<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1994 Commission File Number 1-3863
HARRIS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 34-0276860
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(State of Incorporation) (IRS Employer Identification No.)
1025 West NASA Boulevard
Melbourne, Florida 32919
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(Address of principal executive offices)
(407) 727-9100
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(Registrant's telephone number)
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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
l934 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
39,712,954 Shares
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<PAGE> 2
PART I. FINANCIAL INFORMATION
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HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
The following information for the quarters ended March 31, 1994 and March 26,
1993, has not been examined by independent accountants, but in the opinion of
management reflects all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the results for the indicated
periods. The results of operations for the quarter ended March 31, 1994 are
not necessarily indicative of the results for the full fiscal year.
<TABLE>
<CAPTION>
QUARTER ENDED THREE QUARTERS ENDED
-------------------------- -------------------------
March 31, March 26, March 31, March 26,
1994 1993 1994 1993
------------ ------------ ------------ ------------
(In millions, except per share amounts)
<S> <C> <C> <C> <C>
Revenue
Revenue from sales, rentals
and services $838.3 $744.2 $2,414.9 $2,240.6
Interest 8.3 8.6 25.6 25.4
------ ------ -------- --------
846.6 752.8 2,440.5 2,266.0
Costs and Expenses
Cost of sales, rentals and
services 579.4 501.1 1,652.2 1,515.7
Engineering, selling and
administrative expenses 203.4 197.4 609.2 594.4
Interest 14.8 15.3 43.5 45.4
Other - net (2.0) (3.9) (3.6) (4.5)
------ ------ ------- --------
Income before income taxes 51.0 42.9 139.2 115.0
Income taxes 18.0 15.4 51.5 41.4
------ ------ ------- --------
Income before cumulative effect of
change in accounting principle 33.0 27.5 87.7 73.6
Cumulative effect of change in
accounting principle - - (10.1) -
------ ------ ------- --------
Net Income $ 33.0 $ 27.5 $ 77.6 $ 73.6
====== ====== ======= ========
Income per share before cumulative
effect of change in accounting
principle $.83 $.70 $2.20 $1.87
Cumulative effect of change in
accounting principle - - (.25) -
---- ---- ----- -----
Net Income Per Common Share (Primary) $.83 $.70 $1.95 $1.87
==== ==== ===== =====
Cash Dividends Paid Per Common Share $.28 $.26 $.84 $.78
==== ==== ==== ====
</TABLE>
<PAGE> 3
<TABLE>
HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
March 31 June 30,
1994 1993
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ASSETS (In millions)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 50.1 $ 131.7
Trade accounts and notes receivable - net, less allowance
for collection losses of $27,600,000 at March 31, 1994
and $28,200,000 at June 30, 1993 611.5 607.6
Unbilled costs and accrued earnings on fixed price contracts
based on percentage-of-completion accounting, less progress
payments of $191,900,000 at March 31, 1994 and
$162,300,000 at June 30, 1993 378.6 320.9
Inventories:
Work in process and finished products 420.0 383.0
Raw materials and supplies 69.2 61.4
------- -------
489.2 444.4
Deferred income taxes 76.5 66.0
------- -------
Total Current Assets 1,605.9 1,570.6
Plant and equipment, less allowances for depreciation of
$1,185,300,000 at March 31, 1994 and $1,128,500,000 at
June 30, 1993 566.9 564.1
Notes receivable - net 156.2 147.2
Intangibles resulting from acquisitions 163.4 162.8
Other assets 109.5 97.3
-------- --------
$2,601.9 $2,542.0
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 70.9 $ 35.2
Trade accounts payable 130.5 169.4
Compensation and benefits 176.8 168.0
Other accrued items 150.9 150.6
Advance payments and unearned income 169.6 176.1
Income taxes 37.5 77.4
Current portion of long-term debt .5 1.4
-------- --------
Total Current Liabilities 736.7 778.1
Deferred income taxes 23.1 10.6
Long-term debt 661.9 612.0
Shareholders' Equity
Capital stock:
Preferred Stock, without par value:
Authorized - 1,000,000 shares; issued - none - -
Common Stock, par value $1 per share:
Authorized - 100,000,000 shares; issued 39,712,954 shares
at March 31, 1994 and 39,604,496 at June 30, 1993 39.7 39.6
Other capital 231.5 216.3
Retained earnings 937.9 906.7
Unearned compensation (4.6) (8.3)
Cumulative translation adjustments (24.3) (13.0)
-------- --------
Total Shareholders' Equity 1,180.2 1,141.3
-------- --------
$2,601.9 $2,542.0
======== ========
</TABLE>
<PAGE> 4
<TABLE>
HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
THREE QUARTERS ENDED
-----------------------------
March 31, March 26,
1994 1993
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(In millions)
<S> <C> <C>
Cash flows from operating activities
Income before cumulative effect of change
in accounting principle $ 87.7 $ 73.6
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of plant and equipment 116.4 117.5
Non-current deferred income tax 12.5 .8
Cumulative effect of change in accounting
principle (10.1) -
(Increase) decrease in:
Accounts and notes receivable (13.0) 38.6
Unbilled costs and inventories (102.4) (60.2)
Other assets (18.4) (12.1)
Increase (decrease) in:
Trade payables and accrued expenses (29.9) (76.7)
Advance payments and unearned income (6.5) (6.4)
Income taxes (50.3) 20.0
Other (2.0) (2.1)
----- -----
Net cash used in operating activities (16.0) 93.0
----- -----
Cash flows from investing activities
Capital expenditures-net of
normal disposals (116.8) (102.9)
Cash paid for acquired business - (25.9)
------ ------
Net cash used in investing activities (116.8) (128.8)
------ ------
Cash flows from financing activities
Increase (decrease) in short-term debt 34.8 11.4
Increase (decrease) in long-term debt 49.9 (.2)
Proceeds from sale of Common Stock 13.3 7.5
Purchase of Common Stock for treasury (16.7) -
Cash dividends (33.3) (30.6)
----- -----
Net cash provided by (used in) financing activities 48.0 (11.9)
----- -----
Effect of exchange rate changes on cash and cash
equivalents 3.2 (1.1)
----- -----
Net decrease in cash and cash equivalents $(81.6) $(48.8)
====== ======
</TABLE>
<PAGE> 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all information and
footnotes necessary for a complete presentation of financial position, results
of operations, and changes in cash flows in conformity with generally accepted
accounting principles.
NOTE B -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
For the quarter ended September 30, 1993, 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 that had 10 or more years
of service. This adoption resulted in a one-time charge of $10,100,000 ($.25
per share), net of income tax credits of $6,400,000.
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
Sales for the third quarter and the first three quarters increased 13 percent
and 8 percent from the same respective periods a year ago. Income before
cumulative effect of change in accounting principle increased 20 percent in the
third quarter and 19 percent for the first three quarters compared to the
respective prior year periods.
The Semiconductor segment posted a substantial improvement in earnings for the
quarter and year-to-date on higher sales. Third quarter and year-to-date net
income for this segment included gains from the ongoing sales of investment
securities in both the current and prior fiscal years. Sales and net income
increased significantly in the third quarter and moderately year-to-date in the
Electronic Systems segment due to the continued success of this segment's
diversification strategy and improvement in the segment's commercial computer
business. The Communications segment's earnings were substantially higher for
both periods due to higher sales and improved profit margins. Lanier
Worldwide's sales increased modestly in both periods compared to the prior
year. Net income was moderately higher due to significant improvement in this
segment's European operations.
Cost of sales as a percentage of net sales increased to 69.1 percent in the
third quarter and 68.4 percent in the first three quarters of this year
compared to 67.3 percent and 67.6 percent for the respective periods last year.
The increase was due primarily to decreased gross margins in the Electronic
Systems and Lanier Worldwide segments.
Engineering, selling, and administrative expenses as a percentage of net sales
decreased to 24.3 percent in the third quarter and 25.2 percent year-to-date,
compared to 26.5 percent for both periods in the prior year. The decrease was
due to lower expenses in the Semiconductor, Electronic Systems, and
Communications segments.
Interest expense was lower in the quarter and year-to-date due to lower
interest rates. "Other-net" was lower in the quarter and year-to-date due to
lower gains from the sale of investment securities.
The provision for income taxes as a percentage of pre-tax income was 35.3
percent in the third quarter and 37.0 percent in the first three quarters of
this year compared to 36.0 percent for the third quarter and the first three
quarters of the prior year. The increases from the statutory federal tax rate
of 35 percent during the current year and 34 percent in the prior year were
primarily due to the provision for state income taxes.
Income before cumulative effect of change in accounting principle as a
percentage of sales was 3.9 percent and 3.6 percent for the quarter and
year-to-date, respectively, compared to 3.7 percent and 3.3 percent in the same
periods last year for the previously stated reasons.
Working capital increased $76.7 million from $792.5 million at June 30, 1993 to
$869.2 million at the end of the third quarter. The Corporation anticipates
that the requirements for funds to finance operations during the remainder of
the fiscal year will be met by cash flow from operations.
<PAGE> 7
PART II OTHER INFORMATION
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Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
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(a) Exhibits:
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
SIGNATURES
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Pursuant to the requirements 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)
Date: May 12, 1994 By: /S/BRYAN R. ROUB
------------------------------
Bryan R. Roub
Senior Vice President and
Chief Financial Officer
<PAGE> 1
<TABLE>
EXHIBIT 11 - COMPUTATION OF NET INCOME PER SHARE
<CAPTION>
QUARTER ENDED THREE QUARTERS ENDED
-------------------------- --------------------------
March 31, March 26, March 31, March 26,
1994 1993 1994 1993
---------- ---------- ---------- ----------
(In millions except per share amounts)
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 39.8 39.5 39.8 39.4
===== ===== ===== =====
Income before cumulative effect of
change in accounting principle $ 33.0 $ 27.5 $ 87.7 $ 73.6
Cumulative effect of change in
accounting principle - - (10.1) -
------ ------ ------ ------
Net income $ 33.0 $ 27.5 $ 77.6 $ 73.6
====== ====== ====== ======
Per share amounts:
Income before cumulative effect of
change in accounting principle $.83 $.70 $2.20 $1.87
Cumulative effect of change in
accounting principle - - (.25) -
---- ---- ----- -----
Total $.83 $.70 $1.95 $1.87
==== ==== ===== =====
Fully diluted:
Total primary average shares
outstanding 39.8 39.5 39.8 39.4
Dilutive stock options and employee
stock purchase plan shares - based
on treasury stock method using the
greater of quarter-end market price
or average market price .2 .2 .2 .2
----- ----- ----- -----
Average fully diluted shares
outstanding 40.0 39.7 40.0 39.6
===== ===== ===== =====
Per share amounts:
Income before cumulative effect of
change in accounting principle $.83 $.69 $2.19 $1.86
Cumulative effect of change in
accounting principle - - (.25) -
---- ---- ----- -----
Total $.83 $.69 $1.94 $1.86
==== ==== ===== =====
</TABLE>
