<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
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<S> <C>
For quarter ended December 31, 1993 Commission File Number 1-3863
</TABLE>
HARRIS CORPORATION
======================================================
(Exact name of registrant as specified in its charter)
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<S> <C>
Delaware 34-0276860
======================== =================================
(State of Incorporation) (IRS Employer Identification No.)
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1025 West NASA Boulevard
Melbourne, Florida 32919
========================================
(Address of principal executive offices)
(407) 727-9100
==============================
(Registrant's telephone number)
===============================
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 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.
39,812,156 Shares
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<PAGE> 2
PART I. FINANCIAL INFORMATION
HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
The following information for the quarters ended December 31, 1993 and December
25, 1992, 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 December 31, 1993 are
not necessarily indicative of the results for the full fiscal year.
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<CAPTION>
Quarter Ended Two Quarters Ended
-------------------------- -------------------------
December 31, December 25, December 31, December 25,
1993 1992 1993 1992
------------ ------------ ------------ ------------
(In millions, except per share amounts)
<S> <C> <C> <C> <C>
Revenue
Revenue from sales, rentals
and services $807.5 $768.8 $1,576.6 $1,496.4
Interest 9.1 8.7 17.3 16.8
------ ------ -------- --------
816.6 777.5 1,593.9 1,513.2
Costs and Expenses
Cost of sales, rentals and
services 550.6 519.3 1,072.8 1,014.6
Engineering, selling and
administrative expenses 201.9 202.4 405.8 397.0
Interest 14.5 15.3 28.7 30.1
Other - net 1.2 .3 (1.6) (.6)
------ ------ ------- --------
Income before income taxes 48.4 40.2 88.2 72.1
Income taxes 18.4 14.8 33.5 26.0
------ ------ ------- --------
Income before cumulative effect of
change in accounting principle 30.0 25.4 54.7 46.1
Cumulative effect of change in
accounting principle - - (10.1) -
------ ------ ------- --------
Net Income $ 30.0 $ 25.4 $ 44.6 $ 46.1
====== ====== ======= ========
Income per share before cumulative effect
of change in accounting principle $.75 $.64 $1.37 $1.17
Cumulative effect of change in
accounting principle - - (.25) -
---- ---- ----- -----
Net Income Per Common Share (Primary) $.75 $.64 $1.12 $1.17
==== ==== ===== =====
Cash Dividends Paid Per Common Share $.28 $.26 $.56 $.52
==== ==== ==== ====
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<PAGE> 3
<TABLE>
HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
December 31, June 30,
1993 1993
------------- -------------
ASSETS (In millions)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 48.8 $ 131.7
Trade accounts and notes receivable - net, less allowance
for collection losses of $27,200,000 at December 31, 1993
and $28,200,000 at June 30, 1993 603.2 607.6
Unbilled costs and accrued earnings on fixed price contracts
based on percentage-of-completion accounting, less progress
payments of $175,400,000 at December 31, 1993 and
$162,300,000 at June 30, 1993 365.8 320.9
Inventories:
Work in process and finished products 414.6 383.0
Raw materials and supplies 53.9 61.4
------- -------
468.5 444.4
Deferred income taxes 86.7 66.0
------- -------
Total Current Assets 1,573.0 1,570.6
Plant and equipment, less allowances for depreciation of
$1,161,300,000 at December 31, 1993 and $1,128,500,000 at
June 30, 1993 566.7 564.1
Notes receivable - net 152.5 147.2
Intangibles resulting from acquisitions 162.0 162.8
Other assets 101.5 97.3
-------- --------
$2,555.7 $2,542.0
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 104.5 $ 35.2
Trade accounts payable 138.5 169.4
Compensation and benefits 148.3 168.0
Other accrued items 141.0 150.6
Advance payments and unearned income 168.1 176.1
Income taxes 68.0 77.4
Current portion of long-term debt .4 1.4
-------- --------
Total Current Liabilities 768.8 778.1
Deferred income taxes 12.8 10.6
Long-term debt 612.0 612.0
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 39,812,156 shares
at December 31, 1993 and 39,604,496 at June 30, 1993 39.8 39.6
Other capital 228.1 216.3
Retained earnings 924.9 906.7
Unearned compensation (8.0) (8.3)
Cumulative translation adjustments (22.7) (13.0)
-------- --------
Total Shareholders' Equity 1,162.1 1,141.3
-------- --------
$2,555.7 $2,542.0
======== ========
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<PAGE> 4
<TABLE>
HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Two Quarters Ended
----------------------------
December 31, December 25,
1993 1992
------------- -------------
(In millions)
<S> <C> <C>
Cash flows from operating activities
Income before cumulative effect of change
in accounting principle $ 54.7 $ 46.1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of plant and equipment 77.7 77.7
Non-current deferred income tax 2.2 .1
Cumulative effect of change in accounting
principle (10.1) -
(Increase) decrease in:
Accounts and notes receivable (1.0) 27.7
Unbilled costs and inventories (69.0) (39.6)
Other assets (7.1) (12.1)
Increase (decrease) in:
Trade payables and accrued expenses (60.2) (79.1)
Advance payments and unearned income (7.9) (3.3)
Income taxes (30.0) 15.4
Other (3.0) 1.0
----- -----
Net cash used in operating activities (53.7) (33.9)
----- -----
Cash flows from investing activities
Capital expenditures-net of
normal disposals (79.6) (67.5)
Cash paid for acquired business - (25.9)
----- -----
Net cash used in investing activities (79.6) (93.4)
----- -----
Cash flows from financing activities
Increase (decrease) in short-term debt 68.3 2.6
Increase (decrease) in long-term debt - (.1)
Proceeds from sale of Common Stock 7.3 4.1
Purchase of Common Stock for treasury (5.5) -
Cash dividends (22.2) (20.4)
----- -----
Net cash provided by (used in) financing activities 47.9 (13.8)
----- -----
Effect of exchange rate changes on cash and cash
equivalents 2.5 (4.9)
----- -----
Net decrease in cash and cash equivalents $(82.9) $(78.2)
====== ======
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<PAGE> 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
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 second quarter and the first two quarters increased five percent
from the same periods a year ago. Income before cumulative effect of change in
accounting principle increased 18 percent in the second quarter and 19 percent
for the first two 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 moderately higher sales. Second 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 slightly in the second quarter and year-to-date in the
Electronic Systems segment. The Communications segment's earnings were
substantially higher for both periods due to significantly higher sales of
digital telephone products and improved profit margins on broadcast products.
Lanier Worldwide's net income and sales decreased moderately in the second
quarter when compared to the prior period. Year-to-date net income, however,
was significantly higher on relatively unchanged sales due to reduced losses in
Europe.
Cost of sales as a percentage of net sales increased to 68.2 percent in the
second quarter and 68.0 percent in the first two quarters of this year compared
to 67.5 percent and 67.8 percent for the respective periods last year. The
increase is due primarily to decreased gross margins in the Lanier Worldwide
segment.
Engineering, selling, and administrative expenses as a percentage of net sales
decreased to 25.0 percent in the second quarter and 25.7 percent year-to-date,
compared to 26.3 percent and 26.5 percent for the same periods in the prior
year. The decrease is due to lower expenses in the Semiconductor and
Communications segments.
Interest expense is lower in the quarter and year-to-date due to lower interest
rates. "Other-net" includes gains from the sale of investment securities for
all periods presented.
The provision for income taxes as a percentage of pre-tax income was 38.0
percent in the second quarter and first two quarters of this year compared to
36.8 percent for the second quarter and 36.0 percent for the first two 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 3.7 percent and 3.5 percent for the quarter and
year-to-date, respectively, compared to 3.3 percent and 3.1 percent in the same
periods last year for the previously stated reasons.
Working capital increased $11.7 million from $792.5 million at June 30, 1993 to
$804.2 million at the end of the second 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
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(10)(a) Trust Agreement dated January 7, 1994 between Harris
Corporation and Boston Safe Deposit and Trust Company.
(11) Statement re: computation of per share earnings.
(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
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: February 11, 1994 By: /s/ Bryan R. Roub
------------------------------
Bryan R. Roub
Senior Vice President and
Chief Financial Officer
<PAGE> 1
EXHIBIT (10)(a)
HARRIS CORPORATION MASTER
RABBI TRUST AGREEMENT
<PAGE> 2
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TABLE OF CONTENTS
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PAGE
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Section 1 Establishment of Trust 2
Section 2 Payments to Participants and Their
Beneficiaries 3
Section 3 Trustee Responsibility Regarding Payments
to Trust Beneficiary When Company is
Insolvent 3
Section 4 Payments to Company 4
Section 5 Investment and Administrative Authority 5
Section 6 Disposition of Income 6
Section 7 Monthly and Annual Accounting by Trustee 6
Section 8 Responsibility of Trustee 7
Section 9 Compensation and Expenses of Trustee 8
Section 10 Resignation and Removal of Trustee 8
Section 11 Appointment of Successor 9
Section 12 Amendment or Termination 10
Section 13 Miscellaneous 10
Section 14 Notice of Change in Control 11
Section 15 Communications to Trustee or Company 11
Section 16 Non-Alienation of Benefits 11
Section 17 Payment of Benefits to Others 11
Section 18 Arbitration 11
Section 19 Trust Benefits Limited to Plan Benefits 12
Section 20 Effective Date 12
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<PAGE> 3
HARRIS CORPORATION MASTER
RABBI TRUST AGREEMENT
This Trust Agreement made this 7th day of January, 1994
by and between Harris Corporation ("Company") and Boston Safe
Deposit and Trust Company ("Trustee").
WHEREAS, Company has adopted various nonqualified
deferred compensation plans and arrangements, as listed in
Appendix A (the "Plans");
WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plans with respect to the
individuals participating in such Plans (individually a
"Participant" and collectively the "Participants");
WHEREAS, Company established the Harris Corporation
Benefits Trust Agreement, effective September 23, 1987 (the
"Prior Agreement");
WHEREAS, Company desires to amend and restate the Prior
Agreement in its entirety and appoint Trustee as successor
trustee, effective May 27, 1993;
WHEREAS, Company wishes to contribute to the trust (the
"Trust") the assets that shall be held therein, subject to the
claims of Company's creditors in the event of Company's
insolvency, as herein defined, until paid to Participants and
their beneficiaries in such manner and at such times as
specified in the Plans;
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Plans as unfunded plans maintained for
the purpose of providing deferred compensation for a select
group of management or highly compensated employees for
purposes of Title I of the Employee Retirement Income Security
Act of 1974; and
WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
Plans;
NOW THEREFORE, the parties do hereby amend and restate
the Prior Agreement and agree that the Trust shall be
comprised, held and disposed of as follows.
<PAGE> 4
Section 1. Establishment of Trust.
- -----------------------------------
(a) Company hereby establishes the Trust with the
Trustee, consisting of such sums of money and other property
acceptable to the Trustee as from time to time shall be paid
and delivered to and accepted by the Trustee from the Company
in accordance with subsection (e) below. All such money and
other property paid or delivered to and accepted by the Trustee
shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this
Trust Agreement.
(b) The Trust hereby established is revocable by Company;
it shall become irrevocable upon a Change in Control, as
defined herein.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part
I, subchapter J, chapter 1, subtitle A of the Internal Revenue
Code of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company
and shall be used exclusively for the uses and purposes of the
Participants and general creditors as herein set forth. The
Participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets
of the Trust. Any rights created under the Plans and this
Trust Agreement shall be mere unsecured contractual rights of
the Participants and their beneficiaries against Company. Any
assets held by the Trust shall be subject to the claims of
Company's general creditors under federal and state law in the
event of insolvency, as defined in Section 3(a) herein. No
general creditor of the Company shall have any right to
recover, or any title or interest in, any Trust asset after it
has been distributed by the Trustee to a Participant.
(e) Company, in its sole discretion, may at any time, or
from time to time, make additional deposits of cash or other
property in trust with Trustee to augment the principal to be
held, administered and disposed of by Trustee as provided in
this Trust Agreement. Neither Trustee nor any Participant or
beneficiary shall have any right to compel such additional
deposits. Except as hereinafter provided, Company shall make
contributions to the Trust from time to time as it shall
determine in its sole discretion; provided, however that
Company shall be required to contribute the required funding
amount within the five-day period following a Change in
Control. For purposes of this Agreement, the term "required
funding amount" means the amount required to fund the
obligations of Company under the Plans.
- 2 -
<PAGE> 5
Section 2. Payments to Participants and Their Beneficiaries.
- -------------------------------------------------------------
(a) Company shall from time to time deliver to Trustee a
schedule (the "Payment Schedule") that indicates the amounts
payable in respect of each Participant (and his or her
beneficiaries), that provides a formula or other instructions
acceptable to Trustee for determining the amounts so payable,
the form in which such amount is to be paid (as provided for or
available under the Plans), and the time of commencement for
payment of such amounts. Except as otherwise provided herein,
Trustee shall make payments to the Participants and their
beneficiaries in accordance with such Payment Schedule. The
Trustee shall make provision for the reporting and withholding
of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to
the terms of this Agreement and shall pay amounts withheld to
the appropriate taxing authorities or determine that such
amounts have been reported, withheld and paid by Company. To
the extent that Trustee pays benefits due a Participant under a
Plan, Company shall be forever released and discharged from the
obligation to pay such benefits.
(b) The entitlement of a Participant or his or her
beneficiaries to benefits under the Plan(s) shall be determined
by Company or such party as it shall designate under the Plans,
and any claim for such benefits shall be considered and
reviewed under the procedures set out in the Plans.
(c) Company may make payment of benefits directly to the
Participants or their beneficiaries as they become due under
the terms of the Plans. Company shall notify Trustee of its
decision to make payment of benefits directly prior to the time
amounts are payable to Participants or their beneficiaries. In
addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in
accordance with the terms of the Plan(s), Company shall
immediately make up the balance of each such payment as it
falls due. Trustee shall notify Company when principal and
earnings are not sufficient.
Section 3. Trustee Responsibility Regarding Payments to Trust
- --------------------------------------------------------------
Beneficiary When Company is Insolvent.
- --------------------------------------
(a) Trustee shall cease payment of benefits to the
Participants and their beneficiaries if the Company is
Insolvent. Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject to
a pending proceeding as a debtor under the United States
Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of
the Trust shall be subject to claims of general creditors of
Company under federal and state law as set forth below.
- 3 -
<PAGE> 6
(1) The Board of Directors or the Chief Executive
Officer of Company shall have the duty to inform Trustee in
writing of Company's Insolvency. If a person claiming to be a
creditor of Company alleges in writing to Trustee that Company
has become Insolvent, Trustee shall determine whether Company
is Insolvent and, pending such determination, Trustee shall
discontinue payment of benefits to the Participants or their
beneficiaries. In all cases, Trustee shall be entitled to
conclusively rely upon the written certification of the Board
of Directors or the Chief Executive Officer of the Company when
determining whether Company is Insolvent.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is Insolvent,
Trustee shall have no duty to inquire whether Company is
Insolvent. Trustee may in all events rely on such evidence
concerning Company's solvency as may be furnished to Trustee
and that provides Trustee with a reasonable basis for making a
determination concerning Company's solvency.
(3) If at any time Trustee has determined that
Company is Insolvent, Trustee shall discontinue payments to the
Participants or their beneficiaries and shall hold the assets
of the Trust for the benefit of Company's general creditors.
Nothing in this Trust Agreement shall in any way diminish any
rights of the Participants or their beneficiaries to pursue
their rights as general creditors of Company with respect to
benefits due under the Plans or otherwise.
(4) Trustee shall resume the payment of benefits to
the Participants or their beneficiaries in accordance with
Section 2 of this Trust Agreement only after Company has
informed Trustee that Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due to the Participants or
their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any
payments made to the Participants or their beneficiaries by
Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
Section 4. Payments to Company.
- --------------------------------
Except as provided in Section 3 hereof, after the Trust
has become irrevocable, Company shall have no right or power to
direct Trustee to return to Company or to divert to others any
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<PAGE> 7
of the Trust assets before all payment of benefits have been
made to the Participants and their beneficiaries pursuant to
the terms of the Plans.
Section 5. Investment and Administrative Authority.
- ----------------------------------------------------
Trustee shall have the power:
(1) To invest and reinvest the principal and income
of the Trust and keep it invested, without distinction between
principal and income, in any security or property, including
securities or obligations issued by the Company, pursuant to
the direction of Company or an investment manager appointed by
Company. All rights associated with assets of the Trust shall
be exercised by Trustee or the person designated by Trustee,
and shall in no event be exercisable by or rest with the
Participants, provided that, except in the event of a Change in
Control as defined in Section 13(d), shareholder rights,
including but not limited to voting rights with respect to
Company stock held in the Trust, will be exercised by Company.
(2) To collect and receive any and all money and
other property due to the Trust and to give full discharge
therefor;
(3) To invest and reinvest the principal and income
of the Trust, pursuant to the direction of Company or an
investment manager appointed by Company, in any collective,
common or pooled trust fund operated or maintained exclusively
for the commingling and collective investment of monies or
other assets including any such fund operated or maintained by
Trustee. Notwithstanding the provisions of this Trust Agreement
which place restrictions upon the actions of Trustee or an
investment manager, to the extent monies or other assets are
utilized to acquire units of any collective trust, the terms of
the collective trust indenture shall solely govern the
investment duties, responsibilities and powers of the trustee
of such collective trust and, to the extent required by law,
such terms, responsibilities and powers shall be incorporated
herein by reference and shall be part of this Trust Agreement
For purposes of valuation, the value of the interest maintained
by the Trust in such collective trust shall be the fair market
value of the collective fund units held, determined in
accordance with generally recognized valuation procedures.
Company expressly understands and agrees that any such
collective fund may provide for the lending of its securities
by the collective fund trustee and that such collective fund's
trustee will receive compensation from such collective fund for
the lending of securities that is separate from any
compensation of Trustee hereunder, or any compensation of the
collective fund trustee for the management of such collective
fund;
- 5 -
<PAGE> 8
(4) To purchase, enter, sell, hold, and generally
deal in any manner in and with contracts for the immediate or
future delivery of financial instruments of any issuer or of
any other property; to grant, purchase, sell, exercise, permit
to expire, permit to be held in escrow, and otherwise to
acquire, dispose of, hold and generally deal in any manner with
and in all forms of options in any combination, pursuant to the
direction of Company or an investment manager appointed by
Company;
(5) To settle, compromise or submit to arbitration
any claims, debt or damages due or owing to or from the Trust;
to commence or defend suits or legal proceedings to protect any
interest of the Trust; and to represent the Trust in all suits
or legal proceedings in any court or before any other body or
tribunal; and
(6) Generally to do all acts, whether or not
expressly authorized, which Trustee may deem necessary or
desirable for the protection of the Trust, provided that except
in the event of a Change in Control as defined in
Section 13(d), written approval by Company is required for
Trustee to borrow on behalf of the Trust, or to lease or sell
real property on behalf of the Trust.
Notwithstanding anything to the contrary contained in this
Trust Agreement, in the event of a Change in Control as defined
in Section 13(d), Trustee shall invest all assets of the Trust
in fixed-income securities for a period of one year following
such event and thereafter shall have and exercise investment
discretion with respect to all assets of the Trust.
Section 6. Disposition of Income.
- ----------------------------------
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Monthly and Annual Accounting by Trustee.
- -----------------------------------------------------
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other
transactions required to be made, including such specific
records as shall be agreed upon in writing between Company and
Trustee and all books and records relating thereto shall be
open to inspection and audit at all reasonable times by any
persons designated by Company. Within 30 days following the
close of each month, within 90 days following the close of each
fiscal year (ending June 3Oth) and within 90 days after the
removal or resignation of Trustee, Trustee shall deliver to
Company a written account of its administration of the Trust
during such month or year, as the case may be, or during the
period from the close of the last preceding year to the date of
such removal or resignation, setting forth all investments,
- 6 -
<PAGE> 9
receipts, disbursements and other transactions effected by it,
including a description of all securities and investments
purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being
shown separately), and showing all cash, securities and other
property held in the Trust at the end of such month, year or as
of the date of such removal or resignation, as the case may
be. Company shall be entitled to such conferences with Trustee
as Company shall reasonably request, including but not limited
to an annual conference.
Section 8. Responsibility of Trustee.
- --------------------------------------
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a
prudent person acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims, provided, however, that Trustee
shall incur no liability to any person for any action taken
pursuant to a direction, request or approval given by Company
which is contemplated by, and in conformity with, the terms of
the Plans (as certified to the Trustee by Company) or this
Trust and is given in writing by Company. In the event of a
dispute between Company and a party, Trustee may apply to a
court of competent jurisdiction to resolve the dispute.
Company agrees to indemnify Trustee against Trustee's
reasonable costs, expenses and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) arising
out of or relating to any action or inaction taken by Trustee
without negligence and in reliance upon direction, request or
approval given by the Company.
(b) If Trustee undertakes or defends any litigation
arising in connection with this Trust, Company agrees to
indemnify Trustee against Trustee's reasonable costs, expenses
and liabilities (including, without limitation, reasonable
attorneys' fees and expenses) relating thereto and to be
primarily liable for such payments. If at any time after a
Change in Control Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, Trustee may obtain
payment from the Trust.
(c) Trustee may consult with legal counsel and may
reasonably rely on such counsel (who may also be counsel for
Company generally) with respect to any of its duties or
obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other
professionals reasonably required to assist it in performing
any of its duties or obligations hereunder.
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<PAGE> 10
(e) Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an
insurance policy is held as an asset of the Trust, Trustee
shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a
successor trustee, or to loan to any person the proceeds of any
borrowing against such policy.
(f) However, notwithstanding the provisions of Section
8(e) above, Trustee may loan to Company the proceeds of any
borrowing against an insurance policy held as an asset of the
Trust.
(g) Notwithstanding any powers granted to Trustee
pursuant to this Trust Agreement or to applicable law, Trustee
shall not have any power that could give this Trust the
objective of carrying on a business and dividing the gains
therefrom, within the meaning of Section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant
to the Internal Revenue Code.
Section 9. Compensation and Expenses of Trustee.
- -------------------------------------------------
All administrative and Trustee's fees and expenses shall
be paid from the Trust unless paid by the Company. Trustee
shall be entitled to the fees listed on Schedule A attached
hereto as reasonable compensation for the services rendered
under this Trust Agreement.
Section 10. Resignation and Removal of Trustee.
- ------------------------------------------------
(a) Trustee may resign at any time by written notice to
Company, which shall be effective 90 days after receipt of such
notice unless Company and Trustee agree otherwise.
(b) Trustee may be removed by Company on 90 days' notice
or upon shorter notice accepted by Trustee.
(c) In the event of a Change in Control, as defined
herein, for a one-year period following such event, Trustee may
be removed by Company only if 75 percent of the number of the
Participants consent to such removal.
(d) If Trustee resigns within one year of a Change in
Control, as defined herein, Trustee shall select a successor
trustee in accordance with the provisions of Section 11(b)
hereof prior to the effective date of Trustee's resignation or
removal.
(e) Upon resignation or removal of Trustee and
appointment of a successor trustee, all assets shall
subsequently be transferred to the successor trustee. The
- 8 -
<PAGE> 11
transfer shall be completed within 180 days after receipt of
notice of resignation, removal or transfer, unless Company
extends the time limit.
(f) If Trustee resigns or is removed, a successor shall
be appointed, in accordance with Section 11 hereof, by the
effective date of resignation or removal under paragraph(s) (a)
or (b) of this section. If no such appointment has been made,
Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses
of Trustee in connection with the proceeding shall be allowed
as administrative expenses of the Trust.
Section 11. Appointment of Successor.
- --------------------------------------
(a) If Trustee resigns or is removed in accordance with
Section 10(a) or (b) hereof, Company may appoint any third
party, such as a bank trust department or other party that may
be granted corporate trustee powers under state law, as a
successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the
new trustee, who shall have all of the rights and powers of the
former Trustee, including ownership rights in the Trust
assets. The former Trustee shall execute any instrument
necessary or reasonably requested by Company or the successor
trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the
provisions of Section 10(c) or (d) hereof and selects a
successor trustee, Trustee may appoint any third party such as
a bank trust department or other party that may be granted
corporate trustee powers under state law; provided, however,
that in the event of a Change in Control as defined in
Section 13(d), for a one-year period following such event,
75 percent of the number of the Participants must consent to
the appointment of a successor trustee. The appointment of a
successor trustee shall be effective when accepted in writing
by the new trustee. The new trustee shall have all the rights
and powers of the former Trustee, including ownership rights in
Trust assets. The former Trustee shall execute any instrument
necessary or reasonably requested by the successor trustee to
evidence the transfer.
(c) The successor trustee need not examine the records
and acts of any prior Trustee and may retain or dispose of
existing Trust assets, subject to Sections 7 and 8 hereof. The
successor trustee shall not be responsible for and Company
shall indemnify and defend the successor trustee from any claim
or liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing
at the time it becomes successor trustee.
-9-
<PAGE> 12
Section 12. Amendment or Termination.
- --------------------------------------
(a) This Trust Agreement may be amended by a written
instrument executed by Trustee and Company; provided, however,
that no amendments may be made within a one-year period after
the occurrence of a Change in Control, as defined in
Section 13(d), unless 75 percent of the number of Participants
consent to the amendment. Notwithstanding the foregoing, no
such amendment shall conflict with the terms of the Plans (as
certified to the Trustee by Company) or shall make the Trust
revocable after it has become irrevocable in accordance with
Section 1(b).
(b) The Trust shall not terminate until the date on which
the Participants and their beneficiaries are no longer entitled
to benefits pursuant to the terms of the Plans unless sooner
revoked in accordance with Section 1(b) hereof. Upon
termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c) Upon written approval of the Participants or
beneficiaries entitled to payment of benefits pursuant to the
terms of the Plans, Company may terminate this Trust prior to
the time all benefit payments under the Plans have been made.
All assets in the Trust at termination shall be returned to
Company.
Section 13. Miscellaneous.
- ---------------------------
(a) Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Notwithstanding anything to the contrary contained
elsewhere in this Trust Agreement, any reference to the Plan or
Plan provisions which require knowledge or interpretation of
the Plan shall impose a duty upon the Company to communicate
such knowledge or interpretation to the Trustee. The Trustee
shall have no obligation to know or interpret any portion of
the Plan and shall in no way be liable for any proper action
taken contrary to the Plan.
(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of Massachusetts.
(d) For purposes of this Trust, the term "Change in
Control" shall mean the occurrence of either of the following
events:
(1) A third person, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, or
any rules or regulations thereunder, acquires shares of Company
having 20 percent or more of the total number of votes that may
be cast for the election of Directors of Company; or
- 10 -
<PAGE> 13
(2) As the result of any cash tender or exchange
offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were Directors
of Company before the Transaction shall cease to constitute a
majority of the Board of Directors of Company or any successor
to Company.
Section 14. Notice of Change in Control. Within five days
- -----------------------------------------
after having knowledge of a Change in Control, Company shall
notify Trustee and the Participants of the occurrence of such
Change in Control.
Section 15. Communications to Trustee or Company.
- --------------------------------------------------
Communications to Trustee shall be sent to Trustee as follows:
Boston Safe Deposit and Trust Company, One Cabot Road 028-004G,
Medford, Massachusetts 02155, Attention: Christine D. Kuhn, or
to such other address as Trustee may specify. No communication
shall be binding upon Trustee until it is received by Trustee.
Communications to Company shall be sent to Company's principal
office at 1025 West NASA Boulevard, Melbourne, Florida 32919,
Attention: Corporate Secretary, or to such other address as
Company may specify.
Section 16. Non-Alienation of Benefits. No benefit under a
- ----------------------------------------
Plan shall at any time be subject in any manner to alienation
or encumbrance. If any Participant or beneficiary shall
attempt to, or shall, alienate or in any way encumber his
benefits under a Plan, or any part thereof, or if by reason of
his bankruptcy or other event happening at any time any such
benefits would otherwise be received by anyone else or would
not be enjoyed by him, his interest in all such benefits shall
automatically terminate and the same shall be held or applied
to or for the benefit of such person, his spouse, children, or
other dependents in accordance with the terms of such Plan.
Section 17. Payment of Benefits to Others. If any
- -------------------------------------------
Participant or beneficiary to whom a benefit is payable under a
Plan is unable to care for his affairs because of illness or
accident, any payment due may be made to a duly qualified
guardian or other legal representative. Unless prior claims
therefor shall have been made by a duly qualified guardian or
other legal representative, payments may be paid to the spouse,
parent, brother, or sister, or any other individual in
accordance with the terms of such Plan.
Section 18. Arbitration. Any dispute between Participants
- -------------------------
and Company or Trustee as to the interpretation or application
of the provisions of the Agreement and amounts payable under a
Plan shall be determined exclusively by binding arbitration in
- 11 -
<PAGE> 14
Melbourne, Florida in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court or competent
jurisdiction. All fees and expenses of such arbitration shall
be paid by the Trustee and considered an expense of the Trust.
Section 19. Trust Benefits Limited to Plan Benefits.
- -----------------------------------------------------
Nothing herein contained shall be construed as conferring upon
any person any rights with respect to the Trust or the
administration thereof other than the right to such benefits as
may be provided with respect to such person by the terms of a
Plan. All rights created under the Plans and this Agreement
shall be mere unsecured contractual rights of the Participant
against Company.
Section 20. Effective Date.
- ----------------------------
The effective date of this Trust Agreement shall be
May 27, 1993.
HARRIS CORPORATION
By: /s/ Jeffrey P. Morrill
-----------------------------
Title: Assistant Treasurer
--------------------------
Date: January 6, 1994
---------------------------
BOSTON SAFE DEPOSIT AND TRUST
COMPANY
By: /s/ Christine D. Kuhn
-----------------------------
Title: Vice President
--------------------------
Date: January 7, 1994
---------------------------
1230t
12/93
- 12 -
<PAGE> 15
APPENDIX A
----------
Harris Corporation Master Rabbi Trust Agreement
Supplemental Benefits Plans
---------------------------
- - Harris Corporation Supplemental Executive Retirement Plan
- - Lanier Worldwide, Inc. Supplemental Executive Retirement
Plan
- - Harris Corp. Directors Retirement Plan
- - Harris Corp. Deferred Compensation Plan for Principal
Executives
- - Individual Deferred Compensation Agreements
<PAGE> 1
<TABLE>
EXHIBIT 11 - COMPUTATION OF NET INCOME PER SHARE
<CAPTION>
Quarter Ended Two Quarters Ended
---------------------------- --------------------------
December 31, December 25, December 31, December 25,
1993 1992 1993 1992
---------- ---------- ---------- ----------
(In millions except per share amounts)
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 39.9 39.4 39.8 39.4
===== ===== ===== =====
Income before cumulative effect of
change in accounting principle $30.0 $25.4 $54.7 $46.1
Cumulative effect of change in
accounting principle - - (10.1) -
----- ----- ----- -----
Net income $30.0 $25.4 $44.6 $46.1
===== ===== ===== =====
Per share amounts:
Income before cumulative effect of
change in accounting principle $.75 $.64 $1.37 $1.17
Cumulative effect of change in
accounting principle - - (.25) -
---- ---- ----- -----
Total $.75 $.64 $1.12 $1.17
==== ==== ===== =====
Fully diluted:
Total primary average shares
outstanding 39.9 39.4 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 .1 .2 .1
----- ----- ----- -----
Average fully diluted shares
outstanding 40.1 39.5 40.0 39.5
===== ===== ===== =====
Per share amounts:
Income before cumulative effect of
change in accounting principle $.75 $.64 $1.36 $1.17
Cumulative effect of change in
accounting principle - - (.25) -
---- ---- ----- -----
Total $.75 $.64 $1.11 $1.17
==== ==== ===== =====
</TABLE>
