Back to GetFilings.com
1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1994 COMMISSION FILE NUMBER 1-3863
HARRIS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 34-0276860
- --------------------------------------------------------------------------------------------------------------------
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
1025 W. NASA Boulevard
Melbourne, Florida 32919
---------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(407) 727-9100
---------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
-----------------------------------------------
Common Stock, par value $1 per share New York Stock Exchange, Inc.
7 3/4% Sinking Fund Debentures due 2001 New York Stock Exchange, Inc.
Preferred Stock Purchase Rights New York Stock Exchange, Inc.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Section 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. /X/
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of August 31, 1994.
$1,642,340,000
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of August 31, 1994.
39,391,006 Shares
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement dated September 15, 1994
(Incorporated by Reference into Part III).
2
PART I
ITEM 1. BUSINESS
THE COMPANY
Harris Corporation was incorporated in Delaware in 1926 as the successor to
three companies founded in the 1890's. The executive offices of the Company are
located at 1025 W. NASA Boulevard, Melbourne, Florida 32919, and the telephone
number is (407) 727-9100.
Harris Corporation, along with its subsidiaries (hereinafter called
"Harris" or the "Company"), is a worldwide company focused on four core
businesses: advanced electronic systems, semiconductors, communications and an
office equipment distribution network.
The Company's four core businesses were carried out during fiscal 1994
through three business sectors and a subsidiary, which correspond to its
business segments used for financial reporting purposes: Electronic Systems
Sector, Semiconductor Sector, Communications Sector and Lanier Worldwide, Inc.
Harris structures its operations primarily around the markets it serves. Its
operating divisions, which are the basic operating units, have been organized on
the basis of technology and markets. For the most part, each operating division
has its own marketing, engineering, manufacturing and service organizations.
Reference is made to the Note Business Segments in the Notes to Financial
Statements for further information with respect to business sectors and the
subsidiary.
Total sales in 1994 increased to $3.3 billion from $3.1 billion a year
earlier. Total sales in the United States increased 6.0 percent, and
international sales, which amounted to 29 percent of the corporate total,
increased 11.9 percent. Net Income increased .6 percent to $111.8 million from
$111.1 million. Income from continuing operations before income taxes increased
to $193.5 million in 1994 from $169.8 million in 1993. Results for fiscal 1994
included an $11.5 million after-tax charge resulting from the Company's
write-off of securities received from the 1990 sale of a discontinued business
and a $10.1 million one-time after-tax charge for a cumulative effect of a
change in accounting principle.
The Company's three business sectors and the subsidiary and their principal
products are as follows:
Electronic Systems Sector: engages in advanced research, and develops,
designs and produces advanced information processing and communication systems
and software for defense applications, air traffic control, avionics, satellite
communications, space exploration, mobile radio networks, simulation, energy
management, law enforcement, electronic systems testing, and newspaper
composition.
Semiconductor Sector: produces advanced analog, digital and mixed-signal
integrated circuits and discrete semiconductors for power, signal processing,
data-acquisition, and logic applications for automotive systems, wireless
communications, telecommunications line cards, video and imaging systems,
industrial equipment, computer peripherals, and military and aerospace systems.
Communications Sector: produces broadcast, radio-communication, and
telecommunication products and systems, including transmitters and studio
equipment for radio and TV, HF, VHF and UHF radio-communication equipment,
microwave radios, digital telephone switches, telephone subscriber-loop
equipment, and in-building paging equipment.
Lanier Worldwide, Inc.: sells, services, supports and provides supplies for
copying systems, facsimile systems and networks, dictation systems,
optical-based electronic-image management systems, continuous recording systems
and PC-based health care management systems.
The financial results shown in the tables below are presented to comply
with current financial accounting standards relating to business segment
reporting. Information concerning the identifiable assets of the Company's
business segments is contained in the Note Business Segments in the Notes to
Financial Statements. In calculating operating profit, allocations of certain
expenses among the business segments involve the exercise of business judgment.
Intersegment sales, which are insignificant, are accounted for at prices
comparable to those paid by unaffiliated customers.
1
3
NET SALES AND OPERATING PROFIT BY BUSINESS SEGMENT
(DOLLARS IN MILLIONS)
NET SALES
YEAR ENDED ELECTRONIC SEMI- COMMUNI- LANIER
JUNE 30 SYSTEMS CONDUCTOR CATIONS WORLDWIDE TOTAL
----------------------- ---------- -------- -------- ---------- ---------
1992................... $1,016.9 $584.5 $495.6 $907.0 $ 3,004.0
1993................... 1,042.1 590.8 544.2 922.0 3,099.1
1994................... 1,128.9 635.3 628.2 943.7 3,336.1
OPERATING PROFIT
YEAR ENDED ELECTRONIC SEMI- COMMUNI- LANIER CORPORATE INTEREST
JUNE 30 SYSTEMS CONDUCTOR CATIONS WORLDWIDE EXPENSE EXPENSE TOTAL
----------------------- ------- ------- ------- ------- ------- ------- ------
1992................... $100.9 $(14.4 ) $46.0 $83.9 $(25.4 ) $(66.0 ) $125.0
1993................... 98.9 44.4 43.9 84.2 (41.7 ) (59.9 ) 169.8
1994................... 101.3 70.2 57.6 89.8 (67.1 )* (58.3 ) 193.5
- ---------------
*Corporate expense in 1994 includes a $17.8 million charge resulting from the
write-off of securities received from the 1990 sale of a discontinued business.
ELECTRONIC SYSTEMS
The Electronic Systems Sector of Harris is composed of several operating
divisions and is engaged in advanced research, development, design and
production of advanced information processing and communication systems and
sub-systems for government and commercial organizations in the United States and
overseas. Applications of the sector's state-of-the-art technologies include air
traffic control, avionics, communications, space exploration, mobile radio
networks, energy management, electronics systems testing, newspaper composition
and information management systems.
The Electronic Systems Sector is a major supplier of advanced-technology
and electronic systems to the United States Department of Defense, the Federal
Aviation Administration, National Aeronautics and Space Administration, Federal
Bureau of Investigation and other federal and local government agencies,
aircraft manufacturers, electric utilities, newspapers and publishing houses.
Sales in fiscal 1994 for this business segment increased 8.3 percent to
$1,128.9 million from $1,042.1 million in fiscal 1993. Operating profit of
$101.3 million increased from $98.9 million in the previous year. This sector
contributed 34 percent of Company sales in 1994 and 1993.
The sector is the leading supplier of air-traffic control communication
systems. The sector is also a major supplier of custom aircraft and spaceborne
communication and information processing systems, a leading supplier of
terrestrial and satellite communication systems and a preeminent supplier of
super-high-frequency military satellite ground terminals for the Department of
Defense.
The sector is a major supplier of custom ground-based systems and software
designed to collect, store, retrieve, process, analyze, display and distribute
information for government, defense and law enforcement applications, including
meteorological data processing systems and range management information systems.
The sector also provides computer controlled electronic maintenance, logistic,
simulation and test systems for military aircraft, ships and ground vehicles.
The sector is a worldwide supplier of energy management and distribution
automation systems for electric utilities and information-processing systems for
newspapers and publishing houses.
Most of the sales of this sector are made directly or indirectly to the
United States government under contracts or subcontracts containing standard
government clauses providing for redetermination of profits, if applicable, and
for termination for the convenience of the government or for default of the
contractor. These
2
4
sales consist of a variety of contracts and programs with various governmental
agencies, with no single program accounting for 10 percent or more of total
Harris sales.
The backlog of unfilled orders for this segment of Harris' business was
$530 million at June 30, 1994, substantially all of which is expected to be
filled during the 1995 fiscal year, compared with $593 million a year earlier.
SEMICONDUCTOR
The Semiconductor Sector of the Company produces analog, digital and
mixed-signal integrated circuits and discrete and intelligent-power
semiconductors for data-acquisition, signal processing, logic and power
applications that demand the highest levels of performance in terms of speed,
precision, low power consumption and reliability, often in harsh environments.
Sales in fiscal 1994 for this business segment increased 7.5 percent to
$635.3 million from $590.8 million in fiscal 1993. The sector's operating profit
was $70.2 million in fiscal 1994, compared with $44.4 milion in fiscal 1993. The
sector contributed 19 percent of Company sales in fiscal 1994 and 1993.
The sector produces discrete-power products, including MOS (metal oxide
semiconductors) power devices, transistors, rectifiers, power control circuits
and transient suppression products. The sector pioneered development of
"intelligent-power" technology which permits the combination of analog, logic
and power circuits on the same chip. Such products are widely used in automotive
electronic systems, such as automotive fuel injection systems, anti-lock braking
and engine control, and industrial motor control.
The sector is a major supplier of devices which address the needs of signal
processing applications, including linears, switches, multiplexers, data
conversion and digital signal processing chips. In addition, the sector is a
leader in mixed-signal telecommunication line card applications, including SLICs
(subscriber line interface circuits), CODECs, and cross-point switches used in
private-branch-exchange (PBX) systems and of other circuits for cellular
communications, high resolution graphic monitors, broadcast video and military
radar systems.
The sector is a major supplier of integrated circuits and discrete devices
to the military and aerospace markets, with an emphasis on commercial and
military space applications. The sector is the leading supplier of
radiation-hardened circuits. The sector's custom, semicustom and standard
integrated circuits are based on CMOS (complementary metal oxide semiconductor),
SOS (silicon-on-sapphire), SOI (silicon-on-insulator), bipolar analog and power
analog/digital process technologies.
The sector is also a leading supplier of custom and semicustom integrated
circuits, known as application specific integrated circuits (ASICs). These
circuits are designed for high-performance military, space, automotive and
industrial applications.
Principal customers for the products of this sector include video imaging,
computer, communication, telephone, industrial, medical and other electronic
equipment manufacturers, automobile manufacturers, defense contractors and U.S.
government agencies. In general, these products are sold directly to customers
through a worldwide sales organization, which includes independent
manufacturers' representatives, and to distributors, who, in turn, resell to
their customers. Internationally, this sector also sells through distributors.
See "International Business."
The integrated circuit manufacturing technology and integrated circuit
industry is characterized by rapid advances in product performance technology.
Semiconductor technology is vital to the equipment and electronic systems
designed and manufactured by the Electronic Systems Sector and Communications
Sector of the Company. Harris is a party to technology exchange agreements with
other companies to develop new and expanded technologies.
The backlog of unfilled orders for this segment of Harris' business was
$298 million at June 30, 1994, substantially all of which is expected to be
filled during the 1995 fiscal year, compared with $300 million a year earlier.
3
5
COMMUNICATIONS
The Communications Sector of the Company designs, manufactures, and sells
products characterized by three principal communication technologies: broadcast,
including radio and television products and transmission systems; two-way radio,
including high-frequency (HF), very high frequency (VHF) and ultra-high
frequency (UHF) products, and complete turnkey communication systems; and
telecommunications, including microwave systems, digital telephone switches and
auxiliary telecommunication products.
Sales in fiscal 1994 for this business segment increased 15.4 percent to
$628.2 million from $544.2 million. The sector recorded operating profit of
$57.6 million, up from $43.9 million in fiscal 1993. The sector contributed 19
percent of Company sales in fiscal 1994 and 17 percent in 1993.
Under the Farinon trademark, the sector is the largest producer of low-and
medium-capacity analog and digital microwave systems in North America.
The sector is the largest supplier of radio and television broadcast
transmission equipment and radio-studio equipment in the United States. The
sector's products include radio and television transmitters, antennas, and
audio, remote-control and video production systems. The sector is also a leading
supplier of mobile broadcast units.
This sector is a leading supplier of two-way HF, VHF and UHF radio
equipment and offers a comprehensive line of products and systems for long-and
short-distance communications. The sector also designs and installs turnkey
communication systems involving a variety of communication technologies,
including HF, VHF, microwave, fiber-optics and switching systems with command
and control centers. The products are sold to commercial and government
customers worldwide.
The sector is also a worldwide supplier of voice and data digital network
switches and private branch exchanges (PBXs) to long-distance carriers,
utilities, corporations and government agencies.
In addition, the sector supplies telecommunication products and systems
under the Dracon trademark, including telephone test systems and tools, ISDN
terminal adapters and telephone-integrated voice-paging systems for a wide
variety of in-plant applications.
Internationally, particularly in the developing and oil-producing nations,
the sector designs, sells, installs and services communication systems involving
radio and television broadcasting equipment and long-and short-range radios on
both a product and a turnkey basis.
Principal customers for products of the Communications Sector include
foreign and domestic government and military agencies, commercial and industrial
firms, radio and TV broadcasters, telephone companies, utilities, construction
companies and oil producers.
In general, these products are sold and serviced domestically directly to
customers through the sales organizations of the operating divisions and through
established distribution channels. Internationally, the sector markets and sells
its products and services through established distribution channels. See
"International Business."
The backlog of unfilled orders for this segment of Harris' business was
$300 million at June 30, 1994, substantially all of which is expected to be
filled during the 1995 fiscal year, compared with $258 million a year earlier.
LANIER WORLDWIDE
Lanier Worldwide, Inc. is a wholly-owned subsidiary of Harris which
markets, sells, and services office equipment and business communication
products on a global basis.
Sales in fiscal 1994 for this business segment increased 2.4 percent to
$943.7 million from $922.0 million. Operating profit was $89.8 million, up from
$84.2 million last year. Lanier Worldwide contributed 28 percent of Company
sales in fiscal 1994 and 30 percent in 1993.
Lanier Worldwide markets office products, including copiers, dictation
systems, voice-recording products and systems, facsimile units, and
information-management systems through a global network of direct sales
4
6
offices and authorized dealers. Lanier Worldwide also leases certain of these
products to customers on a short-term basis.
Due to the nature of its business, backlog of unfilled orders is not
considered significant to an understanding of this segment's business.
INTERNATIONAL BUSINESS
In fiscal 1994, sales of products exported from the United States or
manufactured abroad were $982 million or 29.4 percent of the corporate total,
compared with $877 million (28.3 percent) in fiscal 1993 and $861 million (28.7
percent) in fiscal 1992. Exports from the United States, principally to Europe,
Asia and Latin America, totalled $388 million or 39.5 percent of the
international sales in fiscal 1994, $295 million or 33.7 percent in fiscal 1993
of the international sales, and $273 million or 31.7 percent of the
international sales in fiscal 1992.
Foreign operations represented 17.8 percent of consolidated net sales and
23.8 percent of consolidated total assets as of June 30, 1994. Electronic
products and systems are produced principally in the United States and
international electronic revenues are derived primarily from exports.
Semiconductor assembly facilities are located in Malaysia, Ireland and Singapore
and electronic products assembly facilities are located in Canada and England.
International marketing activities are conducted through subsidiaries which
operate in Canada, Europe, Central and South America, Asia and Australia.
Reference is made to Exhibit 21 "Subsidiaries of the Registrant" for further
information regarding foreign subsidiaries.
Harris utilizes indirect sales channels, including dealers, distributors
and sales representatives, in the marketing and sale of some lines of equipment,
both domestically and internationally. These independent representatives may buy
for resale, or, in some cases, solicit orders from commercial or governmental
customers for direct sales by Harris. Prices to the ultimate customer in many
instances may be recommended or established by the independent representative
and may be on a basis which is above or below the Company's list prices. Such
independent representative generally receives a discount to the Company's list
prices and may mark-up such prices in setting the final sales prices paid by the
customer. During the fiscal year, orders came from a large number of foreign
countries, no one of which accounted for as much as five percent of total
orders.
Certain of Harris' exports are paid for by letters of credit, with the
balance either on open account or installment note basis. Advance payments,
progress payments or other similar payments received prior to or upon shipment
often cover most of the related costs incurred. Performance guarantees are
generally required on significant foreign government contracts.
The particular economic, social and political conditions for business
conducted outside the United States differ from those encountered by domestic
business. Management believes that the composite business risk for the
international business as a whole is somewhat greater than that faced by its
domestic operations as a whole. International business may subject the Company
to, among other things: the laws and regulations of foreign governments relating
to investments, operations, currency exchange controls, revaluations and
fluctuations of currencies; uncertainties as to local laws and enforcement of
contract and intellectual property rights; and occasional requirements for
onerous contract clauses; and, in certain areas, the risk of war, rapid changes
in governments and economic policies, the threat of international boycotts and
United States anti-boycott legislation. Nevertheless, in the opinion of
management, these risks are offset by the diversification of the international
business and the protection provided by letters of credit and advance payments.
Except for inconsequential matters involving road and utility
rights-of-way, Harris has never been subjected to threat of government
expropriation, either within the United States or abroad.
Financial information regarding the Company's domestic and international
operations is contained in the Note Business Segments in the Notes to Financial
Statements.
5
7
COMPETITION; PRINCIPAL CUSTOMERS; BACKLOG
The Company operates in highly competitive businesses that are sensitive to
technological advances. While successful product and systems development is not
necessarily dependent on total financial resources, some of Harris' competitors
in each of the sectors of its business are larger and can maintain higher levels
of expenditures for research and development than Harris. Harris concentrates in
each of its sectors on the market opportunities which management believes are
compatible with its overall technological capabilities and objectives. Principal
competitive factors in these sectors are cost-effectiveness, product
reliability, service and ability to meet delivery schedules as well as, in
international areas, the effectiveness of dealers.
Sales to the U.S. government, which is the Company's only customer
accounting for 10 percent or more of total sales, were 34.8 percent, 35.7
percent, and 37.6 percent of total sales in 1994, 1993 and 1992 respectively. It
is not expected that Defense Department budget cutbacks will have a material
effect on the profitability of the Company, due in part to the Company's efforts
to reduce its reliance on defense contracts.
Harris' backlog of unfilled orders was approximately $1.1 billion at June
30, 1994 and at June 30, 1993. Substantially all of the backlog orders at June
30, 1994 are expected to be filled by June 30, 1995.
RESEARCH AND ENGINEERING
Research and engineering expenditures by Harris totaled approximately $624
million in 1994, $564 million in 1993 and $531 million in 1992.
Company-sponsored research and product development costs were $128 million in
1994, $121 million in 1993, $122 million in 1992. The balance was funded by
government and commercial customers. Company-funded research is directed to the
development of new products and to building technological capability in selected
semiconductor, communications and electronic systems areas. Government-funded
research helps strengthen and broaden the technical capabilities of Harris in
its areas of interest. Almost all of the decentralized operating divisions
maintain their own engineering and new product development departments, with
scientific assistance provided by advanced-technology departments.
Harris holds numerous patents which it considers, in the aggregate, to
constitute an important asset. However, it does not consider its business or any
sector to be materially dependent upon any single patent or any group of related
patents. The Company is engaged in a pro-active patent licensing program.
ENVIRONMENTAL AND OTHER REGULATIONS
The manufacturing facilities of Harris, in common with those of industry
generally, are subject to numerous laws and regulations designed to protect the
environment, particularly in regard to wastes and emissions. In general, Harris
has complied with these requirements and such compliance has not had a material
adverse effect on its business or financial condition. Expenditures to protect
the environment and to comply with current environmental laws and regulations
over the next several years are not expected to have a material impact on the
Company's competitive or financial position. If future laws and regulations
contain more stringent requirements than presently anticipated, expenditures may
be higher than the Company's present estimates of potential environmental costs.
New waste treatment facilities and pollution control equipment are being
installed to satisfy legal requirements and to achieve the Company's waste
minimization and prevention goals. An estimated $4.7 million was spent on
environmental capital projects in fiscal 1994. The Company currently forecasts
authorization for environmental-related capital projects totalling $2.5 million
in fiscal 1995. Such amounts may increase in future years. The Company
anticipates that capital expenditures may be required over the next several
years for compliance costs under the new Clean Air Act; however, considerable
uncertainty remains with regard to estimates of such capital expenditures
because the regulations have not yet been issued.
EMPLOYEES
As of June 30, 1994, Harris had approximately 28,200 employees.
6
8
ITEM 2. PROPERTIES
Harris operates approximately 29 plants and approximately 400 offices in
the United States, Canada, Europe, Central and South America, Asia and Australia
consisting of about 7.1 million square feet of manufacturing, administrative,
engineering and office facilities that are owned and about 3.9 million square
feet of sales, office and manufacturing facilities that are leased. The leased
facilities are occupied under leases for terms ranging from one year to 30
years, a majority of which can be terminated or renewed at no longer than
five-year intervals at Harris' option. The location of the principal
manufacturing plants owned by the Company in the United States and the sectors
which utilize such plants are as follows: Electronic Systems -- Malabar,
Melbourne and Palm Bay, Florida; Semiconductor -- Palm Bay, Florida; Findlay,
Ohio; and Mountaintop, Pennsylvania; Communications -- Novato and San Carlos,
California; Quincy, Illinois; and Rochester, New York; and Lanier Worldwide --
Atlanta, Georgia. Harris considers its facilities to be suitable and adequate
for the purposes for which they are used.
As of June 30, 1994, the following facilities were in productive use by
Harris:
SQ. FT. SQ. FT.
TOTAL TOTAL
SECTOR FUNCTION OWNED LEASED
------------------------- --------------------- ---------- ----------
Electronic Systems Office/Manufacturing 3,180,000 552,000
Semiconductor Office/Manufacturing 2,621,000 269,000
Communications Office/Manufacturing 779,000 647,000
Lanier Worldwide Office/Manufacturing 144,000 756,000
OTHER
Corporate Offices 384,000 625
Sales/Service Offices 13,700 1,653,000
---------- ----------
TOTALS 7,121,700 3,877,625
ITEM 3. LEGAL PROCEEDINGS
From time to time, as a normal incident of the nature and kind of business
in which the Company is engaged, various claims or charges are asserted and
litigation commenced against the Company arising from or related to product
liability; patents, trademarks, or trade secrets; breach of warranty; antitrust;
distribution; or contractual relations. Claimed amounts may be substantial, but
may not bear any reasonable relationship to the merits of the claim or the
extent of any real risk of court awards. In the opinion of management, final
judgments, if any, which might be rendered against the Company in such
litigation are reserved against, covered by insurance or would not have a
material adverse effect on the financial position or the business of the Company
as a whole.
The Company may from time to time be, either individually or in conjunction
with other major U.S. manufacturers or defense contractors, the subject of U.S.
government investigations for alleged criminal or civil violations of
procurement or other federal laws. No criminal charges are presently known to be
filed against the Company and the Company is unable to predict the outcome of
such investigations or to estimate the amounts of claims or other actions that
could be instituted against it, its officers or employees as a result of such
investigations. Under present government procurement regulations, indictment
could result in a government contractor, such as the Company, being suspended or
debarred from eligibility for awards of new government contracts for up to three
years. In addition, foreign export control licenses could be suspended or
revoked. The Company is currently involved in various investigations and is
cooperating with the representatives of the responsible government agencies.
Management does not believe that the outcome of these investigations will have
any material adverse effect on the financial position or the business of the
Company as a whole.
In addition, the Company is subject to numerous federal and state
environmental laws and regulatory requirements and is involved from time to time
in investigations or litigation of various potential environmental issues
concerning the ongoing conduct of its facilities or the cleanup of contamination
by past activities. The Company from time to time receives notices from the
United States Environmental Protection Agency
7
9
("EPA") and equivalent state environmental agencies that it is a potentially
responsible party ("PRP") under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA" or the "Superfund Act") and/or
equivalent state legislation. Such notices assert potential liability for
cleanup costs of various sites, most of which are non-Company owned treatment or
disposal sites, allegedly containing hazardous substances attributable to the
Company from past operations. The Company has been named as a PRP at only 14
such sites, excluding sites as to which the Company's records disclose no
involvement or as to which the Company's liability has been finally determined;
the Company expects to resolve most of such exposures on a de minimis basis. The
Company is also occasionally a defendant in "toxic tort" litigation involving
alleged personal injury or property damage claims resulting from past hazardous
waste practices. In the opinion of management, any payments the Company may be
required to make as a result of these claims will not have a material adverse
effect on the financial condition or the business of the Company as a whole.
In August 1991, PLS, Inc., a California software company, filed suit
against the Company in California Superior Court for San Diego County alleging
fraud, breach of contract and other charges in connection with a license
agreement the Company had transferred in January 1990 to a third party, which
thereafter filed for bankruptcy protection. In December 1992, the jury returned
a verdict in favor of the plaintiff. In May 1993, the court reduced the jury
award and entered judgment against the Company for $13,379,000 in compensatory
damages and $53,424,700 in punitive damages, together with interest and costs of
suit. The Company posted a bond to stay enforcement of the judgment and filed a
notice of appeal with the California Court of Appeal. The Company is vigorously
pursuing its appeal; and in February 1994 filed its appellate brief. Plaintiff's
responsive brief was filed in September 1994 seeking, among other things,
reinstatement of the jury verdict of $13,379,000 in compensatory damages and
$85,000,000 in punitive damage.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT AS OF SEPTEMBER 1, 1994.* (SEE ALSO ITEM 10
OF PART III).
EXECUTIVE BUSINESS EXPERIENCE DURING
NAME AGE OFFICE HELD PAST FIVE YEARS
- ------------------------------ ------------------------- -------------------------------------
John T. Hartley 64 Chairman of the Chairman of the Board since October,
Board of Directors 1987. Chief Executive Officer since
and Chief April, 1986. President, 1986 to
Executive Officer 1993. President and Chief Operating
Officer, 1982 to 1986. President
and Principal Operating Officer,
1978 to 1982. Executive Vice
President, 1976 to 1978. Vice
President -- Group Executive, 1971
to 1976. Vice President -- General
Manager, Electronic Systems
Division, 1967 to 1971. Director
since 1976.
- ---------------
*This listing identifies the executive officers of the Company, as defined
pursuant to the Securities Exchange Act of 1934, as well as all other corporate
officers.
8
10
EXECUTIVE BUSINESS EXPERIENCE DURING
NAME AGE OFFICE HELD PAST FIVE YEARS
- ------------------------------ ------------------------- -------------------------------------
Phillip W. Farmer 56 President and Chief President and Chief Operating Officer
Operating Officer since April, 1993. Executive Vice
President and Acting President --
Semiconductor Sector, 1991 to 1993.
President -- Electronic Systems
Sector, 1989 to 1991. Senior Vice
President -- Sector Executive, 1988
to 1989. Vice President -- Palm Bay
Operations, 1986 to 1988. Vice
President -- General Manager,
Government Support Systems
Division, 1982 to 1986. Director
since 1993.
Wesley E. Cantrell 59 President and President and Chief Executive
Chief Executive Officer, Lanier Worldwide, Inc.
Officer, since March, 1987. Senior Vice
Lanier Worldwide, Inc. President -- Sector Executive,
Lanier Business Products Sector,
1985 to 1987. President, Lanier
Business Products, 1977 to 1987.
Executive Vice President and
National Sales Manager, Lanier
Business Products, 1972 to 1977.
Vice President, Lanier Business
Products, 1966 to 1972. Employed by
Lanier Business Products since
1955.
John C. Garrett 51 President -- President -- Semiconductor Sector
Semiconductor Sector since April, 1993. Formerly
Executive Vice President,
Industrial Business, Square D
Company 1987 to 1993, and various
general management assignments with
General Electric Company 1964 to
1987.
Allen S. Henry 54 President -- Electronic President -- Electronic Systems
Systems Sector Sector since June, 1991. Vice
President -- General Manager,
Government Communication Systems
Division, 1989 to 1991. Vice
President -- Programs, Aerospace
Systems Division, 1985 to 1989.
Vice President -- Engineering,
Aerospace Systems Division, 1983 to
1985. Vice President --
Engineering, Electronic Systems
Division, 1980 to 1983. Director --
Engineering, Electronic Systems
Division, April to December 1980.
Employed by Harris since 1972.
9
11
EXECUTIVE BUSINESS EXPERIENCE DURING
NAME AGE OFFICE HELD PAST FIVE YEARS
- ------------------------------ ------------------------- -------------------------------------
Guy W. Numann 62 President -- President -- Communications Sector
Communications Sector since August, 1989. Senior Vice
President -- Sector Executive, 1984
to 1989. Vice President -- Group
Executive, RF Communications Group,
1983 to 1984. Vice President --
General Manager, RF Communications
Division, 1974 to 1983. Vice
President -- Engineering, RF
Communications Division, 1970 to
1974.
Frank J. Lewis 63 Senior Vice President -- Senior Vice President -- Assistant to
Assistant to the the Chairman and Chief Executive
Chairman and Chief Officer since April, 1988. Sector
Executive Officer Executive, 1982 to 1988. Vice
President -- Group Executive, 1979
to 1982. Vice President -- General
Manager, Government Communications
Systems Division, 1978 to 1979.
Vice
President -- Programs, Electronic
Systems Division, 1976 to 1978.
Bryan R. Roub 53 Senior Vice President -- Senior Vice President -- Finance
Chief Financial Officer since July, 1984. Formerly with
Midland-Ross Corporation in the
capacities of Executive Vice
President -- Finance, 1982 to 1984;
Senior Vice President, 1981 to
1982; Vice President and
Controller, 1977 to 1981; and
Controller, 1973 to 1977.
Robert E. Sullivan 62 Senior Vice President -- Senior Vice President --
Administration Administration since September,
1986. Formerly Senior Vice
President -- Finance and
Administration at Harris Graphics
Corporation, 1983 to 1986. Vice
President -- Controller at Harris,
1981 to 1983 and various management
positions, including Vice President
-- Treasurer, 1971 to 1981.
Richard L. Ballantyne 54 Vice President -- General Vice President -- General Counsel and
Counsel and Secretary Secretary since November, 1989.
Formerly Vice President -- General
Counsel and Secretary, Prime
Computer, Inc., 1982 to 1989.
10
12
EXECUTIVE BUSINESS EXPERIENCE DURING
NAME AGE OFFICE HELD PAST FIVE YEARS
- ------------------------------ ------------------------- -------------------------------------
Fayette Brown III 51 Vice President -- Vice President -- Corporate
Corporate Development Development since August, 1985.
Director -- Corporate Development,
February to August 1985. Director
-- Marketing, Semiconductor Sector,
1982 to 1985. Director --
Matra-Harris Liaison, 1979 to 1982.
Manager -- Corporate Development,
1976 to 1979. Various financial
positions, 1967 to 1976.
W. Peter Carney 62 Vice President -- Vice President -- Corporate Relations
Corporate Relations since October, 1987. Director --
Corporate Communications, 1981 to
1987.
James L. Christie 42 Vice President -- Vice President -- Internal Audit
Internal Audit since August, 1992. Director --
Internal Audit, 1986 to 1992.
Formerly Director -- Internal Audit
and Division Controller at Harris
Graphics Corporation, 1985 to 1986.
Various corporate and division
financial positions at Harris, 1978
to 1985.
Robert W. Fay 47 Vice President -- Vice President -- Controller since
Controller January, 1993. Acting Vice
President -- Controller,
Semiconductor Sector, 1991 to 1993.
Vice President -- Treasurer, 1988
to 1993. Treasurer, 1985 to 1988.
Director -- Financial Operations,
Semiconductor Sector, 1984 to 1985.
Controller -- Bipolar Digital
Semiconductor Division, 1981 to
1984. Manager -- Corporate Finance
and Cash Management, 1978 to 1981.
Nick E. Heldreth 52 Vice President -- Vice President -- Human Resources
Human Resources since June, 1986. Formerly Vice
President -- Personnel and
Industrial Relations, Commercial
Products Division, Pratt & Whitney
and various related assignments
with
United Technologies Corporation,
1974 to 1986.
Herbert N. McCauley 61 Vice President -- Vice President -- Information
Information Management Management since August, 1980.
Director -- Management Information
Systems, 1976 to 1980.
11
13
EXECUTIVE BUSINESS EXPERIENCE DURING
NAME AGE OFFICE HELD PAST FIVE YEARS
- ------------------------------ ------------------------- -------------------------------------
Phillip Mighdoll 52 Vice President -- Quality Vice President -- Quality since
and New Products January, 1991. Formerly President
and Chief Executive Officer,
SWEDtech, Inc., 1990 to 1991.
Senior Consultant, Arthur D.
Little, Inc., 1986 to 1989.
David S. Wasserman 51 Vice President -- Vice President -- Treasurer since
Treasurer January, 1993. Vice President --
Taxes 1987 to 1993. Formerly Senior
Vice President, Midland-Ross
Corporation, 1979 to 1987.
There is no family relationship between any of the Company's executive
officers or directors. All of the Company's executive officers are elected by
and serve at the pleasure of the Board of Directors.
12
14
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Harris Corporation Common Stock, par value $1 per share (the "Common
Stock"), is listed on the New York Stock Exchange, Inc. and is also traded on
the Boston, Midwest, Philadelphia and Pacific Stock Exchanges and through the
Intermarket Trading System. As of August 31, 1994, there were 10,562 holders of
record of the Common Stock.
The high and low closing prices as reported in the consolidated transaction
reporting system and the dividends paid on the Common Stock for each quarterly
period in the last two fiscal years are reported below:
PER SHARE AMOUNTS (IN DOLLARS)
--------------------------------------------------------
QUARTERS ENDED
--------------------------------------------------------
9-30-93 12-31-93 3-31-94 6-30-94 TOTAL
----------- ----------- ----------- ----------- -----------
Fiscal 1994
Dividends................... .28 .28 .28 .28 1.12
Stock prices (high/low)..... 43 3/4-36 3/8 47 3/8-41 1/2 52 1/4-44 49-41 3/4
9-25-92 12-25-92 3-26-93 6-30-93 TOTAL
----------- ----------- ----------- ----------- -----------
Fiscal 1993
Dividends................... .26 .26 .26 .26 1.04
Stock prices (high/low)..... 33 1/4-27 1/4 35 1/2-28 3/4 38 5/8-32 7/8 39 1/4-33 7/8
In August, 1994, the directors declared a quarterly cash dividend of 31
cents per share. The Company has paid cash dividends in every year since 1941.
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial information of Harris
Corporation and its subsidiaries for each year during the five year period ended
June 30, 1994. This table should be read in conjunction with other financial
information of Harris, including "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and financial statements included
elsewhere herein.
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED JUNE 30
------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
Net sales..................... $3,336.1 $ 3099.1 $3,004.0 $3,040.1 $3,052.7
Income from continuing
operations before
extraordinary item and
cumulative effect of change
in accounting principle..... 121.9 111.1 87.5 19.5 130.7
Discontinued operations....... -- -- (9.3) -- --
Extraordinary loss from early
retirement of debt.......... -- -- (3.0) -- --
Cumulative effect of change in
accounting principle........ (10.1) -- -- -- --
Net income.................... 111.8 111.1 75.2 19.5 130.7
Per share data:
Income from continuing
operations before
extraordinary item and
cumulative effect of
change in accounting
principle................ 3.07 2.82 2.24 .50 3.30
Discontinued operations..... -- -- (.24) -- --
Extraordinary loss.......... -- -- (.08) -- --
Cumulative effect of
accounting change........ (.25) -- -- -- --
Net income.................. 2.82 2.82 1.92 .50 3.30
Cash dividends.............. 1.12 1.04 1.04 1.04 .96
Net working capital........... 893.6 792.5 768.9 643.0 390.4
Total assets.................. 2,677.1 2,542.0 2,483.8 2,485.8 2,625.1
Long-term debt................ 661.7 612.0 612.5 563.3 300.8
13
15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
The information in this review, along with Business Segment data shown on
page 2, reflects the Company's continuing operations.
RESULTS OF OPERATIONS
FISCAL 1994 COMPARED WITH 1993 -- Sales in fiscal 1994 increased 8 percent,
while income from continuing operations before cumulative effect of change in
accounting principle increased 10 percent. Income from continuing operations for
1994 included a $17.8 million charge ($11.5 million after income taxes) for the
Company's write-off of securities received from a prior-year sale of a
discontinued business.
Semiconductor segment sales increased 8 percent while net income was up 85
percent. Strong sales and earnings of commercial products more than offset a
decline in military shipments. In 1994, the segment took actions to streamline
its manufacturing operations as a response to declining military-related sales.
Segment profit margins increased in 1994 due to ongoing cost reduction programs
and a larger mix of higher-value products. Results for the year included an
after-tax charge of $12.1 million to establish reserves for restructuring
actions to be carried out during fiscal 1995. These charges were partially
offset by an after-tax gain of $9.9 million from the sale of a fabrication
facility. Segment net income in both years also includes comparable gains from
ongoing sales of investment securities.
Communications segment sales increased 15 percent and net income increased
33 percent. Sales growth was principally in international markets. International
sales accounted for 53 percent and 48 percent of total sales in 1994 and 1993,
respectively. International sales in 1994 were particularly strong in rapidly
developing countries such as China, Mexico, and Russia. The segment expects
international sales to account for two-thirds of total segment sales within the
next few years. International segment sales are transacted on terms that
substantially mitigate credit and foreign currency risks. The increase in
segment earnings was due to higher sales while maintaining operating expenses at
prior-year levels.
Lanier Worldwide segment sales increased 2 percent and net income increased
17 percent. In the United States, segment sales and net income continued their
strong performance. The segment returned to profitability in Europe in the
second half of 1994, as a result of restructuring efforts with special emphasis
on the French, Italian, and European Headquarters operations. This turnaround
occurred despite unfavorable foreign exchange rates and economic conditions that
continue in many of the segment's European markets.
Electronic Systems segment sales increased 8 percent while segment net
income decreased 8 percent. Strong sales in the segment's air traffic control
business and information systems business were responsible for the sales
increase and reflect continuing diversification of the segment's product lines
and markets. Changing defense priorities and federal budget pressure are
expected to restrain funding of defense-related programs in the future, thereby
making the segment's diversification strategy a continuing emphasis of the
business. Segment net income declined due to losses incurred in its
telecommunications business and costs associated with the close-down of the
segment's facilities in Orlando, Florida. In the fourth quarter of 1994, the
telecommunications business was downsized and moved to the Company's
Communications segment. As a result of these actions, the Company expects the
telecommunications business to improve in fiscal 1995.
Cost of sales, rentals, and services as a percentage of sales increased to
68.2 percent from 67.3 percent in the prior year due to slightly higher cost
ratios in all segments. This trend is not expected to continue in fiscal 1995.
Engineering, selling, and administrative expenses as a percentage of sales were
24.9 percent in fiscal 1994, compared to 26.5 percent in the prior year. While
total operating expenses were higher than 1993, the increase in these expenses
was less than the relative increase in sales. Lower marketing expenses for the
Lanier Worldwide segment contributed to the 1994 lower expense ratio as this
segment began to realize the savings from combining many of its marketing and
distribution units. Company-sponsored research and development expenditures were
5.8 percent more than the previous year.
Interest income and interest expense were slightly lower during fiscal
1994. The increase in income in the "Other-net" category resulted from a gain on
the sale of a semiconductor facility, offset in part by higher provisions for
doubtful accounts receivable, foreign currency losses, and reductions in gains
from the sale of investment securities.
14
16
The provision for income taxes in fiscal 1994 was 37.0 percent of income
before income taxes compared to 34.6 percent in the prior year. The increase
from the statutory rate in both years resulted from the provision for state
income taxes.
CAPITAL EXPENDITURES -- Expenditures for land, buildings, and equipment totaled
$117 million in 1994, up from $95 million in the prior year. During fiscal 1994,
$51 million was invested in equipment for rental to customers, down from $54
million invested in the prior year. Substantially all of this investment in
rental equipment is related to Lanier Worldwide products.
FISCAL 1993 COMPARED WITH 1992 -- Sales in fiscal 1993 increased slightly, while
income from continuing operations before extraordinary item increased 27.0
percent.
Semiconductor segment sales were relatively unchanged; however, the segment
posted a significant increase in earnings due to improved operating margins.
Operating expense decreased as a result of prior years restructuring activities
and improved product mix. Strong growth in strategic products replaced lower
revenues that resulted from a downturn in defense sales and a move away from
low-value-added products. Segment net income in both years also includes
comparable gains from ongoing sales of investment securities.
Electronic Systems sales increased slightly, while segment net income
decreased 9 percent due to lower computer sales and costs associated with the
realignment of the segment's government automatic-test and support systems
business. Computer sales were down due to vendor-related manufacturing problems
associated with a new series of computers.
Communications segment sales increased 10 percent and net income decreased
7 percent. International sales grew at more than 20 percent while domestic sales
remained flat. Earnings increases in several of the segment's business units
were more than offset by a significant decline in earnings of the broadcast
products unit. Depressed market conditions and new product delays resulted in
lower sales and profit margins for this unit.
Lanier Worldwide's net income decreased significantly on slightly higher
sales due to losses in European operations that resulted from recessionary
market conditions and currency fluctuations. All international operations were
consolidated into one business unit and plans were developed to restructure
these operations in 1994.
Cost of sales, rentals, and services as a percentage of sales decreased to
67.3 percent from 67.7 percent in the prior year due primarily to improved gross
margins in the Semiconductor segment. Engineering, selling, and administrative
expenses as a percentage of sales were 26.5 percent in fiscal 1993, compared to
27.2 percent in the prior year due to lower operating expenses in the
Semiconductor segment. Company-sponsored research and development expenditures
were slightly lower than the previous year.
The $3.7-million decrease in interest income resulted from $4.0 million of
interest recognized on a federal tax claim in the previous year. Interest
expense was lower in fiscal 1993 due to lower interest rates and a reduced level
of borrowing. "Other-net" includes gains from the sale of investment securities
in both years. Income was higher in this category primarily due to prior-year
foreign currency losses and bad debt expenses.
The provision for income taxes as a percentage of income before income
taxes was 34.6 percent compared to 30.0 percent in the prior year. The increase
from the statutory federal tax rate of 34 percent during the current year was
primarily due to the provision for state income taxes, which were partially
offset by adjustments made to prior tax accruals. The reduction from the
statutory federal tax rate in the prior year was primarily due to tax benefits
associated with foreign income and adjustments made to prior tax accruals, which
were partially offset by the provision for state income taxes.
CAPITAL EXPENDITURES -- Expenditures for land, buildings, and equipment totaled
$95 million in 1993, up from $72 million in the prior year. During fiscal 1993,
$54 million was invested in equipment for rental to customers, down from $70
million invested in the prior year. Substantially all of this investment related
to Lanier Worldwide products.
15
17
FINANCIAL CONDITION
Cash Position. At June 30, 1994, cash, and cash equivalents totaled $139
million, an increase from $132 million at June 30, 1993.
Receivables, Unbilled Costs, and Inventories. Notes and accounts receivable
amounted to $798 million at June 30, 1994, compared to $755 million a year
earlier. Unbilled costs and inventories increased $68 million over the prior
year to $833 million. The increase in these accounts is proportionate to the
increase in revenues.
Borrowing Arrangements. The Company has available $220 million under
revolving credit agreements until December 1, 1998. Under these agreements, no
borrowings were outstanding at June 30, 1994. In addition, the Company has $131
million in open bank credit lines, of which $98 million was available at June
30, 1994.
Capitalization. At June 30, 1994, debt totaled $683 million, representing
36.5 percent of total capitalization (defined as the sum of total debt plus
shareholders' equity). A year earlier, debt of $649 million was 36.2 percent of
total capitalization. Year-end long-term debt included $150 million of 10 3/8
percent debentures due 2018, $250 million of notes payable to insurance
companies, $200 million of notes payable to banks and $35 million of unsecured
term notes.
In 1994, the Company issued 621,560 shares of the Common Stock to employees
under the terms of the Company's stock purchase, option and incentive plans.
The Company expects to maintain operating ratios, fixed-charge coverages,
and balance-sheet ratios sufficient for retention of its present debt ratings.
Retirement Plans. Retirement benefits for substantially all of the
Company's employees are provided primarily through a retirement plan having
profit-sharing and savings elements. The Company also has non-contributory
defined-benefit pension plans. All obligations under the Company's retirement
plans have been fully funded by the Company's contributions, the provision for
which totaled $70 million during the 1994 fiscal year. The Company provides
limited health-care benefits to retirees who have 10 or more years of service.
In the first quarter of fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions." The implementation of this accounting standard in relation
to the benefits described above resulted in a one-time after-tax charge of $10.1
million. The ongoing impact of this accounting standard is not expected to have
a material effect in future years.
Impact of Foreign Exchange. The U.S. dollar weakened against a majority of
international currencies in 1994. Approximately 80 percent of the Company's
international business is transacted in local currency environments. The impact
of translating the assets and liabilities of these operations to fewer U.S.
dollars is included as a component of Shareholders' Equity. At June 30, 1994,
the cumulative translation adjustment reduced Shareholders' Equity by $22
million compared to a reduction of $13 million at June 30, 1993.
The Company utilizes exchange rate agreements with customers and suppliers
and foreign currency hedging instruments to minimize the currency risks of
international transactions. Gains and losses resulting from currency rate
fluctuations did not have a material effect on the Company's result in 1994,
1993, or 1992.
IMPACT OF INFLATION
To the extent feasible, the Company has consistently followed the practice
of adjusting its prices to reflect the impact of inflation on wages and salaries
for employees and the cost of purchased materials and services.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by this Item are
set forth in the pages indicated in Item 14(a)(1) and (2) below.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
16
18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item, with respect to Directors of the
Company, is incorporated herein by reference to the Company's Proxy Statement
dated September 15, 1994. See also pages 8 through 11 of Part I above.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item, with respect to compensation of
Directors and Executive Officers of the Company, is incorporated herein by
reference to the Company's Proxy Statement dated September 15, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item, with respect to security ownership
of certain beneficial owners and management, is incorporated herein by reference
to the Company's Proxy Statement dated September 15, 1994.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended June 30, 1994, there existed no relationships
and there were no transactions reportable under this Item.
17
19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
PAGE
(1) Financial Statements:
Consolidated Statement of Income -- Years ended June 30, 1994, 1993
and 1992........................................................... 23
Consolidated Statement of Retained Earnings --
Years ended June 30, 1994, 1993 and 1992.......................... 23
Consolidated Balance Sheet -- June 30, 1994 and 1993................ 24
Consolidated Statement of Cash Flows --
Years ended June 30, 1994, 1993 and 1992.......................... 25
Notes to Financial Statements....................................... 26
(2) Financial Statement Schedules:
For each of the three years in the period ended June 30, 1994.
Schedule II -- Amounts Receivable from Related Parties and
Underwriters, Promoters and Employees other
than Related Parties.......................... 33
Schedule V -- Property, Plant and Equipment.................. 34
Schedule VI -- Accumulated Depreciation, Depletion and
Amortization of Property, Plant and
Equipment...................................................... 37
Schedule VIII -- Valuation and Qualifying Accounts............. 40
Schedule IX -- Short-Term Borrowings.......................... 41
Schedule X -- Supplementary Income Statement Information..... 42
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or the notes thereto.
(3) Exhibits
(3)(a) Restated Certificate of Incorporation of Harris Corporation
(October 1986) is incorporated herein by reference to Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended December
26, 1986.
(3)(b) By-laws of Harris Corporation as in effect on the date
hereof is incorporated herein by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the year ended June 30, 1986.
(4)(a) Specimen stock certificate for the Company's Common Stock is
incorporated herein by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-3 filed with the Securities and
Exchange Commission on September 13, 1982 (Registration Number 2-79308).
(4)(b) Rights Agreement dated as of November 24, 1986, between
Harris Corporation and Ameritrust Company National Association, as
Rights Agent, is incorporated herein by reference to Exhibit 1 to the
Current Report on Form 8-K filed with the Securities and Exchange
Commission on December 9, 1986.
(4)(c) Registrant by this filing agrees, upon request, to furnish
to the Securities and Exchange Commission copies of financial documents
evidencing long-term debt.
(10) Material Contracts:
*(a) Senior Executive Severance Agreements are incorporated
herein by reference to Exhibit 10(a) to the Company's Annual Report
on Form 10-K for the year ended June 30, 1987.
18
20
*(b) Harris Corporation Annual Incentive Plan is incorporated
herein by reference to Exhibit 10(b) to the Company's Annual Report
on Form 10-K for the year ended June 30, 1991.
*(c) Harris Corporation Stock Incentive Plan.
*(d) Harris Corporation 1981 Stock Option Plan for Key Employees
is incorporated herein by reference to Exhibit 10(d) of the Company's
Annual Report on Form 10-K for the year ended June 30, 1991.
*(e) Lanier Worldwide, Inc. Key Contributor Bonus Plan is
incorporated herein by reference to Exhibit 10(e) to the Company's
Annual Report on Form 10-K for the year ended June 30, 1992.
*(f) Lanier Worldwide, Inc. Longer-Term Incentive Plan for Key
Employees is incorporated herein by reference to Exhibit 10(f) of the
Company's Annual Report on Form 10-K for the year ended June 30,
1991.
*(g) Harris Corporation Retirement Plan.
*(h) Revised Harris Corporation Supplemental Executive
Retirement Plan.
*(i) Lanier Worldwide, Inc. Pension Plan.
*(j) Lanier Worldwide, Inc. Savings Incentive Plan.
*(k) Lanier Worldwide, Inc. Supplemental Executive Retirement
Plan.
*(l) Directors Retirement Plan is incorporated herein by
reference to Exhibit 10(l) to the Company's Annual Report on Form
10-K for the year ended June 30, 1990.
(11) Statement regarding computation of net income per share.
(21) Subsidiaries of the Registrant.
(23) Consent of Ernst & Young.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of the
fiscal year ended June 30, 1994.
- ------------------
*Management contract or compensatory plan or arrangement.
19
21
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
HARRIS CORPORATION
(Registrant)
Dated: September 23, 1994
By /s/ BRYAN R. ROUB
Bryan R. Roub
Senior Vice President-Chief
Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------- ----------------
/s/ JOHN T. HARTLEY Chairman of the Board
John T. Hartley and Chief Executive Officer
(Principal Executive Officer)
/s/ BRYAN R. ROUB Senior Vice President -- Chief
Bryan R. Roub Financial Officer
(Principal Financial Officer)
/s/ ROBERT W. FAY Vice President -- Controller
Robert W. Fay (Principal Accounting Officer)
/s/ ROBERT CIZIK Director
Robert Cizik
/s/ LESTER E. COLEMAN Director
Lester E. Coleman
September 23, 1994
/s/ RALPH D. DENUNZIO Director
Ralph D. DeNunzio
/s/ JOSEPH L. DIONNE Director
Joseph L. Dionne
/s/ PHILLIP W. FARMER Director
Phillip W. Farmer
/s/ C. JACKSON GRAYSON, JR. Director
C. Jackson Grayson, Jr.
/s/ WALTER F. RAAB Director
Walter F. Raab
/s/ ALEXANDER B. TROWBRIDGE Director
Alexander B. Trowbridge
20
22
ANNUAL REPORT ON FORM 10-K
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
YEAR ENDED JUNE 30, 1994
HARRIS CORPORATION
MELBOURNE, FLORIDA
21
23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Harris Directors and Shareholders:
We have audited the accompanying consolidated balance sheets of Harris
Corporation and subsidiaries as of June 30, 1994 and 1993, and the related
consolidated statements of income, retained earnings, and cash flows for each of
the three years in the period ended June 30, 1994. Our audits also included the
financial statement schedules listed in the Index at Item 14(a). These financial
statements and schedules are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Harris Corporation and subsidiaries at June 30, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1994, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
As discussed in the Accounting Change note to the financial statements,
effective July 1, 1993, the Corporation changed its method of accounting for
postretirement benefits other than pensions.
ERNST & YOUNG LLP
Orlando, Florida
August 2, 1994
22
24
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
YEARS ENDED JUNE 30
- ---------------------------------------------------------------------------------------
IN MILLIONS EXCEPT PER SHARE AMOUNTS 1994 1993 1992
- ---------------------------------------------------------------------------------------
REVENUE
Revenue from product sales and rentals $2,972.0 $2,739.2 $2,658.0
Revenue from services 364.1 359.9 346.0
Interest 33.3 34.2 37.9
- ---------------------------------------------------------------------------------------
3,369.4 3,133.3 3,041.9
COSTS AND EXPENSES
Cost of product sales and rentals 2,055.7 1,872.7 1,821.0
Cost of services 219.1 213.3 211.6
Engineering, selling, and administrative expenses 830.8 822.2 816.5
Interest 58.3 59.9 66.0
Other-net (5.8) (4.6) 1.8
- ---------------------------------------------------------------------------------------
3,158.1 2,963.5 2,916.9
- ---------------------------------------------------------------------------------------
Income from continuing operations before
write-off of securities and income taxes 211.3 169.8 125.0
Write-off of securities received from 1990 sale
of discontinued data-communications business 17.8 -- --
- ---------------------------------------------------------------------------------------
Income from continuing operations before income
taxes 193.5 169.8 125.0
Income taxes 71.6 58.7 37.5
- ---------------------------------------------------------------------------------------
Income from continuing operations before
extraordinary item and cumulative effect of
change in accounting principle 121.9 111.1 87.5
Discontinued operations net of income taxes -- -- (9.3)
- ---------------------------------------------------------------------------------------
Income before extraordinary item and cumulative
effect of change in accounting principle 121.9 111.1 78.2
Extraordinary loss from early retirement of debt
net of income taxes -- -- (3.0)
Cumulative effect of change in accounting
principle net of income taxes (10.1) -- --
- ---------------------------------------------------------------------------------------
Net income $ 111.8 $ 111.1 $ 75.2
=======================================================================================
Income per share:
Continuing operations before extraordinary item
and cumulative effect of change in
accounting principle $3.07 $2.82 $2.24
Discontinued operations -- -- (.24)
Extraordinary loss -- -- (.08)
Cumulative effect of change in accounting
principle (.25) -- --
- ---------------------------------------------------------------------------------------
Net income per share $2.82 $2.82 $1.92
=======================================================================================
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
YEARS ENDED JUNE 30
- ---------------------------------------------------------------------------------------
IN MILLIONS EXCEPT PER SHARE AMOUNTS 1994 1993 1992
- ---------------------------------------------------------------------------------------
Balance at beginning of year $ 906.7 $ 836.4 $ 801.7
Net income for the year 111.8 111.1 75.2
Cash dividends ($1.12 per share in 1994,
$1.04 per share in 1993 and 1992) (44.2) (40.8) (40.5)
Treasury stock retired (31.2) -- --
- ---------------------------------------------------------------------------------------
Balance at end of year $943.1 $906.7 $836.4
=======================================================================================
See Notes to Financial Statements.
23
25
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
JUNE 30
- -------------------------------------------------------------------------------------------------------
In millions 1994 1993
- -------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 139.1 $ 131.7
Receivables 647.2 607.6
Unbilled costs and accrued earnings on fixed-price contracts 369.7 320.9
Inventories 463.1 444.4
Deferred income taxes 79.2 66.0
- -------------------------------------------------------------------------------------------------------
Total current assets 1,698.3 1,570.6
OTHER ASSETS
Plant and equipment 551.3 564.1
Notes receivable-net 151.1 147.2
Intangibles resulting from acquisitions 166.0 162.8
Other assets 110.4 97.3
- -------------------------------------------------------------------------------------------------------
$2,677.1 $2,542.0
=======================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABLILITIES
Short-term debt $ 19.8 $ 35.2
Trade accounts payable 184.5 169.4
Compensation and benefits 188.5 168.0
Other accrued items 164.9 150.6
Advance payments by customers 59.7 55.5
Unearned leasing and service income 129.3 120.6
Income taxes 57.0 77.4
Current portion of long-term debt 1.0 1.4
- -------------------------------------------------------------------------------------------------------
Total current liabilities 804.7 778.1
OTHER LIABILITIES
Deferred income taxes 22.7 10.6
Long-term debt 661.7 612.0
STOCKHOLDERS' EQUITY
Preferred Stock, without par value:
Authorized-1,000,000 shares; issued-none
Common Stock, $1.00 par value:
Authorized-100,000,000 shares; issued and outstanding
32,298,118 shares in 1994 and 39,604,496 shares in 1993 39.3 39.6
Other capital 230.3 216.3
Retained earnings 943.1 906.7
Unearned compensation (3.2) (8.3)
Cumulative translation adjustments (21.5) (13.0)
- -------------------------------------------------------------------------------------------------------
Total shareholders' equity 1,188.0 1,141.3
- -------------------------------------------------------------------------------------------------------
$2,677.1 $2,542.0
=======================================================================================================
See Notes to Financial Statements.
24
26
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED JUNE 30
- ------------------------------------------------------------------------------------------------
IN MILLIONS 1994 1993 1992
- ------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Income from continuing operations before extraordinary
item and cumulative effect of change in accounting
principle $ 121.9 $ 111.1 $ 87.5
Adjustments to reconcile income to net cash provided by
operating activities:
Depreciation 145.7 150.0 164.7
Amortization 7.7 7.3 6.6
Non-current deferred income taxes 12.1 (27.8) (2.5)
Loss from discontinued operations -- -- (9.3)
Extraordinary loss -- -- (3.0)
Changes in assets and liabilities:
Receivables (43.6) 8.0 35.9
Unbilled costs and inventories (67.4) (58.1) (17.7)
Trade payables and accrued liabilities 39.7 (18.8) (64.1)
Advance payments and unearned income 12.9 7.8 21.2
Income taxes (33.6) 50.6 36.7
Other (22.3) (20.8) 19.2
- ------------------------------------------------------------------------------------------------
Net cash provided by operating activities 173.1 209.3 275.2
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for acquired business -- (25.9) --
Capital expenditures-net of normal disposals (134.9) (137.1) (122.0)
- ------------------------------------------------------------------------------------------------
Net cash used in investing activities (134.9) (163.0) (122.0)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from borrowings 302.7 362.1 344.5
Payments of borrowings (267.1) (373.7) (391.7)
Dividends (44.2) (40.8) (40.5)
Purchase of Common Stock for treasury (36.7) -- --
Proceeds from sale of Common Stock 13.5 10.3 2.0
- ------------------------------------------------------------------------------------------------
Net cash used in financing activities (31.8) (42.1) (85.7)
- ------------------------------------------------------------------------------------------------
Effect of translation on cash equivalents 1.0 3.3 (1.8)
- ------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 7.4 7.5 65.7
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 131.7 124.2 58.5
- ------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 139.1 $ 131.7 $ 124.2
================================================================================================
See Notes to Financial Statements.
25
27
NOTES TO FINANCIAL STATEMENTS
SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include the
accounts of the Corporation and its subsidiaries. Significant intercompany
transactions and account have been eliminated.
CASH EQUIVALENTS--Cash equivalents are temporary cash investments with a
maturity of three months or less when purchased. These investments include
accrued interest and are carried at the lower of cost or market.
INVENTORIES--Inventories are priced at the lower of cost (determined by average
and first-in, first-out methods) or market.
PLANT AND EQUIPMENT--Plant and equipment are carried on the basis of cost.
Depreciation is computed by straight-line and accelerated methods using
estimated useful lives of the assets.
INTANGIBLES--Intangibles resulting from acquisitions are being amortized by the
straight-line method principally over 40 years.
INCOME TAXES--The Corporation follows the liability method of account for
income taxes.
REVENUE RECOGNITION--Revenue is recognized from sales other than a long-term
contracts when a product is shipped, from rentals as they accrue, and from
services when performed. Revenue on long-term contracts is accounted for
principally by the percentage-of-completion method whereby income is recognized
based on the estimated stage of completion of individual contracts. Unearned
income on service contracts is amortized by the straight-line method over the
term of the contracts.
FUTURES AND FORWARD CONTRACTS--Gains and losses on futures and forward
contracts that qualify as hedges are deferred and recognized as an adjustment
of the carrying amount of the hedged asset or liability or anticipated
transaction.
RETIREMENT BENEFITS--The Corporation and its subsidiaries provide retirement
benefits to substantially all employees primarily through a retirement plan
having profit-sharing and savings elements. Contributions by the Corporation
to the retirement plan are based on profits and employee' savings with no other
funding requirements. The Corporation may make additional contributions to the
fund at its discretion. The Corporation also has noncontributory
defined-benefit pension plans which are fully funded.
Retirement benefits also include an unfunded limited health-care plan
for U.S. based retirees. In 1994, the Corporation began accruing the estimated
cost of retiree medical benefits during an employee's active service life. The
Corporation previously expensed the cost of these benefits on a pay-as-you-go
basis.
EARNINGS PER SHARE--Income per share is based upon the weighted average of
common shares outstanding during each year.
RECLASSIFICATIONS--Certain prior year amounts have been reclassified to conform
with current-year classifications.
ACCUNTING CHANGE
In 1994, the Corporation adopted Statement of Financial Accounting Standards
No. 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions." Health-care benefits are provided on a limited cost-sharing basis
to retirees who have 10 or more years of service. The cumulative effect at
July 1, 1993, of adopting this statement resulted in a one-time charge of
$10,100,000, net of income tax benefits of $6,400,000. The impact of this
change on income before extraordinary item and cumulative effect of change in
accounting principle was not material in fiscal 1994.
DISCONTINUED OPERATIONS
In 1989, the Corporation decided to exit a significant portion of its
data-communications and computer-based office systems businesses. In 1992, the
Corporation provided $9,300,000 (net of income tax benefits of $5,700,000) for
additional losses incurred in the disposal of the computer-based office systems
business.
26
28
In 1993, a California state court awarded damages against the
Corporation in the amount of $66.9 million to a California software company.
The suit arose from a contract between the plantiff and a discontinued operation
of the Corporation. The Corporation believes the judgment is unjustified and
has filed an appeal with the California Court of Appeals. The ultimate outcome
of this ligitation is unknown. Accordingly, no provisions, beyond those
already provided as part of prior discontinued operation charges, have been
made in the accompanying consolidated financial statements.
NONRECURRING ITEM
In 1994, the Corporations residual holdings in a company that acquired its 1989
discontinued data-based communication business became impaired. Consequently,
the Corporation provided $17,800,000 ($11,500,000 after income taxes or 29
cents per share) to write off its interest in this company.
RECEIVABLES
Receivables are summarized below:
(In millions) 1994 1993
- -------------------------------------------------------------
Accounts receivable $581.8 $547.0
Notes receivable due within one year-net 94.9 88.0
- -------------------------------------------------------------
676.7 635.8
Less allowances for collection losses 29.5 28.2
- --------------------------------------------------------------
$647.2 $607.6
=============================================================
INVENTORIES AND UNBILLED COSTS
Inventories are summarized below:
(In millions) 1994 1993
- -------------------------------------------------------------
Finished products $185.6 $176.9
Work in process 200.0 206.1
Raw materials and supplies 77.5 61.4
- -------------------------------------------------------------
$463.1 $444.4
=============================================================
Unbilled costs and accrued earnings on fixed-price contracts are net of
progress payments of $206.4 million in 1994 and $162.3 million in 1993.
PLANT AND EQUIPMENT
Plant and equipment are summarized below:
(In millions) 1994 1993
- -------------------------------------------------------------
Land $ 30.3 $ 35.7
Buildings 431.4 442.1
Machinery and equipment 1,257.1 1,214.8
- -------------------------------------------------------------
1,718.8 1,692.6
Less allowances for depreciation 1,167.5 1,128.5
- -------------------------------------------------------------
$ 551.3 $ 564.1
=============================================================
INTANGIBLES
Accumulated amortization of intangible assets at June 30 was $33,100,000 for
1994 and $29,100,000 for 1993.
CREDIT ARRANGEMENTS
The Corportion maintains revolving credit agreements which provide for
borrowings up to $220,000,000 until December 1, 1998. These agreements provide
for various interest rates at the Corporation's election, but in no event above
LIBOR plus 0.5 percent. A commitmenet fee of 0.2 percent per annum is payable
on the unused portion of the credit. The Corporation is not required to
maintain compensation balances in connection with these agreements. No
borrowings were outstanding at June 30, 1994 under these agreements.
The Corporation also has lines of credit for short-term financing
aggregating $130,700,000 from various U.S. and foreign banks, of which
$97,700,000 was available on June 30, 1994. These arrangements provide for
borrowing at various interest rates, are reviewed annually for renewal, and may
be used on such terms as the Corporation and the banks mutually agree. These
lines do not require compensating balances.
Short-term debt is summarized below:
(In millions) 1994 1993
- -------------------------------------------------------------
Bank notes $14.5 $28.4
Other 5.3 6.8
- -------------------------------------------------------------
$19.8 $35.2
=============================================================
27
29
NOTES TO FINANCIAL STATEMENTS
LONG-TERM DEBT
Long-term debt includes the following:
- ----------------------------------------------------------------------
(IN MILLIONS) 1994 1993
- ----------------------------------------------------------------------
Notes payable to insurance companies $250.0 $250.0
Notes payable to banks 200.0 150.0
10 3/8% debentures, due 2018 150.0 150.0
Unsecured term notes 34.5 34.5
Other 27.2 27.5
- ----------------------------------------------------------------------
$661.7 $612.0
======================================================================
Notes payable to insurance companies mature $100,000,000 in 1996,
$54,000,000 in 1999, $34,000,000 in 2000, and $62,000,000 in 2001. The weighted
average interest rate for this debt is 9.42 percent.
In 1992, the Corporation refinanced $80,950,000 of its 11.5 percent
debentures, due 2010, and a portion of its short-term debt with $150,000,000 of
unsecured bank notes. The debenture redemption resulted in an extraordinary loss
of $3,020,000, net of income tax benefits of $1,851,000. In 1994, the
Corporation borrowed an additional $50,000,000 of unsecured bank notes. These
bank notes currently bear an interest rate of LIBOR plus 0.5 percent and mature
in fiscal 1999. The fiscal 1994 weighted average interest rate for notes payable
to banks is 4.26 percent.
Indentures and note agreements contain certain financial covenants
including maintenance of at least $800,000,000 of tangible net worth and total
debt not to exceed 45 percent of total capital.
Maturities on long-term debt for the five years following 1994 are:
$1,049,000 in 1995. $131,019,000 in 1996, $503,000 in 1997, $4,886,000 in 1998,
and $256,436,000 in 1999.
SHAREHOLDERS' EQUITY
Changes in shareholders' equity accounts other than retained earnings are
summarized as follows:
COMMON CUMULATIVE
STOCK OTHER UNEARNED TRANSLATION
(IN MILLIONS) AMOUNT CAPITAL COMPENSATION ADJUSTMENTS
- --------------------------------------------------------------------------------------------------------------------------
BALANCE AT JULY 1, 1991 $38.9 $196.5 $ (8.9) $ .2
Shares issued under Stock Option Plan (56,722 shares) .1 1.5 -- --
Shares granted under Stock Incentive Plans (214,250 shares) .2 5.3 (5.5) --
Compensation expense -- -- 1.6 --
Termination of shares granted under Stock Incentive Plans (39,442
shares) -- (1.3 ) 1.3 --
Shares sold under Employee Stock Purchase Plans (23,200 shares) -- .4 -- --
Foreign currency translation adjustments -- -- -- 1.8
- --------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1992 39.2 202.4 (11.5) 2.0
Shares issued under Stock Option Plan (299,811 shares) .3 9.7 -- --
Shares granted under Stock Incentive Plans (228,750 shares) .2 6.2 (6.5) --
Compensation expense -- -- 7.3 --
Termination of shares granted under Stock Incentive Plans (75,192
shares) (.1 ) (2.3 ) 2.4 --
Shares sold under Employee Stock Purchase Plans (10,294 shares) -- .3 -- --
Foreign currency translation adjustments -- -- -- (15.0)
- --------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1993 39.6 216.3 (8.3) (13.0)
Shares issued under Stock Option Plan (315,747 shares) .3 11.1 -- --
Shares granted under Stock Incentive Plans (257,909 shares) .3 9.6 (9.8) --
Compensation expense -- -- 10.7 --
Termination of shares granted under Stock Incentive Plans (126,638
shares) (.1 ) (4.1 ) 4.2 --
Shares sold under Employee Stock Purchase Plans (47,904 shares) -- 2.1 -- --
Foreign currency translation adjustments -- -- -- (8.5)
Purchase and retirement of Common Stock for treasury (801,300
shares) (.8 ) (4.7 ) -- --
- --------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1994 $39.3 $230.3 $ (3.2) $ (21.5)
==========================================================================================================================
PREFERRED STOCK PURCHASE RIGHTS
Each outstanding share of Common Stock includes one preferred share purchase
right that entitles the holder to purchase one two-hundredth share of a new
series of participating preferred stock at an exercise price of $125. The rights
will not be exercisable, or transferrable apart from the Common Stock, until 10
days following an announcement that a person or affiliated group has acquired,
or obtained the right to acquire, beneficial ownership of 20 percent or more of
the Common Stock or until 10 days following an announcement of a tender or
exchange offer for 30 percent or more of the Common Stock. The rights, which do
not have voting rights, will be exercisable by all holders except for a holder
or affiliated group
28
30
beneficially owning 20 percent or more of the Common Stock. All rights will
expire on November 23, 1996, and may be redeemed by the Corporation at a price
of $.01 per right at any time prior to either their expiration or such time
that the rights become exercisable.
In the event the Corporation is acquired in a merger or other business
combination or certain other events occur, provision shall be made so that each
holder of a right shall have the right to receive, upon exercise thereof at the
then current exercise price, that number of shares of common stock of the
surviving company which at the time of such transaction would have a market
value of two times the exercise price of the right.
STOCK OPTIONS AND AWARDS
The following information relates to stock option and incentive stock awards.
Option prices are 100 percent of market value on the date the options are
granted. Option grants are for a maximum of ten years after dates of grant and
may be exercised in installments.
Number of Option Prices
Shares Per Share
- -------------------------------------------------------------------------------
Exercised during the Year:
1992 56,722 $14.38 to $28.38
1993 411,538 $14.38 to $35.69
1994 504,203 $14.38 to $38.63
Granted during 1994 172,848 $40.88 to $52.25
Expired during 1994 2,000 $35.69
Terinations during 1994 20,546 $14.38 to $42.50
Outstanding at June 30, 1993 1,105,827 $14.38 to $38.63
Outstanding at June 30, 1994 751,926 $14.38 to $52.25
Exercised at June 30, 1993 862,227 $14.38 to $38.63
Exercised at June 30, 1994 581,660 $14.38 to $46.88
===============================================================================
The Corporation has a stock incentive plan for directors and key
employees. Awards under this plan may include the grant of performance shares,
restricted stock, stock options, stock appreciation rights, or other
stock-based awards. The aggregate number of shares of Common Stock which may be
awarded under the plan in each fiscal year is one percent of the total
outstanding shares of Common Stock plus shares available from prior years.
Performance shares outstanding were 735,966 at June 30, 1994; 608,306 at June
30, 1993; and 454,748 at June 30, 1992. Shares of Common Stock reserved for
future awards under the plan were 864,970 at June 30, 1994; 749,169 at June 30,
1993; and 668,841 at June 30, 1992.
Unearned compensation resulting from the stock incentive plan and
charged to shareholders' equity was $10,646,000 in 1994, $6,434,000 in 1993 and
$5,490,000 in 1992. Unearned compensation is amortized to expense over the
vesting period of the performance shares and is adjusted for changes in the
market value of the Common Stock.
Under the Corporation's domestic retirement plan, employees may
purchase a limited amount of the Corporation's Common Stock at 70 percent of
current market value. Under employee stock purchase plans, 47,904 shares were
issued during fiscal 1994. Shares of Common Stock reserved for future purchases
by the retirement plan were 1,460,497 at June 30, 1994.
RESEARCH AND DEVELOPMENT
Corporation-sponsored research and product development costs were $127,770,000
in 1994, $120,600,000 in 1993, and $122,100,000 in 1992.
RETIREMENT PLANS
Retirement and defined-benefit plans expense amounted to $70,200,000 in 1994,
$56,900,000 in 1993, and $53,000,000 in 1992.
INTEREST EXPENSE
Total interest was $58,600,000 in 1994, $60,200,000 in 1993, and $66,100,000 in
1992, of which $300,000, $300,000, and $100,000, respectively, was capitalized.
Interest paid was $59,000,000 in 1994, $60,800,000 in 1993, and $67,600,000 in
1992.
INCOME TAXES
The provisions for income taxes from continuing operations are summarized as
follows:
- -------------------------------------------------------------
(In millions) 1994 1993 1992
- -------------------------------------------------------------
Current:
United States $50.0 $18.6 $ 4.0
International 11.3 20.7 16.3
State and local 4.9 6.0 5.6
- --------------------------------------------------------------
66.2 45.3 25.9
- --------------------------------------------------------------
Deferred:
United States (2.8) 15.6 7.2
International 5.6 (.4) 1.1
State and local 2.6 (1.8) 3.3
- --------------------------------------------------------------
5.4 13.4 11.6
- --------------------------------------------------------------
$71.6 $58.7 $37.5
==============================================================
29
31
NOTES TO FINANCIAL STATEMENTS
The components of deferred income tax assets (liabilities) at June 30 are as
follows:
- -----------------------------------------------------------------------------------
(In millions) 1994 1993
- -----------------------------------------------------------------------------------
Current Non-Current Current Non-Current
Deferred Deferred Deferred Deferred
- -----------------------------------------------------------------------------------
Completed contracts $(13.2) $ 20.6 $(22.0) $ 18.1
Inventory valuations 15.8 - 17.2 -
Accruals 73.9 8.5 62.7 22.6
Depreciation - (49.3) - (51.4)
Leases (1.0) (18.3) (1.6) (13.1)
International tax loss
carryforwards - 12.8 - 14.6
All other - net 6.6 15.8 13.0 13.2
- -----------------------------------------------------------------------------------
82.1 (9.9) 69.3 4.0
Valuation allowance (2.9) (12.8) (3.3) (14.6)
- -----------------------------------------------------------------------------------
$79.2 $(22.7) $ 66.0 $(10.6)
===================================================================================
A reconciliation of the effective income tax rate follows:
- -----------------------------------------------------------------------------------
1994 1993 1992
- -----------------------------------------------------------------------------------
Statutory U.S. income tax rate 35.0% 34.0% 34.0%
State taxes 2.6 1.6 4.7
Adjustment to prior year accruals - (3.1) (4.0)
Interantional incvome 1.2 2.2 (4.3)
Tax benefits related to export sales (3.1) (1.4) (1.0)
Nondeductible amortization .9 .7 .9
Other items .4 .6 (.3)
- -----------------------------------------------------------------------------------
Effective income tax rate 37.0% 34.6% 30.0%
===================================================================================
United States income taxes have not been provided on $414,900,000 of
undistributed earnings of international subsidiaries because of the
Corporation's intention to reinvest these earnings. The determination of
unrecognized deferred U.S. tax liability for the undistributed earnings of
international subsidiaries is not practicable.
Pretax income from continuing operations of international subsidiaries
was $55,900,000 in 1994, $38,200,000 in 1993, and $47,700,000 in 1992.
BUSINESS SEGMENTS
Descriptions of the Corporation's business segments appear on page 1. Net sales
and operating profit by segment are on page 2.
Sales made to the U.S government by all segments (primarily Electronic
Systems segment) were 34.8 percent of total sales in 1994, 35.7 percent of total
sales in 1993, and 37.6 percent of total sales in 1992. Intersegment sales,
which are insignificant, are accounted for at prices comparable to unaffiliated
customers.
Selected information by business segment and geographical area is
summarized below:
- -----------------------------------------------------------------------------------
(In millions) 1994 1993 1992
- -----------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Electronic Systems $ 730.8 $ 657.9 $ 555.6
Semiconductor 609.3 643.1 702.0
Communications 406.2 370.5 359.7
Lanier Worldwide 738.6 689.2 682.7
Corporate 192.2 181.3 183.8
- -----------------------------------------------------------------------------------
$2,677.1 $2,542.0 $2,483.8
===================================================================================
CAPITAL EXPENDITURES
Electronic Systems $ 26.5 $ 34.5 $ 27.7
Semiconductor 43.6 27.4 21.8
Communications 17.5 16.5 13.1
Lanier Worldwide 14.1 8.9 6.3
Corporate 14.9 8.1 2.8
- -----------------------------------------------------------------------------------
$ 116.6 $ 95.4 $ 71.7
===================================================================================
DEPRECIATION
Electronic Systems $ 29.0 $ 30.4 $ 30.8
Semiconductor 47.5 52.0 69.0
Communications 13.9 13.1 13.5
Lanier Worldwide 7.0 6.9 6.1
Corporate 6.5 6.8 7.7
- -----------------------------------------------------------------------------------
$ 103.9 $ 109.2 $ 127.1
===================================================================================
GEOGRAPHICAL INFORMATION
U.S. operations:
Net sales $2,741.8 $2,517.2 $2,415.5
Operating profit 137.6 131.6 77.3
Identifiable assets 2,041.2 1,951.0 1,913.7
International operations:
Net sales $594.3 $ 581.9 $ 588.5
Operating profit 55.9 38.2 47.7
Identifiable assets 635.9 591.0 570.1
===================================================================================
Corporate assets consist primarily of cash, cash equivalents, deferred
income taxes, and plant equipment.
Export sales approximated $387,600,000 in 1994, $295,400,000 in 1993,
and $272,700,000 in 1992. Export sales and net sales of international
operations were principally to Europe, Asia, and Latin America.
LEASE COMMITMENTS
Total rental expense from continuing operations amounted to $52,900,000 in 1994,
$56,100,000 in 1993. Future minimum rental commitments under leases, primarily
for land and buildings, amounted to approximately $148,800,000 at June 30, 1994.
These commitments for the years following 1994 are: 1995-$41,100,000,
1996-$30,700,000, 1997-$22,900,000, 1998-$13,900,000, 1999-$8,200,000 and
$32,000,000 thereafter.
30
32
FINANCIAL INSTRUMENTS
The Corporation uses foreign exchange contracts and options to hedge
intercompany accounts and off-balance-sheet foreign currency commitments.
Management believes the use of foreign currency financial instruments should
not subject the Corporation to undue risk resulting from changes in foreign
currency exchange rates. The Corporation had foreign exchange forward and
option contracts with a face value of $288,800,000 at June 30, 1994 and
$195,500,000 at June 30, 1993. These contracts were primarily agreements to buy
or sell Japanese, European and Malaysian currencies for periods consistent
with the terms of the underlying transaction, generally one year or less.
Foreign exchange forward and option contracts used to hedge off-balance sheet
commitments were $165,600,000 at June 30, 1994 and $88,400,000 at June 30,
1993.
Concentractions of credit risk with respect to trade and notes
receivable are limited due to the wide variety of customers and markets into
which the Corporation sells its products and services.
The net carrying amounts of foreign exchange contracts, long-term
investments and debt approximates the quoted fair market value of these
financial instruments.
31
33
QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data is summarized below.
QUARTERS ENDED
- ----------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS 9-30-93 12-31-93 3-31-94 6-30-94(1) TOTAL YEAR
- ----------------------------------------------------------------------------------------------------------------------------
FISCAL 1994
Net sales $769.1 $807.5 $838.3 $921.2 $3,336.1
Gross profit 248.6 257.8 259.5 295.4 1,061.3
Income before income taxes 39.8 48.4 51.0 54.3 193.5
Income before cumulative effect of
change in accounting principle 24.7 30.0 33.0 34.2 121.9
Cumulative effect of change in
accounting principle (10.1) -- -- -- (10.1)
Net income 14.6 30.0 33.0 34.2 111.8
Per share:
Income before continuing operations
before cumulative effect of
change in accounting principle .62 .75 .83 .87 3.07
Cumulative effect of change in
accounting principle (.25) -- -- -- (.25)
Net income .37 .75 .83 .87 2.82
Dividends .28 .28 .28 .28 1.12
Stock prices (high/low) 43 3/4-36 3/8 47 3/8-41 1/2 52 1/4-44 49-41 3/4
===========================================================================================================================
(1) Fiscal 1994 fourth quarter results include a $17.8 million ($11.5 million
after income taxes or 29 cents per share) charge for the write-off of
securities received from a prior-year sale of a discontinued business.
QUARTERS ENDED
- -----------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS 9-25-92 12-25-92 3-26-93 6-30-93 TOTAL YEAR
- -----------------------------------------------------------------------------------------------------------------------------
FISCAL 1993
Net sales $727.6 $768.8 $744.2 $858.5 $3,099.1
Gross profit 234.3 251.4 244.7 282.7 1,013.1
Income before income taxes 31.9 40.2 42.9 54.8 169.8
Net income 20.7 25.4 27.5 37.5 111.1
Per share:
Net income .53 .64 .70 .95 2.82
Dividends .26 .26 .26 .26 1.04
Stock prices (high/low) 33 1/4-27 1/4 35 1/2-28 3/4 38 5/8-32 7/8 39 1/4-33 7/8
============================================================================================================================
32
34
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS, AND EMPLOYEES
OTHER THAN RELATED PARTIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ---------------------------------------------------------------------------------------------------------
BALANCE AT END OF
DEDUCTIONS PERIOD
BALANCE ------------------------- ----------------------
AT (1) (2) (2)
BEGINNING AMOUNTS AMOUNTS (1) NOT
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT
- ---------------------
YEAR ENDED JUNE 30,
1994:
Ricardo A. Diaz.... $773,890 $ 8,510 -- $9,171 $756,209
Gerald L. Doyle.... $373,015 $235,907 (C) $ 4,140 -- $6,107 $598,675
YEAR ENDED JUNE 30,
1993:
Ricardo A. Diaz.... $781,141 -- $ 7,251 -- $8,510 $765,380
Gerald L. Doyle.... -- $375,000 (B) $ 1,985 -- $3,611 $369,404
YEAR ENDED JUNE 30,
1992:
Ricardo A. Diaz.... $786,569 (A) -- $ 5,428 -- $5,936 $775,205
- ---------------
Note A -- Amount represents a 7.5% Employee Note Receivable due April 1996. Note
is secured by employee's real property.
Note B -- Amount represents a 7.5% Employee Note Receivable due December 1997.
Note is secured by employee's real property.
Note C -- Amount represents a 7.5% Employee Note Receivable due March 1999. Note
is secured by employee's real property.
33
35
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
HARRIS CORPORATION AND SUBSIDIARIES
YEAR ENDED JUNE 30, 1994
(IN THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A
COL. B COL. C COL. D COL. E COL. F
- --------------------------------------------------------------------------------------------------------
OTHER
CHANGES--
BALANCE AT ADD BALANCE
BEGINNING ADDITIONS (DEDUCT)-- AT END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
- ---------------------------------
Plant and Equipment
Land........................... $ 35,655 -- $ 5,388 -- $ 30,267
$ (131)(A)
Buildings...................... 387,973 $ 14,882 20,738 52(B) 382,038
Construction in progress....... 5,695 (150) -- -- 5,545
Land improvements.............. 19,910 164 13 -- 20,061
(232)(A)
Leasehold improvements......... 28,611 2,758 7,139 (264)(B) 23,734
---------- -------- -------- ----------- ----------
Land and buildings.......... 477,844 17,654 33,278 (575) 461,645
---------- -------- -------- ----------- ----------
5(A)
Machinery and equipment........ 941,667 92,083 63,693 (999)(B) 969,063
(80)(A)
Rental equipment............... 174,287 50,797 32,432 (4,282)(B) 188,290
Tools, jigs and fixtures....... 2,518 139 57 4(B) 2,604
Trucks and automobiles......... 4,732 594 936 27(B) 4,417
438(A)
Furniture and fixtures......... 66,916 7,246 5,211 (243)(B) 69,146
Plant orders in progress....... 24,669 (1,019) 8 -- 23,642
---------- -------- -------- ----------- ----------
Machinery and equipment..... 1,214,789 149,840 102,337 (5,130) 1,257,162
---------- -------- -------- ----------- ----------
Totals.................... $1,692,633 $167,494 $135,615 $(5,705) $1,718,807
========= ======== ======== =========== =========
[FN]
Note A -- Transfers between property, plant and equipment classifications.
Note B -- Foreign currency translation gains and losses.
Note C -- The annual provisions for depreciation have been computed principally
in accordance with the following rates:
Buildings............................... 2% to 20%
Land improvements....................... 2% to 33%
Leasehold improvements.................. 5% to 50%
Machinery and equipment................. 5% to 33%
Rental equipment........................ 20% to 50%
Tools, jigs and fixtures................ 10% to 33%
Trucks and automobiles.................. 14% to 33%
Furniture and fixtures.................. 5% to 33%
34
36
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
HARRIS CORPORATION AND SUBSIDIARIES
YEAR ENDED JUNE 30, 1993
(IN THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A
COL. B COL. C COL. D COL. E COL. F
- ------------------------------------------------------------------------------------------------------
OTHER
CHANGES--
BALANCE AT ADD BALANCE
BEGINNING ADDITIONS (DEDUCT)-- AT END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
- ---------------------------------
Plant and Equipment
$ 184(A)
Land........................... $ 34,614 $ 126 -- 731(B) $ 35,655
(302)(A)
9,306(B)
Buildings...................... 368,722 13,988 $ 3,310 (431)(C) 387,973
902(A)
Construction in progress....... 5,788 (998) -- 3(B) 5,695
Land improvements.............. 17,582 1,443 2 887(B) 19,910
412(A)
(605)(C)
Leasehold improvements......... 28,217 2,552 2,204 239(D) 28,611
---------- -------- ------- ---------- ----------
Land and buildings.......... 454,923 17,111 5,516 11,326 477,844
---------- -------- ------- ---------- ----------
(222)(A)
1,609(B)
(3,195)(C)
Machinery and equipment........ 911,066 64,700 33,952 1,661(D) 941,667
(969)(A)
(5,926)(C)
Rental equipment............... 163,135 54,059 36,029 17(D) 174,287
(92)(A)
Tools, jigs and fixtures....... 2,431 298 -- (119)(C) 2,518
(129)(A)
135(B)
(213)(C)
Trucks and automobiles......... 4,486 1,047 632 38(D) 4,732
1,123(A)
3,064(B)
(612)(C)
Furniture and fixtures......... 60,618 4,526 2,157 354(D) 66,916
Plant orders in progress....... 17,987 7,739 150 (907)(A) 24,669
---------- -------- ------- ---------- ----------
Machinery and equipment..... 1,159,723 132,369 72,920 (4,383) 1,214,789
---------- -------- ------- ---------- ----------
Totals.................... $1,614,646 $149,480 $78,436 $ 6,943 $1,692,633
========= ======== ======= ========== =========
[FN]
Note A -- Transfers between property, plant and equipment classifications.
Note B -- Transfers (to) from other classifications in the Consolidated Balance
Sheet.
Note C -- Foreign currency translation gains and losses.
Note D -- Assets acquired in acquisition.
Note E -- The annual provisions for depreciation have been computed principally
in accordance with the following rates:
Buildings............................... 2% to 20%
Land improvements....................... 2% to 33%
Leasehold improvements.................. 5% to 50%
Machinery and equipment................. 5% to 33%
Rental equipment........................ 20% to 50%
Tools, jigs and fixtures................ 10% to 33%
Trucks and automobiles.................. 14% to 33%
Furniture and fixtures.................. 5% to 33%
35
37
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
HARRIS CORPORATION AND SUBSIDIARIES
YEAR ENDED JUNE 30, 1992
(IN THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A
COL. B COL. C COL. D COL. E COL. F
- -------------------------------------------------------------------------------------------------------
OTHER
CHANGES--
BALANCE AT ADD BALANCE
BEGINNING ADDITIONS (DEDUCT)-- AT END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
- ---------------------------------
Plant and Equipment
Land........................... $ 34,988 -- $ 338 $ (36)(A) $ 34,614
1,270(A)
Buildings...................... 355,988 $ 12,837 1,687 314(C) 368,722
Construction in progress....... 12,064 (6,276) -- -- 5,788
Land improvements.............. 17,096 167 9 328(A) 17,582
(2,746)(A)
Leasehold improvements......... 31,902 2,183 3,449 327(C) 28,217
---------- -------- ------- ----------- ----------
Land and buildings.......... 452,038 8,911 5,483 (543) 454,923
---------- -------- ------- ----------- ----------
1,172(A)
1,900(B)
Machinery and equipment........ 883,140 63,969 40,324 1,209(C) 911,066
24(A)
Rental equipment............... 118,394 69,528 31,289 6,478(C) 163,135
(2)(A)
1(B)
Tools, jigs and fixtures....... 2,205 184 -- 43(C) 2,431
43(A)
Trucks and automobiles......... 4,471 557 755 170(C) 4,486
(82)(A)
Furniture and fixtures......... 58,461 4,792 3,302 749(C) 60,618
Plant orders in progress....... 24,719 (6,671) 90 29(A) 17,987
---------- -------- ------- ----------- ----------
Machinery and equipment..... 1,091,390 132,359 75,760 11,734 1,159,723
---------- -------- ------- ----------- ----------
Totals.................... $1,543,428 $141,270 $81,243 $11,191 $1,614,646
========= ======== ======= =========== =========
[FN]
Note A -- Transfers between property, plant and equipment classifications.
Note B -- Transfers (to) from other classifications in the Consolidated Balance
Sheet.
Note C -- Foreign currency translation gains and losses.
Note D -- The annual provisions for depreciation have been computed principally
in accordance with the following rates:
Buildings............................... 2% to 20%
Land improvements....................... 2% to 33%
Leasehold improvements.................. 5% to 50%
Machinery and equipment................. 5% to 33%
Rental equipment........................ 20% to 50%
Tools, jigs and fixtures................ 10% to 33%
Trucks and automobiles.................. 14% to 33%
Furniture and fixtures.................. 5% to 33%
36
38
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
HARRIS CORPORATION AND SUBSIDIARIES
YEAR ENDED JUNE 30, 1994
($000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A
COL. B COL. C COL. D COL. E COL. F
- -------------------------------------------------------------------------------------------------------
OTHER
CHANGES--
BALANCE AT ADD BALANCE
BEGINNING ADDITIONS (DEDUCT)-- AT END OF
DESCRIPTION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
- ---------------------------------
Plant and Equipment $ (245)(A)
Buildings...................... $178,178 $19,316 $6,992 (4)(B) $190,253
Land improvements.............. 11,777 852 7 -- 12,622
(102)(A)
Leasehold improvements........... 20,816 3,176 6,628 (116)(B) 17,146
---------- -------- -------- ---------- ----------
Buildings and
improvements.............. 210,771 23,344 13,627 (467) 220,021
---------- -------- -------- ---------- ----------
460(A)
Machinery and equipment.......... 759,080 74,688 58,215 (670)(B) 775,343
(212)(A)
Rental equipment................. 100,561 41,787 25,962 (2,583)(B) 113,591
2(A)
Tools, jigs and fixtures......... 2,436 215 43 2(B) 2,612
(84)(A)
Trucks and automobiles........... 3,577 514 506 12(B) 3,513
181(A)
Furniture and fixtures........... 52,068 5,099 4,780 (158)(B) 52,410
---------- -------- -------- ---------- ----------
Machinery and equipment........ 917,722 122,303 89,506 (3,050) 947,469
---------- -------- -------- ---------- ----------
Totals.................... $1,128,493 $145,647 $103,133 $ (3,517) $1,167,490
========= ======== ======== ========== =========
Note A -- Transfers between property, plant and equipment classifications.
Note B -- Foreign currency translation gains and losses.
37
39
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
HARRIS CORPORATION AND SUBSIDIARIES
YEAR ENDED JUNE 30, 1993
(IN THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A
COL. B COL. C COL. D COL. E COL. F
- ----------------------------------------------------------------------------------------------------
OTHER
CHANGES--
BALANCE AT ADD BALANCE
BEGINNING ADDITIONS (DEDUCT)-- AT END OF
DESCRIPTION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
- ---------------------------------
Plant and Equipment
$ (78)(A)
Buildings...................... $ 154,490 $ 20,270 $ 2,280 5,776(C) $ 178,178
Land improvements.............. 10,431 847 1 500(C) 11,777
(39)(A)
Leasehold improvements......... 20,369 2,821 1,767 (568)(B) 20,816
---------- -------- ------- -------- ----------
Buildings and
improvements................... 185,290 23,938 4,048 5,591 210,771
---------- -------- ------- -------- ----------
(65)(A)
(1,942)(B)
Machinery and equipment........ 710,258 78,940 29,688 1,577(C) 759,080
(517)(A)
Rental equipment............... 94,719 40,834 29,846 (4,629)(B) 100,561
(24)(A)
Tools, jigs and fixtures....... 2,180 273 -- 7(B) 2,436
44(A)
(167)(B)
Trucks and automobiles......... 3,374 697 506 135(C) 3,577
679(A)
(300)(B)
Furniture and fixtures......... 45,769 5,362 1,956 2,514(C) 52,068
---------- -------- ------- -------- ----------
Machinery and equipment..... 856,300 126,106 61,996 (2,688) 917,722
---------- -------- ------- -------- ----------
Totals.................... $1,041,590 $150,044 $66,044 $2,903 $1,128,493
========= ======== ======= ======== =========
Note A -- Transfers between property, plant and equipment classifications.
Note B -- Foreign currency translation gains and losses.
Note C -- Transfers (to) from other classifications in the Consolidated Balance
Sheet.
38
40
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
HARRIS CORPORATION AND SUBSIDIARIES
YEAR ENDED JUNE 30, 1992
(IN THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A
COL. B COL. C COL. D COL. E COL. F
- --------------------------------------------------------------------------------------------------
ADDITIONS
BALANCE CHARGED OTHER
AT TO CHANGES--
BEGINNING COSTS ADD BALANCE
OF AND (DEDUCT)-- AT END OF
DESCRIPTION PERIOD EXPENSES RETIREMENTS DESCRIBE PERIOD
- ---------------------------------
Plant and Equipment
$ (145)(A)
Buildings...................... $136,485 $ 19,599 $ 1,455 6(B) $ 154,490
Land improvements.............. 9,707 741 9 (8)(A) 10,431
(176)(A)
Leasehold improvements......... 20,414 3,167 3,311 275(B) 20,369
-------- -------- ------- -------- ----------
Buildings and
improvements................... 166,606 23,507 4,775 (48) 185,290
-------- -------- ------- -------- ----------
715(A)
Machinery and equipment........ 649,392 96,019 36,616 748(B) 710,258
(292)(A)
Rental equipment............... 69,691 37,606 16,987 4,701(B) 94,719
(2)(A)
Tools, jigs and fixtures....... 1,914 261 -- 7(B) 2,180
24(A)
Trucks and automobiles......... 3,126 687 543 80(B) 3,374
(116)(A)
Furniture and fixtures......... 42,030 6,582 3,083 356(B) 45,769
-------- -------- ------- -------- ----------
Machinery and equipment..... 766,153 141,155 57,229 6,221 856,300
-------- -------- ------- -------- ----------
Totals.................... $932,759 $164,662 $62,004 $6,173 $1,041,590
======== ======== ======= ======== =========
Note A -- Transfers between property, plant and equipment classifications.
Note B -- Foreign currency translation gains and losses.
39
41
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
HARRIS CORPORATION AND SUBSIDIARIES
(IN THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A
COL. B COL. C COL. D COL. E
- -------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
(1) (2)
BALANCE CHARGED CHARGED
AT TO COSTS TO OTHER BALANCE
BEGINNING AND ACCOUNTS DEDUCTIONS-- AT END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
- -----------------------------------
YEAR ENDED JUNE 30, 1994:
Amounts Deducted From
Respective Asset Accounts $ 891(A)
6,754(B)
------------
Allowances for collection
losses........................... $28,245 $ 8,790 $ 102(C) $ 7,645 $29,492
========= ========= =========== ============ ========
YEAR ENDED JUNE 30, 1993:
Amounts Deducted From
Respective Asset Accounts $ 1,028(A)
8,058(B)
------------
Allowances for collection
losses........................... $29,638 $ 7,648 $ 45(D) $ 9,086 $28,245
========= ========= =========== ============ ========
YEAR ENDED JUNE 30, 1992:
Amounts Deducted From
Respective Asset Accounts $ 1,118(A) $ 11,583(B)
65(D) 1,526(C)
----------- ------------
Allowances for collection
losses........................... $30,545 $11,019 $ 1,183 $ 13,109 $29,638
========= ========= =========== ============ ========
Note A -- Foreign currency translation gains and losses.
Note B -- Uncollectible accounts charged off, less recoveries on accounts
previously charged off.
Note C -- Amounts reclassified to other accounts in the Consolidated Balance
Sheet.
Note D -- Additions resulting from businesses acquired.
40
42
SCHEDULE IX -- SHORT-TERM BORROWINGS
HARRIS CORPORATION AND SUBSIDIARIES
(IN THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A
COL. B COL. C COL. D COL. E COL. F
- ----------------------------------------------------------------------------------------------------------
WEIGHTED
AVERAGE AVERAGE
MAXIMUM AMOUNT INTEREST
AMOUNT OUTSTANDING RATE
BALANCE WEIGHTED OUTSTANDING DURING DURING
AT AVERAGE DURING THE THE
CATEGORY OF AGGREGATE END OF INTEREST THE PERIOD PERIOD
SHORT-TERM BORROWINGS PERIOD RATE PERIOD (B) (C)
- -------------------------------------
YEAR ENDED JUNE 30, 1994:
Short-term debt payable to banks
(A)................................ $ 19,765 9.4 % $163,466 $101,977 6.5%
YEAR ENDED JUNE 30, 1993:
Short-term debt payable to banks
(A)................................ $ 35,222 9.3 % $103,688 $ 65,157 11.8%
YEAR ENDED JUNE 30, 1992:
Short-term debt payable to banks
(A)................................ $ 43,043 11.5 % $206,544 $102,867 10.6%
- ---------------
Note A -- Short-term debt includes borrowings by Harris international
subsidiaries from banks under bank overdraft, lines of credit, or
short-term note agreements. Maturity dates under bank overdraft
arrangements are not formalized but are reviewed periodically --
generally on an annual basis.
Note B -- The average amount outstanding during the period was computed by
dividing the total month-end principal balances by 13.
Note C -- The weighted average interest rate during the period was computed by
dividing the actual interest expense on short-term debt by the average
short-term debt outstanding.
41
43
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
HARRIS CORPORATION AND SUBSIDIARIES
(IN THOUSANDS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COL. A
COL. B
- -----------------------------------------------------------------------------------------------
CHARGED TO
COSTS AND EXPENSES
YEARS ENDED JUNE 30,
--------------------------------
ITEM 1994 1993 1992
- -----------------------------------------------------------
1. Maintenance and repairs................................ $56,081 $57,400 $59,847
2. Depreciation and amortization of intangible assets,
preoperating costs and similar deferrals.............. A A A
3. Taxes, other than payroll and income taxes............. A A A
4. Royalties.............................................. A A A
5. Advertising costs...................................... A $31,859 $34,092
- ---------------
Note A -- Amounts are not presented as such amounts are less than 1% of total
sales and revenues.
42