow Ha rri sAutom a ti on – Ha rris is the leading su pp l i er ofbroadcast autom a ti on soluti ons and is po s i ti on ed to expand into the cable and satell i te market s .

Studio Integration: Ha rris de s i gns and integra te stotal studio soluti ons for its broadcast custom ers .Am ong new con tracts in fiscal 2000, Ha rris wass el ected to provi de com p l ete , i n tegra ted re s o u rce -s h a ring studio and tra n s m i s s i on soluti ons for theAckerl ey Gro u p’s new Radio Broadc a s ting Divi s i on in Se a t t l e . The Ackerl ey Group has 24 indepen den tm edia and en tert a i n m ent opera ti on s .

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We are the leading worldwide provider of

digital broadcast so l u t i o ns.The Masters in DT VHarris cont i nued its leadership role in the tra ns i t ion to DT V in fiscal 2000 through a mu l t i - m i l l io ndollar partnership with W R D W -T V. Us i ng Harris equipme nt, theAugusta, Georg ia, C B S a f f i l iate broadcast the dramatic sights a nd sounds of the 2000 Ma s t e r sGolf To u r na me nt in full dig i t a lh ig h - de f i n i t ion television ( H DT V ).

The station’s digital channel,WRDW-DT/31, offered stunninglyclear Masters images a nd dig i t a lq uality sound to ne a r l y 600,000 a rea viewers as well as to tens of tho u s a nds of patro ns on theg ro u nds of the lege ndary Au g u s t aNational Golf Club. To u r na me ntc o v e ra ge was displayed on 1 2 5H DTV monitors located in both p u b l ic and bro a dcast venu e s.

Harris pro v ided W R D W with a ne wmu l t i - c h a n nel digital master cont ro lfor both its analog and digital tel-e v i s io n ( DTV) c h a n ne l s, along with a Sig ma ®CD UHF DT V t ra ns m i t t e ra nd other equipme nt. “This collab-o ra t ion, which began just thre emo nt hs befo re the tourna me nt ,p ropels W R D W to the fo re f ro nt oft he digital television re v o l u t io n , ”s a id Bruce Allan, pre s ide nt, Ha r r i sB ro a dcast Commu n ic a t io ns.

Just like being there. Joe Mack, director,National Accounts, for Harris BroadcastCommunications, chips on to a high definition television golf course from the comfort of his living room.

H DTV in the 16x9 format, using the FCC 8-VSB U.S. standard

We service and direct the

e n t i re network.

Total Network ManagementHarris this year int ro duc e dNe t B o s sT M, the telecom indu s t r y ’ sfirst int e g rated commu n ic a t io nsma na ge me nt platform. NetBoss ist he only platform that supportsw i re l e s s, wire l i ne, and Int e r ne ts e r v ices while he l p i ng ne t w o r ko p e rators to ma na ge, stre a m l i ne,a nd automate func t io ns.T he pow-erful NetBoss platform pro v ide sseamless cont rol in an inc re a s i ng l yd i v e r s e, complex commu n ic a t io nse n v i ro n me nt.

T he NetBoss platform inc l udes six “of f - t he - s helf” capabilities thatc a n be added to a customer’s ne t-work in a mo dular fa s h ion to suiti nd i v idual business ne e d s. The s emo dules inc l ude network ma na ge-me nt, perfo r ma nce ma na ge me nt ,s e r v ice activatio n ,b i l l i ng me d ia t io n ,testing, and electronic bondingbetween service pro v ide r s. Ne t B o s salso inc l udes Smart Age nt plug-insthat enable operators to quic k l ydeploy NetBoss in their telecome n v i ro n me nt s.

“ We looked at the curre nt state ofnetwork support and felt some t h i ngwas missing,” said Dan Pe a r s o n ,p re s ide nt, Harris Network Support.“ No one was putting toge t her asimple way to ma na ge the ne w,i nt e g rated commu n ic a t io ns ne t-works that are eme rg i ng amo ngc o m mu n ic a t io ns service pro v ide r sa nd missio n - c r i t ical ent e r p r i s e s.NetBoss is a bold new step in thee v o l u t ion of our ex i s t i ng Ha r r i sNetwork Ma na ge me nt platfo r m . ”

T hey know how to ma na ge ne t w o r k s. NetBoss team members pic t u red (R-L): E r ic Feibelman, Ashley Fleeman, Melvin Ha l e, and Adr ia na We i s s.

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The NetBoss™ CommunicationsManagement Sys t e mThe NetBoss™ CommunicationsManagement Sys t e mThe NetBoss™ CommunicationsManagement Sys t e mThe NetBoss™ CommunicationsManagement Sys t e mThe NetBoss™ CommunicationsManagement Sys t e mThe NetBoss™ CommunicationsManagement Sys t e mThe NetBoss™ CommunicationsManagement Sys t e mThe NetBoss™ CommunicationsManagement Sys t e mThe NetBoss™ CommunicationsManagement Sys t e m

A ny t i m e, Any w h e re : Tod ay ’s businesses and indivi du a lcon su m ers are demanding re ady access to voi ce , d a t a ,and vi deo sources – and high - s peed In tern et servi ce –a nyti m e ,a ny wh ere . This demand for inform a ti on isd riving a rapid worl dwi de bu i l do ut of wi rel e s s ,f i beropti c , copper, c a bl e , and In tern et net work s .E ach net-work requ i res con ti nuous mon i tori n g, te s ti n g, s ervi ce ,and upgrade s . Ha rri s’ Net work Su pport business pro-vi des the sys tem su pport requ i red by trad i ti onal andem er ging tel ecom carri ers to maintain and ex p a n ds ervi ce capabi l i ti e s . Ha rris servi ces the en ti re net workwith test sys tems that manage con su m er local loops ervi ce s ; technician tools used to repair indivi dual linec i rc u i t s ; and sof t w a re sys tems that manage com p l ex ,i n tegra ted tel ecom net work s .

Access Test and Management: When a telephone or data line fails in a home or of f i ce ,s ervi ce provi dersre s pond to a cen tu ry-old qu e s ti on : “Why is my linenot work i n g ? ” The service provider activates a linecertification c a p a bi l i ty. A line test sys tem ch ecks the con n ecti on on the local tel ecom loop from the cen tral of f i ce to the home or of f i ce , f i xes the probl em ,or issues a tro u ble ti cket to the technician on ce the probl em has been iden ti f i ed .

Ha rris is an indu s try leader in tel ecom line te s tsystems and during the past 18 months has success-fully introduced a line of digital products that hash el ped to fuel the dep l oym ent of h i gh - s peed In tern etaccess. For example, its Carrier Test Access Switchrepre s en ted test access capac i ty for over one mill i ondigital subscriber lines (DSLs) by the end of 1999.During fiscal 2000, the company introduced itsPyramid Seri e sT M test sys tem to manage local loopservice. The hardware and software componentsenable service providers to pre-qualify, provision,and manage high - b a n dwidth D S L, I S D N, and voi ceservices over copper local loops.

Technician Tools and Test Sets: Ha rris of fers a broadline of test equ i pm ent and spec i a l i zed tools used bya pprox i m a tely 90 percent of tel ecom technicians inthe U.S. Harris provides most of what the line testtechnician carries on his or her belt and in their servi ceveh i cl e s . The com p a ny is adding new produ cts for theU. S . and produ cts de s i gn ed for Eu ropean standard s .A new line of produ cts for I S D N and D S L te s ti n ggives technicians gre a ter analysis capabi l i ties in thef i el d . Ha rris also has begun to market its produ ct swh ere servi ce profe s s i onals shop – in retail out l et ssu ch as Fry ’s Electronics and Home Depo t .

Harris Network Management Sys t e m s : Ha rri s’Net Boss OSS (Opera ti onal Su pport Sys tem ) a pp l i c a ti on ssu i te all ows tel ecom mu n i c a ti on s s ervi ce provi ders to mon i tor net work perform a n ce ,a n a ly ze trends thatprovi de early alerts to po ten tial probl em s , and pinpoi n tn et work faults, down to the line card ,f rom thousandsof miles aw ay. Ad d i ti on a lly, Net Boss provi des the too l sn eeded to su pport servi ce activa ti on , bi lling med i a ti on ,and el ectronic bon d i ng – a ll cri tical el em ents neededto re a l i ze flow - t h ro u gh provi s i on i n g. Ha rris sys tem si m prove net work upti m e ,s i gn i f i c a n t ly redu ce co s t sa s s oc i a ted with field opera ti on s , and improve revenu egen era ti on by enhancing the servi ce activa ti on proce s s .

Ha rris net work managem ent sys tem s ,i n trodu cedin 1993, h ave been install ed by more than 125 servi ceproviders worldwide. The company successfullyi n trodu ced its sys tems in Eu rope du ring fiscal 2000and recorded sales in North and South America,Eu rope , and the Mi d dle East. Dereg u l a ti on of com-mu n i c a ti on s ervi ces around the world has cre a ted a ra p i dly expanding market and thousands of n ewservice providers. NetBoss is an open system that can con trol and integra te vi rtu a lly any net work and is the ideal soluti on for em er ging tel ecom carri ers ,wh i ch of ten don’t have large work force s .

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N E T W O R K S U P P O R T

(L to R)

Remote Te s t i n g : Service providers can deployand manage high-speed digital services moreefficiently by remotely testing and qualifyinglines using Harris’ Pyramid™ Series remote test units.

N e t work Management: Kelley Octigan is the NOC Supervisor for Citizens Commu n ic a t io ns, an int e g rated commu n ic a t io ns pro v ider usingHarris’ network ma na ge me nt platform to support its mu l t i - v e ndor ne t w o r k .

Test Sets: This year, Harris introduced theTS1000™ ADSL. The TS1200™ pictured herewill be the next expansion of Harris’ ADSL test line.

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R F C O M M U N I C A T I O N S

(L to R)

N e t wo r k i n g : Using Harris radios, militaryforces can create integrated networks for s i t ua t io nal aware ne s s, tactical me s s a g i ngand fire control applications.

Po r t a b i l i t y : T he Harris Falcon Series offersextended frequency ranges and advancedembedded features in compact, lightweightpackaging.

Mobile Communications: Denmark’s Armyuses Harris HF radio systems for fast, reliable, error-free, mobile communications.

Rugged, Lightweight, Multifunction Radios: Wh enU. S . S pecial Forces jump from airplanes with heav yb ack p ack s , the less radio equ i pm ent they have toc a rry, the bet ter. But less also has to do more . Th eru gged i zed radios must have em bed ded en c rypti onfor sec u ri ty, a n ti - jam capabi l i ties to en su re rel i a bi l i ty,and interopera bi l i ty with equ i pm ent carri ed by othera ll i ed force s . In ad d i ti on , the equ i pm ent must provi deh i gh data ra tes and constant con n ectivi ty to com m a n dpo s t s , rega rdless of h ow rem o te the mission . Ha rri shas been exceeding the to u gh requ i rem ents for two -w ay military radio equ i pm ent for the past 40 ye a rs .

World Leader In HF, VHF, and UHF Tactical Radios:Ha rris two - w ay radio com mu n i c a ti ons produ cts ands ys tems inclu de military tactical radios for defense andpe ace keeping forces in 70 co u n tri e s . Over 60 percen tof revenues for the tactical radio business come fromi n tern a ti onal market s . Ha rris has long been the nu m berone provi der in the world of H F radios used by militaryforces for back p ack - port a bl e , f i xed - i n s t a ll a ti on , a n dveh i c u l a r- m o u n ted app l i c a ti on s . More recen t ly, t h ecom p a ny has become the nu m ber- one world provi derof mu l ti b a n d , mu l ti m i s s i on radios that provi de m i l i t a ry forces with the abi l i ty to com mu n i c a te overH F, V H F, and U H F bands for gro u n d , a i r, and satel-l i te - b a s ed sys tem s . One com p act radio performs thef u n cti ons of f ive legacy produ ct s .

Ha rris also provi des sec u re , tu rn key lon g - h a u lradio systems for other government agencies. Forex a m p l e , Ha rris radios are used as a pri m a ry or back-up sys tem by U. S . embassies that must be indepen den tof i n - co u n try infra s tru ctu re ; and also by law en force-m ent agen c i e s , su ch as the F B I, wh i ch requ i re sec u rem obile radio sys tem s .

N ew Marke t – Pa r t n e rs For Pe a c e : Several factors a re driving growth in this bu s i n e s s . Form er EasternBl oc co u n tries are modernizing their military

com mu n i c a ti ons sys tems so that equ i pm ent is inter-opera ble with those of NATO force s . These Pa rtn ersFor Pe ace co u n tries have cre a ted a large new marketfor tactical rad i o s . The need for high er data ra tes and more mobi l i ty on the digital battlef i eld also isd riving new tech n o l ogy in rad i o s . Requ i rem en t si n clu de inform a ti on assu ra n ce – the uncorru pted ,u n i n terru pted flow of i n form a ti on – wi reless e-mail,and sec u re wi reless LA Ns . In ad d i ti on , com m erc i a ltech n o l ogies are influ encing con ti nuing adva n ce-m ents and lower costs in military rad i o s .

A Track Record of Success: These fiscal 2000 con-tracts are a few examples of the com p a ny ’s bre adth of su ccess with its Fa l con and Fa l con II family oft actical rad i o s :

• H F radios and Wi reless Me s s a ging Terminals forDanish troops en ga ged in pe ace keeping mission s ;

• H F and V H F radios for high - s peed voi ce anddata com mu n i c a ti ons for the Un i ted Ara bE m i ra tes Mi n i s try of Defen s e ;

• Multiband, multimission radios for U.S.

Navy ground,air, shipboard, and vehicle communications;

• HF and VHF tactical radios for U. S . Army combat medical units;

• HF radios for All i ed Command Eu rope pe ace keeping forces in areas su ch as Bosnia and Al b a n i a ; a n d

• HF manpack and vehicular radios for the U. S .

Army 82nd Ai rborne Divi s i on para troopers .

Ha rris is expanding its R F Com mu n i c a ti ons bu s i n e s sby adding handheld rad i o s ,h i gh er data ra te produ ct s ,V H F / U H F mu l tiband sys tem s , and tactical net work s .This ex p a n s i on , com bi n ed with the use of com m erc i a ltech n o l ogies that all ow the com p a ny to provi de manyof f - t h e - s h el f s o luti on s , has po s i ti on ed Ha rris to servean expanding intern a ti onal market for two - w ay rad i o s .

Meeting Defense and Pe a c e ke e p i n gN e e d s Sales of the Falcon II fa m i l yof ra d ios exc e e ded 3,000 units thisy e a r. Falcon II ra d ios are used byevery bra nch of the U . S . m i l i t a r y, aswell as de f e nse and peaceke e p i ngfo rces thro u g hout the world.

T he Falcon II’s success is due l a rgely to its advanced waveform c a p a b i l i t ie s, particularly the abilityto send re l ia b l e, high-speed data a t rates up to four times that oft he best-in-class competitors.T hese high-speed mo de ms ena b l e

new applic a t io ns to be used on theb a t t l e f ie l d, inc l ud i ng the tra ns m i s-s ion of hig h - re s o l u t ion still ima ge sa nd live video. The mo de ms also sett he stage for the effic ie nt exe c u t io nof tactical ne t w o r k i ng applic a t io nss uch as tactical me s s a g i ng, situa-t io nal aware ness ma p p i ng, andi n fo r ma t ion ma na ge me nt .

T he latest member of the Falcon IIfa m i l y, the mu l t i b a nd / mu l t i m i s s io nA N / P R C- 1 1 7F, replaces up to fiveo t her pieces of commu n ic a t io nsand encryption equipment. T he

ra d io has received full certific a t io nf rom the Na t io nal Security Age ncy ( N SA )to tra nsmit voice and data tra f f ic upt h rough the TOP SECRET l e v e l .

“This has been a sig n i f ic a nt year for us with large orders and shipme nts of Falcon II ra d io s,” said Chet Ma s s a r i ,p re s ide nt, Harris R F C o m mu n ic a t io ns.“ T he A N / P R C- 1 1 7F is the only ra d io of its type in pro duc t ion, a nd we areex t re mely pleased by the e nt hu s ia s t ica c c e p t a nce the ent i re Falcon II fa m i l yhas gained in the ma r ke t . Ma ny N ATOa nd Pa r t nership for Peace count r ies a re now standa rd i z i ng on the FalconII pro duc t s. ”

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We provide highly secure andmobile communications for

21st C e ntury peaceke e p e rs.George Helm, product director of Tactical RadioProduct Sales for Harris RF Communications,with the Falcon IITM Radio, which has soaredto new heights in customer acceptance.

Falcon II™ Multiband/Multimission Radio

T he Mu l t i - b a nd Shipboard SatelliteC o m mu n ic a t io ns Te r m i nal ( MS S C T )System will greatly enhance theship’s commu n ic a t io ns capability by int e g ra t i ng military X-band andcommercial C-band dual-antennat e r m i nals to pro v ide satellite-basedv o ic e, v ide o , a nd data commu n ic a-t io ns. The system also can be easilyu p g ra de d t o o p e ra t e o v e r t he m i l i t a r yKa - b a nd, and comme rc ial L- and Ku -b a nd fre q u e nc ie s.

“This win solid i f ies Harris as thel e a d i ng wide b a nd commu n ic a t io nsp ro v ider to the U.S. Navy fleet,” s a id Bob He n r y, pre s ide nt, Ha r r i sG o v e r n me nt Commu n ic a t io nsS y s t e ms. “ It also positio ns Ha r r i sas a ma j o r player in mu l t i - b a nd SATC O M t e r m i na l s for the ent i reD e p a r t me nt of Defens e. ”

S h i p b o a rd S a t e l l i t eC o m m u n i c a t i o n s D u r i ng fiscal2000, the United States Space &Naval Wa r fa re Systems Comma nda w a rde d Harris a five-year, $111m i l l ion cont ract to supply the nex tge ne ra t ion of s o p h i s t ic a t e d, mu l t i -b a nd shipboard satellite termina l sfor the U . S . Navy’s Arleigh BurkeD D G-51 class de s t ro y e r s.

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At the helm of Harris’ Multi-bandShipboard Satellite Terminal program are (L to R) Mike Tuttle, business development manager; Rhodie Humbert,program manager; and Mike O’Reilly,senior systems engineer.

We provide swift and securecommunications for the digital

b attlespace of the future.

Multi-band ShipboardSatellite Te r m i n a l s

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G O V E R N M E N T C O M M U N I C A T I O N S

(L to R)I n formation As s u ra n c e : Harris STAT™, a commercial Windows NT™ network defense system, allows administrators to identify and eliminate security deficiencies that can result in hacker intrusions.

Urban Modeling: Associate Product ManagerGigi Cowart displays Harris RealSite™, whichtakes sensor data and creates 3-D softwaremodels of urban areas for military opera t io nsre he a r s a l and urban planning/surveying.

A i rc raft Av i o n i c s : Harris is developing next-generation avionics systems for the U.S.Army’s RAH-66 Comanche stealth helicopter.The total value of these contracts couldexceed $1 billion.

A New Mission for Defense: The U. S . defense i n du s try is redefining its mission to ad d ress mu l ti p l et h reats around the world –a ch a n ge that plays well tothe strengths of Ha rris Corpora ti on . Adva n t a ge in theb a t t l e s p ace of the futu re wi ll depend upon provi d i n gthe indivi dual warf i gh ter swi f t ,a s su red , and sec u rei n form a ti on and com mu n i c a ti on s . Ha rris ex pertise in wi reless com mu n i c a ti on s , com pre s s i on tech n i qu e s ,h i gh - d a t a - ra te links, and high - s peed modems bri n gsthe best of the In tern et– re a l - time data, voi ce ,a n dvi deo – to the combat aren a .

C u r rent Pro g ra m s : A recent $111 mill i on program win for mu l ti-band satell i te com mu n i c a ti on ( S AT-

C O M ) terminals on de s troyers (see oppo s i te page) fo ll ows a similar con tract for terminals on airc raft c a rri ers . Ha rris also is providing vital com mu n i c a ti onlinks bet ween U. S . Navy ships and hel i copters . Un derdevel opm ent is a Tactical Com m on Data Link call ed“ Hawk l i n k ™ ” that wi ll all ow recon n a i s s a n ce data andi m a gery from hel i copters to be sent to ships up to200 kilom eters aw ay for near re a l - time analys i s . Th ecom p a ny also is te a m ed with Vi a Sa t , In c . , to produ cea Mu l ti - f u n cti on In form a ti on Di s tri buti on Sys tem(MIDS) for the U.S. military that collects data frommu l tiple sources and displays an el ectronic overvi ewof the battlespace .

H e l i c o p t e rs and Fighters : Harris was recentlyaw a rded an ad d i ti onal $67 mill i on con tract for thedevel opm ent of com p uting and com mu n i c a ti on sequ i pm ent on the U. S . Army ’s RA H-66 Com a n ch eh el i copter. Equ a lly import a n t , Ha rris is po s i ti on ed to figure prom i n en t ly on all of the futu re defense avi a ti on platforms including the F-22 figh ter and the Joint Stri ke Figh ter.

Other Significant Wins: Am ong Ha rri s’ most sign i f i-cant wins in fiscal 2000 was a cl a s s i f i ed program for a govern m ent agen c y. Over 55 percent of the workHa rris does for the U. S . govern m ent is cl a s s i f i ed .

Ot h er significant wins inclu de a $4.8 mill i on en gi n eering and field servi ces con tract for the U. S .

Air Force fleet of U-2 recon n a i s s a n ce airc ra f t , a $26m i ll i on servi ces and su pport con tract for the U. S . Ai rForce Sa tell i te Con trol Net work and Global Po s i ti on i n gSys tem ground net work , and a con tract to test andmaintain avi onics on the Ca n adian military ’s pri m a rya t t ack figh ter jet . At the end of the ye a r, Ha rris wasaw a rded a $20 mill i on con tract for produ cti on ofi m proved fire - con trol el ectronics su pporting theU. S . Army Mu l tiple Launch Rocket Sys tem .

World Class Antenna Te c h n o l o g y : Ha rri s’ ph a s eda rray antenna tech n o l ogy, devel oped for the newra p i d - dep l oym ent requ i rem ents of the U. S . Army,provi des constant broadband wi reless access to voi ce ,d a t a , vi deo, In tern et and e-mail for military forces on the move .

Ha rris is nu m ber one in the world wh en it com e sto unfurl a bl e ,s p ace - dep l oya ble anten n a s . In April 2000,t wo of the com p a ny ’s 12-meter diameter “u m brell a -s tyl e” a n tennas were dep l oyed on a com m ercial satel-l i te that provi des mobile voi ce ,p a gi n g, and fac s i m i l es ervi ces to mill i ons of c u s tom ers in As i a .

A Source of Technological Strength for theC o m p a ny: With more than 3,200 en gi n eers ,$ 3 8 0m i ll i on in custom er- f u n ded R & D ex pen d i tu re s , a n d50 ye a rs of ex peri en ce in defense tech n o l ogy, the gov-ern m en t business of Ha rris is helping to drive manyof the adva n cem ents in the com p a ny ’s com m erc i a lcom mu n i c a ti ons bu s i n e s s e s .

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J O I N T V E N T U R E S & V E N T U R E F I R S T I N I T I A T I V E S

Joint Ve n t u re s : Du ring the past five ye a rs , Ha rris has form ed joint ven tu res (JVs) to cre a te ad d i ti on a lopportunities for the exploitation of Harris technol-ogy. Ha rris owns 20 percent of G E - Ha rris Ra i lw ayE l ectronics (see oppo s i te page ) , 49 percent of both GEHa rris Ener gy Con trol Sys tems and GE Ha rris Avi a ti onIn form a ti on So luti on s , and approx i m a tely 40 percen tof L ive TV, a J V with Sextant In - F l i ght Sys tem s .

GE Ha rris En ergy Co n trol Sys tem s ,L LC :This J Vad d resses the inform a ti on tech n o l ogy needs of t h egl obal el ectric uti l i ty indu s try and is a worl d - cl a s ssu pp l i er of re a l - time inform a ti on and con trol sys tem sfor the gen era ti on , tra n s m i s s i on , and distri buti on of power. Produ cts and servi ces meet the evo lvi n gn eeds of the uti l i ty indu s try for en er gy managem en t ,su pervi s ory con trol and data acqu i s i ti on ,i n tegra tedsu b s t a ti on con tro l , su b s t a ti on autom a ti on ,d i s tri bu-ti on a utom a ti on , and distri buti on managem en t .

GE Ha rris Avi a tion In fo rm a tion Sol u ti o n s :Th i sven tu re of fers inform a ti on net work produ cts anddec i s i on su pport servi ces that en a ble airlines totransmit and receive a wi de ra n ge of i n form a ti ona bo ut flight opera ti on s , en gi n eering and mainte-n a n ce , and cabin and passen ger servi ce s . The new s ys tems and servi ces em p l oy a high - s peed wi rel e s sdata link that captu res and exch a n ges inform a ti onbet ween the airc raft and an airport .

Live TV: This joint ven tu re is the first com p a ny toprovi de live tel evi s i on to the seats of a i rline passen gers .Jet Blue and Legend airlines curren t ly have LiveTV

on boa rd all of t h eir airc ra f t , and Alaska Ai rlines iss ch edu l ed to begin of fering the servi ce in 2001. Wi t hL ive TV, p a s s en gers can acce s s , for a nominal ch a r ge ,as many as 48 TV channels on seat-back screens.Approx i m a tely 70 percent of dom e s tic flights do not pre s en t ly of fer vi deo en tert a i n m en t .

Ve n t u re First Companies: Ha rris also has cre a ted a partn ership with a ven tu re capital firm , c a ll edVen tu re Firs t , to use Ha rris tech n o l ogies and cashf rom other inve s tors to launch indepen dent newcom p a n i e s . Ha rris has an equ i ty po s i ti on in each ofthe ven tu re companies and re a l i zes financial retu rn sas they are sold or go publ i c .

In Decem ber 1999, for ex a m p l e , Ai r NetCom mu n i c a ti on s , In c . ,h ad a su ccessful initial publ i cof fering ( I P O ). At the end of fiscal 2000, the va lue ofHa rri s’ po s i ti on in Ai r Net was va lu ed at $95 mill i on .Ai r Net Com mu n i c a ti on s , In c . was fo u n ded in 1994 to de s i gn , m a nu f actu re , m a rket and su pport wi rel e s scom mu n i c a ti ons infra s tru ctu re produ cts that inclu deh i gh - c a p ac i ty broad b a n d ,s of t w a re - def i n ed base s t a ti ons and “b ack h a u l - f ree” base stati on s . Produ ct sf rom Ai r Net en a ble servi ce provi ders to of fer co s t -ef fective G S M ( G l obal Sys tem for Mobile com mu n i -c a ti on) net works that su pport tod ay ’s high - vo lu m evoi ce traffic while being easily ad a pted to su pporttom orrow ’s high - s peed wi reless data and In tern ets ervi ce s .

Ot h er Ha rris Ven tu re First companies inclu de :Teri on , In c . , wh i ch is devel oping mobile tra n s port a-ti on tracking and inform a ti on produ ct s ; Im a ge L i n k s ,In c . , wh i ch provi des aerial and satell i te image proce s s-i n g, geogra phic po s i ti on i n g, and distri buti on servi ce s ;and Aut h en Tec , In c . , wh i ch has introdu ced integra tedc i rcuits for fingerprint imaging that en a ble bi om etri cauthentication for consumers and businesses in net-work, PC, access control,and wireless applications.The com p a ny ’s newest Ven tu re First com p a ny isN XTWave Com mu n i c a ti on s , In c . , a fabless ch i pcom p a ny that de s i gns and markets sem i con du ctorsused in the digital television and other broadbandcom mu n i c a ti ons market s .

GE Harris Aviation Information Solutions GE Harris Energy Control Sys t e m s L i ve T V AirNet Communications, Inc.

Leveraging Harris technologiesfor new market opportunities and

greater shareholder value.GE-Harris Railway Electro n i c s T h i sj o i nt vent u re s o l id i f ied its positio nas a leading global supplier ofe l e c t ro n ic ra i l road solutio ns inJuly 2000 with the anno u nc e me ntof the $425 million acquisition ofHa r mon Indu s t r ie s, I nc. , a ra i l ro a de q u i p me nt ma nu fa c t u rer with 2 , 0 0 0employees worldw ide and 1999sales of $304 million.

Harris pre v iously held a 49 perc e ntequity position in GE-Harris RailwayE l e c t ro n ics and is investing an e s t i-ma t e d $45 million in the busine s s t os e c u re a 20 perc e nt equity p o s i t io nin the ne w, larger company.

Harmon’s transit signaling andcontrol, and systems communica-tions products will complementGE-Harris’ wide range of railwayp ro duc t s. These inc l ude P I N P O I N T,a technology that gives ra i l ro a d sthe ability to track the exact

p o s i t ion of locomotives to within100 meters, thereby enhancingp ro duc t i v i t y, impro v i ng safety, andreducing costs; and the wirelessTrainTalk product that eliminateswire connectors between railcarsby using radio signals to transmitbraking commands evenly along at rain. In add i t ion, GE-Harris Pa c i ngtechnology is a migrational steptowards Precision Train Control.Train Pacing combines the capa-bilities of the Precision Dispatch system and P I N P O I N T asset tra c k i ngto inform the train engineer ofthe optimum plan.

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Commercial Communications SegmentM i c rowa ve Communications B roa d band wi reless access sol u ti o n s ,m i crowaveradio netwo rk s ,and wi reless local loop sys tem s .

Redwood Shore s , Ca l i fornia Tel : 1-650-594-3000 Fa x : 1-650-594-3110 E - m a i l :m i c row ave @ h a rri s . com

B roadcast CommunicationsAnalog and digital broadcast equipm en t , s tudio s ys tem s , and auto m a tion and managem ent sys tem s .

Ci n c i n n a ti , Ohio Tel : 1-513-459-3400 Fa x : 1-513-701-5306 E - m a i l : broadc a s t @ h a rri s . com

N e t work Support Business co m mu n i c a ti o n s ,n etwo rk managem en tand test sys tem s , wo rk fo rce managem ent sys tem s ,and tel e co m mu n i c a tion test sets and tool s .

Mel bo u rn e ,F l orida Tel : 1-321-724-3488 Fa x : 1-321-724-3990 E - m a i l :N S D m a i l @ h a rri s . com

RF CommunicationsS e c u re radio produ ct s ,s ys tem s , and netwo rks fo rvo i ce and data co m mu n i c a tions to military, govern-m en t , and co m m ercial orga n i z a tions wo rl dwi d e .

Roch e s ter, New York Tel : 1-716-244-5830 Fa x : 1-716-242-4755 E - m a i l : rfcom m @ h a rri s . com

Government Communications SegmentG overnment Communications Sys t e m sCo m mu n i c a ti o n ,co m m a n d ,co n trol , co m pu ter,and intell i gen ce (C4I) sys tems; custom aircraft and spa ceb o rne co m mu n i c a tion sys tems; and data pro cessing sys tems that coll e ct ,pro ce s s ,d i s pl ay, and distri bu te info rm a ti o n .

Palm Bay, F l orida Tel :1 - 3 2 1 - 7 2 7 - 6 5 1 4Fa x : 1-321-727-4500 E - m a i l : gov t @ h a rri s . com

Harris Technical Services Corporation En gi n e ering and su ppo rt servi ces for the Depa rtm ent of Defen se and ot h er govern m ent agen ci e s .

Al ex a n d ri a , Vi r ginia Tel : 1-703-739-1713 Fa x : 1-703-739-1779 E - m a i l :h t s c @ h a rri s . com In tern et :w w w. h t s c . h a rri s . com

Maritime Communication Services, Inc. Wi d eband co m mu n i c a tion servi ces and dataretri eval from ocean pl a tfo rm s ,bu oys , and ve s sels as well as tel e co m mu n i c a tion servi ces for rem ote regions on land.

Mel bo u rn e ,F l orida Tel : 1-321-674-4750 Fa x : 1-321-674-4751 E - m a i l :i n fo @ m c s . h a rri s . com In tern et :w w w. m c s . h a rri s . com

Harris Joint Ventures GE-Harris Railway Electro n i c sAdva n ced el e ctronic co m mu n i c a tion and co n trol sys tems and produ cts for ra i l roa d s .Mel bo u rn e ,F l orida Tel : 1-321-435-7000 Fa x : 1-321-435-7940 E - m a i l : m a rcom @ ge - h a rri s . com In tern et :w w w. geh a rri s . com

GE Harris Energy Control Sys t e m s, LLC Re a l - time co n trol sys tem s , produ ct s ,and servi ces to monito r, co n trol ,a u to m a te , and opti m i ze the opera tions of el e ctric and ot h er pu blic uti l i ty co m pa n i e s .

Mel bo u rn e ,F l orida Tel : 1-321-242-4329 Fa x : 1-321-242-4073 E - m a i l :l ori . ru s hwort h @ p s . ge . com In tern et :w w w. gepower. com / geh a rri s en er gy

GE Harris Aviation Information Solutions Co m m ercial airline servi ces that transmit and re ceive info rm a tion including aircra f t ,en gi n e ,f l i ght deck , and cabin servi ces data,d i re ct ly to and from the aircra f t .

Palm Bay, F l orida Tel : 1-321-674-0066 Fa x : 1-321-674-0072 E - m a i l :j i m . z i a rn o @ ae . ge . com

L i veTV S a tell i te - ba sed and in-se a t ,i n - f l i ght en tert a i n m ent sys tem s , produ ct s ,and servi ces for co m m ercial aircraft wo rl dwi d e .

Palm Bay, F l orida Tel : 1-321-729-3445 Fa x : 1-321-729-7199 E - m a i l : gl en n _ l a t t a @ m i n d s pri n g. com In tern et :i fet v. com

Venture First Companies AirNet Communications, Inc. De s i gn s ,m a nu f a ctu re s ,m a rket s , and su ppo rts wi reless infra s tru ctu re produ cts that include h i gh - c a pa ci ty broa d ba n d , sof twa re - d ef i n ed ba se stations and “ba ck h a u l - f re e” ba se stati o n s ,wh i ch en a ble servi ce provi d ers to of fer co s t -ef fe ctive GSM netwo rk s .

Mel bo u rn e ,F l orida Tel : 1-321-984-1990 Fa x :1 - 3 2 1 - 9 5 3 - 6 6 4 1E - m a i l :p u bl i c @ a i rcom . com In tern et :w w w. a i rcom . com

Au t h e n Te c, Inc. Provides a silico n - ba sed , bi o m etric finger-print authen ti c a tion te ch n ol o gy, c a pa ble of being used by everyo n e , to repl a ce keys ,pa s s wo rds and PINs– making access and se c u ri ty more co nven i en t .

Mel bo u rn e ,F l orida Tel : 1-321-308-1300 Fa x : 1-321-308-1430 E - m a i l :s a l e s @ a ut h en tec . com In tern et :w w w. a ut h en tec . com

I m a g e L i n ks, Inc. Provides aerial and satell i te image pro cessing and distri bu tion servi ce s .

Mel bo u rn e ,F l orida Tel : 1-321-253-0011 Fa x : 1-321-253-5559 E - m a i l :i n fo @ i m a gel i n k s . com In tern et :w w w. i m a gel i n k s . com

M e d Ac o u s t i c s, Inc. Produ ces non-inva s ive , pa s s ive ,a cou s tical m edical imagery devi ces for dete cting c a rd i ova scular and va scular diso rd ers using a spa tial acou s tic sensing sys tem (SASS).

Ra l ei gh , North Ca rolina Tel : 1-919-303-8304 Fa x : 1-919-303-8358 E - m a i l : po s tm a s ter @ m ed aco u s ti c s . com In tern et :w w w. m ed aco u s ti c s . com

N X T Wa ve Communications, Inc. A fabless chip co m pa ny that designs and m a rkets sem i co n du cto rs used in the b roa d band co m mu n i c a tions market .

L a n gh orn e , Pen n s ylvania Tel : 1-267-757-1100 Fa x : 1-267-757-1120 E - m a i l : bu s i n e s s @ n x t w avecom m . com In tern et :w w w. n x t w avecom m . com

Terion, Inc. Provides co m preh en s ive mobile info rm a tion produ cts and servi ces for targeted domestic and intern a tional market s .

Mel bo u rn e ,F l orida Tel : 1-321-752-3000 Fa x : 1-321-752-0294 E - m a i l : corpora te @ teri on . com In tern et :w w w. teri on . com

B U S I N E S S D I R E C T O R Y

Harris Ma r i t i me Commu n ic a t ion Services (below)p ro v ides telecommu n ic a t io ns and Int e r net conne c-tivity via satellite for passenger and survey ships,data buo y s, and re mote land locatio ns aro u nd t he world, inc l ud i ng opera t ion of the U.N. Wo r l dHealth Org a n i z a t ion’s Global Private Ne t w o r k .

E u ro p e, Middle East, and Africa (EMEA)Ha rris Sys tems Ltd .Eskdale Road Wi n n ers h , Wo k i n gham Berk s h i re RG41 5TS Un i ted Ki n gdom Tel : 44-118-964-8000 Fa x : 44-118-964-8001

C a r i bbean and Latin America (CALA)( i n cludes Brazil and Mexi co )Ha rris Corpora ti on5301 Blue Lagoon DriveSu i te 290Mi a m i , FL 33126Tel :3 0 5 - 9 2 5 - 2 0 2 0Fa x :3 0 5 - 9 2 5 - 2 0 8 0

Asia Pa c i f i cHa rris Corpora ti on1109B (10th Floor, Bl k .E )Kelana Pa rk vi ew TowerNo. 1 , Jalan SS 6/247301 Petaling JayaSel a n gor, Ma l ays i aTel :6 0 - 3 - 7 0 0 - 6 2 0 1Fa x :6 0 - 3 - 7 0 3 - 1 8 1 4

G reater ChinaHa rris Corpora ti on Tower 2, Room 1817-1818 Bri ght China Chang An Building No. 7Jian Guo Men Nei Avenue Dong Ch eng Di s tri ct Beij i n g, 100005 P. R . C .Tel : 86-10-6510-1880 Fa x :8 6 - 1 0 - 6 5 1 0 - 1 8 7 0

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As part of the R S O s t r uc t u re, Ha r r i salso has created an Int e r na t io na lG o v e r n me nt Sales Org a n i z a t ion to pro v ide a specific focus on itsde f e nse and go v e r n me nt custome r s.This team combines the talents ofHarris people from differe nt divisio nsin order to bring the total Ha r r i sp ro duct portfo l io to go v e r n me ntc u s t o mers thro u g hout the world.

In add i t ion, the company hase s t a b l i s hed several Global Ac c o u ntMa na ge me nt teams to service andsupport key customers in the globalc o m mu n ic a t io ns service pro v ide rma r ket. In fiscal 2000, these cus-t o mers accounted for $125 millio nin total sales.

In order to stre ng t hen Ha r r i s ’p o s i t ion in the global commu n ic a-t io ns ma r ket, the company hase s t a b l i s hed four Regio nal SalesO p e ra t io ns (R S Os) in stra t e g icl o c a t io ns aro u nd the world (seemap below). These R S Os int e g ra t ege o g ra p h ic and func t io nal re s p o n-s i b i l i t ies within int e r na t io nal ma r ke t s, and each operates as a self-supporting local sales andsupport pre s e nce close to Ha r r i s ’i nt e r na t io nal custome r s. Duringfiscal 2000, Harris R S Os account e dfor $404 million in total sales.

H a rris I n t e rn a t i o n a lSales Operations

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Financial Table of Contents

Financial Review

21 Management’s Discussion and Analysis

Financial Statements

30 Consolidated Statement of Income

31 Consolidated Balance Sheet

32 Consolidated Statement of Cash Flows

33 Consolidated Statement of Comprehensive

Income and Shareholders’ Equity

45 Report of Independent Public Accountants

46 Business Segment Information

47 Selected Financial Data

48 Directors and Officers

Bryan R. Roub,Senior Vice President andChief Financial Officer

A strong balance sheet provides us the

flexibility to growthe company.

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The following discussion and analysis provides informationthat management believes is useful in understanding Harris’operating results,cash flows,and financial condition. The dis-cussion is based on Harris’ continuing operations and shouldbe read in conjunction with, and is qualified in its entirety byreferen ce to, the Con s o l i d a ted Financial Statem ents and related notes appearing elsewhere in this report. Except forthe historical information contained here, the discussions inthis doc u m ent contain forw a rd - l ooking statem ents thatinvolve risks and uncertainties. Harris’ actual results coulddiffer materially from those discussed here. Factors that couldcause or contribute to such differences include, but are notl i m i ted to, those discussed under “ Forw a rd - Loo k i n gStatements” below.

Results of Opera t i o n sOn November 5, 1999, Harris completed the spin-off of itsLanier Worldwide, Inc. subsidiary as an independent,publiclyowned company. Additionally, on August 13, 1999, Harriscompleted the sale of substantially all of its semiconductorbusiness. As a result of these actions,the Lanier and semicon-ductor businesses are pre s en ted as discon ti nu ed opera ti ons fora ll peri ods pre s en ted . Continuing operations are reportedunder two segments: the Government Communications seg-ment, which is comprised of the operations of the formerElectronic Systems Sector, and the Commercial Communi-cations segment, which is comprised of the operations of theformer Communications Sector. The following discussion ison a continuing operations basis.

RestructuringIn fiscal 2000, Harris recorded a $41 million charge ($26.7million after income tax) for the restructuring of its opera-tions. Restructuring actions included a reduction in work-force of approximately 161 employees and provisions for thewrite-down of intangible assets, equipment, and other assetsassociated with the exit from Harris’ telephone switching andalarm management product lines.

In the third quarter of fiscal 2000, 161 switching businessemployees were notified that their employment would be ter-minated and what their specific severance benefit would be.These employees worked in the marketing, sales,manufactur-ing, and administ rative areas and were primarily located inMarin County, California. As of June 30, 2000, 62 employeeshad been terminated with the balance to be terminated bySeptember 30, 2000.

In June 2000, Ha rris sold the core swi tch business toTeltronics, Inc. Harris also sold the alarm management busi-ness to Mediation Technology Corporation in August 2000.Harris also intends to sell other porti ons of this produ ct line,i n cluding the intern a ti onal activi ti e s , du ring fiscal 2001. G a i n sor losses from the sale of these operations are included orwill be included in restructuring expenses in the period thesale occurs. Estimated discounted cash flows were used indetermining the fair value of assets and liabilities in recordingthe restructuring charge.

Cash outlays for restructuring actions will be primarily forseverance benefits. Harris expects to pay these benefits ratablyover the first two quarters of fiscal 2001 from currently avail-able cash sources. Sales from these product lines were $73.5million in 2000,$126.6 million in 1999,and $140.4 million in1998. Operating losses from these product lines were $18.9million in 2000, $3.6 million in 1999, and $2.9 millionin 1998.

In fiscal 1999, Harris recorded a $5.1 million charge ($3.3million after income tax) for severance costs associated withthe restructuring of Harris. In connection with this restruc-turing, Harris identified employee reductions of 606, all ofwhich occurred during fiscal 2000.

Harris does not anticipate any further restructuring chargeswith respect to the items noted above in fiscal 2001 other thangains or losses that may result from the sale of the exitedproduct lines or restructuring noted above. For further infor-mation, see the “Restructuring” footnote in the Notes toFinancial Statements.

Purchased In-Process Research and DevelopmentIn January 2000, Harris purchased Louth Automation,a lead-ing supplier of advanced automation systems for radio andtelevision broadcasters. Harris paid cash in the net amount ofapproximately $87 million. The final determination of thepurchase price is subject to adjustment.

In connection with the acquisition, Harris allocated $10.7million of the purchase price to in-process research anddevel opm ent proj ect s . This all oc a ti on repre s ents the esti m a tedfair va lue based on ri s k - ad ju s ted cash flows rel a ted to thei n com p l ete produ ct s . At the date of acqu i s i ti on , the devel op-m ent of these proj ects had not yet re ach ed tech n o l ogical fe a s i-bi l i ty and the in-process re s e a rch and devel opm ent had noa l tern a tive futu re uses. Accord i n gly, these costs were ex pen s ed asa on e - time ch a r ge to earn i n gs in the third qu a rter of fiscal 2000.

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A L C O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S

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In making the purchase price allocation to in-process re s e a rchand devel opm en t , Ha rris rel i ed on pre s ent va lue calculati ons ofi n com e , an analysis of proj ect accom p l i s h m ents and com p l eti onco s t s , and an assessment of overa ll con tri buti on and proj ectri s k . The amounts assign ed to the in-process re s e a rch anddevel opm ent were determ i n ed by iden ti f ying sign i f i c a n tre s e a rch proj ects for wh i ch tech n o l ogical fe a s i bi l i ty had notbeen establ i s h ed. The fair va lues assign ed to each of the sign i f i-cant proj ects and the stage of com p l eti on are reported bel ow:

Fair Value Stage ofProduct (In millions) Completion

Version 9.5 ofADC Software $ 6.8 80%

Media Browser 1.7 70%News 1.0 70% All others 1.2 50% to 90%

Total $10.7

A discussion of the three most significant projects follows:

Version 9.5 of the Automated Device Controller (“ADC”) Software:

• Base ADC product is an all-purpose program/commercialautomation system with the ability to integrate a widevariety of broadcast devices.

• Version 9.5 provides a link between traffic, engineering, andon-air broadcasting operations.

• The primary functions under development include:

• The implem en t a ti on of Net work Devi ce Con tro lProtocall and control of hardware and video serversacross the network;

• The abi l i ty to use TCP/IP and other rem o te configurations;

• Creation of a driver that will function with proprietarySony Protocall;

• Other specific functionality such as Spencer Still Storeand DUET; and

• Creation of video disk enhancements.

• The development of Version 9.5 was initiated in earlycalendar 1998 (conceptualization of features, etc.).

• The amount of completion is estimated at 80% (consideringtime-based, cost-based, and milestone-based completionmeasures).

• Version 9.5 incorporates significant leverage on existingtechnology from ADC version 9.4. The degree of leveragewas estimated to be 50%.

Media Browser:

• Media Browser will provide scaleable infrastructure that willexpedite the simultaneous browsing of broadcast mediaclips from servers at different loc a ti on s . This new functi on a l i tywi ll equip the con trol room with new traffic managem ent ands ch eduling capabi l i ti e s .

• The development of Media Browser was initiated in July1998 (conceptualization of features, etc.).

• The amount of completion is estimated at 70% (consideringtime-based, cost-based, and milestone-based completionmeasures).

• Media Browser’s leverage on existing technology base is estimated at 25%.

News:

• News will provide new functionality related to three majora reas of n ews broadcast opera ti on s : n ews tra n s m i s s i on ,material acquisition, and material management.

• The development of News was initiated in July 1999.

• The amount of completion is estimated at 70% (consideringtime-based, cost-based, and milestone-based completionmeasures).

• News has minimal levera ge on ex i s ting tech n o l ogy base from ADC version 9.4. The degree of leverage was estimated at 10%. There is no previous version of the Newsproduct.

The value assigned to purchased in-process research anddevelopment was determined by estimating the costs todevelop the purchased in-process research and developmentinto commercially viable products and discounting the netcash flows to their present value using a discount rate of 28percent.

Remaining development efforts for these in-process researchand development projects include various phases of design,development, and testing . The anticipated completion datesfor the in-process research and development projects willoccur within the next twelve months, after which Harrisexpects to begin generating economic benefits from the technologies over a seven-year life cycle. Expenditures tocomplete these projects are expected to total $0.9 million.

These estimates are subject to change, given the uncertaintiesof the development process, and no assurance can be giventhat deviations from these estimates will not occur. We expectto continue these development efforts and believe we have areasonable chance of successfully completing the research a n ddevel opm ent progra m s . However, t h ere is a risk assoc i a tedwith the completion of the projects and there is no assurancethat any wi ll attain ei t h er tech n o l ogical or com m ercial success.

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Fiscal 2000 Compared with 1999Revenue and Operating Income by SegmentRevenue for fiscal 2000 was $1,807.4 million, an increase of3.7 percent compared to the prior year. Operating income infiscal 2000 was $36.3 million versus $74.5 million for theprior year.

Segment revenue and operating income were as follows:

PercentIncrease/

(In millions) 2000 1999 (Decrease)

R eve n u eGovernment

Communications $ 815.9 $ 813.2 0.3%Commercial

Communications 991.5 930.3 6.6%

Total Revenue $1,807.4 $1,743.5 3.7%

O p e rating Income

Government Communications $58.1 $ 52.1 11.5%% of revenue 7.1% 6.4%

Commercial Communications (1) (33.3) 34.1 –% of revenue (3.4)% 3.7%

Headquarters expense (2) (36.7) (31.0) 18.4%

Other income (3) 48.2 19.3 149.7%

Total Operating Income $36.3 $ 74.5 (51.3)%% of revenue 2.0% 4.3%

(1) Fiscal 2000 includes a $41 million restructuring expense and a $10.7

million write-off of purchased in-process research and development.

Fiscal 1999 inclu des a $20.6 mill i on special ch a r ge for a liti ga ti on set t l em en t .

(2) Fiscal 1999 includes a $5.1 million restructuring expense.

(3) Fiscal 2000 includes a $21.9 million gain from the sale of Intersil

Holding Corporation stock.

G overn m ent Com mu n i c a ti ons Segm en t : G overn m en tCom mu n i c a ti on s segment revenue in fiscal 2000 increased 0.3percent from the prior year, and operating income increased11.5 percent. These results were impacted by an $18.0 millionwrite-off in fiscal 1999 for the settlement of claims and unre-covera ble con tract devel opm ent costs on two con tract s .Excluding this write-off, revenues declined 1.0 percent andoperating income declined 17.1 percent from fiscal 1999.Despite improved operating margins on more recent contractaw a rds in 2000, opera ting income has been impacted by margi n

pressure from poorer-performing older contracts. Revenuegrowth and operating income improved significantly in thefo u rth qu a rter com p a red to the third qu a rter of fiscal 2000.Back l og con ti nu ed to bu i l d , ref l ecting a robust win ra te percen t a geand incre a s ed spending by the U. S . govern m ent for defen s e .

Com m ercial Com mu n i c a ti ons Segm en t : Com m erc i a lCom mu n i c a ti on s segment revenue in fiscal 2000 increased6.6 percent over 1999. Excluding sales from the recen t ly ex i ted tel eph one swi tching produ ct line, the Com m erc i a lCom mu n i c a ti on s s egm en t’s sales incre a s ed from $803.7 mill i onto $918.0 million, or 14.2 percent. This segment experienceddo u bl e - d i git growth in all four of the segm en t’s major continuing commercial product lines: microwave, networksu pport , broadc a s t , and tactical rad i o. These revenue incre a s e swere partially offset by a 41.9 percent decrease in revenuefrom the recently exited telephone switching and alarmmanagement product lines.

The segment’s operating loss for 2000 was impacted by the$41.0 million restructuring charge and the $10.7 millionpurchased in-process research and development write-offmentioned previously, as well as a $12.0 million write-downof inventory related to the telephone switching and alarmmanagement product lines that were exited. These productlines also incurred an additional $18.9 million in operatinglosses in 2000 compared to a loss of $3.6 million in 1999. Thesegment’s fiscal 2000 operating loss also includes transitioncosts of $16.5 million associated with exiting these productlines. Such costs included relocation of the network supportbusiness unit ’s headquarters from Marin County, Californiato Melbourne, Florida; collection losses on accounts receiv-able; and excess manufacturing costs related to idle capacityin Marin County. Harris ceased all marketing, sales, andresearch and development for the telephone switching andalarm m a n a gem ent produ ct lines as of Febru a ry 2000. Th eopera ting losses thro u gh Febru a ry 2000 inclu ded a sign i f i c a n tamount of m a rketing and sales ex pen s e s , as well as re s e a rchand devel opm ent costs in the tel eph one swi tching produ ctl i n e .

Excluding the items mentioned above in both the current andpri or ye a r, as well as a $20.6 mill i on special ch a r ge for a paten tlitigation settlement in the prior year, the CommercialCom mu n i c a ti on s segment’s operating income increased from$58.3 mill i on in 1999 to $65.8 mill i on in 2000, or 12.9 percen t .The increase in operating income was driven mainly by the14.2 percent sales growth in the Com m ercial Com mu n i c a ti on ss egm en t’s con ti nuing com m ercial produ ct lines.

Orders and revenue increased for microwave radios duringthe year as markets continued to rebound in North America,Latin America,and China. In June 2000,Harris completed the

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acquisition of the point-to-point microwave business of TRTLucent Technologies. The acquisition provides for a five-yearpreferred 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 entered intoagreements to acquire Wavtrace, Inc.,a privately-held,leadingdevel oper of broadband wi reless access sys tem s . The acqu i s i-ti on , wh en com p l eted , is ex pected to su pport Ha rri s’ i n i ti a tiveto lead the world in the del ivery of poi n t - to - point and poi n t - to -mu l ti point broadband wi reless access soluti ons for microw aveand mill i m eter wave frequencies.

The broadcast communications business reported a strongincrease in revenues due primarily to its new studio automa-tion business, which was bolstered by the purchase of LouthAutomation, the leading supplier of advanced automationsystems for digital television, over-the-air broadcast, andcable and industrial applications. The acquisition of LouthAutomation brings competencies in automation and controlto com p l em ent Ha rri s’ l e adership po s i ti on in broadc a s ttransmission and digital encoding. This acquisition furtherbroadens Harris’ global position in the broadcast markets.

The tactical radio produ ct line ex peri en ced a significant incre a s ein sales as it continues to benefit from the market’s enthusi-asm for its high data ra te , mu l ti b a n d ,s ec u re rad i o s , wh i ch wereintroduced in fiscal 2000 to meet the growing bandwidthrequ i rem ent as digital tech n o l ogy is em braced by the military.

O rders and revenues also incre a s ed su b s t a n ti a lly for the net worksu pport bu s i n e s s . This increase was aided by incre a s eddemand for the telecom line test systems used by competitivelocal exchange carriers (CLECs) to deploy digital subscriberlines (DSLs) for applications such as high-speed Internetservice and other broadband communication services forvoice, data, and video.

Comparative Statement of IncomeHarris’ comparative statement of income is as follows:

PercentIncrease/

(In millions) 2000 1999 (Decrease)

Revenue fromproduct sales and services $1,807.4 $1,743.5 3.7%

Cost of productsales and services 1,352.6 1,278.3 5.8%

Gross margin 454.8 465.2 (2.2)%% of revenue 25.2% 26.7%

Engineering, selling and administrativeexpenses 404.5 380.0 6.4%% of revenue 22.4% 21.8%

Amortizationof goodwill andpurchasedintangible assets 10.5 4.3 144.2%

Restructuring expenses 41.0 5.1 703.9%Purchased in-process

research and development 10.7 – –

Special chargefor litigation – 20.6 –

Other income (48.2) (19.3) 149.7%

Operating income 36.3 74.5 (51.3)%% of revenue 2.0% 4.3%

Interest income 27.4 13.3 106.0%Interest expense (25.2) (9.8) 157.1%

Income fromcontinuing operations before taxes 38.5 78.0 (50.6)%% of revenue 2.1% 4.5%

Income taxes 13.5 28.1 (52.0)%

Income fromcontinuing operations beforeextraordinary item $ 25.0 $ 49.9 (49.9)%

% of revenue 1.4% 2.9%

Gross Margin: The gross margin as a percent of revenue was25.2 percent in fiscal 2000 compared to 26.7 percent in 1999.The decline in gross margin was primarily due to a $12.0 m i ll i on wri te - down of i nven tory and lower gross margin rel a ted to the tel eph one swi tching produ ct line that was ex i ted .

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Excluding the impact of this exited product line, gross marginas a percent of revenue was 26.2 percent in 2000 compared to25.8 percent in 1999. The increase is due to improved gro s sm a r gins in Ha rri s’ Com m ercial Com mu n i c a ti ons segm en t’sbroadc a s t , n et work su pport , and microw ave radio produ ctl i n e s .

E n gi n eeri n g , Selling and Ad m i n i s tra tive Expen s e s :Engineering, selling, and administrative expenses as a percentof revenue were 22.4 percent in fiscal 2000 versus 21.8 percentin 1999. Fiscal 2000 operating expenses were impacted by$16.5 million of transition costs associated with exiting thetelephone switching product line. Such costs include reloca-ti on of the net work su pport business unit’s head qu a rters fromMa rin Co u n ty, Ca l i fornia to Mel bo u rn e , F l ori d a ; co ll ecti onlosses on accounts receiva bl e ; and excess manu f actu ring co s t srel a ted to idle capac i ty in Ma rin Co u n ty. The opera ti n gex penses were also impacted by ad m i n i s tra tive and gen era l ,m a rketing and sales, and re s e a rch and devel opm en t expensesin the telephone switching product line in the first half of thefiscal year.

Excluding the impact of the exited product line, operatingexpenses as a percent of revenue were 20.6 percent in 2000versus 20.3 percent in 1999. The increase was primarily due toplanned increases in selling and engineering, research anddevelopment expenses, as well as increased headquartersex pen s e s . The incre a s ed head qu a rters ex penses were pri m a ri lyattributable to unusually low executive compensation in fiscal1999 and costs assoc i a ted with the cen tra l i z a ti on of com p a ny -wide shared services in fiscal 2000.

Goodwill Amortization: Goodwill amortization increasedfrom $4.3 million in fiscal 1999 to $10.5 million in fiscal 2000.The increase was due to acquisitions made in Har ris’ broad-cast systems product line during fiscal 2000, primarily theacquisition of Louth Automation.

Other Income: Other income increased from $19.3 million in1999 to $48.2 million in 2000 due primarily to a $21.9 milliongain from the sale of one million shares of Intersil HoldingCorporation stock as a part of Intersil Holding Corporation’sinitial public offering. The remaining increase was due togains on the sale and redemption of other securities partiallyoffset by lower income from Harris’ equity investments.

In terest In come and In terest Expen s e : In terest incom eincreased from $13.3 million in 1999 to $27.4 million in 2000due to higher cash balances that resulted from the sale of thes em i con du ctor business and the spin-of f of L a n i erWorldwide, Inc. Interest expense increased from $9.8 millionin 1999 to $25.2 million in 2000 due to a higher allocation ofinterest expense to the results of discontinued operations inthe prior year. Total interest expense from both continuingopera ti ons and discon ti nu ed opera ti ons dec re a s ed from$84.0 million in 1999 to $41.7 million in 2000. This decreaseis due to the repayment of short-term debt with the cashreceived from the sale of the semiconductor business and thespin-off of Lanier Worldwide, Inc., and lower interest rates.

Income Taxes: The provision for income taxes as a percentageof pretax income was 35.0 percent in fiscal 2000 versus 36.0percent in the prior year. Both 2000 and 1999 benefited fromtax rates on foreign source income and export sales, whichoffset the additional provision needed for state income taxes.

Return on Revenue: Income from continuing operations as apercentage of revenue was 1.4 percent in 2000 versus 2.9 percent in 1999. The redu cti on was pri m a ri ly due to re s tru ctu ri n g expenses, purchased in-process research anddevelopment,and the transition costs and operating losses ofexited product lines which were partially offset by the gainfrom sales of Intersil Holding Corporation stock. Excludingthese item s , i n come from con ti nuing opera ti ons as a percentage of revenue increased from 4.2 percent in 1999 to4.3 percent in 2000.

Sel ected financial inform a ti on rel a ting to geogra ph i c a lregions and export sales is set forth in the note “BusinessSegments” in the Notes to Financial Statements.

Fiscal 1999 Compared with 1998Net Sales and Operating Income: Revenue from productsales and services decreased 9.4 percent to $1.74 billion in fiscal 1999, from $1.92 billion in fiscal 1998. Income fromcontinuing operations before extraordinary item was $49.9million, down 24.8 percent from $66.4 million in fiscal 1998.Income from continuing operations before extraordinaryi tem in fiscal 1999 inclu ded a re s tru ctu ring ch a r ge forem p l oyee redu cti ons of $5.1 mill i on , a on e - time $20.6 million charge for litigation costs for the settlement of apatent litigation relating to an older product no longermanufactured by the Company, and an $18.0 million chargefor set t l em ent of claims and unrecovera ble con tract devel op-m ent costs on two con tract s . Pri or- year income from con ti nu i n goperations includes $16.1 million of restructuring expensesand a $12.0 million provision for costs associated with aMalaysian contract. Excluding all of the above items for bothyears, income from continuing operations declined approxi-mately 8 percent in fiscal 1999.

Net sales for the Government C ommunications segment infiscal 1999 were $813.2 million, 14.5 percent lower than theprior year, while operating profit increased 18.7 percent to$52.1 million. Excluding prior year restructuring charges andu nu sual lon g - term con tract ch a r ges in both ye a rs ($18.0 mil-l i on in fiscal 1999 and $19.8 mill i on in fiscal 1998), opera ti n gprofit incre a s ed 10.0 percent in fiscal 1999. Lower sales in thes egm en t’s inform a ti on sys tems and aero s p ace sys tems produ ctlines more than of fs et growth in the com mu n i c a ti ons sys tem sproduct line. Lower sales in information systems and aero-space systems was primarily attributable to declining orderbacklog. The increase in operating profit was related to f i n a ls et t l em ent of pri or ye a r ’s overh e ad ra tes and to incre a s ed gro s sm a r gins re su l ting from a more favora ble con tract mix.

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Commercial Communications segment sales decreased 4.5percent to $930.3 million in fiscal 1999, from $973.7 millionin fiscal 1998. Excluding a fiscal 1999 one-time $20.6 millioncharge for litigation costs and a fiscal 1998 restructuringcharge of $8.3 million, operating profit declined 19.9 percentto $54.7 mill i on from $68.3 mill i on in fiscal 1998.Significantly lower sales and gross margins in the segment’sm i c row ave radio and digital swi tch produ ct lines of fs et mode s timprovement in sales and earnings for the segment’s broad-cast equipment product line. Lower sales in the microwaveproduct lines resulted primarily from weak internationalmarkets and lower than expected PCS growth in the NorthAmerican market. As a result, overcapacity in the industrycaused severe pricing pressures and margin erosion. Therealso was a significant reduction in foreign sales for digitals wi tch produ ct s . Sales for the segm en t’s radio com mu n i c a ti onproduct line were marginally higher than the prior year whileoperating profit was relatively unchanged.

Cost of Sales and Services: Cost of sales and services was$1.28 billion in fiscal 1999. Costs as a percentage of salesdecreased from 75.0 percent in fiscal 1998 to 73.3 percent infiscal 1999. The dec rease was pri m a ri ly attri but a ble toi m proved gross margins in the Com p a ny ’s Govern m en tCommunications segment which were partially offset by thedecline in the gross margins in the Com m erc i a lCommunications segment.

Operating Expenses: Engineering, selling, and administra-tive expenses as a percentage of sales were 22 percent in 1999,up slightly from 21.9 percent in the prior year. Higher expen-ditures for marketing and Company-sponsored research anddevelopment were offset by lower administrative expenses forthe year. Headquarters expense, which is included in admin-istrative expenses, was $28.4 million lower than fiscal 1998due to lower expenses associated with the employee benefitplans and a continued emphasis on cost controls.

Other Income and Expense: Interest expense was lower infiscal 1999 due to a lower level of borrowi n gs from con ti nu i n goperations in fiscal 1999 compared to fiscal 1998. Interestexpense is allocated to the Company’s discontinued opera-tions based upon the capital employed by the business.Interest expense before allocations to discontinued opera-tions increased from $73.2 million to $84.0 million due tohigher borrowings and higher interest rates.

“Other income” was $38.3 million lower in fiscal 1999 dueprimarily to lower amounts of gains from the sale of invest-ment securities and lower royalty income compared to fiscal1998.

The p rovision for income taxes from continuing operationsas a percen t a ge of i n come before income taxes was 36.0 percen t

in both fiscal 1999 and fiscal 1998. The increase from thestatutory U.S. income tax rate of 35.0 percent in both yearswas due primarily to provisions for state income taxes.

Liquidity and Financial Po s i t i o nHarris’ comparative financial position is as follows:

PercentIncrease/

per share amounts) 2000 1999 (Decrease)

Cash and marketable securities $ 810.7 $ 101.2 701.1%

Othercurrent assets 818.3 930.2 (12.0)%

Current liabilities 555.9 807.3 (31.1)%

Working capital $1,073.1 $ 224.1 378.8% % of revenue 59.4% 12.9%Intangibles resulting

from acquisitions $ 166.2 $ 72.8 128.3%Non-current

deferredincome taxes $ 14.1 $ 47.3 (70.2)%

Total debt $ 491.0 $ 838.7 (41.5)%Total

shareholders’equity $1,374.3 $1,589.5 (13.5)%

Total debt as a % of total capital 26.3% 34.5%

Book value per share $ 19.93 $ 19.96 (0.2)%Purchase of Common

Stock for treasury $ 232.8 $ 15.7 1,382.8%Additions of plant

and equipment $ 81.3 $ 60.4 34.6%

Cash and marketable securities: Harris completed severaltransactions that resulted in significant cash receipts includ-ing $520 million from the sale of it semiconductor business toIn tersil Corpora ti on , $546 mill i on from the LanierWorldwide, Inc.spin-off,and $120 million from the paymentof a note and the sale of Intersil Holding Corporation sharesas a result of the initial public offering of Intersil HoldingCorporation. Harris has used a portion of this cash to reducetotal debt by $347.7 million, to repurchase Harris’ CommonStock, and for other general corporate purposes, such as theacqu i s i ti ons of Lo uth Autom a ti on and TRT Lu cen tTechnologies’ point-to-point microwave radio business.

Harris plans to use its remaining cash balances for similargeneral corporate purposes in the future, such as acquisitionsand repurchases of its Common Stock.

Marketable securities increased from $15.5 million as of July2,1999 to $432.5 million as of June 30,2000. The increase waspri m a ri ly due to Ha rri s’ h o l d i n gs in In tersil Ho l d i n gCorpora ti on and Ai r Net Com mu n i c a ti ons Corpora ti on , e achof wh i ch com p l eted initial public of feri n gs du ring fiscal 2000.

(In millions except

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Harris also has available a $500 million syndicated creditfacility and a $500 million shelf registration. Managementc u rren t ly bel i eves that ex i s ting cash, funds gen era ted from opera-tions, sales of marketable securities, the credit facility, andaccess to the public debt markets wi ll be su f f i c i ent to provi defor Ha rri s’ a n ti c i p a ted requ i rem ents for working capital, capi-tal expenditures, and any additional stock repurchases underthe current repurchase program for the next twelve months.

Working capital: Working capital increased $849.0 millionfrom $224.1 million as of July 2, 1999 to $1,073.1 million asof June 30, 2 0 0 0 . Al s o, total debt dec re a s ed from $838.7 mill i onto $491.0 million for the same periods. These changes werelargely due to a $292.5 million increase in cash and cashequivalents,a $248.1 million decrease in short-term debt dueto the sale of Harris’ semiconductor operation and the spin-off of Lanier Worldwide, Inc., and a $417.0 million increase in marketable securities noted above. These increases werepartially offset by a $142.9 million change in current deferredi n come taxes rel a ted pri m a ri ly to unre a l i zed gains on m a rket a ble sec u ri ti e s , i n c re a s ed receiva bles due to moreex ten ded terms in Ha rri s’ Com m ercial Com mu n i c a ti ons segment, and a decrease in accounts payable.

Intangibles resulting from acquisitions: In t a n gi bles re su l t-ing from acqu i s i ti ons incre a s ed from $72.8 mill i on as of Ju ly2 , 1999 to $166.2 mill i on as of June 30, 2 0 0 0 . The increase wasdue pri m a ri ly to goodwi ll recorded as a re sult of the Lo ut hAutom a ti on acqu i s i ti on and intell ectual property assoc i a tedwith the TRT Lu cent Tech n o l ogi e s’ poi n t - to - point microw averadio business acqu i s i ti on .

Non-current deferred income taxes: The liability for non-current deferred income taxes was $14.1 million as of June 30,2000 versus $47.3 million as of July 2,1999. The decrease wasdue primarily to lower amounts of timing differences relatedto accruals and depreciation par tially offset by more timingdifferences related to international tax loss carryforwards.

Total debt and capitalization: At June 30, 2000, debt totaled$491.0 million, representing 26.3 percent of total capital(defined as the sum of total debt plus shareholders’ equity). Ayear earlier, debt of $838.7 million was 34.5 percent of totalcapital. Cash received from the sale of Harris’ semiconductoroperation and the spin-off of Lanier Worldwide, Inc. wasused to decrease the debt balance. Year-end long-term debtincluded $350.0 million of debentures,$30.5 million of notespayable to banks,and $2.1 million of other long-term debt.

In 2000, Harris issued 161,545 shares of Common Stock toemployees under the terms of Harris’ stock purchase, option,and incentive plans.

Harris’ debt is currently rated “BBB” by Standard and Poor’sRatings Group and “Baa1” by Moody’s Investors Service.Ha rris ex pects to maintain opera ting ra ti o s ,f i xed ch a r ge covera geratios, and balance sheet ratios sufficient for retention ofthese debt ratings.

Pu rchase of Com m on Stock for Trea su ry: Ha rris used$232.8 mill i on to rep u rchase 10.7 mill i on shares of i t sCommon Stock in fiscal 2000 compared to $15.7 million topurchase 0.4 million shares in fiscal 1999. Harris’ Board ofDirectors has approved a share repurchase program whichauthorizes the repurchase of up to 15 million shares throughopen market transactions,in negotiated block transactions orpursuant to tender offers.

Additions of Plant and Equipment: Additions of plant andequipment for 2000 were $81.3 million versus $60.4 millionin 1999. The increase is due to the purchase of a new head-qu a rters building for Ha rri s’ broadcast com mu n i c a ti on soperation in Mason, Ohio and the buyout of a lease on a PCboard manufacturing plant in San Antonio, Texas. Harris hasoutsourced this manufacturing process and is leasing thespace to the new manufacturer. Total additions for Harris infiscal 2001 a re ex pected to be approx i m a tely $80 mill i on .

R e t i rement PlansRetirement benefits for substantially all of Harris’ employeesare provided primarily through a retirement plan havingprofit sharing and savings elements. Harris also provides limited health-care benefits to retirees who have 10 or moreyears of service. All obligations under Harris’ retirement planshave been fully funded by Harris’ contributions,the provisionfor which totaled $37.4 million in fiscal 2000.

Impact of Fo reign Exc h a n g eApproximately 50 percent of Harris’ international business istransacted in local currency environments. The impact oftranslating the assets and liabilities of these operations to U.S.dollars is included as a component of shareholders’ equity. AtJune 30,2000,the cumulative translation adjustment reducedshareholders’ equity by $16.5 million compared to a reduc-tion of $11.7 million at July 2, 1999.

Ha rris uti l i zes forei gn currency hed ging instru m ents to minimizethe currency risk of international transactions. Gains andlosses resulting from currency rate fluc tuations did not havea material effect on Harris’ results in 2000,1999, or 1998.

Impact of InflationTo the extent feasible, Harris has consistently followed thepracti ce of ad ju s ting its pri ces to ref l ect the impact of i n f l a ti onon salaries and fringe benefits for employees and the cost ofpurchased materials and services.

M a r ket Risk ManagementHarris,in the normal course of doing business, is exposed tothe risks associated with foreign currency exchange rates,fluctuations in the market value of its equity securities avail-able for sale, and changes in interest rates. Harris employs

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established policies and procedures governing the use offinancial instruments to manage its exposure to such risks.

Harris uses foreign exchange contracts and options to hedgeboth balance sheet and off-balance sheet foreign currencycommitments. Specifically, these foreign exchange contractsoffset foreign currency denominated inventory and purchasecommitments from supplie rs, and accounts receivable fromand future committed sales to customers, and intercompanyloans. Management believes the use of foreign currencyfinancial instruments should reduce the risks that arise fromdoing business in international markets. Contracts are gener-ally one year or less. At June 30,2000, Harris had open foreignexchange contracts with a notional amount of $28.5 million,of which $4.0 million were to hedge off-balance sheet com-mitments. At July 2, 1999, Harris had open foreign exchangecontracts with a notional amount of $37.0 million, of which$7.7 million was to hedge off-balance sheet commitments.Additionally, for the fiscal year ended June 30, 2000, Harrispurchased and sold $432.3 million of foreign exchange for-ward and option contracts, compared to $366.1 million forthe comparable prior year period. Harris’ hedging activitiesprovide only limited protection against currency exchangerisks. Factors that could impact the effectiveness of Harris’hedging programs include accuracy of sales estimates, volatil-ity of currency markets, and the cost and availability of h ed g-ing instru m en t s . A 10 percent adverse ch a n ge in curren c yexchange rates for Harris’ foreign currency derivatives held atJune 30, 2000 would have an impact of approximately $1.7million on the fair value of such instruments. This quantifi-cation of exposure to the market risk associated with foreignexchange financial instruments does not take into accountthe offsetting impact of changes in the fair value of Harris’forei gn den om i n a ted asset s ,l i a bi l i ti e s , and firm com m i tm en t s .

Harris also maintains a portfolio of marketable equity securi-ties available for sale. These investments result from theret a i n ed interest in sold or spun-of f businesses and the inve s t-m ent in start-up companies that have tech n o l ogy or produ ct sthat are of interest to Harris. The fair market value of thesesecurities at June 30, 2000 was $432.5 million, compared to$15.5 million as of July 2, 1999. This increase was due to theinitial public offerings of two of these investments and anincrease in these securities’ quoted market prices. The corre-sponding unrealized gain is included as a component ofshareholders’ equity. These investments have historically hadhigher volatility than most market indices. A 10 percentadverse change in the quoted market price of marketableequity securities would have an impact of approximately$43.3 million on the fair market value of these securities.

Harris utilizes a balanced mix of debt maturities along withboth fixed - ra te and va ri a bl e - ra te debt to manage its ex po su re sto changes in interest rates. Harris does not expect changes ininterest rates to have a material effect on income or cash flowsin fiscal 2001, a l t h o u gh there can be no assu ra n ces that intere s trates will not significantly change.

E n v i ronmental MattersHarris is actively engaged in complying with environmentalprotection laws. In addition to ongoing internal complianceprograms, an estimated $0.1 million was spent on environ-m ental capital proj ects in fiscal 2000 and $0.3 mill i on in fiscal1999. Harris estimates that it will authorize $0.1 million infiscal 2001 for environmental-related capital projects. Underthe Superfund Act or similar state environmental laws, Harrisalso has potential liability at various waste sites designated forclean-up. Harris is named as a potentially responsible party ateleven such sites where future liabilities could exist. Thesesites include two Harris-owned sites, four sites associatedwith former Harris locations, and five non-Harris-ownedtreatment or disposal sites, allegedly containing hazardoussubstances attributable to Harris from past operations. Harrisroutinely assesses its contingencies, obligations, and commit-ments to clean up and monitor sites in light of in-depth studies, analysis by environmental experts, and legal reviews.At the two Ha rri s - own ed sites and four sites assoc i a ted with form er Ha rris loc a ti on s , Ha rris is invo lved pri m a ri ly in mon i-toring and rem ed i a ti on programs that have been implem en tedin coopera ti on with va rious envi ron m ental agen c i e s . At theo t h er site s , Ha rris is invo lved as one of nu m erous po ten ti a llyre s pon s i ble parties (PRPs ) . In ascertaining envi ron m en t a lex po su re s ,m a n a gem ent must assess the ex tent of con t a m i n a ti on ,the nature of remedial actions, continually evolving govern-mental standards, and the number, participation level, andfinancial vi a bi l i ty of o t h er PRPs and other similar variables. Based upon internal and third-party studies,as wellas the remediation and monitoring expense history at the twoHarris-owned sites and four sites associated with formerHarris locations, the number and solvency of PRPs at theother sites,and an assessment of other relevant factors, Harrishas esti m a ted that its disco u n ted liabi l i ty under theSu perfund Act and other envi ron m ental statutes and regulations for identified sites, using a 9.5 percent discountrate, is approximately $5.5 million. Harris has accrued t h e s ed i s co u n ted liabi l i ti e s . The ex pected aggrega te undisco u n tedamount that will be incurred over the next 20 to 25 years( depending on the nu m ber of ye a rs for each site) is approximately $11.1 million. The expected payments for thenext five years are: 2001 – $1.4 million; 2002 – $0.9 million;2003 – $0.6 million;2004 – $0.6 million; 2005 – $0.6 million;and the aggrega te amount there a f ter is approx i m a tely $7.0 million.

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Year 2000 IssueThe Year 2000 statements set forth below are designated as“Year 2000 Readiness Disclosures” pursuant to the Year 2000Information and Readiness Disclosure Act.

Certain sof t w a re and hardw a re sys tems are time sen s i tive . Ol derti m e - s en s i tive sys tems of ten use a two - d i git dating conven ti on( e . g. ,“ 0 0 ” ra t h er than “2000”) that could re sult in sys tem failu reand disru pti on of opera ti ons in 2000 and later ye a rs .

During the past several years Harris diligently addressed thepotential Year 2000 problem by undertaking 235 remediationproject initiatives relating to four basic aspects of Harris andits business operations: (1) int ernal information technologys ys tem s , i n cluding sales order proce s s i n g, con tract manage-m en t , financial sys tem s , and servi ce managem en t ; (2) intern a ln on - i n form a ti on tech n o l ogy sys tem s , i n cluding of f i ce equ i p-m ent and test equ i pm en t ; (3) produ cts and servi ce s ; and (4)m a terial third - p a rty rel a ti on s h i p s . Ha rris com p l eted all thesei n i ti a tives at the ori gi n a lly esti m a ted cost of $20 mill i on do ll a rs .This cost was gen era lly not increm ental to ex i s ti n g informationtechnology budgets.

Harris did not experience any significant business disruptionsor system failures as a result of Year 2000 issues.Further, therehave been no substantial Year 2000 related issues reportedfrom our major suppliers or customers.

Al t h o u gh the Year 2000 event has occ u rred , and while there canbe no assu ra n ce that there wi ll be no probl ems rel a ted to the Ye a r2000 for a peri od of time after Ja nu a ry 1, 2 0 0 0 , Ha rris bel i eves ithas not and wi ll not be advers ely impacted by Year 2000 issu e s .

O u t l o o kThe outlook for fiscal 2001 is for strong growth in sales andearnings, building on the momentum established during thepast ye a r. The major repo s i ti oning acti ons have been completed, yielding reductions in overhead costs and muchtighter integration of Harris. Although profit margins are lowby historical standards as Ha rris ends the repo s i ti oning peri od ,Harris expects to see continued improvement, quarter byqu a rter, du ring the coming ye a r. Ha rris also ex pects toaccomplish ad d i ti onal acqu i s i ti ons to furt h er stren g t h enHarris’ position in markets that it serves.

Fo r wa rd-Looking StatementsThis report contains forw a rd - l ooking statem ents that ref l ectm a n a gem en t’s current ex pect a ti on s , a s su m pti on s , and e s ti m a tes of f utu re perform a n ce and econ omic con d i ti on s .Su ch statem ents are made in rel i a n ce upon the safe harborprovi s i ons of Secti on 27A of the Sec u ri ties Act of 1933 andSecti on 21E of the Sec u ri ties Exch a n ge Act of 1 9 3 4 . Th e s es t a tem ents may be iden ti f i ed by their use of forw a rd - l oo k i n gterm i n o l ogy, su ch as “bel i eve s”, “ex pect s”, “m ay ”, “s h o u l d ”,“ wo u l d ”,“ wi ll ”,“ i n ten d s”,“p l a n s”,“e s ti m a te s”,“a n ti c i p a te s”, a n dsimilar word s . Ha rris cauti ons inve s tors that any forw a rd -l ooking statem ents are su bj ect to risks and uncert a i n ties thatm ay cause actual re sults and futu re trends to differ materi a lly

f rom those matters ex pre s s ed in or implied by su ch forw a rd -l ooking statem en t s . Ha rri s’ con s o l i d a ted re sults and the forw a rd - l ooking statem ents could be affected by many factors ,i n clu d i n g :• general economic conditions in the markets in which Harris

operates;• economic developments that have a particularly adverse

effect on one or mo re of the markets served by Harris;• continuing challenges and the exit of its telecom switching

business;• s t a bi l i ty of key markets for com mu n i c a ti ons produ ct s ,

particularly Asia and Brazil;• fluctuation in foreign currency exchange rates and the

effectiveness of Harris’ currency hedging program;• fluctuations in the U.S. and worldwide defense and space

budgets;• ef fect of the con s o l i d a ti on in the U. S . defense indu s try

on Ha rri s’d i rect and indirect business with the U. S . govern m en t ;• Harris’ ability to receive U.S. government contract awards;• con ti nu ed devel opm ent and market accept a n ce of n ew

products, especially digital television broadcast productsand broadband wireless access products;

• continued success in the management and integration ofacquired businesses;

• con ti nu ed su ccess in produ ct cost redu cti ons and ef f i c i en c i e sin Harris’ commercial manufacturing operations;

• a bi l i ty to con ti nue the liqu i d a ti on of its market a ble sec u ri ti e sportfolio; and

• the successful resolution of patent infringement and othergeneral litigation.

The forward-looking statements contained in this report aremade as of the date hereof and Harris disclaims any intentionor obligation to update or revise any forward-looking state-ments or to update the reasons why actual results could differmaterially from those projected in the forward-looking state-ments, whether as a result of new information,future events,or otherwise.

Harris Common Stock Info r m a t i o nDividends: A quarterly dividend of $.24 per share was paid inthe first quarter of fiscal 2000 and quarterly dividends of $.05per share were paid in the second, third and fourth quarter offiscal 2000. During the year 4,855 shareholders participatedin Ha rri s’ Autom a tic Divi dend Rei nve s tm ent Plan wi t hresulting purchases of 15,604 shares.

Markets for Harris Securities: Harris Common Stock istraded on the New York , Bo s ton , Ch i c a go, Pac i f i c , a n dPhiladelphia Stock Exchanges under the symbol HRS. Duringfiscal 2000, a total volume of 120.6 million shares of Harrisstock was traded, representing an average of 478,391 shareseach day. This volume compares with the previous year’s totalof 85.8 million shares, and a daily average of 340,500.

Both put and call options on Harris shares are traded on theChicago Board Options Exchange.

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Fiscal Years Ended

2000 1 9 9 9 1 9 9 8R eve n u eRevenue from product sales and services $1,807.4 $1,743.5 $1,924.8

Costs and ExpensesCost of product sales and services 1,352.6 1,278.3 1,443.5Engineering, selling and administrative expenses 404.5 380.0 416.0Amortization of goodwill and purchased

intangible assets 10.5 4.3 4.7Restructuring expenses 41.0 5.1 16.1Purchased in-process research and

development 10.7 – –Special charge for litigation costs – 20.6 –Other income (48.2) (19.3) (57.6)

1,771.1 1,669.0 1,822.7

Operating income 36.3 74.5 102.1Interest income 27.4 13.3 14.1Interest expense (25.2) (9.8) (12.5)

Income from continuing operationsbefore income taxes 38.5 78.0 103.7

Income taxes 13.5 28.1 37.3

Income from continuing operations before extraordinary item 25.0 49.9 66.4

Discontinued operations net of income taxes (7.0) 12.4 66.6

Income before extraordinary item 18.0 62.3 133.0Extraordinary loss from early retirement

of debt net of income taxes – (9.2) –

Net income $ 18.0 $ 53.1 $ 133.0

Net income per common share

Basic:Continuing operations $ .34 $ .63 $ .84Discontinued operations (.09) .16 .84Extraordinary item – (.12) –

$ .25 $ .67 $ 1.68

Diluted:Continuing operations $ .34 $ .63 $ .83Discontinued operations (.09) .16 .83Extraordinary item – (.12) –

$ .25 $ .67 $ 1.66

See Notes to Financial Statements

(In millions except per share amounts)

C O N S O L I D A T E D S T A T E M E N T O F I N C O M E

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C O N S O L I D A T E D B A L A N C E S H E E T

June 30, 2000 July 2, 1999

AssetsCurrent AssetsCash and cash equivalents $ 378.2 $ 85.7Marketable securities 432.5 15.5Receivables 466.5 411.7Unbilled costs and accrued earnings on fixed price contracts 154.6 184.4Inventories 197.2 205.7Deferred income taxes – 128.4

Total current assets 1,629.0 1,031.4Other AssetsPlant and equipment 295.4 291.6Intangibles resulting from acquisitions 166.2 72.8Net assets of discontinued operations – 1,293.2Other assets 236.3 269.6

697.9 1,927.2

$2,326.9 $2,958.6

Liabilities and Shareholders’ EquityCurrent LiabilitiesShort-term debt $ 75.6 $ 323.7Accounts payable 109.5 154.3Compensation and benefits 86.3 103.2Other accrued items 148.0 113.9Advance payments and unearned income 73.7 84.9Income taxes 15.5 26.8Deferred income taxes 14.5 –Current portion of long-term debt 32.8 0.5

Total current liabilities 555.9 807.3

Other LiabilitiesNon-current deferred income taxes 14.1 47.3Long-term debt 382.6 514.5

Shareholders’ EquityPreferred Stock, without par value; 1,000,000 shares

authorized; none issued – –Common Stock, $1.00 par value; 250,000,000 shares

authorized; issued and outstanding 68,957,761 shares atJune 30, 2000 and 79,650,994 shares at July 2, 1999 69.0 79.7

Other capital 228.4 271.5Retained earnings 864.1 1,246.7Unearned compensation (3.2) (4.0)Accumulated other comprehensive income (loss) 216.0 (4.4)

Total shareholders’ equity 1,374.3 1,589.5

$2,326.9 $2,958.6

See Notes to Financial Statements

(In millions)

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C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S

Fiscal Years Ended

(In millions) 2000 1999 1998

O p e rating Ac t i v i t i e sIncome from continuing operations $ 25.0 $ 49.9 $ 66.4Adjustments to reconcile net income

to net cash provided by operating activities:Depreciation and amortization 68.6 63.5 61.9Non-current deferred income tax (33.2) (0.1) 28.5Extraordinary loss – (9.2) –Purchased in-process research & development 10.7 – –Income (loss) from discontinued operations-net

of items not affecting cash (41.6) 184.7 246.4(Increase) decrease in:

Accounts and notes receivable 41.4 (55.1) (12.6)Unbilled costs and inventories 52.6 87.0 59.9

Increase (decrease) in:Accounts payable and accrued expenses (38.8) 5.4 29.7Advance payments and unearned income (20.7) (18.0) (43.2)Income taxes (0.7) (67.8) 17.3

Other 2.5 12.3 (9.3)

Net cash provided by operating activities 65.8 252.6 445.0

I n vesting Ac t i v i t i e sAcquisitions of businesses, net of cash acquired (123.9) (35.7) –Additions of plant and equipment (81.3) (60.4) (87.3)Net assets of discontinued operations 1,038.2 69.1 (324.2)

Net cash provided by (used in) investing activities 833.0 (27.0) (411.5)

Financing Ac t i v i t i e sProceeds from borrowings 8,215.4 9,301.4 5,391.1Payment of borrowings (8,563.3) (9,457.9) (5,332.7)Proceeds from sale of Common Stock 2.6 4.4 12.1Purchase of Common Stock for treasury (232.8) (15.7) –Cash dividends (29.9) (76.5) (70.1)

Net cash (used in) provided by financing activities (608.0) (244.3) 0.4

Effect of exchange rate changes on cash and cash equivalents 1.7 2.9 0.4

Net increase (decrease) in cash and cash equivalents 292.5 (15.8) 34.3Cash and cash equivalents at beginning of year 85.7 101.5 67.2

Cash and cash equivalents at end of year $ 378.2 $ 85.7 $ 101.5

See Notes to Financial Statements

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C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E A N D S H A R E H O L D E R S ’ E Q U I T Y Accumulated Other

Comprehensive IncomeNet Unrealized Cumulative

Common Other Retained Unearned Gain on Translation(In millions) Stock Capital Earnings Compensation Securities Adjustments Total

Balance at June 27, 1997 $39.8 $289.9 $1,219.9 $ 4.4 $ 45.3 $(5.4) $1,593.9Net income – – 133.0 – – – 133.0Foreign currency translation – – – – – (4.4) (4.4)Net unrealized loss on securities

net of income taxes of $(17.0) – – – – (29.0) – (29.0)

Comprehensive income 99.6Two-for-one stock split (39,949,231

shares) 39.9 (39.9) – – – – –Shares issued under Stock Option

Plan (237,476 shares) .2 5.6 – – – – 5.8Shares granted under Stock

Incentive Plans (238,550 shares) .3 10.1 – (10.3) – – .1Compensation expense – – – 7.8 – – 7.8Termination and award of

shares granted underStock Incentive Plans (340,170 shares) (.3) (.5) – (5.1) – – (5.9)

S h a res sold under Employee Stock Pu rchase Plans (114,707 share s ) .1 6.1 – – – – 6.2

Cash dividends ($.88 per share) – – (70.1) – – – (70.1)

Balance at July 3, 1998 80.0 271.3 1,282.8 (3.2) 16.3 (9.8) 1,637.4Net income – – 53.1 – – – 53.1Foreign currency translation – – – – – (1.9) (1.9)Net unrealized loss on securities

net of income taxes of $(5.3) – – – – (9.0) – (9.0)

Comprehensive income 42.2Shares issued under Stock Option

Plan (100,945 shares) .1 2.5 – – – – 2.6Shares granted under Stock Incentive

Plans (67,400 shares) .1 2.2 – (2.3) – – –Compensation expense – – – (.2) – – (.2)Termination and award of shares

granted under Stock Incentive Plans (153,738 shares) (.2) (3.6) – 1.7 – – (2.1)

S h a res sold under Employee Stock Pu rchase Plans (53,962 share s ) .1 1.7 – – – – 1.8

Purchase and retirement of CommonStock for treasury (430,200 shares) (.4) (2.6) (12.7) – – – (15.7)

Cash dividends ($.96 per share) – – (76.5) – – – (76.5)

Balance at July 2, 1999 79.7 271.5 1,246.7 (4.0) 7.3 (11.7) 1,589.5Net income – – 18.0 – – – 18.0Foreign currency translation – – – – – (4.8) (4.8)Net unrealized gain on securities net

of income taxes of $(132.3) – – – – 225.2 – 225.2

Comprehensive income 238.4Shares issued under Stock Option

Plan (74,392 shares) .1 1.9 – – – – 2.0Shares granted under Stock Incentive

Plans (63,500 shares) .1 1.6 – (1.7) – – –Compensation expense – – – (3.6) – – (3.6)Termination and award of shares

granted under StockIncentive Plans (202,768 shares) (.2) (7.2) – 6.1 – – (1.3)

S h a res sold under Employee Stock Pu rchase Plans (23,653 share s) – .7 – – – – .7

Purchase and retirement of CommonStock for treasury (10,652,100 shares) (10.7) (40.1) (182.0) – – – (232.8)

Cash dividends ($.39 per share) – – (29.9) – – – (29.9)Non-cash dividends related to the

spin-off of Lanier Worldwide – – (188.7) – – – (188.7)

Balance at June 30, 2000 $69.0 $228.4 $ 864.1 $(3.2) $232.5 $(16.5) $1,374.3

See Notes to Financial Statements

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N O T E S T O F I N A N C I A L S T A T E M E N T S

Significant Accounting Po l i c i e sPrinciples of Consolidation – The consolidated financialstatements include the accounts of Harris Corporation a n dits subsidiaries (“Harris”). These statements have beenprep a red in con form i ty with acco u n ting principles gen era llyaccepted in the Un i ted States and requ i re managem ent to makee s ti m a tes and assu m pti on s . These assu m pti ons affect the report-ed amounts of a s s ets and liabi l i ties and discl o su re of con ti n gen ta s s ets and liabi l i ties at the date of the financial statem ents andthe reported amounts of revenues and ex penses du ring thereporting peri od . Actual re sults could differ from those esti-m a te s . Si gnificant intercom p a ny tra n s acti ons and accounts havebeen el i m i n a ted .

Fiscal Year – Harris’ fiscal year ends on the Friday nearestJune 30. Fiscal Years 2000 and 1999 include 52 weeks, whilethe 1998 fiscal year includes 53 weeks.

Cash Equivalents – Cash equivalents are temporary cashinvestments with a maturity of three months or less whenpurchased. These investments include accrued interest andare carried at the lower of cost or market.

Ma rket a ble Sec u ri ti e s – Ma rket a ble equ i ty sec u ri ties are statedat fair value, with unrealized gains and losses, net of tax,included as a separate component of shareholders’ equity.Realized gains and losses from marketable securities aredetermined using the specific identification method. The costbasis of marketable securities was $63.5 million at June 30,2000, and $3.9 million at July 2, 1999. The proceeds from thesale of marketable securities was $52.6 million in 2000, $9.9million in 1999, and $39.6 million in 1998. The amount ofgross realized gains included in “Other income” was $49.6m i ll i on in 2000, $9.6 mill i on in 1999, and $38.8 mill i on in 1998.The fiscal 2000 gross realized gains included a $21.9 milliongain from the sale of one million shares of Intersil HoldingCorporation stock as a part of Intersil Holding Corporation’sinitial public offering.

Inven tori e s – Inven tories are pri ced at the lower of cost (deter-m i n ed by avera ge and firs t - i n ,f i rs t - o ut met h ods) or market .

Plant and Equipment – Plant and equipment are carried onthe basis of cost. Depreciation of buildings, machinery, andequipment is computed by the straight-line and acceleratedm et h od s . The esti m a ted useful lives of bu i l d i n gs ra n gebet ween 5 and 50 ye a rs . The esti m a ted useful lives of m ach i n eryand equipment range between 3 and 10 years.

Intangibles – In t a n gi bles re su l ting from acqu i s i ti ons are bei n ga m orti zed by the stra i ght-line met h od pri n c i p a lly over 10 to 15ye a rs . Recovera bi l i ty of i n t a n gi bles is assessed using esti m a tedu n d i s co u n ted cash flows of rel a ted opera ti on s . In t a n gi bles thata re not ex pected to be recovered thro u gh futu re undisco u n tedcash flows are ch a r ged to ex pense wh en iden ti f i ed . Am o u n t sch a r ged to ex pense are amounts in excess of the fair va lue ofthe intangi ble asset . Fair va lue is determ i n ed as the pre s en tva lue of e s ti m a ted ex pected futu re cash flows using a disco u n tra te com m en su ra te with the risks invo lved .

In come Ta xe s – Ha rris fo ll ows the liabi l i ty met h od ofaccounting for income taxes.

Revenue Recognition – Revenue is recognized from salesother than on long-term contracts when a product is shipped,from rentals as they accrue, and from services when per-formed. Unearned income on service contracts is amortizedby the straight-line method over the term of the contracts.

Revenue and anticipated profits under long-term contractsare recorded on a percentage-of-completion basis, generallyusing the cost-to-cost method of accounting where sales andprofits are recorded based on the ratio of costs incurred toestimated total costs at completion. Contracts are combinedwhen specific aggregation criteria are met. Criteria generallyinclude close ly interrelated activities performed for a singlecustomer within the same economic environment. Contractsgenerally are not segmented.

Amounts representing contract change orders, claims, orother items are included in sales only when they can bereliably estimated and realization is probable. Incentives orpenalties and awards applicable to performance on contractsare considered in estimating sales and profit rates, and arerecorded wh en there is su f f i c i ent inform a ti on to assess a n ti c i p a ted con tract perform a n ce . In cen tive provi s i on s ,which increase or decrease earnings based solely on a singlesignificant event, are generally not recognized until the eventoccurs.

When adjustments in contract value or estimated costs aredetermined,any changes from prior estimates are reflected inearnings in the current period. Anticipated losses on con-tracts or programs in progress are charged to earnings whenidentified.

Roya l ty income is inclu ded as a com pon ent of “Ot h erincome” and is recognized on the basis of terms specified incontractual agreements.

Reti rem ent Ben ef i t s – Ha rris and its su b s i d i a ri e s provideretirement benefits to substantially all employees primarilythrough a retirement plan having profit-sharing and savingselements. Contributions by Harris to the retirement plan areb a s ed on profits and em p l oyee s’ s avi n gs with no other fundingrequirements. Harris may make additional contributions tothe fund at its discretion.

Retirement benefits also include an unfunded limited health-care plan for U.S.-based retirees and employees on long-termdisability. Harris accrues the estimated cost of these medicalbenefits, which are not material, during an employee’s activeservice life.

Environmental Expenditures – Harris capitalizes environ-mental expenditures that increase the life or efficiency ofproperty or that reduce or prevent environmental contami-nation. Harris accrues environmental expenses resulting fromexisting conditions that relate to past operations when thecosts are probable and reasonably estimable.

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Ba s ed on an assessment of rel evant factors , Ha rris has estimated that its discounted liability under the SuperfundAct and other environmental statutes and regulations foridentified sites, using a 9.5 percent discount rate, is approxi-mately $5.5 million. This liability is accrued in the June 30,2000 consolidated balance sheet. The expected aggregateundiscounted amount that will be incurred over the next 20to 25 years (depending on the number of years for each site)is approximately $11.1 million. The expected payments forthe next five ye a rs are : 2001 – $1.4 mill i on ; 2002 – $0.9 mill i on ;2003 – $0.6 mill i on ; 2004 – $0.6 mill i on ; 2005 – $0.6 mill i on ;and the aggrega te amount there a f ter is approx i m a tely $7.0million.

Fut u res and Forw a rd Con tra c t s – Wh en Ha rris sells products outside the United States or enters into purchasecommitments, transactions are sometimes denominated incurrencies other than U.S. dollars. To minimize the impact onrevenue and cost from currency fluctuations, Harris entersinto currency exchange agreements that qualify for hedgeaccounting treatment. It is Harris’ policy not to speculate inforeign currencies. Currency exchange agreements are desig-nated as,and are effective as,hedges of foreign currency assetsand liabilities. In addition, these agreements are consistentwith the designated currency of the underlying asset or liabil-ity. Gains and losses on currency exchange agreements thatqualify as hedges are deferred and recognized as an adjust-ment of the carrying amount of the hedged asset or liability.Gains and losses on currency exchange agreements that donot qualify as hedges are recognized in income based onchanges in the fair market value of the currency exchangeagreement.

Foreign Currency Translation – The functional currency formost international subsidiaries is the local currency. Assetsand liabilities are translated at current rates of exchange, andincome and expense items are translated at the weighted aver-age exchange rate for the year. The resulting translationadjustments are recorded as a separate component of share-holders’ equity.

Unearned Compensation – Compensation resulting fromperformance shares granted under Harris’ long-term incen-tive plan is amortized to expense over the performance peri-od and is adjusted for changes in the market value of Harris’Common Stock.

Net Income Per Share – Net income per share is based uponthe weighted average number of common shares outstandingduring each year.

Reclassifications – Certain prior-year amounts have beenreclassified on the financial statements to conform with current year classifications

Stock SplitOn August 23,1997,the Board of Directors authorized a two-for-one stock split to shareholders of record on September 4,1997. All references in the financial statements and notes to

financial statements to number of shares, per share amounts,and market prices of Harris’ Common Stock have beenre s t a ted to ref l ect the incre a s ed nu m ber of s h a res out s t a n d i n g.

Accounting ChangesIn February 1998, the American Institute of Certified PublicAccountants issued Statement of Position (“SOP”) 98-1,“Accounting for the Costs of Computer Software Developedor Obtained for Internal Use,” which is effective for fiscalyears beginning after December 15, 1998. This SOP requirescapitalization of certain costs incurred in the development ofinternal-use software, including external direct material andservice costs, employee payroll and payroll-related costs, andinterest. Harris has adopted SOP 98-1 for fiscal 2000. Theadoption did not have a material effect on Harris’ financialstatements.

In June 1998, the Financial Accounting Standards Board( “ FA S B”) issu ed Statem ent of Financial Acco u n ti n gStandards No. 133 (“SFAS 133”), “Accounting for DerivativeIn s tru m ents and Hed ging Activi ti e s ,” wh i ch establ i s h e saccounting and reporting standards for derivative instru-ments and for hedging activities. It requires an entity torecognize that all derivatives are either assets or liabilities inthe balance sheet and measure those investments at fair value.Implementation of this standard has been delayed by theFASB for a twelve-month period. Harris will be requiredto adopt SFAS 133 in the first quarter of fiscal 2001. This willnot have a material effect on Harris’ results of operations orfinancial position.

In December 1999, the Securities and Exchange Commission( “SEC”) issu ed Staff Acco u n ting Bu ll etin No. 101 (“SAB 101”),“Revenue Recognition in Financial Statements.” SAB 1 0 1su m m a ri zes the SEC’s vi ews in app lying gen era lly acceptedaccounting principles to revenue recognition in financialstatements. Harris is required to adopt SAB 101 in the fourthquarter of fiscal 2001. Management does not believe theadoption of SAB 101 will have a material effect on Harris’results of operations or financial position.

Discontinued Opera t i o n sIn fiscal 1999, Harris decided to sell its semiconductor busi-ness and spin off its Lanier Worldwide, Inc. subsidiary.Accordingly, the results of operations and the net assets of these business segm ents have been recl a s s i f i ed as discontinued operations.

On August 13, 1 9 9 9 , Ha rris com p l eted the sale of su b s t a n ti a llyall of its semiconductor business to Intersil Corporation andits affiliate s .In tersil Corpora ti on was a newly form ed com p a nyown ed by Sterling Holding Com p a ny, L LC , a Ci ti corpVenture Capital Ltd. investment portfolio company, alongwith certain management investors, and affiliates of CreditSuisse First Boston Corporation.

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The assets disposed of consisted primarily of land, buildings,equ i pm en t , i nven tory, receiva bl e s , tech n o l ogy, and otherassets related to the operation of the semiconductor business.

In addition to acquiring a 10 percent equity interest in IntersilHolding Corporation for which Harris paid $9 million,Harris received cash of $520 million, a promissory note of$90 mill i on , and In tersil Corpora ti on assu m ed certain liabi l i ti e s .Harris also retained receivables and patent rights. Harrisrecorded an after-tax loss of $76 million for the disposal of itsentire semiconductor business including the portion sold toIntersil Corporation. Intersil Holding Corporation under-took an initial public offering (IPO) in February, 2000. Atthat time, the promissory note was paid, as was the accrued

interest. Harris also participated in the IPO and sold one million of its Intersil Holding Corporation shares at a gain of$21.9 million.

On October 22, 1999, Harris announced that its Board ofDi rectors form a lly approved the spin-of f of its LanierWorldwide, Inc. subsidiary as an independent publicly tradedcompany. The Board declared a dividend of one share ofLanier common stock for each share of Harris CommonStock to Harris shareholders of record on November 1, 1999.The distri buti on of the divi dend was com p l eted onNovember 5, 1999. Harris retained approximately 10 percentof the outstanding shares of Lanier.

R e s t r u c t u r i n gIn fiscal 2000, Ha rris recorded a $41 mill i on ch a r ge ($26.7 million after income tax) for the restructuring of itsopera ti on s . Re s tru ctu ring acti ons inclu de a redu cti on of a pprox i m a tely 161 em p l oyees and provi s i ons for the wri te - down of i n t a n gi ble asset s , equ i pm en t , and other assets associated with the exit from Harris’ CommercialCommunications segment’s telephone switching and alarmmanagement product lines.

In the third quarter of fiscal 2000, 161 switching businessem p l oyees were noti f i ed that their em p l oym ent would be term i n a ted and what their specific severa n ce ben efit would be .

These em p l oyees worked in the marketi n g, s a l e s ,m a nu f actu ri n g,and administrative areas and were primarily located in MarinCounty, California. As of June 30, 2000, 62 employees hadbeen term i n a ted with the balance to be term i n a ted bySeptember 30, 2000.

In June of 2000, Harris sold the core switch business toTel tron i c s , In c . Ha rris also intends to sell other porti ons of t h i sprodu ct line, i n cluding the alarm managem ent and intern a ti on a lactivities, during fiscal 2001. Gains or losses from the sale ofthese operations are included or will be included in restruc-turing expenses in the period the sale occurs. Estimated dis-counted cash flows were used in determining the fair value ofassets and liabilities in recording the restructuring charge.

Summarized financial information for the discontinued operations follows:

(In millions) 2000 1999 1998

Net revenues $512.1 $2,032.4 $1,952.6

Income before income taxes $ 8.2 $ 133.1 $ 96.3Income taxes 3.0 43.7 29.7

Income from discontinued operations 5.2 89.4 66.6Provision for disposal of discontinued

operations after income tax benefits of$6.1 million in fiscal 2000 and $5.8 million in fiscal 1999 (12.2) (77.0) –

Discontinued operations net of income taxes $ (7.0) $ 12.4 $ 66.6

(In millions) 2000 1999

Current assets $ – $ 930.6 Total assets – 1,994.5Current liabilities – 660.8Total liabilities – 743.2Accumulated comprehensive income – (41.9)Net assets of discontinued operations $ – $1,293.2

The information set forth in the remaining notes to the financial statements relates to continuing operations unless otherwise specified.

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Cash outlays for restructuring actions will be primarily forseverance benefits. Harris expects to pay these benefits ratablyover the first two quarters of fiscal 2001 from currentlyavailable cash sources. Sales from this product line were $73.5million in 2000,$126.6 million in 1999,and $140.4 million in1998. Operating losses from these product lines were $18.9million in 2000, $3.6 million in 1999, and $2.9 millionin 1998.

In fiscal 1999, Harris recorded a $5.1 million charge ($3.3million after income taxes) for severance costs associated withthe restructuring of its operations. Restructuring actionsi n clu ded a work force redu cti on of a pprox i m a tely 606employees. At June 30,2000,all of these employees have beenterminated.

Business Combinations In January 2000, Harris purchased Louth Automation, aleading supplier of advanced automation systems for radioand television broadcasters. Also, on June 30, 2000, Harrispurchased the assets of TRT Lucent Technologies’ point-to-point microwave radio business. These acquisitions have beenaccounted for under the purchase method of accounting and,accord i n gly, the re sults of opera ti ons of these acqu i red entities have been included in Harris’ consolidated incomestatement since the date of acquisition. Pro forma results ofoperations have not been presented because the effect of theseacquisitions was not m a teri a l . Ha rris paid cash in the netamount of a pprox i m a tely $87 million for Louth Automationand $30 million for TRT Lucent Technologies’ point-to-pointmicrowave radio business. The final determination o f thesep u rchase pri ces is su bj ect to ad ju s tm en t . The amount allocated to purchased in-process research and developmenton the Louth Automation acquisition was $10.7 million. Thepurchased in-process research and development expenseswere determined through established valuation techniques in

the technology communications industry and were expensedupon acquisition because technological feasibility had notbeen establ i s h ed and no futu re altern a tive uses ex i s ted .Research and development costs to bring the products fromthe acquired company to technological feasibility are notexpected to have a material impact on Harris’ future results ofoperations or cash flows. Amounts allocated to goodwill andp u rch a s ed intangi ble assets for Lo uth Autom a ti on are amortized on a straight-line basis over periods not exceedingten years. The amortization period for purchased intangiblea s s ets in the TRT Lu cent Tech n o l ogi e s’ poi n t - to - poi n tmicrowave radio business has not b een finalized.

E x t ra o rdinary LossIn June 1999, Harris retired $150.0 million of 10-3/8%debentures due in 2018 and $96.0 million of notes payable toinsurance companies due from 1999 to 2001. Debt retirementresulted in an extraordinary loss of $9.2 million ($.12 pershare),net of related income taxes of $4.7 million.

Joint Ve n t u re sHarris has investments in joint ventures (less than 50%owned), which are accounted for using the equity method of

(In millions) Original Use of Reserve Reserve BalanceReserve Cash Non-Cash at June 30,2000

Fiscal 1999:Severance benefits $ 5.1 $5.1 $ – $ –

Fiscal 2000:Severance benefits $ 4.7 $0.4 – $ 4.3Capitalized software write-offs 14.1 – $14.1 –Intangible asset write-offs 4.4 – 4.4 –Equipment write-downs 6.2 – 6.2 –Other exit costs 11.6 2.3 – 9.3

$41.0 $2.7 $24.7 $13.6

The components and use of restructuring reserves are summarized below:

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accounting. Condensed balance sheets as of June 30, 2000,and Ju ly 2, 1 9 9 9 ; and con den s ed statem ents of i n come for fiscalyears 2000, 1999, and 1998 for these joint ventures follow.Ha rris has ad ju s tm ents to income rel a ted to these inve s tm en t s

that are not pushed down to these condensed financial state-ments. The amount of income (loss) before taxes included in“Ot h er incom e” rel a ted to these joint ven tu res is $(7.5) mill i onin 2000, $7.5 million in 1999, and $4.0 million in 1998.

Condensed Balance Sheets of Joint Ve n t u re s

(In millions) 2000 1999

Assets Current assets $122.9 $127.5Non-current assets 68.4 60.0

$191.3 $187.5

Liabilities and Shareholders’ EquityCurrent liabilities $122.8 $102.7Non-current liabilities 7.6 9.1Shareholders’ equity 60.9 75.7

$191.3 $187.5

Condensed Statements of Income of Joint Ve n t u re s

(In millions) 2000 1999 1998

Revenue $252.4 $212.2 $165.8Costs and expenses 256.7 195.6 139.8

Income (loss) before income taxes (4.3) 16.6 26.0Income taxes 4.6 4.7 2.2

Net income (loss) $ (8.9) $ 11.9 $ 23.8

R e c e i va b l e sReceivables are summarized below:

(In millions) 2000 1999

Accounts receivable $479.5 $416.6Notes receivable due within one year-net 17.7 17.0

497.2 433.6Less allowances for collection losses 30.7 21.9

$466.5 $411.7

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C redit Arra n g e m e n t sHarris has available a syndicated credit facility with va ri o u sbanks that provi des for borrowi n gs up to $500 mill i on . Th i sf ac i l i ty ex p i res in Novem ber 2001. In terest ra tes on borrowi n gsu n der the $500 mill i on fac i l i ty are determ i n ed by a pri c i n gmatrix based upon Harris’ long-term debt ratings assigned byStandard and Poor ’s Ra ti n gs Group and Moody ’s Inve s torsServi ce . A fac i l i ty fee is paya ble on the credit and determ i n ed inthe same manner as the interest rates. Harris is not required tomaintain compensating balances in connection with thisagreement. Un der the credit fac i l i ty, n one was outstanding atJune 30, 2 0 0 0 . This agreem ent contains certain financial convenants including mainten a n ce of at least $900 mill i on oft a n gi bl e net worth and total debt not to exceed 50 percent oftotal capital.

Ha rris also has lines of c redit for short - term financing aggre-gating $98.8 million from various U.S. and foreign banks, ofwhich $23.2 million was available on June 30, 2000. Thesearrangements provide for borrowing at various interest rates,are reviewed annually for renewal, and may be used on suchterms as Harris and the banks mutually agree. These lines donot require compensating balances. Approximately $149.8m i ll i on worth of debt was inclu ded in net assets ofdiscontinued operations on the July 2, 1999, consolidatedbalance sheet.

S h o r t - Term DebtShort-term debt of $75.6 million in 2000 and $323.7 millionin 1999 is entirely made up of notes payable to banks in bothyears. As of June 30, 2000, $26.0 million of these bank noteswere with Brazilian banks at a weighted-average interest rateof 18.1 percent. The weighted-average interest rate for banknotes other than those with Brazilian banks was 6.4 percent asof June 30, 2000 and 6.3 percent as of July 2,1999.

L o n g - Term DebtLong-term debt includes the following:

(In millions) 2000 1999

Notes payable to banks $ 30.5 $162.5

6.35% debentures, due 2028 150.0 150.07% debentures, due 2026 100.0 100.06.65% debentures, due 2006 100.0 100.0Other 2.1 2.0

$382.6 $514.5

The weighted-average interest rate for notes payable to bankswas 6.4 percent as of June 30, 2000 and 6.3 percent as ofJuly 2, 1999.Maturities of long-term debt for the five yearsfollowing 2000 are: $32.8 million in 2001, $0.6 million in2002, $31.0 million in 2003, $0.5 million in 2004, and $0.3million in 2005.

I n ventories and Unbilled CostsInventories are summarized below:

(In millions) 2000 1999

Finished products $ 39.4 $ 34.7Work in process 61.9 66.0Raw materials and supplies 95.9 105.0

$197.2 $205.7

Unbilled costs and accrued earnings on fixed-price contracts are net of progress payments of $180.0 million at June 30,2000and $171.1 million at July 2, 1999.

Plant and EquipmentPlant and equipment are summarized below:

(In millions) 2000 1999

Land $ 11.5 $ 13.6Buildings 264.7 255.0Machinery and equipment 556.1 547.3

832.3 815.9Less allowances for depreciation 536.9 524.3

$295.4 $291.6

I n t a n g i b l e sAccumulated amortization of intangible assets was $52.1 million at June 30,2000 and $22.3 million at July 2, 1999.

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P re f e r red Stock Purchase RightsOn December 6, 1996, Harris declared a dividend of one pre-ferred share purchase right for each outstanding share ofCommon Stock. These rights, which expire on December 6,2006, are evidenced by the Common Stock share certificatesand trade with the Common Stock until they become exercis-able, entitle the holder to purchase one two-hundredth of ashare of Participating Preferred Stock for $125, subject toadjustment. The rights are not exercisable until the earlier of10 business days (or such later date fixed by the Board) aftera party commences a tender or exchange offer to acquire abeneficial interest of at least 15% of Ha rri s’ o ut s t a n d i n gCom m on Stock, or the first date of public announcement byHarris that a person has acquired a beneficial interest of atleast 15% of Harris’ outstanding Common Stock, or suchlater date fixed by the Board of Directors of Harris.

Upon the first date of public announcement by Harris that aperson has acquired a beneficial interest of at least 15% ofHarris’ outstanding Common Stock, or such later date fixedby the Board of Directors of Harris, each right (other thanrights beneficially owned by an acquiring person or any affil-iate or associate thereof) would entitle the holder to purchaseshares of Common Stock of Harris having a market valueequal to twice the exercise price of the right. In addition,each

right (other than rights beneficially owned by an acquiringperson or any affiliate or associate thereof) would entitle theri gh t h o l der to exercise the ri ght and receive shares of com m ons tock of the acqu i ring com p a ny, u pon a mer ger or other bu s i n e s scombination, having a market value of twice the exerciseprice of the right.

Un der certain circ u m s t a n ces after the ri ghts become exercisable, the Board of Directors may elect to exchange allof the then outstanding rights for shares of Common Stock atan exchange ratio of one share of Common Stock per right,subject to adjustment. The rights have no voting privilegesand may be redeemed by the Board of Directors at a price of$.01 per ri ght at any time pri or to the acqu i s i ti on of a ben ef i c i a lownership of 15% of the outstanding Common Stock.

Stock Options and Awa rd sThe fo ll owing inform a ti on rel a tes to stock opti on and incen tivestock awards. Option prices are 100 percent of market valueon the date the options are granted. Option grants are for am a x i mum of ten ye a rs after dates of grant and may be exerc i s edin install m en t s . As a re sult of the spin-of f of L a n i erWorldwide, Inc. on November 5, 1999, Harris adjusted theopti on pri ce and the nu m ber of s h a res on all of its out s t a n d i n goptions so that the fair value of each option holders’ optionwould be the same b efore and after the distribution.

Number Weighted Average Option Pricesof Shares Exercise Price Per Share

Exercised during:1998 439,708 $26.46 $10.94 to $45.501999 132,574 $24.17 $ 7.19 to $35.63July 3,1999 to November 5, 1999 25,607 $18.59 $11.88 to $33.44

Granted July 3,1999 to November 5,1999 682,284 $27.20 $24.00 to $37.75Terminations from July 3, 1999 to November 5, 1999 506,900 $34.53 $11.88 to $53.63Outstanding at July 2, 1999 2,179,523 $34.88 $ 7.19 to $53.63Outstanding at November 5, 1999 2,329,300 $32.90 $ 7.19 to $53.63Outstanding at November 6, 1999 after

adjustment for Lanier Worldwide, Inc.spin-off 2,566,889 $29.85 $ 6.52 to $48.66

Exercisable at July 2,1999 1,096,045 $33.64 $ 7.19 to $53.63Exercisable at November 5, 1999 1,266,162 $34.78 $ 7.19 to $53.63Exercisable at November 6, 1999 after

adjustment for Lanier Worldwide, Inc.spin-off 1,395,311 $31.56 $ 6.52 to $48.66

Exercised from November 6, 1999 to June 30, 2000 55,490 $27.52 $13.33 to $34.26Granted from November 6, 1999 to June 30, 2000 89,214 $27.78 $20.63 to $39.00Terminations from November 6, 1999 to June 30,2000 318,072 $31.07 $21.78 to $48.04Outstanding at June 30, 2000 2,282,541 $29.65 $ 6.52 to $48.66Exercisable at June 30, 2000 1,205,283 $31.60 $ 6.52 to $48.66

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Presented below is pro forma information regarding netincome and net income per share. It has been determined asif Harris had accounted for stock options using the fair valuemethod of accounting for stock options. The fair value ofeach option grant is estimated on the grant date using theBl ack - S choles opti on pricing model with the fo ll owi n gassumptions:

2000 1999 1998

Expected dividend yield 0.5% 2.1% 2.1%Expected stock price volatility 36.3% 24.5% 20.4%Risk-free interest rate 6.0% 5.0% 5.8%Expected life (years) 4 4 4

For purposes of pro forma disclosure,the estimated fair valueof options is amortized to expense over their three-year vesting period. Under the fair value method, Harris’ netincome and net income per share would have been reducedas follows:

(In millions,except per share amounts) 2000 1999 1998

Net income $5.7 $5.3 $4.9Basic net income per share $.08 $.07 $.06Diluted net income per share $.08 $.07 $.06

Because the fair value method of accounting for optionsapplies only to options granted subsequent to June 30, 1995,the pro forma effect was not fully reflected until 1999.

Harris has a stock incentive plan for directors and keyemployees. Awards under this plan may include the grant ofperformance shares, restricted stock, stock options, stockappreciation rights, or other stock-based awards. The aggre-gate number of shares of Common Stock which may beawarded under the plan in each fiscal year is 1.0 percent ofthe total outstanding shares of Common Stock plus sharesavailable from prior years. Performance shares outstandingwere 209,716 at June 30, 2000, 429,869 at July 2, 1999, and625,365 at July 3,1998.Shares of Common Stock reserved forfuture awards under the plan were 3,242,441 at June 30,2000,2,296,417 at July 2, 1999, and 2,509,002 at July 3,1998.

Under Harris’ domestic retirement plan, employees maypurchase a limited amount of Harris’ Common Stock at 70

percent of current market value. The discounts from fairmarket value on Common Stock purchased by employeesu n der the dom e s tic reti rem ent plan are ch a r ged to com pen s a ti onex pense in the peri od of the rel a ted purch a s e . S h a res of Common Stock reserved for future purchases by the retirement plan were 2,172,688 at June 30, 2000.

Net Income Per ShareAverage outstanding shares used in the computation of netincome per share are summarized below:

(In millions) 2000 1999 1998

Basic:Weighted average

shares outstanding 73.5 79.9 79.9Contingently issuable shares (0.3) (0.5) (0.6)

73.2 79.4 79.3

Diluted:Weighted average

shares outstanding 73.5 79.9 79.9Dilutive stock options 0.2 0.1 0.3Contingently issuable shares (0.3) (0.3) (0.2)

73.4 79.7 80.0

R e t i rement PlansReti rem ent and def i n ed ben efit plans ex pense from continuing operations amounted to $37.4 million in 2000,$43.0 million in 1999 and $55.0 million in 1998.

R e s e a rch and Deve l o p m e n tCom p a ny - s pon s ored re s e a rch and produ ct devel opm en tcosts from continuing operations are expensed as incurred.These costs were $99.9 million in 2000,$92.4 million in 1999,and $94.0 million in 1998.

Customer-sponsored research and development costs areincurred pursuant to long-term contractual arrangementsand are accounted for principally by the percentage-of-com-pletion method. Customer-sponsored research and develop-ment costs incurred under government-sponsored contractsrequire Harris to provide a product or service meeting certaindef i n ed perform a n ce or other spec i f i c a ti ons (su ch asdesigns).

Price ranges of outstanding and exercisable options as of June 30,2000 are summarized below:

OUTSTANDING OPTIONS EXERCISABLEOPTIONS

Range of Number of Average Remaining Weighted Average Number of Weighted AverageExercise Prices Options Life (years) Exercise Price Options Exercise Price

$ 6.52 – $27.11 1,006,394 7.89 $24.59 283,839 $24.45$27.85 – $38.11 829,634 7.51 $30.19 558,481 $29.64$38.42 – $48.67 446,513 6.83 $40.07 362,963 $40.22

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The components of deferred income tax assets (liabilities)are as follows:

2000 1999

Non- Non-(In millions) Current Current Current Current

Inventoryvaluations $ 19.2 – $ 16.8 –

Accruals 72.7 $(17.6) 107.1 $(30.7)Depreciation – (17.0) – (20.8)Leases – – – (1.0)International

tax loss carryforwards – 8.5 – 5.0

Unrealized gains on securities (136.5) – (5.2) –

All other – net 30.1 12.0 9.7 2.9

(14.5) (14.1) 128.4 (44.6)Valuation

allowance – – – (2.7)

$(14.5) $(14.1) $128.4 $(47.3)

United States income taxes have not been provided on $346m i ll i on of u n d i s tri buted earn i n gs of i n tern a ti onal su b s i d i a ri e sbecause of Harris’ intention to reinvest these earnings. Thedetermination of unrecognized deferred U.S. tax liability forthe undistributed earnings of international subsidiaries is notpracticable.

Pretax income (loss) from continuing operations of interna-tional subsidiaries was $1.0 million in 2000, $2.7 million in1999, and $(3.4) million in 1998.

Income taxes paid were $47.4 million in 2000, $35.5 millionin 1999, and $29.2 million in 1998.

Business SegmentsHarris is structured primarily around the markets it servesand opera tes in two business segm ents – Govern m en tCom mu n i c a ti ons and Com m ercial Com mu n i c a ti on s . Th eGovernment Communications segment engages in advancedresearch and develops, designs, and produces advanced com-mu n i c a ti on and inform a ti on processing sys tem s . Th eCommercial Communications segment produces broadcast,radio communications, and telecommunications productsand sys tem s . Ha rri s’ produ cts and sys tems are produ ced principally in the United States with international revenuesderived primarily from exports.

The accounting policies of the operating segments are thesame as those described in the Significant Accounting Policiesfootnote. Harris evaluates performance based on profit orloss from operations before income taxes excluding interestincome and expense, equity income, and gains or losses fromsecurities and other investments. Intersegment sales, which

I n t e rest ExpenseTotal interest from continuing operations was $25.2 millionin 2000, $9.9 million in 1999, and $13.5 million in 1998.Interest attributable to funds used to finance major long-termconstruction projects is capitalized as an additional cost ofthe related asset. No interest was capitalized in fiscal 2000.Interest capitalized was $0.1 million in 1999 and $1.0 millionin 1998. Interest paid was $25.5 million in 2000,$14.6 millionin 1999, and $9.9 million in 1998.

Lease CommitmentsTotal rental expense from continuing operations amountedto $21.7 million in 2000,$21.8 million in 1999,and $19.3 mil-lion in 1998. Future minimum rental commitments underleases, primarily for land and buildings,amounted to approx-imately $60.9 million at June 30, 2000. These commitmentsfor the years following 2000 are: 2001 – $16.3 million; 2002 –$12.4 million; 2003 – $8.9 million; 2004 – $7.0 million; 2005– $6.4 million; and $9.9 million thereafter.

Income Ta xe sThe provi s i ons for income taxes from con ti nuing operations are summarized as follows:

(In millions) 2000 1999 1998

Current:United States $ 9.7 $ 38.5 $17.3International 25.4 (3.4) 6.3State and local (2.3) 5.0 5.1

32.8 40.1 28.7

Deferred:United States (0.2) (8.1) 11.9International (21.2) (3.3) (2.0)State and local 2.1 (0.6) (1.3)

(19.3) (12.0) 8.6

$13.5 $28.1 $37.3

A reconciliation of the statutory United States income taxrate to the effective income tax rate follows:

2000 1999 1998

Statutory U.S. income tax rate 35.0% 35.0% 35.0%State taxes (0.7) 3.6 2.4International income (1.7) – –Tax benefits related to

export sales (7.0) (4.0) (3.8)Nondeductible amortization 5.1 1.6 1.0Other items 4.3 (0.2) 1.4

Effective income tax rate 35.0% 36.0% 36.0%

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are insignificant, are accounted for at prices comparable tounaffiliated customers. Net revenue and operating income bysegment are on page 46. That information is an integral partof these financial statements.

Sales made to the U. S . govern m ent by all segm ents (pri m a ri lythe Govern m ent Com mu n i c a ti ons segm ent) were 40.6 percen tof total revenues from con ti nuing opera ti ons in 2000, 42.3 per-cen t of total revenues from con ti nuing opera ti ons in 1999, a n d47.2 percent of revenues from con ti nuing opera ti ons in 1998.

Selected information by business segment and geographicalarea is summarized below:

(In millions) 2000 1999 1998

Total Assets

Government Communications $ 402.8 $ 4 6 3 . 5 $ 5 1 7 . 7Commercial Communications 8 6 8 . 0 7 3 6 . 7 7 3 1 . 0Headquarters 1 , 0 5 6 . 1 1 , 7 5 8 . 4 1 , 9 8 1 . 7

$ 2 , 3 2 6 . 9 $ 2 , 9 5 8 . 6 $ 3 , 2 3 0 . 4

Capital Expenditures

Government Communications $ 19.1 $ 19.5 $ 24.9Commercial Communications 5 1 . 0 35.5 32.7Headquarters 1 1 . 2 5.4 29.7

$ 81.3 $ 60.4 $ 87.3

Depreciation and Amortization

Government Communications $ 22.9 $ 20.9 $ 23.8Commercial Communications 38.4 32.9 28.3Headquarters 7.3 9.7 9.8

$ 68.6 $ 63.5 $ 61.9

Geographical Information

U.S. operations:Revenue $1,549.8 $1,537.2 $1,689.0Long-lived assets $ 581.6 $ 546.7$ 571.4

International operations:Revenue $ 257.6 $ 206.3$ 235.8 Long-lived assets $ 116.3 $ 87.3 $ 71.3

Corpora te assets consist pri m a ri ly of c a s h ,m a rket a ble sec u ri ti e s ,plant and equ i pm en t , and net assets of d i s con ti nu ed opera ti on s .

Export sales were $229.7 million in 2000, $242.2 million in1999,and $320.6 million in 1998. Export sales and net sales ofinternational operations were principally to Europe, Asia,andLatin America.

Financial InstrumentsThe carrying va lues of cash equ iva l en t s ,m a rket a ble sec u ri ti e s ,accounts receivable,notes receivable, accounts payable,short-term debt, and long-term debt approximates fair value. Thefair value of long-term debt, as determined by quotes from

financial institutions, was $351.3 million at June 30, 2000,and $493.5 million at July 2, 1999.

Harris uses foreign exchange contracts and options to hedgei n tercom p a ny accounts and of f - b a l a n ce sheet forei gn curren c ycommitments. Specifically, these foreign exchange contractsoffset foreign currency denominated inventory and purchasecommitments from supplie rs, accounts receivable from andfuture committed sales to customers, and firm committedoperating expenses. Management believes the use of foreigncurrency financial instruments should reduce the risks, whicharise from doing business in international markets. Contractsare for periods consistent with the terms of the underlyingtransaction, generally one year or less. At June 30, 2000, openforeign exchange contracts were $28.5 million, of which $4.0million were to hedge off-balance sheet commitments. Thefair market value of foreign exchange contracts and optionsas determined by quoted market indices and quotes fromfinancial institutions was $28.5 million. Additionally, for theyear ended June 30, 2000, Harris purchased and sold $ 4 3 2 . 3m i ll i on of forei gn exch a n ge forw a rd and opti on con tract s .

Deferred gains and losses are included on a net basis in theConsolidated Balance Sheet as other assets and are recordedin income as part of the underlying transaction when it is recognized.

At June 30, 2000, Harris had no open option contracts. Totalopen forei gn exch a n ge con tracts at June 30, 2 0 0 0 , a redescribed in the table below:

Commitments to Buy Fo reign Currencies (In millions)

CONTRACT AMOUNT

Foreign Deferred Gains MaturitiesCurrency Currency U.S. and (Losses) (in months)

Canadian Dollar 13.3 $9.0 $ – 1

BrazilianReal 6.4 $3.6 $(0.1) 1 to 3

BritishPound 1.4 $2.2 $(0.1) 1 to 6

Commitments to Sell Fo reign Currencies (In millions)

CONTRACT AMOUNT

Foreign Deferred Gains MaturitiesCurrency Currency U.S. and (Losses) (in months)

Brazilian Real 15.3 $8.4 $ – 2 to 10

British Pound 3.2 $4.9 $0.2 1 to 4

Korean Won 475.3 $0.4 $ – 1 to 3

Quarterly Financial Data (Unaudited)

Selected quarterly financial data is summarized below:

(In millions except per share amounts) Quarters EndedTotal

Fiscal 2000 10-1-99 12-31-99 3-31-00(1)

6-30-00(2)

Year

Revenue $398.8 $441.0 $455.2 $512.4 $1,807.4Gross profit 99.3 111.8 112.6 131.1 454.8Income (loss) from continuing

operations before income taxes 14.3 21.0 (22.1) 25.3 38.5Income (loss) from continuing operations 9.3 13.6 (14.3) 16.4 25.0Discontinued operations (8.0) 1.0 – – (7.0)Net income (loss) 1.3 14.6 (14.3) 16.4 18.0Per share (Basic):

Continuing operations .12 .18 (.21) .24 .34Discontinued operations (.10) .01 – – (.09)Net income (loss) .02 .19 (.21) .24 .25

Per share (Diluted):Continuing operations .12 .18 (.21) .24 .34Discontinued operations (.10) .01 – – (.09)Net income (loss) .02 .19 (.21) .24 .25Cash dividends .24 .05 .05 .05 .39Stock prices – high 39.69 28.94 39.38 36.75

low 23.63 18.25 23.75 26.63

(In millions except per share amounts) Quarters EndedTotal

Fiscal 1999 10-2-98(3) 1-1-99 4-2-99 7-2-99(4) Year

Revenue $412.6 $417.5 $445.4 $468.0 $1,743.5Gross profit 110.0 120.6 118.1 116.5 465.2Income from continuing operations

before income taxes 11.3 27.2 34.7 4.8 78.0Income from continuing operations

before extraordinary item 7.2 17.4 22.2 3.1 49.9Discontinued operations 21.2 35.4 19.2 (63.4) 12.4Extraordinary loss – – – (9.2) (9.2)Net income (loss) 28.4 52.8 41.4 (69.5) 53.1Per share (Basic):

Continuing operations before extraordinary loss .09 .22 .28 .04 .63

Discontinued operations .27 .44 .24 (.80) .16Extraordinary loss – – – (.12) (.12)Net income (loss) .36 .66 .52 (.88) .67

Per share (Diluted):Continuing operations

before extraordinary loss .09 .22 .28 .04 .63Discontinued operations .27 .44 .24 (.80) .16Extraordinary loss – – – (.12) (.12)Net income (loss) .36 .66 .52 (.88) .67Cash dividends .24 .24 .24 .24 .96Stock prices – high 44.25 39.69 39.94 40.63

low 29.94 27.56 27.81 27.31(1) Income from continuing operations includes a $40.0 million ($26.0 million after tax) restructuring expense,a $21.9 million

($14.2 million after tax) gain on the sale of Intersil Holding Corporation stock,and a $10.7 million ($7.0 million after tax) write-off of purchased in-process research and development.

(2) Income from continuing operations includes a $1.0 million ($0.7 million after tax) restructuring expense.(3) Income from continuing operations includes a $20.6 million ($13.1 million after tax) special charge for litigation costs.(4) Income from continuing operations includes a $5.1 million ($3.3 million after tax) restructuring expense. Discontinued operations

includes a $82.8 million ($77.0 million after tax) provision for disposal of discontinued operations.:44

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R E P O R T O F I N D E P E N D E N T P U B L I C A C C O U N T A N T S

To Harris Directors and Shareholders:

We have audited the accompanying consolidated balance sheets of Harris Corporation and its subsidiaries as

of June 30, 2000 and July 2, 1999 and the related consolidated statements of income, cash flows, and

comprehensive income and shareholders’ equity for each of the three fiscal years in the period ended

June 30, 2000. These financial statements are the responsibility of the Corporation’s management. Our

responsibility is to express an opinion on these financial statements based on our audits. The financial

statements of GE-Harris Railway Electronics, LLC and subsidiaries, (a company in which the Corporation

has a 49% interest), have been audited by other auditors whose report has been furnished to us; insofar as

our opinion on the consolidated financial statements as of and for the year ended July 2,1999, relates to data

included for GE-Harris Railway Electronics, LLC and subsidiaries, it is based solely on their report.

We conducted our audits in accordance with auditing standards generally accepted in the United States.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the financial statements. An audit also includes

assessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis

for our opinion.

In our op i n i on ,b a s ed on our audits and the report of o t h er auditors (as of and for the year en ded Ju ly 2,

1999), the financial statements referred to above present fairly, in all material respects, the consolidated

financial position of Harris Corporation and subsidiaries at June 30, 2000 and July 2, 1999, and the

consolidated results of their operations and their cash flows for each of the three fiscal years in the period

ended June 30,2000, in conformity with accounting principles generally accepted in the United States.

Orlando, Florida

July 26, 2000

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B U S I N E S S S E G M E N T I N F O R M A T I O N

R eve n u e (continuing operations) (In millions)

Fiscal Year

Government Commercial Communications Communications Total

1996 $953.2 $843.9 $1,797.11997 996.6 952.0 1,948.61998 951.1 973.7 1,924.81999 813.2 930.3 1,743.52000 $815.9 $991.5 $1,807.4

O p e rating Profit (continuing operations) (In millions)

Fiscal Year Government Commercial Headquarters OtherCommunications Communications Expense Income(1) Total

1996 $78.9 $ 85.2 $(68.1) $ 8.6 $104.61997 84.7 73.7 (70.4) 30.8 118.8 1998(2) 43.9 60.0 (59.4) 57.6 102.1 1999(3) 52.1 34.1 (31.0) 19.3 74.52000(4) $58.1 $(33.3) $(36.7) $48.2 $ 36.3

(1) “Other Income” includes equity income, royalties,and gains and losses from the sale of securities and other investments.(2) Fiscal 1998 re sults inclu de re s tru ctu ring ex penses of $16.1 mill i on , of wh i ch $7.8 mill i on is all oc a ted to the Govern m ent Com mu n i c a ti on s

segment and $8.3 million is allocated to the Commercial Communications segment.(3) Fiscal 1999 Headquarters expense includes restructuring expenses of $5.1 million. Commercial Communications segment results include

a $20.6 million charge for litigation costs.(4) Fiscal 2000 Commercial Communications segment includes restructuring expenses of $41.0 million and a w rite-off of purchased

in-process research and development of $10.7 million. Other income includes the $21.9 million gain from the sale of Intersil HoldingCorporation stock.

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(All figures in millions except per share amounts) 2000(1) 1999(2) 1998(3) 1997 1996

Revenue from sales and services $1,807.4 $1,743.5 $1,924.8 $1,948.6 $1,797.1Cost of sales and services 1,352.6 1,278.3 1,443.5 1,460.7 1,325.6Interest expense 25.2 9.8 12.5 23.8 33.3Income from continuing operations before income taxes 38.5 78.0 103.7 99.2 77.3Income taxes 13.5 28.1 37.3 34.9 27.7Income from continuing operations before extraordinary item 25.0 49.9 66.4 64.3 49.6Discontinued operations net of income taxes (7.0) 12.4 66.6 143.2 128.8 Income before extraordinary item 18.0 62.3 130.0 207.5 178.4Extraordinary loss from early retirement of debt net

of income taxes – (9.2) – – –Net income 18.0 53.1 133.0 207.5 178.4Average shares outstanding (Diluted) 73.4 79.7 80.0 78.8 77.8Per share data (Diluted):

Income from continuing operations beforeextraordinary item .34 .63 .83 .81 .64

Discontinued operations (.09) .16 .83 1.82 1.65Extraordinary loss – (.12) – – –Net income .25 .67 1.66 2.63 2.29Cash dividends .39 .96 .88 .76 .68

Net working capital 1,073.1 224.1 268.6 310.6 386.0Net plant and equipment 295.4 291.6 314.8 293.1 293.9Long-term debt 382.6 514.5 761.0 681.4 584.4Total assets 2,326.9 2,958.6 3,230.4 3,075.7 2,677.9Shareholders’ equity 1,374.3 1,589.5 1,637.4 1,593.9 1,372.8Book value per share 19.93 19.96 20.46 20.02 17.66

(1) Results for fiscal 2000 include after-tax charges of $26.7 million (36 cents per share) for restructuring expenses and a $7.0 million (10 cents per share) write-off of purchased in-process research and development.

(2) Results for fiscal 1999 include after-tax charges of $3.3 million (4 cents per share) for restructuring expenses and a $13.1 million(16 cents per share) special charge for litigation costs.

(3) Results for fiscal 1998 include an after-tax charge of $10.3 million (13 cents per share) for restructuring expenses.

S E L E C T E D F I N A N C I A L D A T A

DirectorsPhillip W. Farmer Ch a i rm a n , Pre s i den t ,a n dCh i ef Exec utive OfficerHa rris Corpora ti on

Lester E. Coleman Reti red Ch a i rman andCh i ef Exec utive OfficerLu bri zol Corpora ti on( s pec i a l ty ch emical produ ct s )

A l f red C. DeCra n e, Jr. Reti red Ch a i rman and Ch i ef Exec utive Officer Tex aco, In c .( petro l eum produ ct s )

Ralph D. DeNunzioPre s i dent Ha rbor Point As s oc i a te s , In c .( priva te inve s tm ent and con su l ti n g )

Joseph L. DionneReti red Ch a i rman andCh i ef Exec utive OfficerThe Mc Graw - Hi ll Com p a n i e s , In c .( p u blishing and inform a ti on )

John T. HartleyReti red Ch a i rman andCh i ef Exec utive OfficerHa rris Corpora ti on

Ka ren Ka t e nPre s i den tUn i ted States Pharm aceuticals Gro u p,P f i zer, In c .( ph a rm aceutical produ cts)

Stephen P. Ka u f m a nCh a i rman of the Boa rdArrow Electron i c s , In c .( d i s tri butor of el ectronic com pon en t sand com p uter produ ct s )

G regory T. SwientonPre s i dent and Ch i ef Opera ting OfficerRyder Sys tem , In c .( l ogi s tic and tra n s port a ti on servi ce s )

A l exander B. Trow b r i d g ePre s i den tTrowbri d ge Pa rtn ers , In c .( business con su l ting)

Joseph A. Boyd Ch a i rman Emeri tus

Officers and SeniorManagementPhillip W. Fa r m e rCh a i rm a n , Pre s i den t , and Ch i ef Exec utive Officer

B r yan R. RoubSen i or Vi ce Pre s i den tand Ch i ef Financial Officer

Division PresidentsBruce M. AllanBroadcast Com mu n i c a ti ons

Robert K. Henry G overn m ent Com mu n i c a ti ons Sys tems

Chester A. MassariRF Com mu n i c a ti on s

Daniel R. Pe a rs o nNet work Su pport

Samuel D. Wy m a nMi c row ave Com mu n i c a ti on s

Corporate Management R i c h a rd L. BallantyneVi ce Pre s i den tG en eral Co u n s el and Sec ret a ry

David R. BallardVi ce Pre s i den tS h a red Servi ce s

Kwame A. BoakyeVi ce Pre s i den tTech n o l ogy

James L. ChristieVi ce Pre s i den tCon tro ll er

Nick E. Heldre t hVi ce Pre s i den tHuman Re s o u rces andCorpora te Rel a ti on s

John G. JohnsonVi ce Pre s i den tQ u a l i ty and Produ ctivi ty

William H. MillerVi ce Pre s i den tHa rris In form a ti on Servi ce s

Pamela Pa d g e t tVi ce Pre s i den tInve s tor Rel a ti on s

Ronald R. SpoehelVi ce Pre s i den tCorpora te Devel opm en t

Daniel B. Wa l t e rsVi ce Pre s i den tIn tern a ti onal Opera ti ons

David S. Wa s s e r m a nVi ce Pre s i den tTre a su rer

Raymon M. WhiteVi ce Pre s i den tWa s h i n g ton Opera ti on s

Board CommitteesE xe c u t i ve and Finance CommitteeJohn T. Ha rt l ey, Ch a i rpers onRa l ph D. De Nu n z i oJo s eph L. Di on n eP h i llip W. Fa rm er

Management Development andCompensation CommitteeLe s ter E. Co l em a n , Ch a i rpers onJo s eph L. Di on n eKa ren Ka ten S teph en P. Ka u f m a n

I n vestment CommitteeR e t i rement PlanJohn T. Ha rt l ey, Ch a i rpers onRa l ph D. De Nu n z i oP h i llip W. Fa rm erAl ex a n der B. Trowbri d ge

Audit CommitteeRa l ph D. De Nu n z i o, Ch a i rpers onLe s ter E. Co l em a nAl f red C. De Cra n e ,J r.Gregory T. Swi en tonAl ex a n der B. Trowbri d ge

Ethics CommitteeAl f red C. De Cra n e ,J r. , Ch a i rpers onLe s ter E. Co l em a nRa l ph D. De Nu n z i oJo s eph L. Di on n eJohn T. Ha rt l eyKa ren Ka tenS teph en P. Ka u f m a nGregory T. Swi en tonAl ex a n der B. Trowbri d ge

C o r p o rate Governance CommitteeJo s eph L. Di on n e , Ch a i rpers onAl f red C. De Cra n e ,J r.Ka ren Ka ten

D I R E C T O R S A N D O F F I C E R S

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Ad d re s sHa rris Corpora ti on 1025 W. NASA Bo u l eva rd Mel bo u rn e ,F l orida 32919 321-727-9100 w w w. h a rri s . com

Stock Exchanges New York , Bo s ton , Ch i c a go,Pac i f i c ,P h i l adel phia Ti cker Sym bo l : HRS

Buying and Selling StockHa rris Corpora ti on Com m on Stockgen era lly is bo u ght or sold thro u gh as tock bro ker or a financial insti tuti onthat provi des bro kera ge servi ce s . You do not need to con t act Ha rris in con n ecti on with the sale or purchase of its Com m on Stock .

Dividend Reinvestment PlanTh ro u gh the Divi dend Rei nve s tm en tPlan of fered by Ha rris Corpora ti on’sPlan agen t , The Chase Manhattan Ba n k ,N . A . , Ha rris shareh o l ders can buy ad d i ti onal shares by rei nve s ting thei rcash divi dends or by inve s ting ad d i ti on a lc a s h . For det a i l s , con t act Ch a s e Mell onS h a reh o l der Servi ce s ,L . L . C .( ad d re s sand to ll - f ree nu m ber are noted in thes econd co lumn of this page ) .

Transferring Stock or Making a Name ChangeA stock tra n s fer is requ i red 1) wh ens h a res are don a ted as a gi f t , or 2) wh ent h ere is a ch a n ge in name or own ers h i p.To tra n s fer stock , com p l ete and sign thea s s i gn m ent secti on on the back of t h ecerti f i c a te , or on an assign m ent forms ep a ra te from the stock certi f i c a te .Th en forw a rd it, via regi s tered mail,to Ch a s e Mell on Shareh o l der Servi ce s ,L . L . C . , P. O. Box 3312, So uth Hacken s ack ,NJ 07606-1912. Be su re to inclu de alln ece s s a ry names, ad d re s s e s , and Soc i a lSec u ri ty or tax iden ti f i c a ti on nu m bersfor the new regi s tra ti on . The sign a tu re ( s )must be guara n teed by a financial i n s ti tuti on or stock bro ker that is a recogn i zed mem ber of the Med a ll i onS TAMP Program accept a ble to thetra n s fer agent before the certi f i c a te issu bm i t ted to Ch a s e Mell on Shareh o l derServi ce s ,L . L . C .

Change of Ad d re s sS h a reh o l ders should send ch a n ge - of -ad d ress inform a ti on to Ch a s e Mell onS h a reh o l der Servi ce s ,L . L . C . , P. O. Box3 3 1 6 , So uth Hacken s ack , NJ 07606-1 9 1 6 , or call 1-888-261-6777 (to ll free )as soon as po s s i ble to en su re proper and ti m ely del ivery of d ivi dends andi m portant mailings from the com p a ny.

Missing CertificatesIf s tock certi f i c a tes are lost, s to l en , orde s troyed , you should immed i a tely noti-fy Ch a s e Mell on Shareh o l der Servi ce s ,L . L . C . ,E s toppel Dep a rtm en t , P. O. Box3 3 1 7 , So uth Hacken s ack , NJ 07606-1917by mail. In clu de ex act name(s) in wh i chthe stock is regi s tered and, i f po s s i bl e ,the nu m bers and issue dates of the missing certi f i c a te s .

D i v i d e n d sNo tify Ch a s e Mell on Shareh o l derServi ce s ,L . L . C . , P. O. Box 3315, So ut hHacken s ack , NJ 07606-1915 if you fail toreceive your divi dend ch eck in a ti m elym a n n er.

Duplicate MailingsS h a res own ed by one pers on but held in different forms of the same name( e . g. , John Sm i t h , John B. Sm i t h , J. B.Smith) re sult in du p l i c a te mailing ofs h a reh o l der inform a ti on at ad dedex pense to the com p a ny and to you as a shareh o l der. By law, su ch du p l i c a ti oncan be el i m i n a ted on ly at the request ofthe shareh o l der. No tify Ch a s e Mell onS h a reh o l der Servi ce s ,L . L . C . , P. O. Box3 3 1 6 , So uth Hacken s ack , NJ 07606-1916i f you wish to el i m i n a te du p l i c a ti on .

Consolidating Ac c o u n t sSome shareh o l ders have more than one account in the same name, wh i chre sults in the mailing of a sep a ra te d ivi dend ch eck and/or other com p a nym a terial for each acco u n t . To con s o l i-d a te acco u n t s ,s end stock certi f i c a te s ,via regi s tered mail, to Ch a s e Mell onS h a reh o l der Servi ce s ,L . L . C . , P. O. Box3 3 1 2 , So uth Hacken s ack , NJ 07606-1916with sign a tu res guara n teed as noted inthe secti on for tra n s ferring stock .

Transfer Agent and Registrar Ch a s e Mell on Shareh o l der Servi ce s ,L . L . C .Overpeck Cen tre 85 Ch a ll en ger Road Ri d gef i eld Pa rk , NJ 07660 1-888-261-6777

Regi s tered shareh o l ders can now acce s st h eir Ha rris account inform a ti on andm a ke certain inform a ti on tra n s acti on susing the Ch a s e Mell on web site :w w w. ch a s em ell on . com/

Annual MeetingThe 2000 annual meeting of s h a reh o l derswi ll be held on October 27 at theMel bo u rne Ai rport Hi l ton at Ri a l toP l ace , Mel bo u rn e ,F l ori d a ,s t a rting at10:00 a.m.

Form 10-KA copy of the annual report filed wi t hthe Sec u ri ties and Exch a n ge Com m i s s i onon Form 10-K is ava i l a bl e , wi t h o utch a r ge ,u pon wri t ten request to the corpora te sec ret a ry at:Ha rris Corpora ti on 1025 W. NASA Bo u l eva rd Mel bo u rn e ,F l orida 32919

Harris on the Internet In form a ti on abo ut Ha rris Corpora ti onis ava i l a ble on the In tern et . You mayaccess qu a rterly and annual financiali n form a ti on ;n ews rel e a s e s ;d ivi den di n form a ti on ; an overvi ew of the com p a-ny's produ ct s ,s ys tem s , and servi ce s ;a n do t h er inform a ti on . The Ha rris In tern etad d ress is: w w w. h a rri s . com

E n v i ronmental, Health and SafetyHa rris Corpora ti on is com m i t ted topro tecting the envi ron m ent and thehealth and safety of em p l oyee s . We havei m p l em en ted programs that minimizew a s te , redu ce em i s s i on s , and con s erveen er gy and water. In the area of h e a l t hand safety, it is our goal for each bu s i n e s sunit to be bel ow the indu s try avera ge for lost time incidents and severi ty ra te s .Our focus in the year ahead is on main-taining com p l i a n ce with all app l i c a bl eFedera l ,S t a te , and local envi ron m en t a lhealth and safety reg u l a ti ons wh i l ereducing the occ u rren ce of i n c i den t s ;i m proving the ef f i c i ency of our opera-ti ons by con s erving materials andre s o u rce s ; and eva lu a ting the po ten ti a lenvi ron m ental impacts of our produ ct s .

This en ti re An nual Report is pri n ted on rec ycl ed paper.

Aurora, ClearBurst, Constellation,Galaxy,MegaStar, CD Eye, Sigma, NetBoss, PyramidSeries, TS1000, TS1200, Falcon II, Hawklink,STAT, RealSite and LiveTV, are trademarks orregi s tered tradem a rks of Ha rris Corpora ti onin the United States and/or other countries.Tra i n Ta l k , PI N P O I N T, Prec i s i on Train Con tro l ,Train Pacing and Prec i s i on Di s p a tch are trade-m a rks of G E - Ha rris Ra i lw ay Electron i c s ,L . L . C .All other tradem a rks and regi s tered tradem a rk sa re the property of t h eir re s pective own ers .

S H A R E H O L D E R I N F O R M A T I O N

Harris Corpora t i o n1025 West NASA Bouleva rdM e l b o u r n e, Florida 32919