<PAGE> 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, 1995 COMMISSION FILE NUMBER 1-3863
HARRIS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 34-0276860
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(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
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1025 W. 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, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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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.
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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/
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of August 31, 1995 is $2,222,850.00.
The number of shares outstanding of the registrant's class of common stock,
as of August 31, 1995 is 39,122,312.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement to be filed September 15, 1995
(Incorporated by Reference into Part III).
<PAGE> 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 1995
through three business sectors and a subsidiary, which correspond to its
business segments used for financial reporting purposes: Communications Sector,
Semiconductor Sector, Lanier Worldwide, Inc. and Electronic Systems Sector.
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 fiscal 1995 increased to $3.4 billion from $3.3 billion a
year earlier. Total sales in the United States increased 3.1 percent, and
international sales, which amounted to 30 percent of the corporate total,
increased 3.5 percent. Net Income increased 38.2 percent to $154.5 million from
$111.8 million. 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:
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.
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.
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.
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, public safety, simulation, energy management,
law enforcement, electronic systems testing, airports, and newspaper
composition.
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.
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NET SALES AND OPERATING PROFIT BY BUSINESS SEGMENT
(DOLLARS IN MILLIONS)
NET SALES
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YEAR ENDED COMMUNI- SEMI- LANIER ELECTRONIC
JUNE 30 CATIONS CONDUCTOR WORLDWIDE SYSTEMS TOTAL
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1993................... $544.2 $590.8 $ 922.0 $1,042.1 $ 3,099.1
1994................... 628.2 635.3 943.7 1,128.9 3,336.1
1995................... 724.8 658.7 1,024.8 1,035.8 3,444.1
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OPERATING PROFIT
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YEAR ENDED COMMUNI- SEMI- LANIER ELECTRONIC CORPORATE INTEREST
JUNE 30 CATIONS CONDUCTOR WORLDWIDE SYSTEMS EXPENSE EXPENSE TOTAL
----------------------- ------- ------- ------- ------- ------- ------- ------
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1993................... $43.9 $44.4 $ 84.2 $ 98.9 $(41.7 ) $(59.9 ) $169.8
1994................... 57.6 70.2 89.8 101.3 (67.1 )* (58.3 ) 193.5
1995................... 68.5 83.0 105.7 95.5 (49.7 ) (65.4 ) 237.6
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*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.
COMMUNICATIONS
The Communications Sector of the Company designs, manufactures, and sells
products characterized by three principal communication technologies:
telecommunications, including microwave products and systems, digital telephone
switches, telephone test equipment and auxiliary telecommunication products;
broadcast, including radio and television products and transmission systems; and
two-way radio, including high-frequency (HF), very high frequency (VHF) and
ultra-high frequency (UHF) products, and complete turnkey communication systems.
Sales in fiscal 1995 for this business segment increased 15.4 percent to
$724.8 million from $628.2 million. The sector recorded operating profit of
$68.5 million, up from $57.6 million in fiscal 1994. The sector contributed 21
percent of Company sales in fiscal 1995 and 19 percent in fiscal 1994.
The sector is a worldwide supplier of voice and data digital network
switches and private-branch exchanges (PBXs) to long-distance carriers,
utilities, corporations and government agencies.
The sector also 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.
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.
2
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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
$309 million at June 30, 1995, substantially all of which is expected to be
filled during the 1996 fiscal year, compared with $300 million a year earlier.
SEMICONDUCTOR
The Semiconductor Sector of the Company produces advanced analog, digital,
power and mixed-signal integrated circuits and discrete 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 1995 for this business segment increased 3.7 percent to
$658.7 million from $635.3 million in fiscal 1994. The sector's operating profit
was $83.0 million in fiscal 1995, compared with $70.2 milion in fiscal 1994. The
sector contributed 19 percent of Company sales in fiscal 1995 and 1994.
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 ignition systems, anti-lock braking and
engine control, and instrument display.
The sector is a major supplier of devices which address the communications
market through the provision of complex functions, including wireless, broadband
and data conversion components. In addition, the sector is a leader in
mixed-signal telecommunication line card applications, including SLICs
(subscriber line interface circuits), CODECs (Coder/Decoder), and cross-point
switches used in private-branch-exchange (PBX) systems and of other circuits for
cellular communications, high resolution medical imaging, broadcast and
interactive cable 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."
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The integrated circuit manufacturing technology and integrated circuit
industry is characterized by rapid advances in product performance technology.
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
$354 million at June 30, 1995, substantially all of which is expected to be
filled during the 1996 fiscal year, compared with $298 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 1995 for this business segment increased 8.6 percent to
$1,024.8 million from $943.7 million in fiscal year 1994. Operating profit was
$105.7 million, up from $89.8 million last year. Lanier Worldwide contributed 30
percent of Company sales in fiscal 1995 and 28 percent in 1994.
Lanier Worldwide provides copying, dictation, continuous recording,
facsimile systems and multi-functional devices, as new management solutions,
facilities management operations and other services through a global network of
direct sales and service centers 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.
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, 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, airports, electric utilities, newspapers and publishing
houses.
Sales in fiscal 1995 for this business segment decreased 8.2 percent to
$1,035.8 million from $1,128.9 million in fiscal 1994. Sales in fiscal 1994
included a computer systems business which was spun off to shareholders in
fiscal 1995. Excluding the sales of this business in 1994, sales decreased 2.7
percent. Operating profit of $95.5 million decreased from $101.3 million in the
previous year. This sector contributed 30 percent of Company sales in fiscal
1995 and 34 percent in 1994.
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.
4
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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 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
$568 million at June 30, 1995, substantially all of which is expected to be
filled during the 1996 fiscal year, compared with $530 million a year earlier.
INTERNATIONAL BUSINESS
In fiscal 1995, sales of products exported from the United States or
manufactured abroad were $1,016 million or 29.5 percent of the corporate total,
compared with $982 million or 29.4 percent of the corporate total in fiscal 1994
and $877 million (28.3 percent) in fiscal 1993. Exports from the United States,
principally to Europe and Asia, totalled $525 million or 51.6 percent of the
international sales in fiscal 1995, $388 million or 39.5 percent of the
international sales in fiscal 1994 and $295 million or 33.7 percent in fiscal
1993 of the international sales.
Foreign operations represented 14.3 percent of consolidated net sales and
22.7 percent of consolidated total assets as of June 30, 1995. 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 and Ireland 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 from 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, taxes, 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 and political 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.
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Financial information regarding the Company's domestic and international
operations is contained in the Note Business Segments in the Notes to Financial
Statements.
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 quality and
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 30.4 percent, 34.8
percent, and 35.7 percent of total sales in 1995, 1994 and 1993 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 diversify and reduce its reliance on defense contracts.
Harris' backlog of unfilled orders was approximately $1.2 billion at June
30, 1995 and $1.1 billion at June 30, 1994. Substantially all of the backlog
orders at June 30, 1995 are expected to be filled by June 30, 1996.
RESEARCH AND ENGINEERING
Research and engineering expenditures by Harris totaled approximately $601
million in 1995, $624 million in 1994 and $564 million in 1993.
Company-sponsored research and product development costs were $134 million in
1995, $128 million in 1994 and $121 million in 1993. 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 and has
entered into a number of license agreements which generate royalty income.
Although existing license agreements have generated income in past years and
will do so in the future, there can be no assurances the Company will enter into
additional income producing agreements.
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. 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 capital expenses.
Waste treatment facilities and pollution control equipment have been
installed to satisfy legal requirements and to achieve the Company's waste
minimization and prevention goals. An estimated $.9 million was spent on
environmental capital projects in fiscal 1995. The Company currently forecasts
authorization for environmental-related capital projects totalling $1.2 million
in fiscal 1996. Such amounts may increase in future years. The Company
anticipates that capital expenditures may be required over the next several
years
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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, 1995, Harris had approximately 26,600 employees.
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 7.0 million square feet of manufacturing, administrative,
engineering and office facilities that are owned and about 3.5 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, 1995, the following facilities were in productive use by
Harris:
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SQ. FT. TOTAL SQ. FT. TOTAL
SECTOR FUNCTION OWNED LEASED
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Electronic Systems Office/Manufacturing 2,866,000 457,000
Semiconductor Office/Manufacturing 2,067,000 52,000
Communications Office/Manufacturing 750,000 628,000
Lanier Worldwide Office/Manufacturing 144,000 592,000
OTHER
Corporate Offices 1,188,000 121,000
Sales/Service Offices 13,700 1,690,000
---------- ----------
TOTALS 7,028,700 3,540,000
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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 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, the Company's 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
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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 remediation as a result
of past activities. The Company from time to time receives notices from the
United States Environmental Protection Agency and equivalent state environmental
agencies that it is a potentially responsible party ("PRP") under the
Comprehensive Environmental Response, Compensation and Liability Act (commonly
known as 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 management 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. All appellate briefs have been filed and a decision is
expected mid-calendar year 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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EXECUTIVE OFFICERS OF THE REGISTRANT AS OF SEPTEMBER 1, 1995.* (SEE ALSO ITEM 10
OF PART III).
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EXECUTIVE BUSINESS EXPERIENCE DURING
NAME AGE OFFICE HELD PAST FIVE YEARS
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<S> <C> <C> <C>
Phillip W. Farmer 57 Chairman, President and Chairman of the Board and Chief
Chief Executive Officer Executive Officer since July, 1995.
President since April, 1993. Chief
Operating Officer 1993-95.
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 60 President and President and Chief Executive
Chief Executive Officer Officer, Lanier Worldwide, Inc.
Lanier Worldwide, Inc. since March, 1987. Senior Vice
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 52 President -- Semiconductor President -- Semiconductor Sector
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.
</TABLE>
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*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.
9
<PAGE> 11
<TABLE>
<CAPTION>
EXECUTIVE BUSINESS EXPERIENCE DURING
NAME AGE OFFICE HELD PAST FIVE YEARS
---- --- ----------- --------------------------
<S> <C> <C> <C>
Allen S. Henry 55 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.
Guy W. Numann 63 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.
Bryan R. Roub 54 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 63 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.
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
EXECUTIVE BUSINESS EXPERIENCE DURING
NAME AGE OFFICE HELD PAST FIVE YEARS
---- --- ----------- --------------------------
<S> <C> <C> <C>
Richard L. Ballantyne 55 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.
W. Peter Carney 63 Vice President -- Vice President -- Corporate Relations
Corporate Relations since October, 1987. Director --
Corporate Communications, 1981 to
1987.
James L. Christie 43 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 48 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 53 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 62 Vice President -- Vice President -- Information
Information Management Management since August, 1980.
Director -- Management Information
Systems, 1976 to 1980.
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
EXECUTIVE BUSINESS EXPERIENCE DURING
NAME AGE OFFICE HELD PAST FIVE YEARS
---- --- ----------- --------------------------
<S> <C> <C> <C>
Ronald R. Spoehel 37 Vice President -- Vice President -- Corporate
Corporate Development Development since October, 1994.
Formerly, Senior Vice President,
ICF Kaiser International, Inc., in
various general management
assignments including member of the
office of the chairman, chief
financial officer, and treasurer,
1990 to 1994; and, Vice President,
Investment Banking, Lehman Brothers
(formerly Shearson Lehman Hutton
Inc.), 1985 to 1990.
David S. Wasserman 52 Vice President -- Treasurer Vice President -- Treasurer since
January, 1993. Vice President --
Taxes 1987 to 1993. Formerly Senior
Vice President, Midland-Ross
Corporation, 1979 to 1987.
</TABLE>
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
<PAGE> 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, Chicago, Philadelphia and Pacific Stock Exchanges and through the
Intermarket Trading System. As of August 31, 1995, there were 9,845 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:
<TABLE>
<CAPTION>
PER SHARE AMOUNTS (IN DOLLARS)
--------------------------------------------------------
QUARTERS ENDED
--------------------------------------------------------
9-30-94 12-31-94 3-31-95 6-30-95 TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Fiscal 1995
Dividends................... $.31 $.31 $.31 $.31 $1.24
Stock Prices (high/low)..... 49 1/8-41 3/8 48 7/8-38 48 3/8-40 1/2 53 3/8-46 3/8
</TABLE>
<TABLE>
<CAPTION>
9-30-93 12-31-93 3-31-94 6-30-94 TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
In August, 1995, the directors declared a quarterly cash dividend of 34
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, 1995. 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.
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED JUNE 30
------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales..................... $3,444.1 $3,336.1 $3,099.1 $3,004.0 $3,040.1
Income from continuing
operations before
extraordinary item and
cumulative effect of change
in accounting principle..... 154.5 121.9 111.1 87.5 19.5
Discontinued operations....... -- -- -- (9.3) --
Extraordinary loss from early
retirement of debt.......... -- -- -- (3.0) --
Cumulative effect of change in
accounting principle........ -- (10.1) -- -- --
Net income.................... 154.5 111.8 111.1 75.2 19.5
Per share data:
Income from continuing
operations before
extraordinary item and
cumulative effect of
change in accounting
principle................ 3.95 3.07 2.82 2.24 .50
Discontinued operations..... -- -- -- (.24) --
Extraordinary loss.......... -- -- -- (.08) --
Cumulative effect of
accounting change........ -- (.25) -- -- --
Net income.................. 3.95 2.82 2.82 1.92 .50
Cash dividends.............. 1.24 1.12 1.04 1.04 1.04
Net working capital........... 755.4 893.6 792.5 768.9 643.0
Total assets.................. 2,836.0 2,677.1 2,542.0 2,483.8 2,485.8
Long-term debt................ 475.9 661.7 612.0 612.5 563.3
</TABLE>
13
<PAGE> 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 1995 COMPARED WITH 1994 -- Sales in fiscal 1995 increased 3 percent while
income before cumulative effect of change in accounting principle increased 27
percent. Income for 1994 included a $17.8 million charge ($11.5 million after
income taxes) for the Corporation's write-off of securities received from a
prior-year sale of a discontinued business.
Semiconductor segment sales increased 4 percent despite a significant
decline in defense business. Strong sales of commercial products more than
offset the decline in military shipments. The segment reported a 37 percent
increase in net income for the year. Segment earnings benefited from increased
sales of core commercial products, continuing improvements in operating margins,
and increased patent royalty income. These increases were partially offset by
reduced gains from the ongoing sales of investment securities.
Communications segment sales increased 15 percent and net income increased
19 percent. The increase in sales and earnings resulted from growth in the
segment's radio communications, broadcast equipment, and telecommunication
systems businesses. Domestic sales were up sharply for the year and
international sales were maintained despite economic disruptions in certain
major markets such as Mexico.
Sales in the Lanier Worldwide segment increased 9 percent while net income
increased 27 percent. Sales were strong in both domestic and international
markets. Segment earnings benefited from the increased profitability of Lanier's
European and other international operations.
Electronic Systems sales and net income decreased 8 and 12 percent,
respectively. Prior-year results included a computer systems business which was
spun off to shareholders in the first quarter of fiscal 1995. Excluding the
computer systems business from fiscal 1994 results, sales and net income
decreased 3 and 9 percent, respectively. Segment results were adversely impacted
by lower sales to the U.S. Government and by delays in shipments of a new energy
management system.
Cost of sales, rentals, and services as a percentage of sales decreased to
67.6 percent from 68.2 percent in the prior year. Continuing margin improvement
in the Semiconductor and Communications segments was offset in part by a higher
cost ratio in the Electronic Systems segment. Engineering, selling, and
administrative expenses as a percentage of sales were 24.3 percent in fiscal
1995, compared to 24.9 percent in the prior year. Electronic Systems segment
operating expenses were sharply lower due to cost reduction efforts begun in the
second quarter of fiscal 1995. Corporation-sponsored research and development
expenditures were 4.9 percent more than the previous year's expenditures.
Interest income and interest expense were higher in fiscal 1995 due to
higher interest rates. "Other-net" expense was higher in fiscal 1995 because
1994 included a $15.6 million gain from the sale of a facility.
The provision for income taxes in fiscal 1995 was 35.0 percent of income
before income taxes compared to 37.0 percent in fiscal 1994. The lower rate in
fiscal 1995 resulted from increased tax benefits associated with foreign income.
CAPITAL EXPENDITURES -- Expenditures for land, buildings, and equipment totaled
$140 million in 1995, up from $117 million in the prior year. In addition,
during fiscal 1995, $65 million was invested in equipment for rental to
customers, up from $51 million invested in the prior year. Substantially all of
this investment in rental equipment is related to Lanier Worldwide products.
FISCAL 1994 COMPARED WITH 1993 -- Sales in fiscal 1994 increased 8 percent,
while income before cumulative effect of change in accounting principle
increased 10 percent. Income from 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
14
<PAGE> 16
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 completed during fiscal 1995. Restructuring actions
resulted primarily from a decision to close a facility in Singapore and related
employee-termination costs. Restructuring charges were partially offset by an
after-tax gain of $9.9 million from the sale of a fabrication facility. The sale
of this facility will not materially impact segment operations. 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.
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. 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.
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. In addition, 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.
15
<PAGE> 17
FINANCIAL CONDITION
Cash Position. At June 30, 1995, cash, and cash equivalents totaled $119
million, a decrease from $139 million at June 30, 1994. Marketable securities
were $22 million at June 30, 1995.
Receivables, Unbilled Costs, and Inventories. Notes and accounts receivable
amounted to $824 million at June 30, 1995, compared to $798 million a year
earlier. Unbilled costs and inventories increased $37 million over the prior
year to $870 million. The increase in these accounts is proportionate to the
increase in revenues.
Borrowing Arrangements. The Company has available $500 million under
revolving credit agreements until May 1, 2000. Under these agreements, $160
million was outstanding at June 30, 1995. In addition, the Company has $143
million in open bank credit lines, of which $106 million was available at June
30, 1995.
Capitalization. At June 30, 1995, debt totaled $646 million, representing
34.1 percent of total capitalization (defined as the sum of total debt plus
shareholders' equity). A year earlier, debt of $683 million was 36.5 percent of
total capitalization. Year-end long-term debt included $150 million of 10 3/8
percent debentures due 2018, $300 million of notes payable to banks and
insurance companies and $26 million of other long-term debt.
In 1995, the Company issued 484,937 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 $71 million during the 1995 fiscal year. The Company provides
limited health-care benefits to retirees who have 10 or more years of service.
In 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 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. 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 U.S. dollars is
included as a component of Shareholders' Equity. At June 30, 1995, the
cumulative translation adjustment reduced Shareholders' Equity by $10 million
compared to a reduction of $22 million at June 30, 1994.
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 1995,
1994, or 1993.
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
<PAGE> 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 to
be filed September 15, 1995. 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 to be filed September 15, 1995.
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 to be filed September 15, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended June 30, 1995, there existed no relationships
and there were no transactions reportable under this Item.
17
<PAGE> 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:
<TABLE>
<CAPTION>
PAGE
<S> <C>
(1) Financial Statements:
Consolidated Statement of Income -- Years ended June 30, 1995, 1994
and 1993........................................................... 23
Consolidated Statement of Retained Earnings --
Years ended June 30, 1995, 1994 and 1993.......................... 23
Consolidated Balance Sheet -- June 30, 1995 and 1994................ 24
Consolidated Statement of Cash Flows --
Years ended June 30, 1995, 1994 and 1993.......................... 25
Notes to Financial Statements....................................... 26
(2) Financial Statement Schedules:
For each of the three years in the period ended June 30, 1995.
Schedule II -- Valuation and Qualifying Accounts............... 33
</TABLE>
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.
*(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 is incorporated
herein by reference to Exhibit 10(c) of the Company's Annual Report
on Form 10-K for the year ended June 30, 1994.
*(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.
18
<PAGE> 20
*(e) Lanier Worldwide, Inc. Key Contributor Bonus Plan.
*(f) Lanier Worldwide, Inc. Long-Term Incentive Plan for Key
Employees.
*(g) Harris Corporation Retirement Plan.
*(h) Harris Corporation Supplemental Executive Retirement Plan
is incorporated by reference to Exhibit 10(h) of the Company's Annual
Report on Form 10-K for the year ended June 30, 1994.
(h)(i) Amendment to Harris Corporation Supplemental Executive
Retirement Plan.
*(i) Lanier Worldwide, Inc. Pension Plan is incorporated herein
by reference to Exhibit 10(i) of the Company's Annual Report on Form
10-K for the year ended June 30, 1994.
*(j) Lanier Worldwide, Inc. Savings Incentive Plan is
incorporated herein by reference to Exhibit 10(j) of the Company's
Annual Report on Form 10-K for the year ended June 30, 1994.
*(k) Lanier Worldwide, Inc. Supplemental Executive Retirement
Plan is incorporated herein by reference to Exhibit 10(k) of the
Company's Annual Report on Form 10-K for the year ended June 30,
1994.
*(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.
(12) Ratio of Earning to Fixed Charges.
(21) Subsidiaries of the Registrant.
(23) Consent of Ernst & Young LLP.
(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, 1995.
------------------
*Management contract or compensatory plan or arrangement.
19
<PAGE> 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 8, 1995
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------------------------------------------------------------------------- ----------------
<S> <C> <C>
/s/ PHILLIP W. FARMER Chairman of the Board, President
Phillip W. Farmer 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
/s/ RALPH D. DENUNZIO Director
</TABLE>
September 8, 1995
<TABLE>
<S> <C> <C>
Ralph D. DeNunzio
/s/ JOSEPH L. DIONNE Director
Joseph L. Dionne
/s/ C. JACKSON GRAYSON, JR. Director
C. Jackson Grayson, Jr.
/s/ JOHN T. HARTLEY Director
John T. Hartley
/s/ KAREN KATEN Director
Karen Katen
/s/ WALTER F. RAAB Director
Walter F. Raab
/s/ ALEXANDER B. TROWBRIDGE Director
Alexander B. Trowbridge
</TABLE>
20
<PAGE> 22
ANNUAL REPORT ON FORM 10-K
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
YEAR ENDED JUNE 30, 1995
HARRIS CORPORATION
MELBOURNE, FLORIDA
21
<PAGE> 23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Harris Directors and Shareholders:
We have audited the accompanying consolidated balance sheet of Harris
Corporation and subsidiaries as of June 30, 1995 and 1994, and the related
consolidated statements of income, retained earnings, and cash flows for each of
the three years in the period ended June 30, 1995. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements and
schedule 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Harris
Corporation and subsidiaries at June 30, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, 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
July 27, 1995
22
<PAGE> 24
FINANCIAL STATEMENTS
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
<CAPTION> Years ended June 30
-------------------------------------------------------------------------------------------------------
In millions except per share amounts 1995 1994 1993
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
Revenue from product sales and rentals $3,032.2 $2,972.0 $2,739.2
Revenue from services 411.9 364.1 359.9
Interest 36.8 33.3 34.2
-------------------------------------------------------------------------------------------------------
3,480.9 3,369.4 3,133.3
COSTS AND EXPENSES
Cost of product sales and rentals 2,075.9 2,055.7 1,872.7
Cost of services 252.6 219.1 213.3
Engineering, selling, and administrative expenses 835.8 830.8 822.2
Interest 65.4 58.3 59.9
Write-off of securities - 17.8 -
Other-net 13.6 (5.8) (4.6)
-------------------------------------------------------------------------------------------------------
3,243.3 3,175.9 2,963.5
-------------------------------------------------------------------------------------------------------
Income before income taxes 237.6 193.5 169.8
Income taxes 83.1 71.6 58.7
-------------------------------------------------------------------------------------------------------
Income before cumulative effect of change
in accounting principle 154.5 121.9 111.1
Cumulative effect of change in accounting principle -
net of income taxes - (10.1) -
-------------------------------------------------------------------------------------------------------
Net income $ 154.5 $ 111.8 $ 111.1
=======================================================================================================
Income per share:
Before cumulative effect of change in accounting principle $3.95 $3.07 $2.82
Cumulative effect of change in accounting principle - (.25) -
-------------------------------------------------------------------------------------------------------
Net income per share $3.95 $2.82 $2.82
=======================================================================================================
Consolidated Statement of Retained Earnings
Years ended June 30
-------------------------------------------------------------------------------------------------------
In millions except per share amounts 1995 1994 1993
-------------------------------------------------------------------------------------------------------
Balance at beginning of year $943.1 $906.7 $836.4
Net income for the year 154.5 111.8 111.1
Cash dividends ($1.24 per share in 1995,
$1.12 per share in 1994 and $1.04 per share in 1993) (48.2) (44.2) (40.8)
Non-cash dividend (55.2) - -
Treasury stock retired (24.8) (31.2) -
-------------------------------------------------------------------------------------------------------
Balance at end of year $969.4 $943.1 $906.7
=======================================================================================================
</TABLE>
See Notes to Financial Statement
Harris Corporation
23
<PAGE> 25
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
June 30
-----------------------------------------------------------------------------------------------------
In millions 1995 1994
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 119.3 $ 139.1
Marketable securities 22.3 -
Receivables 657.1 647.2
Unbilled costs and accrued earnings on fixed-price contracts 374.9 369.7
Inventories 494.9 463.1
Deferred income taxes 142.2 79.2
-----------------------------------------------------------------------------------------------------
Total current assets 1,810.7 1,698.3
OTHER ASSETS
Plant and equipment 581.0 551.3
Notes receivable-net 166.6 151.1
Intangibles resulting from acquisitions 166.6 166.0
Other assets 111.1 110.4
-----------------------------------------------------------------------------------------------------
$2,836.0 $2,677.1
=====================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 37.7 $ 19.8
Trade accounts payable 168.7 184.5
Compensation and benefits 193.4 188.5
Other accrued items 168.4 164.9
Advance payments by customers 89.4 59.7
Unearned leasing and service income 174.6 129.3
Income taxes 90.5 57.0
Current portion of long-term debt 132.6 1.0
-----------------------------------------------------------------------------------------------------
Total current liabilities 1,055.3 804.7
OTHER LIABILITIES
Deferred income taxes 56.0 22.7
Long-term debt 475.9 661.7
SHAREHOLDERS' EQUITY
Preferred Stock, without par value:
1,000,000 shares authorized; none issued
Common Stock, $1.00 par value:
100,000,000 shares authorized; issued and outstanding
38,877,019 shares in 1995 and 39,298,118 shares in 1994 38.9 39.3
Other capital 240.3 230.3
Retained earnings 969.4 943.1
Net unrealized gain on securities available for sale 12.2 -
Unearned compensation (1.7) (3.2)
Cumulative translation adjustments (10.3) (21.5)
-----------------------------------------------------------------------------------------------------
Total shareholders' equity 1,248.8 1,188.0
-----------------------------------------------------------------------------------------------------
$2,836.0 $2,677.1
=====================================================================================================
</TABLE>
See Notes to Financial Statements.
24
Harris Corporation
<PAGE> 26
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended June 30
------------------------------------------------------------------------------------------------------
In millions 1995 1994 1993
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before cumulative effect of change in
accounting principle $154.5 $121.9 $111.1
Adjustments to reconcile income to net cash provided by
operating activities:
Depreciation 155.0 145.7 150.0
Amortization 10.3 7.7 7.3
Non-current deferred income taxes 33.3 12.1 (27.8)
Changes in assets and liabilities:
Receivables (49.5) (43.6) 8.0
Unbilled costs and inventories (53.4) (67.4) (58.1)
Trade payables and accrued liabilities (1.0) 39.7 (18.8)
Advance payments and unearned income 76.0 12.9 7.8
Income taxes (35.9) (33.6) 50.6
Other (.3) (22.3) (20.8)
------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 289.0 173.1 209.3
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for acquired business - - (25.9)
Capital expenditures-net of normal disposals (194.5) (134.9) (137.1)
------------------------------------------------------------------------------------------------------
Net cash used in investing activities (194.5) (134.9) (163.0)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 750.0 302.7 362.1
Payments of borrowings (787.8) (267.1) (373.7)
Cash dividends (56.6) (44.2) (40.8)
Purchase of Common Stock for treasury (29.8) (36.7) -
Proceeds from sale of Common Stock 8.6 13.5 10.3
------------------------------------------------------------------------------------------------------
Net cash used in financing activities (115.6) (31.8) (42.1)
------------------------------------------------------------------------------------------------------
Effect of translation on cash and cash equivalents 1.3 1.0 3.3
------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (19.8) 7.4 7.5
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 139.1 131.7 124.2
------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $119.3 $139.1 $131.7
======================================================================================================
</TABLE>
See Notes to Financial Statements.
25
Harris Corporation
<PAGE> 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 accounts 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.
MARKETABLE SECURITIES-Marketable securities are stated at fair value, with the
unrealized gains and losses, net of tax, included as a separate component of
shareholders' equity. Realized gains and losses from marketable securities are
determined using the specific identification method.
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 is carried on the basis of cost.
Depreciation of buildings, machinery and equipment is computed by straight-line
and accelerated methods. The estimated useful lives of buildings range between
5 and 50 years. The estimated useful lives of machinery and equipment range
between 3 and 10 years. Depreciation of rental equipment is computed by the
straight-line method using estimated useful lives between 3 and 5 years.
INTANGIBLES-Intangibles resulting from acquisitions are being amortized by the
straight-line method principally over 40 years. Recoverability of intangibles
is assessed using estimated undiscounted cash flows of related operations.
INCOME TAXES-The Corporation follows the liability method of accounting for
income taxes.
REVENUE RECOGNITION-Revenue is recognized from sales other than on 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 employees' savings with no other
funding requirements. The Corporation may make additional contributions to the
fund at its discretion. The Corporation also has non-contributory
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.
UNEARNED COMPENSATION-Compensation resulting from performance shares granted
under the Corporation's long-term incentive plan 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.
EARNINGS PER SHARE-Income per share is based upon the weighted average number
of common shares outstanding during each year.
ACCOUNTING CHANGES
In 1995, the Corporation adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities."
Under the provisions of this standard, the Corporation's marketable
securities, all of which are classified as available-for-sale, are reported at
fair value, with unrealized gains and losses excluded from net income. The net
after-tax amount of unrealized gains and losses is reported as a separate
component of shareholders' equity until realized. The cost basis of marketable
securities at June 30, 1995, was $2.3 million. The amount of gross realized
gains included in net income in 1995 was not material.
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 $10.1
million net of income tax benefits of $6.4 million. The impact of this change
on income before cumulative effect of change in accounting principle was not
material in 1994.
26
Harris Corporation
<PAGE> 28
NONRECURRING ITEMS
In 1994, the Corporation's residual holding in a company that acquired its 1989
discontinued data-communication business became impaired due to bankruptcy
proceedings. Consequently, the Corporation provided $17.8 million ($11.5
million after income taxes or 29 cents per share) to write off its interest in
equity securities and promissory notes of this company. Also in 1994, the
Corporation sold a Semiconductor fabrication facility for $35.5 million in
cash. This sale resulted in a gain of $15.6 million ($9.9 million after income
taxes or 25 cents per share) and is included in "Other-net" expense in the
Consolidated Statement of Income.
CONTINGENCIES RESULTING FROM
DISCONTINUED OPERATION
In 1993, a jury in a California state court awarded a California software
company $13.4 million in compensatory damages and $85.0 million in punitive
damages against the Corporation. The court reduced the punitive damages to
$53.4 million, and entered judgment for the compensatory and punitive damages,
together with interest and costs of suit. The suit arose from a contract
between the plaintiff and a discontinued operation of the Corporation. The
Corporation believes the judgment is unjustified and has appealed to the
California Court of Appeals. The plaintiff has filed a separate appeal seeking
reinstatement of the original punitive damage award. The appeals court is
expected to render its decision by June 1996. No provisions beyond those
already provided as part of prior discontinued operation charges have been made
in the accompanying consolidated financial statements. Prior discontinued
operation charges included legal costs the Corporation expects to incur in
defending itself in this matter.
<TABLE>
RECEIVABLES
<CAPTION>
Receivables are summarized below:
--------------------------------------------------------------
(In millions) 1995 1994
--------------------------------------------------------------
<S> <C> <C>
Accounts receivable $588.3 $581.8
Notes receivable due within one year-net 98.8 94.9
--------------------------------------------------------------
687.1 676.7
Less allowances for collection losses 30.0 29.5
--------------------------------------------------------------
$657.1 $647.2
==============================================================
INVENTORIES AND UNBILLED COSTS
Inventories are summarized below:
--------------------------------------------------------------
(In millions) 1995 1994
--------------------------------------------------------------
Finished products $184.4 $185.6
Work in process 226.8 200.0
Raw materials and supplies 83.7 77.5
--------------------------------------------------------------
$494.9 $463.1
==============================================================
</TABLE>
Unbilled costs and accrued earnings on fixed-price contracts are net of
progress payments of $240.2 million in 1995 and $206.4 million in 1994.
<TABLE>
<CAPTION>
PLANT AND EQUIPMENT
Plant and equipment are summarized below:
-------------------------------------------------------------------
(In millions) 1995 1994
-------------------------------------------------------------------
<S> <C> <C>
Land $ 30.2 $ 30.3
Buildings 441.9 431.4
Machinery and equipment 1,133.4 1,068.8
Rental equipment 211.7 188.3
-------------------------------------------------------------------
1,817.2 1,718.8
Less allowances for depreciation 1,236.2 1,167.5
-------------------------------------------------------------------
$ 581.0 $ 551.3
===================================================================
</TABLE>
INTANGIBLES
Accumulated amortization of intangible assets at June 30 was $43.1 million for
1995 and $33.1 million for 1994.
CREDIT ARRANGEMENTS
The Corporation maintains revolving credit agreements which provide for
borrowing up to $500.0 million until May 1, 2000. These agreements provide for
advances under a competitive advance facility and a committed facility at
various interest rates, but in no event above LIBOR plus 0.225 percent. A
facility fee of 0.125 percent per annum is payable on the credit. The
Corporation is not required to maintain compensating balances in connection
with these agreements. Under these agreements, $160.0 million was outstanding
at June 30, 1995, $150.0 million of which has been classified as long-term
based on the Corporation's intent to maintain borrowings of at least that
amount for the next year.
The Corporation also has lines of credit for short-term financing
aggregating $142.6 million from various U.S. and foreign banks, of which $105.8
million was available on June 30, 1995. 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:
<TABLE>
<CAPTION>
-------------------------------------------------------------------
(In millions) 1995 1994
-------------------------------------------------------------------
<S> <C> <C>
Bank notes $33.1 $14.5
Other 4.6 5.3
-------------------------------------------------------------------
$37.7 $19.8
===================================================================
LONG-TERM DEBT
Long-term debt includes the following:
-------------------------------------------------------------------
(In millions) 1995 1994
-------------------------------------------------------------------
<S> <C> <C>
Notes payable to banks $150.0 $200.0
10 3/8% debentures, due 2018 150.0 150.0
Notes payable to insurance companies 150.0 250.0
Unsecured term notes 4.5 34.5
Other 21.4 27.2
-------------------------------------------------------------------
$475.9 $661.7
===================================================================
</TABLE>
Harris Corporation
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS
The weighted average interest rate for notes payable to banks was 6.2
percent in 1995 and 4.8 percent in 1994. The weighted average interest rate for
notes payable to insurance companies was 9.7 percent in 1995 and 9.4 percent in
1994. Indentures and note agreements contain certain financial covenants
including maintenance of at least $800.0 million 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 1995 are: $132.6 million in 1996, $1.5
million in 1997, $5.6 million in 1998, $57.0 million in 1999, and $187.7
million in 2000.
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
Changes in shareholders' equity accounts other than retained earnings are summarized as follows:
------------------------------------------------------------------------------------------------------------------------------------
Common Net Unrealized Cumulative
Stock Other Gain on Unearned Translation
(In millions) Amount Capital Securities Compensation Adjustments
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JULY 1, 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)
Adjustment to beginning balance for change in accounting
method, net of income taxes of $7.1 - - 11.1 - -
Shares issued under Stock Option Plan (136,058 shares) .1 4.0 - - -
Shares granted under Stock Incentive Plans (249,950 shares) .3 10.6 - (10.9) -
Compensation expense - - - 11.8 -
Termination and award of shares granted under
Stock Incentive Plans (202,536 shares) (.2) (4.7) - .6 -
Shares sold under Employee Stock Purchase Plans
(98,929 shares) .1 4.4 - - -
Change in unrealized gains on securities, net of
income taxes of $.7 - - 1.1 - -
Foreign currency translation adjustments - - - - 11.2
Purchase and retirement of Common Stock for treasury
(703.500 shares) (.7) (4.3) - - -
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1995 $38.9 $240.3 $12.2 $(1.7) $(10.3)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 transferable 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 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 that 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.
28
<PAGE> 30
NON-CASH DIVIDEND
In 1995, the Corporation spun off as a tax-free dividend its computer systems
business by distributing one share of Harris Computer Systems Corporation
common stock for every 20 shares of the Corporation's Common Stock. Cash
dividends shown in the Consolidated Statement of Cash Flows includes the $8.4
million cash balance of the Harris Computer System Corporation at the time of
the spin-off; the remainder of the dividend is a non-cash transaction.
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.
<TABLE>
<CAPTION>
--------------------------------------------------------------
Number of Option Prices
Shares Per Share
--------------------------------------------------------------
<S> <C> <C>
Exercised during the year:
1993 411,538 $14.38 to $35.69
1994 504,203 $14.38 to $38.63
1995 283,604 $23.75 to $50.50
Granted during 1995 159,994 $40.63 to $52.88
Expired during 1995 20,750 $30.88 to $52.25
Terminations during 1995 2,074 $21.88 to $48.50
Outstanding at June 30, 1994 751,926 $14.38 to $52.25
Outstanding at June 30, 1995 605,492 $21.88 to $52.88
Exercisable at June 30, 1994 581,660 $14.38 to $46.88
Exercisable at June 30, 1995 508,251 $21.88 to $51.00
==============================================================
</TABLE>
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 625,551 at June 30, 1995; 735,966 at June 30, 1994; and
608,306 at June 30, 1993. Shares of Common Stock reserved for future awards
under the plan were 1,046,717 at June 30, 1995; 864,970 at June 30, 1994; and
749,169 at June 30, 1993.
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, 98,929 shares were issued
during fiscal 1995. Shares of Common Stock reserved for future purchases by the
retirement plan were 1,361,568 at June 30, 1995.
RETIREMENT PLANS
Retirement and defined-benefit plans expense amounted to $71.2 million in 1995,
$70.2 million in 1994, and $56.9 million in 1993.
RESEARCH AND DEVELOPMENT
Corporation-sponsored research and product development costs were $133.9
million in 1995, $127.7 million in 1994, and $120.6 million in 1993.
INTEREST EXPENSE
Total interest was $65.4 million in 1995, $58.6 million in 1994, and $60.2
million in 1993, of which $.3 million was capitalized in 1994 and 1993.
Interest paid was $64.8 million in 1995, $59.0 million in 1994, and $60.8
million in 1993.
LEASE COMMITMENTS
Total rental expense amounted to $52.7 million in 1995, $52.9 million in 1994,
and $56.1 million in 1993. Future minimum rental commitments under leases,
primarily for land and buildings, amounted to approximately $185.9 million at
June 30, 1995. These commitments for the years following 1995 are: 1996-$48.5
million; 1997-$36.0 million; 1998- $23.4 million; 1999-$17.7 million;
2000-$12.0 million; and $48.3 million thereafter.
INCOME TAXES
The provisions for income taxes are summarized as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------
(In millions) 1995 1994 1993
--------------------------------------------------------------
<S> <C> <C> <C>
Current:
United States $ 89.0 $ 50.0 $ 18.6
International 19.9 11.3 20.7
State and local 11.7 4.9 6.0
--------------------------------------------------------------
120.6 66.2 45.3
--------------------------------------------------------------
Deferred:
United States (32.5) (2.8) 15.6
International (4.7) 5.6 (.4)
State and local (.3) 2.6 (1.8)
--------------------------------------------------------------
(37.5) 5.4 13.4
--------------------------------------------------------------
$ 83.1 $ 71.6 $ 58.7
==============================================================
</TABLE>
The components of deferred income tax assets (liabilities) at June 30 are as
follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(In millions) 1995 1994
--------------------------------------------------------------------------
CURRENT NON-CURRENT Current Non-Current
DEFERRED DEFERRED Deferred Deferred
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Completed contracts $ 7.1 $ - $(13.2) $ 20.6
Inventory valuations 13.5 - 15.8 -
Accruals 117.6 7.3 73.9 8.5
Depreciation - (54.3) - (49.3)
Leases (.5) (19.8) (1.0) (18.3)
International tax loss
carryforwards - 9.7 - 12.8
All other net 4.5 16.8 6.6 15.8
--------------------------------------------------------------------------
142.2 (40.3) 82.1 (9.9)
Valuation allowance - (15.7) (2.9) (12.8)
--------------------------------------------------------------------------
$142.2 $(56.0) $ 79.2 $(22.7)
==========================================================================
</TABLE>
Harris Corporation
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS
A reconciliation of the the statutory United States income tax rate to the
effective income tax rate follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
(In millions) 1995 1994 1993
--------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. income tax rate 35.0% 35.0% 34.0%
State taxes 3.1 2.6 1.6
Adjustment to prior-year accruals - - (3.1)
International income (4.0) 1.2 2.2
Tax benefits related to export sales (1.4) (3.1) (1.4)
Nondeductible amortization .8 .9 .7
Other items 1.5 .4 .6
--------------------------------------------------------------------
Effective income tax rate 35.0% 37.0% 34.6%
====================================================================
</TABLE>
United States income taxes have not been provided on $440.2 million 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 of international subsidiaries was $63.2 million in 1995,
$55.9 million in 1994, and $38.2 million in 1993.
Income taxes paid were $79.2 million in 1995, $80.2 million in 1994, and
$24.4 million in 1993.
BUSINESS SEGMENTS
Descriptions of the Corporation's business segments appear on page 1. Net
sales and operating profit by segment are on page 2. These pages
are an integral part of these financial statements.
Sales made to the U.S. government by all segments (primarily Electronic
Systems segment) were 30.4 percent of total sales in 1995, 34.8 percent of
total sales in 1994, and 35.7 percent of total sales in 1993. 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:
<TABLE>
<CAPTION>
------------------------------------------------------------
(In millions) 1995 1994 1993
------------------------------------------------------------
<S> <C> <C> <C>
IDENTIFIABLE ASSETS
Communications $ 442.5 $ 406.2 $ 370.5
Semiconductor 639.2 609.3 643.1
Lanier Worldwide 831.6 738.6 689.2
Electronic Systems 672.3 730.8 657.9
Corporate 250.4 192.2 181.3
------------------------------------------------------------
$2,836.0 $2,677.1 $2,542.0
============================================================
CAPITAL EXPENDITURES
Communications $ 22.6 $ 17.5 $ 16.5
Semiconductor 80.4 43.6 27.4
Lanier Worldwide 13.0 14.1 8.9
Electronic Systems 18.6 26.5 34.5
Corporate 5.4 14.9 8.1
------------------------------------------------------------
$ 140.0 $ 116.6 $ 95.4
============================================================
DEPRECIATION
Communications $ 14.8 $ 13.9 $ 13.1
Semiconductor 44.5 47.5 52.0
Lanier Worldwide 10.0 7.0 6.9
Electronic Systems 25.7 29.0 30.4
Corporate 10.2 6.5 6.8
------------------------------------------------------------
$ 105.2 $ 103.9 $ 109.2
============================================================
GEOGRAPHICAL
INFORMATION
U.S. operations:
Net sales $2,952.4 $2,741.8 $2,517.2
Operating profit 174.4 137.6 131.6
Identifiable assets 2,191.9 2,041.2 1,951.0
International operations:
Net sales $ 491.7 $ 594.3 $ 581.9
Operating profit 63.2 55.9 38.2
Identifiable assets 644.1 635.9 591.0
============================================================
</TABLE>
Corporate assets consist primarily of cash, cash equivalents, deferred
income taxes, and plant and equipment.
Export sales were approximately $524.6 million in 1995, $387.6 million in
1994, and $295.4 million in 1993. Export sales and net sales of international
operations were made principally to Europe and Asia.
FINANCIAL INSTRUMENTS
The Corporation uses foreign exchange contracts and options to hedge
intercompany accounts and off-balance-sheet foreign currency commitments.
Specifically, these foreign exchange contracts offset foreign currency
denominated inventory and purchase commitments from suppliers, accounts
receivable from--and future committed sales to--customers, and firm committed
operating expenses. Management believes the use of foreign currency financial
instruments should reduce the risks that arise from doing business in
international markets. Contracts are for periods consistent with the terms of
the underlying transaction, generally one year or less.
30
Harris Corporation
<PAGE> 32
At June 30, 1995, open foreign exchange contracts were $270.7 million (as
described below), of which $179.9 million were to hedge off-balance-sheet
commitments. Additionally, for the year ended June 30, 1995, the Corporation
purchased and sold $787.8 million of foreign exchange forward and option
contracts.
Deferred gains and losses are included on a net basis in the Consolidated
Balance Sheet as "Other assets" and are recorded in income as part of the
underlying transaction when it is recognized.
At June 30, 1995, the Corporation had $14.5 million in open option contracts.
Total open foreign exchange contracts at June 30, 1995, are described in the
table below.
COMMITMENTS TO BUY
FOREIGN CURRENCIES:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Contract Amount
---------------
Foreign Deferred Gains Maturities
(In millions) Currency U.S. and (Losses) (in months)
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Australian Dollar 7.2 $ 5.3 $(.1) 1 to 8
Canadian Dollar 16.6 12.0 - 1 to 4
Belgian Franc 72.0 2.4 .1 1 to 5
Irish Punt 5.8 8.8 .7 1 to 12
Japanese Yen 5,271.0 61.9 .8 1 to 6
Malaysian Ringgit 103.7 40.7 1.8 1 to 6
British Pound .4 .6 - 1
German Mark 12.7 8.5 .7 7
Italian Lira 1,000.0 .6 - 3
----------------------------------------------------------------------------------
</TABLE>
COMMITMENTS TO SELL
FOREIGN CURRENCIES:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Contract Amount
---------------
Foreign Deferred Gains Maturities
(In millions) Currency U.S. and (Losses) (in months)
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Australian Dollar 6.0 $ 4.4 $ - 1 to 10
Canadian Dollar 3.5 2.5 - 1
French Franc 82.4 15.9 (1.0) 1 to 12
German Mark 74.4 50.1 (3.7) 1 to 13
Italian Lira 22,945.0 13.3 (.8) 1 to 12
Japanese Yen 624.3 6.9 (.5) 1 to 3
British Pound 23.5 36.8 (.4) 1 to 19
----------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 33
QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data is summarized below.
<TABLE>
<CAPTION>
Quarters ended
----------------------------------------------------------------------------------------------------------------------------
Dollars in millions except per share amounts 9-30-94 12-31-94 3-31-95 6-30-95 TOTAL YEAR
----------------------------------------------------------------------------------------------------------------------------
FISCAL 1995
<S> <C> <C> <C> <C> <C>
Net sales $ 807.3 $ 863.1 $ 850.4 $ 923.3 $3,444.1
Gross profit 245.8 272.9 271.8 325.1 1,115.6
Income before income taxes 44.3 53.5 58.5 81.3 237.6
Net income 28.8 34.8 38.0 52.9 154.5
Per share:
Net income .73 .88 .98 1.36 3.95
Cash dividends .31 .31 .31 .31 1.24
Stock prices (high/low) 49-1/8 - 41-3/8 48-7/8 - 38 48-3/8 - 40-1/2 53-3/8 - 46-3/8
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Quarters ended
----------------------------------------------------------------------------------------------------------------------------
Dollars in millions except per share amounts 9-30-93 12-31-93 3-31-94 6-30-94(1) TOTAL YEAR
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 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
Cash 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
----------------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
</TABLE>
32
<PAGE> 34
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
HARRIS CORPORATION AND SUBSIDIARIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
=================================================================================================================
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
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1995:
Amounts Deducted From
Respective Asset Accounts $ 7,746(B)
257(C)
--------
Allowances for collection losses... $29,492 $ 7,897 $ 590(A) $ 8,003 $29,976
======= ======= ======= ======== =======
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
======= ======= ======= ======== =======
<FN>
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.
</TABLE>
33
<PAGE> 1
Exhibit 10(e)
LANIER WORLDWIDE, INC.
KEY CONTRIBUTOR BONUS PLAN
ALTERNATE
GENERAL INFORMATION:
The Key Contributor Bonus Plan (alternate) is an annual bonus plan
based on revenue growth over the previous fiscal year and actual
profit-after-tax results relative to the Annual Incentive Plan (AIP) for
Lanier Worldwide, Inc. and its operating units. The plan is intended to
motivate and reward key contributors for their leadership and contributions
within their business units. This plan is intended as an alternate to the
Return on Capital Key Contributor Plan for use in instances where the
company wishes to place greater emphasis on profit.
PARTICIPATION ELIGIBILITY:
Participants eligible for this plan are exempt, non-sales employees as
approved by management.
PARTICIPATION LEVELS:
The bonus potential of participants in this plan is determined on an
individual basis.
MAXIMUM BONUS POTENTIAL:
Participants in this plan may earn up to 120% of their annual target
bonus if the profit and revenue growth results of their measurement unit
exceed the profit and sales goals established.
MEASUREMENT UNIT(S):
The measurement unit for each participant in this plan must be
designated. The measurement unit for a participant may be any
organizational unit with an independent AIP, or any combination of such
units. The unit(s) used as the measurement for an individual participant
will be determined by management on the basis for the individual's sphere of
influence and contribution.
BONUS PAYMENTS:
Up to 20% of the annual target bonus opportunity will be advanced
quarterly based on results for each of the quarters. The remaining 20%
will be based on total year results. Payments are made quarterly
approximately six weeks following the end of the first three quarters.
The final year-end payment is made following the formal audit
certification for the year. Employees must be actively employed on the
last day of a quarter to qualify for the bonus calculated for that time
frame.
1
<PAGE> 2
BONUS MEASUREMENT:
Eighty percent (80%) of the plan is based on profit-after-tax and
twenty percent (20%) on revenue growth. If the maximum quarterly bonus
opportunity (i.e. 20% of annual target bonus) is not achieved in any of the
first three quarters, the deficiency can be caught up in subsequent
quarters based on a year-to-date calculation, provided the subsequent
quarter results are one hundred percent (100%) or greater of the bonus
measurement criteria. This plan provides a provision to earn in excess of
the target annual bonus for exceeding the final year-end plan. This
provision does not apply to quarterly calculations.
In order to earn a bonus under the revenue growth measurement a minimum
of 75% of the previous year's revenues must be attained. A minimum of 70%
of AIP profit after tax must be achieved for a bonus payment under the
profit measurement.
<TABLE>
<CAPTION>
Revenue Growth Measurement Profit-After-Tax Measurement
----------------------------------- -----------------------------------
% of Previous Year's % of Bonus % of AIP % of
Revenue Attained Earned Attained Bonus Earned
---------------- --------- ------- ------------
<S> <C> <C> <C>
Under 75 -0- Under 70 -0-
75 20 70 40
80 30 75 55
85 40 80 70
90 75 85 80
95 85 90 85
100 90 95 95
110 105 100 100
120 120 105 105
Over 120 120 110 110
120 120
Over 120 120
</TABLE>
Prorations will apply for attainment between the defined levels. The
payout formula for executives may differ from the above outline, but may
not exceed the percentages defined.
SPECIAL PROVISIONS:
New Hires: A participant's initial participation will be prorated
according to the date of hire or addition to the plan. Employees who begin
participation prior to or on the 15th of the month will be bonus eligible
as of the first of the month in which they become a participant. Employees
who begin participation on or after the 16th of the month will be eligible
as of the first of the following month.
Terminations: Employees must be actively employed on the last day of a
quarter to qualify for the bonus calculated for that time frame.
2
<PAGE> 3
Retirement or Death: In the event that an employee retires or dies
during the year, the employee will be eligible for prorated bonus payments
at the end of the last quarter worked and at the end of the fiscal year.
Leaves of Absence: Employees who go on leave of absence will not be
eligible for bonus beginning the first day of the month following their
last day of active employment. Employees returning from leave of absence
will begin eligibility on the first day of the month in which they return
to work, IF they return on or before the 15th of the month. If an
employee returns on the 16th or later, bonus eligibility will be reinstated
on the first day of the month following the return.
Promotions: In the event participation in this plan is affected by a
promotion, prorations will apply. Prorations will be based on the same
criteria as new hires.
Demotions/Transfer: In the event a participant is demoted or
transferred to a position not eligible to participate in this plan,
participation for the quarter in which the demotion/transfer takes place
will be prorated, provided the employee is still actively employed on the
last day of the quarter. Prorations will use the same criteria as new
hires to determine eligibility for the month of the position change. The
twenty percent of the annual bonus based on total year results will be
prorated under this same criteria and the number of months worked during
the fiscal year. If a participant in the plan is demoted or transferred to
a position qualilfying to participate in the plan at a lesser bonus level,
participation in the plan will continue for the year with appropriate
prorations based on the same criteria as new hires.
The company reserves the right to adjust the total bonus payout on a
final year-to-date basis (fourth quarter and final year-end payout), if the
actual quarterly bonus payout computation exceeds the total year bonus
payout computation by more than 10%.
BONUS PERIOD:
This is a fiscal year plan. Each fiscal year (July 1 to June 30) is an
independent plan year. Carryovers from one fiscal year to another are not
permitted.
ADMINISTRATION:
Participation in this plan is at the discretion of Lanier Worldwide,
Inc. All interpretations and exceptions to the plan are reserved for
senior management of the company.
REVISIONS:
This plan may be modified, replaced or canceled at any time as deemed
appropriate by Lanier Worldwide management.
LIMITATION:
Participants in this plan may not participate in any other annual
incentive plan.
3
<PAGE> 1
EXHIBIT 10(f)
LANIER WORLDWIDE, INC.
LONG-TERM INCENTIVE PLAN FOR KEY EMPLOYEES
(LTIP)
(AS AMENDED SEPTEMBER 1992)
I. NAME AND PURPOSE
----------------
The name of this plan is the Lanier Worldwide, Inc. Long-Term Incentive
Plan for Key Employees (LTIP). The purpose of the Plan is to facilitate the
attraction and retention of highly qualified key employees.
II. EFFECTIVE DATE; PERFORMANCE PERIOD; DEFERRED PAYMENT PERIOD; TERM
-----------------------------------------------------------------
A. The effective date of the plan shall be July 1, 1991. The Plan
is composed of three-year plan cycles with performance measured over the three
years of the cycle (the "Performance period"). Payouts will be made at the
end of the three-year performance period. It is contemplated that a new plan
cycle will start at the beginning of each fiscal year.
B. The Plan shall remain in effect until terminated by the Board.
III. AWARDS
------
A. Cash awards may be made from time to time to such employees of
the Company and its affiliates as may be selected by the Committee upon
recommendation of the Chief Executive Officer.
1
<PAGE> 2
B. The performance measurement criteria for the LTIP will be based
on the net income and return on capital objectives as stated in the approved
strategic plans of Lanier.
It is contemplated that, if a business unit achieves its net
income and return on capital objectives, there would be 100% payout of the
targeted award. Exceeding objectives would generally result in payouts above
100%, with a maximum payout of 200%. Performance below plan would likewise
generally result in a reduced payment, depending on the degree of and the
reasons for variation from the plan objectives. Performance significantly
below plan due primarily to "internal factors" would generally result in no
payment. Percentage payments would range from 0-200% in increments of 10%.
Each year all eligible plan participants will be advised of
their targeted award amounts, plus the strategic plan net income and return on
capital objectives.
C. Each award is based upon the assumption that the employee shall
continue to perform substantially the same duties throughout the performance
period, and such award may be reduced or increased to reflect a change in
duties during the performance period.
D. Awards shall be expresssed in U.S. dollar amounts. For
employees ordinarily paid in currency other than U.S. dollars, the dollar
amount of the award which is earned at the conclusion of the performance
period shall be translated into the currency in which the recipient is
ordinarily paid. The translation from the dollar amount to the local currency
shall be based on a single average of the currency exchange rates at the end of
each calendar quarter, as published in the WALL STREET JOURNAL, for the twelve
quarters that comprise the performance period. The result of this calculation
shall be ussed for the actual award payment.
E. An employee may elect to defer all or a portion of his award
until a specified future date or event, by giving written notification of his
intent ot make such a voluntary deferral election. The election to defer part
or all of the award must be made prior to the end of the second year of the
performance period. During the voluntary deferral period, the deferred amounts
shall accumulate interest at a rate set from time to time by the Committee.
However, employees shall
2
<PAGE> 3
have no security interest in the defered amounts, and the rights to these
deferred awards shall be the same as those of general creditors of the Company.
In consideration of overseas assignments, the Company may agree
to defer payments until completion of the assignment.
IV. RELATION TO EMPLOYEE BENEFITS PROGRAM
-------------------------------------
Awards paid under the Plan shall be excluded from the employee's
earning base used in determination of any payment of coverage under the
Company's employee benefit programs.
V. TERMINATION OF EMPLOYMENT
-------------------------
A. If the employee ceases to be an employee of the Company and its
affiliates prior to the expiration of the performance period: (i) for any
reason other than death, disability or retirement pursuant to an established
retirement plan or policy of the Corporation or of its appllicable affiliate,
all awards to the employee hereunder shall be forfeited; or (ii) due to death,
disability or retirement pursuant to an established retirement plan or policy
of the Company or of its affiliate, he shall be eligible to receive a pro-rata
proportion of the amount which would have been paid to him under any
outstanding awards at the end of the performance period, such pro-rata
proportion to be measured by a fraction of which the numerator is the number of
months of the performance period during which the employee's employment
continued, and the denominator is the full number of months of the performance
period. For purposes hereof, employment for any period of a month shall be
deemed employment for a full month.
B. If the employee ceases to be an employee of the Company and its
affiliates thereof due to death, disability or retirement pursuant to an
established retirement plan or policy of the Company of its affiliates, all
awards to be paid to him shall be paid thereto in the event of cessation
3
<PAGE> 4
of employment prior to the expiration of the performance period, within a
reasonable period following the expiration of the performance period.
VI. TRANSFER OF EMPLOYMENT
----------------------
If the employee transfers employment from one business unit of the
Company or one of its affiliates to another business unit during the
performance period, such employee shall be eligible to receive an amount
determined by the Committee based on such factors as the Committee in its sole
discretion may deem appropriate.
VII. TAX WITHHOLDING
---------------
Applicable federal, state or local withholding taxes of any kind
required by law to be withheld by the Company shall be withheld from payments
of awards.
VIII. CHANGE OF CONTROL
-----------------
A. Upon a "change of control" of the Company prior to the
expiration of the deferred payment period, the performance objectives
applicable to the award shall be conclusively deemed to have been fully
attained and the deferred payment period shall be deemed to have expired, and
all outstanding awards shall be paid.
B. For purposes of the Plan, a "change of control" shall mean the
change of control of Harris Corporation as determined by its Board of
Directors.
4
<PAGE> 5
IX. MISCELLANEOUS
-------------
A. An employee shall not assign, transfer, or encumber his rights
and interests under this Plan. In the event of an employee's death or
incapacity, subject to the terms of Section V hereof, the Committee shall
authorize within one year after an employee's death or incapacity, the payment
of an award to the employee's designated beneficiary or guardian, or, in the
absence of such written designation, to the person specified by will or by the
applicable laws of descent and distribution. Any such beneficiary designation
may be revoked and new beneficiaries appointed by the employee by written
instrument delivered to the Committee.
B. This Plan (a) shall be binding upon and inure to the benefit of
any successor of the Company and (b) shall be governed by the laws of the State
of Florida and any applicable laws of the United Statets. No contract or
right of employment shall be implied by this Plan. If any award is assumed or
a new award is substituted therefor in any corporate reorganization
(including, but not limited to, any transaction of the type referred to in
Section 425(a) of the Internal Revenue Code of 1986, as amended), employment by
such assuming or subsequent corporation or by a parent corporation of
affiliate thereof, shall be considered for all purposes of this award to be
employment by the Company.
C. Subject to Section XI hereof, the Committee shall be authorized
to make adjustments in performance award criteria and in the other terms and
conditions of awards in recognition of unusual or non-recurring events
affecting the Company or its financial statements or changes in applicable
laws, regulations or accounting principles; provided, however, that no such
adjustment shall impair the rights of any employee without his consent. The
Committee may also make awards hereunder in replacement of, or as alternatives
to, awards previously granted to employees. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or any
award in the manner and to the extent it shall deem desirable to carry it into
effect. In the event the Company shall assume outstanding employee benefit
awards or the right or obligation to make future such awards in connection
with the acquisition of another corporation or business entity, the Committee
may, in its discretion, make such adjustments in the terms of awards under the
Plan as it shall deem appropriate.
5
<PAGE> 6
D. Except as otherwise required in any applicable agreement or by
the terms of the Plan, employees under the Plan shall not be required to make
any payment or provide consideration for an award other than the rendering of
services.
E. Capitalized terms used herein shall have the meanings assigned
thereto on Exhibit A hereto, which is incorporated herein by reference.
X. COMMITTEE
---------
The Plan shall be administered by the Committee. The Committee shall
have the authority to construe the Plan, to establish, amend, and rescind
rules and regulations relating to the Plan, and to make all other
determinations in the judgment of the Committee necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply an
omission or reconcile any inconsistency in the Plan in the manner and to the
extent it shall deem expedient to carry the Plan into effect, and shall be the
sole and final judge of such expediency.
XI. AMENDMENT OR TERMINATION
------------------------
Until such time as a "change of control" shall have occurred, the Board
may amend, suspend or terminate the Plan or any part thereof from time to time,
provided that no change may be made which would impair the rights of an
employee to whom awards have theretofore been granted without the consent of
said employee.
6
<PAGE> 7
EXHIBIT A
DEFINITIONS
-----------
BOARD shall mean the Board of Directors of the Company.
CAPITAL shall mean capital as determined on a Harris Corporation Management
Financial Statement basis.
COMMITTEE shall mean a sub-committee of the Pension/Compensation Committee of
the Board consisting of the non-employee members thereof.
COMPANY shall mean Lanier Worldwide, Inc., a Delaware corporation.
NET INCOME shall mean net income determined on a Harris Corporation Management
Financial Statement basis. Net Income growth shall mean the sum of Net
Income during the performance period less three times the base year Net Income.
Average growth rate of Net Income shall be calculated on a compounded annual
basis.
PLAN shall mean the Lanier Worldwide, Inc. Long-Term Incentive Plan for Key
Employees (LTIP).
RETURN ON CAPITAL shall mean the sum of Net Income and the after-tax impact of
interest expense, divided by average Capital (based on a quarterly average).
The statutory U.S. income tax rate will be used in the calculation of after-tax
interest.
<PAGE> 1
EXHIBIT 10(g)
AMENDMENT TO HARRIS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, the Harris Corporation Supplemental Executive Retirement Plan
(the "Plan") has been established and is duly maintained;
WHEREAS, pursuant to Section 8.1 of the Plan, the Plan may be amended;
and
WHEREAS, it is desired to clarify the provisions of the Plan
applicable to deemed investments in Harris Stock;
NOW THEREFORE, be it resolved that the following amendment be, and
hereby is adopted, effective July 1, 1995.
1. Section 5.1 of the Plan is amended to read as follows:
5.2 INVESTMENTS. Amounts credited to the Account of a Participant
shall be deemed to be invested pursuant to the Participant's investment
election under the Retirement Plan. If a Participant's investment election
under the Retirement Plan directs that a portion of additions to his or her
account under the Retirement Plan is invested in Harris Stock, earnings and
losses for a corresponding portion of additions to the Participant's SERP
Account shall reflect the performance of Harris Stock; however, the
Participant's SERP Account is not required to be invested in Harris Stock and
the Participant shall have no right to a distribution of his or her Account in
the form of Harris Stock. If a Participant who is also a participant in the
Retirement Plan has no investment election in effect under the Retirement Plan,
such Participant's Account shall be deemed to be invested in the Balanced Fund.
If a Participant is not a participant in the Retirement Plan, the Participant
may file an investment election under the SERP, directing the deemed investment
of his Account in conformity with the terms of the Retirement Plan, except that
Participants may not direct the investment of their SERP Account to reflect
performance of Harris Stock unless they are participants in the Retirement Plan
and their account under the Retirement Plan is invested in the Harris Stock
Fund.
A restatement of the Plan to reflect this amendment is hereby
authorized.
<PAGE> 2
IN WITNESS WHEREOF, Harris Corporation has caused this amendment to be
executed and its seal to be affixed and attested by its duly authorized
officers as of the effective date hereof.
HARRIS CORPORATION
By: /s/ D. S. Wasserman
---------------------------------
Title: Vice President-Treasurer
---------------------------------
- 2 -
<PAGE> 1
EXHIBIT 10(h)
July 1, 1995
HARRIS CORPORATION
RETIREMENT PLAN
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
1.2 After-Tax Account . . . . . . . . . . . . . . . . . . . . . - 2 -
1.3 After-Tax Contributions . . . . . . . . . . . . . . . . . . - 2 -
1.4 Basic Account . . . . . . . . . . . . . . . . . . . . . . . - 2 -
1.5 Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . - 2 -
1.6 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
1.7 Break-in-Service . . . . . . . . . . . . . . . . . . . . . . - 3 -
1.8 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
1.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
1.10 Consolidated Subsidiaries . . . . . . . . . . . . . . . . . - 6 -
1.11 Corporation . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
1.12 Corporation Committee . . . . . . . . . . . . . . . . . . . - 6 -
1.13 Disability . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
1.14 Early Retirement Age . . . . . . . . . . . . . . . . . . . - 6 -
1.15 Employment Unit . . . . . . . . . . . . . . . . . . . . . . - 6 -
1.16 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
1.17 ERISA - . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
1.18 Excess Compensation . . . . . . . . . . . . . . . . . . . . - 7 -
- i -
<PAGE> 3
1.19 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
1.20 Harris Stock Fund . . . . . . . . . . . . . . . . . . . . . - 8 -
1.21 Harris Stock After-Tax Account . . . . . . . . . . . . . . . - 8 -
1.22 Harris Stock Matching Account . . . . . . . . . . . . . . . - 8 -
1.23 Harris Stock Pre-Tax Account . . . . . . . . . . . . . . . . - 8 -
1.24 Highly Compensated Employee . . . . . . . . . . . . . . . . - 8 -
1.25 Hour of Service . . . . . . . . . . . . . . . . . . . . . . - 9 -
1.26 Investment Funds . . . . . . . . . . . . . . . . . . . . . - 9 -
1.27 Layoff . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
1.28 Leave of Absence . . . . . . . . . . . . . . . . . . . . . - 9 -
1.29 Matching After-Tax Account . . . . . . . . . . . . . . . . . - 10 -
1.30 Matching After-Tax Contributions . . . . . . . . . . . . . - 10 -
1.31 Matching Contributions . . . . . . . . . . . . . . . . . . - 10 -
1.32 Matching Pre-Tax Account . . . . . . . . . . . . . . . . . - 10 -
1.33 Matching Pre-Tax Contributions . . . . . . . . . . . . . . . - 10 -
1.34 Military Leave . . . . . . . . . . . . . . . . . . . . . . . - 11 -
1.35 Normal Retirement Age . . . . . . . . . . . . . . . . . . . - 11 -
1.36 Participant . . . . . . . . . . . . . . . . . . . . . . . . - 11 -
1.37 Participating Company . . . . . . . . . . . . . . . . . . . - 11 -
1.38 Period of Service . . . . . . . . . . . . . . . . . . . . . - 11 -
1.39 Period of Severance . . . . . . . . . . . . . . . . . . . . - 12 -
1.40 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
- ii -
<PAGE> 4
1.41 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
1.42 Predecessor Company . . . . . . . . . . . . . . . . . . . . - 12 -
1.43 Pre-Tax Account . . . . . . . . . . . . . . . . . . . . . . - 13 -
1.44 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . - 13 -
1.45 Profit-Sharing Account . . . . . . . . . . . . . . . . . . - 13 -
1.46 Profit-Sharing Contributions . . . . . . . . . . . . . . . - 13 -
1.47 Related Company . . . . . . . . . . . . . . . . . . . . . . - 13 -
1.48 Rollover Account . . . . . . . . . . . . . . . . . . . . . . - 14 -
1.49 Savings Account . . . . . . . . . . . . . . . . . . . . . . - 14 -
1.50 Severance from Service Date . . . . . . . . . . . . . . . . - 14 -
1.51 Supplemental Account . . . . . . . . . . . . . . . . . . . - 14 -
1.52 Taxable Wage Base . . . . . . . . . . . . . . . . . . . . . - 15 -
1.53 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . - 15 -
1.54 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . - 15 -
1.55 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . - 15 -
1.56 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . - 15 -
ARTICLE II
PARTICIPATION
2.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
2.2 Renewal of Participation on Reemployment . . . . . . . . . . - 16 -
2.3 Periods of Service on Reemployment . . . . . . . . . . . . . - 16 -
2.4 Service with Predecessor Company . . . . . . . . . . . . . . - 17 -
- iii -
<PAGE> 5
2.5 Participation for Purposes of Rollover Contributions . . . . - 18 -
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
3.1 Profit-Sharing Contributions . . . . . . . . . . . . . . . . - 19 -
3.2 Allocation of Profit-Sharing Contributions to Participants . - 22 -
3.3 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . - 23 -
3.4 Matching Pre-Tax Contributions . . . . . . . . . . . . . . . - 24 -
3.5 After-Tax Contributions . . . . . . . . . . . . . . . . . . - 25 -
3.6 Matching After-Tax Contributions . . . . . . . . . . . . . . - 25 -
3.7 Elections to Make Pre-Tax and After-Tax Contributions . . . - 26 -
3.8 Rollover Contributions . . . . . . . . . . . . . . . . . . . - 27 -
3.9 Participating Company's Obligation to Make Contributions . . - 28 -
3.10 Treatment of Forfeited Amounts . . . . . . . . . . . . . . . - 29 -
3.11 Finality of Allocations . . . . . . . . . . . . . . . . . . - 29 -
ARTICLE IV
LIMITATIONS ON CONTRIBUTIONS
4.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
4.2 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . - 30 -
4.3 Percentage Limitation on Pre-Tax Contributions . . . . . . . - 31 -
4.4 Percentage Limitation on After-Tax and Matching Contribution. - 31 -
4.5 Multiple Use of Alternative Limitations . . . . . . . . . . - 33 -
- iv -
<PAGE> 6
4.6 Limitations on Annual Additions . . . . . . . . . . - 33 -
ARTICLE V
VESTING AND FORFEITURES
5.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
5.2 Vesting on Retirement, Death or Disability . . . . . . . . . - 36 -
5.3 Vesting on Other Termination of Employment . . . . . . . . . - 36 -
5.4 Effect of In-Service Withdrawals on a Participant's Vested . - 37 -
5.5 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . - 38 -
ARTICLE VI
ACCOUNTS AND INVESTMENTS
6.1 Establishment of Accounts . . . . . . . . . . . . . . . . . - 40 -
6.2 Investment of Profit-Sharing Account . . . . . . . . . . . . - 41 -
6.3 Investment of Accounts Other than Profit-Sharing Account . . - 42 -
6.4 Allocation of Earnings and Losses . . . . . . . . . . . . . - 44 -
6.5 Special Rules Concerning Harris Stock Fund . . . . . . . . . - 45 -
ARTICLE VII
DISTRIBUTIONS
7.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 48 -
7.2 Small Benefit Cash-out . . . . . . . . . . . . . . . . . . . - 48 -
7.3 Form of Payment . . . . . . . . . . . . . . . . . . . . . . - 49 -
7.4 Time of Payment . . . . . . . . . . . . . . . . . . . . . . - 50 -
- v -
<PAGE> 7
7.5 Direct Rollover . . . . . . . . . . . . . . . . . . . . . . - 50 -
7.6 Payments on Death . . . . . . . . . . . . . . . . . . . . . - 52 -
7.7 Benefit Amount and Withholding . . . . . . . . . . . . . . . - 52 -
7.8 Order of Distributions . . . . . . . . . . . . . . . . . . . - 53 -
7.9 Statutory Requirements . . . . . . . . . . . . . . . . . . . - 53 -
7.10 Designating Beneficiaries . . . . . . . . . . . . . . . . . - 57 -
7.11 Payment of Group Insurance Premiums . . . . . . . . . . . . - 58 -
7.12 Inability to Locate Participant . . . . . . . . . . . . . . - 58 -
ARTICLE VIII
LOANS
8.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 60 -
8.2 Loan Administration . . . . . . . . . . . . . . . . . . . . - 60 -
8.3 Terms and Conditions of Loans . . . . . . . . . . . . . . . - 61 -
8.4 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . - 63 -
8.5 Repayment and Default . . . . . . . . . . . . . . . . . . . - 63 -
8.6 Mechanics . . . . . . . . . . . . . . . . . . . . . . . . . - 65 -
8.7 Special Powers . . . . . . . . . . . . . . . . . . . . . . . - 65 -
ARTICLE IX
IN-SERVICE WITHDRAWLS
9.1 At-Will Withdrawals from Savings Account and After-Tax Acco. - 67 -
9.2 Hardship Withdrawals from Pre-Tax Account . . . . . . . . . - 67 -
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<PAGE> 8
9.3 Emergency Withdrawals . . . . . . . . . . . . . . . . . . . - 69 -
9.4 Reduction of Investment Fund Balances . . . . . . . . . . . - 70 -
ARTICLE X
TOP-HEAVY PROVISIONS
10.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 71 -
10.2 Minimum Allocation . . . . . . . . . . . . . . . . . . . . . - 71 -
10.3 Minimum Vesting . . . . . . . . . . . . . . . . . . . . . . - 72 -
10.4 Definitions . . . . . . . . . . . . . . . . . . . . . . . . - 72 -
ARTICLE XI
ADMINISTRATION
11.1 Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . - 79 -
11.2 Corporation Committee . . . . . . . . . . . . . . . . . . . - 79 -
11.3 Powers and Duties of Committee . . . . . . . . . . . . . . . - 79 -
11.4 Actions of Committee . . . . . . . . . . . . . . . . . . . . - 79 -
11.5 Finality of Decisions . . . . . . . . . . . . . . . . . . . - 80 -
11.6 Immunities of Committee . . . . . . . . . . . . . . . . . . - 80 -
11.7 Advisers and Agents . . . . . . . . . . . . . . . . . . . . - 80 -
11.8 Committee Member who is Participant . . . . . . . . . . . . - 81 -
11.9 Information Provided by Participating Companies . . . . . . - 81 -
11.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . - 81 -
11.11 Trust Fund Available to Pay All Plan Benefits . . . . . . . - 82 -
- vii -
<PAGE> 9
ARTICLE XII
AMENDMENT AND TERMINATION AND CHANGE OF CONTROL
12.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . - 83 -
12.2 Termination of Plan . . . . . . . . . . . . . . . . . . . - 84 -
12.3 Discontinuance of Contributions . . . . . . . . . . . . . - 84 -
12.4 Vesting on Termination or Discontinuance of Contributions - 84 -
12.5 Distribution on Termination . . . . . . . . . . . . . . . - 85 -
12.6 Change of Control . . . . . . . . . . . . . . . . . . . . - 85 -
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Restrictions on Alienation; Qualified Domestic Relations
Orders . . . . . . . . . . . . . . . . . . . . . . . . . - 88 -
13.2 Exclusive Benefit Requirement . . . . . . . . . . . . . . - 89 -
13.3 Return of Contributions . . . . . . . . . . . . . . . . . - 90 -
13.4 No Contract of Employment . . . . . . . . . . . . . . . . - 90 -
13.5 Payment of Benefits on Incapacity . . . . . . . . . . . . - 90 -
13.6 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . - 91 -
13.7 Construction . . . . . . . . . . . . . . . . . . . . . . . - 91 -
13.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . - 92 -
13.9 Mistaken Payments . . . . . . . . . . . . . . . . . . . . - 92 -
- viii -
<PAGE> 10
ARTICLE XIV
SPECIAL PROVISIONS FOR
EMPLOYEES OF
HARRIS TECHNICAL SERVICES DIVISION OF
HARRIS TECHNICAL SERVICES CORPORATION
14.1 Participation . . . . . . . . . . . . . . . . . . . . . . . - 93 -
14.2 Profit-Sharing Contributions . . . . . . . . . . . . . . . . - 93 -
14.3 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . - 94 -
14.4 No Matching Pre-Tax Contributions . . . . . . . . . . . . . - 94 -
14.5 No Investment in the Harris Stock Fund . . . . . . . . . . . - 94 -
14.6 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . - 94 -
- ix -
<PAGE> 11
INTRODUCTION
------------
The Harris Corporation Retirement Plan (the "Plan") is hereby amended
and restated effective July 1, 1995. Those Participants in the Plan who are
Employees on July 1, 1995 shall continue to participate in the Plan, as
restated. Those Participants in the Plan who are not Employees on July 1, 1995
shall not be participants in the Plan, as restated, and their benefits shall be
determined under the terms of the Plan that were in effect prior to July 1,
1995 unless they are reemployed as Employees by a Participating Company.
The Plan and the related trust are intended to be a tax-exempt plan and trust
under sections 401(a) and 501(a) of the Code, respectively. The Plan also is
intended to be a profit-sharing plan that contains a qualified cash or deferred
arrangement under section 401(k) of the Code.
- 1 -
<PAGE> 12
ARTICLE I
DEFINITIONS
-----------
1.1 ACCOUNTS -- means all of the accounts described in section 6.1,
and such other accounts that may be established on behalf of each Participant,
to be credited with contributions made on behalf of a Participant, adjusted for
earnings and losses as provided in the Plan and debited by Plan expenses
allocable to the Accounts, distributions, withdrawals and loans to the
Participant.
1.2 AFTER-TAX ACCOUNT - means the account established to record
After-Tax Contributions made on the Participant's behalf other than those
invested in the Harris Stock Fund.
1.3 AFTER-TAX CONTRIBUTIONS -- means the contributions described in
section 3.5.
1.4 BASIC ACCOUNT -- means the account established to record the
portion of the Profit-Sharing Contributions allocable to a Participant's
Compensation.
1.5 BALANCED FUND -- means the Balanced Fund described in Appendix A.
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Harris Retirement Plan
<PAGE> 13
Definitions
1.6 BENEFICIARY -- means the person or persons entitled to receive
any benefits payable under the Plan on account of a Participant's death.
1.7 BREAK-IN-SERVICE -- means a Period of Severance, as defined
below.
1.8 CODE -- means the Internal Revenue Code of 1986, as amended from
time to time.
1.9 COMPENSATION -- means the following items of remuneration which
an Employee earns for work or personal services performed for a Participating
Company:
(a) salary or wage;
(b) commission paid pursuant to a sales incentive plan;
(c) overtime premium, shift differential or, additional
compensation in lieu of overtime premium;
(d) compensation in lieu of vacation;
(e) any annual bonus or incentive compensation payable in
the form of cash pursuant to the Annual Incentive Plan
or any successor thereto or other similar plan adopted
by the Corporation from time to time or any stock award
made in lieu of an annual cash bonus or incentive
compensation;
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Harris Retirement Plan
<PAGE> 14
Definitions
(f) any cash bonus or incentive compensation payable in
the form of cash or any stock awards made pursuant to
an established plan of the Corporation or Employee's
Employment Unit, including but not limited to, bonus
awards, spot awards, lump sum, profit sharing, team
awards and gain sharing awards;
(g) any compensation of a type described in items (a)
through (f) above which is paid as an employee
contribution to the Plan;
(h) any salary reduction contributions to a Section 125
plan maintained by a Participating Company;
but excluding:
(i) any extraordinary compensation of a recurring or
non-recurring nature not included under items (a) to
(f) above;
(ii) any extraordinary compensation in the nature of bonus,
commission or incentive compensation which is not
paid pursuant to an established plan of the Employee's
Employment Unit or pursuant to an established sales
incentive plan;
(iii) any bonus or special allowance paid by reason of
employment in a foreign country;
(iv) any award made or amount paid pursuant to the Stock
Incentive Plan or any successor thereto, including,
but not
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Harris Retirement Plan
<PAGE> 15
Definitions
limited to, performance shares, stock options,
restricted stock, SARs, or other stock-based awards
or dividend equivalents;
(v) severance pay or special retirement pay;
(vi) retention bonuses or completion bonuses unless
authorized by the appropriate officer of the
Corporation in a uniform and nondiscriminatory
manner;
(vii) reimbursement or allowances with respect to expenses
incurred in connection with employment, such as tax
equalization, reimbursement for moving expenses,
mileage or expense allowance or education refund.
In no event does the term "Compensation" include indirect compensation such as
employer paid group insurance premiums, or contributions under this or other
qualified employee benefit plan, other than as a contribution described in item
(g) above.
Only Compensation not in excess of the amount allowed under Code
section 401(a)(17), which is $150,000 for 1995, shall be taken into account.
In addition, in the year in which an Employee becomes a Participant, only
Compensation received after he becomes a Participant shall be taken into
account. For purposes of any test imposed under any section of the Code, the
Plan authorizes the use of any definition of Compensation that satisfies the
requirements of such section.
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Harris Retirement Plan
<PAGE> 16
Definitions
1.10 CONSOLIDATED SUBSIDIARIES -- means those subsidiaries of the
Corporation which are included in the consolidated annual financial statement
for the Corporation.
1.11 CORPORATION -- means Harris Corporation.
1.12 CORPORATION COMMITTEE -- means the committee established under
section 11.2.
1.13 DISABILITY -- means a disability that qualifies a Participant
for disability benefits under title II or title XVI of the Federal Social
Security Act, and occurs on the effective date determined by the Social Security
Administration.
1.14 EARLY RETIREMENT AGE -- means age 55.
1.15 EMPLOYMENT UNIT - means any division or other readily
identifiable segment of the operations of a Participating Company, for example,
as identified in the annual report or such other segments as may be established
for purposes of the Plan by the Corporation, in its discretion.
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Harris Retirement Plan
<PAGE> 17
Definitions
1.16 EMPLOYEE -- means an individual who is employed by a
Participating Company, or division or operation thereof, designated in Appendix
C either (a) within the United States or (b) outside the United States who is
covered by the Corporation's current expatriate assignment policy; provided that
the individual is not covered by a retirement plan which is maintained by the
Participating Company pursuant to a collective bargaining agreement and which
was in effect on or after July 1, 1990. With respect to a Participating Company
not all of whose employees are eligible to be participants (a "Limited
Participating Company"), the term "Employee" shall include those employees of
the Participating Company who were Participants prior to their employment by the
Limited Participating Company. Solely for Plan qualification testing, the term
"Employee" includes a "leased employee" only to the extent required in section
414(n) of the Code.
1.17 ERISA -- means the Employee Retirement Income Security Act of
1974, as amended from time to time.
1.18 EXCESS COMPENSATION -- means the portion of a Participant's
Compensation that exceeds the Taxable Wage Base for the year in which the
Compensation is received.
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Harris Retirement Plan
<PAGE> 18
Definitions
1.19 FISCAL YEAR -- means the fiscal year of the Corporation
commencing on July 1 and ending on June 30.
1.20 HARRIS STOCK FUND -- means the Fund described in Appendix A that
is designed to be invested in qualifying employer securities within the meaning
of section 407 of ERISA, as it applies to an eligible individual account plan.
1.21 HARRIS STOCK AFTER-TAX ACCOUNT -- means the portion of the
After-Tax Contributions made on the Participant's behalf invested in the Harris
Stock Fund.
1.22 HARRIS STOCK MATCHING ACCOUNT -- means the portion of the
Matching Contributions made on the Participant's behalf invested in the Harris
Stock Fund.
1.23 HARRIS STOCK PRE-TAX ACCOUNT -- means the portion of the Pre-Tax
Contributions made on the Participant's behalf invested in the Harris Stock
Fund.
1.24 HIGHLY COMPENSATED EMPLOYEE -- means a "highly compensated
employee" for a Plan Year as defined in section 414(q) of the Code, including
the family aggregation rules contained therein.
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Harris Retirement Plan
<PAGE> 19
Definitions
1.25 HOUR OF SERVICE -- means each hour for which an Employee is paid
or entitled to payment for the performance of duties for a Participating Company
or Related Company.
1.26 INVESTMENT FUNDS -- means the funds described in Appendix A to
the Plan.
1.27 LAYOFF -- means a temporary suspension of the active employment
of an Employee with the understanding that the Employee will be recalled to
active employment if and when his services are again required. A period of
Layoff terminates, and a Participant who is not recalled is deemed to terminate
employment, on the earliest of the following dates:
(a) the expiration date specified in a notice of recall
delivered to the Employee;
(b) the first anniversary of the date the Layoff began, or
(c) the election of an Employee to terminate the Layoff by
written notice delivered to the Corporation.
1.28 LEAVE OF ABSENCE -- means a period of interruption of the active
employment of an Employee granted by the Participating Company or Predecessor
Company with the understanding that the Employee will return to active
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Harris Retirement Plan
<PAGE> 20
Definitions
employment at the expiration of the period of time. A Leave of Absence is of
definite duration, but may be extended by the Participating Company or
Predecessor Company for additional periods. The term Leave of Absence does not
include a Military Leave.
1.29 MATCHING AFTER-TAX ACCOUNT -- means the account established to
record Matching After-Tax Contributions made on the Participant's behalf other
than those invested in the Harris Stock Fund.
1.30 MATCHING AFTER-TAX CONTRIBUTIONS -- means the contributions made
on behalf of a Participant under section 3.6.
1.31 MATCHING CONTRIBUTIONS -- means the aggregate of the Matching
After-Tax Contributions and the Matching Pre-Tax Contributions.
1.32 MATCHING PRE-TAX ACCOUNT -- means the account established to
record the Matching Pre-Tax Contributions made on the Participant's behalf other
than those invested in the Harris Stock Fund.
1.33 MATCHING PRE-TAX CONTRIBUTIONS -- means the contributions made
on behalf of a Participant under section 3.4.
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Harris Retirement Plan
<PAGE> 21
Definitions
1.34 MILITARY LEAVE -- means an interruption of active employment of
an Employee with a Participating Company or Predecessor Company to enter the
Armed Forces of the United States under such circumstances that the Employee
thereby becomes entitled to reemployment rights under Federal law. Military
Leave terminates on the expiration of such reemployment rights.
1.35 NORMAL RETIREMENT AGE -- means age 65.
1.36 PARTICIPANT -- means an Employee who satisfies the requirements
of section 2.1. Employees who do not satisfy the requirements of Article II
may, nevertheless, be Participants solely for purposes of making Rollover
Contributions under section 3.8.
1.37 PARTICIPATING COMPANY -- means the Corporation and any Related
Company or division or operation thereof so designated by the Corporation.
Appendix C, as it may be amended from time to time, lists each Participating
Company, or division thereof, whose Employees may become Participants.
1.38 PERIOD OF SERVICE -- means the period of time that begins on the
Employee's employment or reemployment date, whichever is applicable, and ends on
his Severance from Service Date. The Employee's employment or
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Harris Retirement Plan
<PAGE> 22
Definitions
reemployment date is the date on which the Employee first performs an Hour of
Service.
1.39 PERIOD OF SEVERANCE -- means the period of time commencing on
the Severance from Service Date and ending on the date on which the Employee
again performs an Hour of Service.
1.40 PLAN -- means the Harris Corporation Retirement Plan.
1.41 PLAN YEAR -- means the Fiscal Year.
1.42 PREDECESSOR COMPANY -- means any corporation (a) of which a
Related Company is a successor by reason of having acquired all or substantially
all of its business and assets by purchase, merger, consolidation or
liquidation, or (b) from which a Related Company acquired a business formerly
conducted by such corporation; provided, however, that in the case of any such
corporation that continued to conduct a trade or business subsequent to the
acquisition by a Related Company referred in (a) or (b) above, the status of
such corporation as a Predecessor Company relates only to the period of time
prior to the date of such acquisition.
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Harris Retirement Plan
<PAGE> 23
Definitions
1.43 PRE-TAX ACCOUNT -- means the account established to record the
Pre-Tax Contributions made on the Participant's behalf other than those invested
in the Harris Stock Fund.
1.44 PRE-TAX CONTRIBUTIONS -- means the contributions made on behalf
of a Participant under section 3.3.
1.45 PROFIT-SHARING ACCOUNT -- means the account established to
record the Profit-Sharing Contributions made on a Participant's behalf, and
includes the Basic Account and the Supplemental Account.
1.46 PROFIT-SHARING CONTRIBUTIONS -- means the contributions
described in section 3.1.
1.47 RELATED COMPANY -- means the Corporation and any corporation
that is a member of a controlled group of corporations (as defined in section
414(b) of the Code) with the Corporation; any trade or business (whether or not
incorporated) which is under common control (as defined in section 414(c) of the
Code) with the Corporation; any organization (whether or not incorporated) which
is a member of an affiliated service group (as defined in section 414(m) of the
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Harris Retirement Plan
<PAGE> 24
Definitions
Code) which includes the Corporation, and any other entity required to be
aggregated with the Corporation under section 414(o) of the Code.
1.48 ROLLOVER ACCOUNT -- means the account established to record the
Rollover Contributions made by a Participant from another tax-qualified plan.
1.49 SAVINGS ACCOUNT -- means the account established under section
6.1(f).
1.50 SEVERANCE FROM SERVICE DATE -- means, with respect to a Related
Company, the earlier of (a) the date on which the Employee quits, retires, is
discharged or dies, or (b) the first anniversary of the first date of a period
in which an Employee remains absent from service (with or without pay) for any
reason other than quitting, retirement, discharge or death; provided that
"second anniversary" shall be substituted for "first anniversary" if the absence
is due to maternity or paternity reasons as defined in section 410(a)(5)(E) of
the Code. The period between the first and the second anniversary shall not be
a Period of Service or a Period of Severance.
1.51 SUPPLEMENTAL ACCOUNT -- means the account established to record
the portion of the Profit-Sharing Contribution allocable to a Participant's
Excess Compensation.
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Harris Retirement Plan
<PAGE> 25
Definitions
1.52 TAXABLE WAGE BASE -- means the maximum amount of earnings that
may be considered wages under section 3121(a)(1) of the Code, except for
purposes of Medicare taxes, as in effect on the first day of the Plan Year. In
the case of an Employee who was a Participant for only a portion of a particular
Plan Year, the Taxable Wage Base shall be multiplied by the ratio of the number
of calendar months (including a fractiRon of a month as a full month) in the
Plan Year during which he was a Participant to 12 months.
1.53 TRUST AGREEMENT -- means the Trust Agreement relating to the
Harris Corporation Retirement Plan, entered into between the Corporation and the
Trustee, as it may be amended from time to time.
1.54 TRUST FUND -- means the assets held by the Trustee in accordance
with the Trust Agreement.
1.55 TRUSTEE -- means Boston Safe Deposit & Trust Company, or such
successor (or successors) thereto designated by the Corporation to act as
trustee under the provisions of the Trust Agreement, who shall agree to act as
such by executing the Trust Agreement.
1.56 VALUATION DATE -- means the last day of each calendar month.
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Harris Retirement Plan
<PAGE> 26
ARTICLE II
PARTICIPATION
-------------
2.1 IN GENERAL. An Employee shall become a Participant in the Plan
on the date he completes a one-year Period of Service, provided that he is
employed by a Participating Company on that date. Notwithstanding the above,
and solely for purposes of making Pre-Tax Contributions and certain After-Tax
Contributions, an Employee shall become a Participant in the Plan on the date he
first performs an Hour of Service.
2.2 RENEWAL OF PARTICIPATION ON REEMPLOYMENT. An Employee who
terminates employment after he completes a one-year Period of Service and is
reemployed by a Participating Company shall become a Participant immediately on
reemployment. An Employee who terminates employment before he completes a
one-year Period of Service shall become a Participant as provided in section
2.1, provided that his Period of Service prior to reemployment shall be used to
satisfy the one-year Period of Service requirement of section 2.1 to the extent
provided under section 2.3.
2.3 PERIODS OF SERVICE ON REEMPLOYMENT. The following rules shall
apply to an Employee who terminates employment before he completes a one-year
Period of Service and is reemployed by a Related Company:
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<PAGE> 27
Participation
(a) EARLY REEMPLOYMENT. If the Employee (or Participant)
is reemployed before he incurs a one-year Period of Severance, his Period of
Service before he terminated employment shall be counted as service.
(b) LATER REEMPLOYMENT. If the Employee (or Participant)
is reemployed after he incurs a one-year Period of Severance, his Period of
Service before he terminated shall be counted as service, unless his Period of
Severance equals or exceeds the greater of his prior Period of Service or five
years.
(c) MEASURING THE TIME PERIOD FOR REEMPLOYMENT UNDER
SPECIAL CIRCUMSTANCES. If an Employee terminates employment for any reason
other than quitting, discharge, or retirement, and subsequently quits, is
discharged, or retires, his Period of Severance shall be counted as service
only if he is reemployed by a Related Company within 12 months of when he first
terminated employment.
2.4 SERVICE WITH PREDECESSOR COMPANY. In the case of a
corporation (other than a Related Company) which becomes a Predecessor Company
by reason of the acquisition of all or substantially all of the assets and
business of such corporation by a Related Company, an Employee's Period of
Service shall include employment with such Predecessor Company, as provided in
the corporate documents effecting the acquisition.
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Harris Retirement Plan
<PAGE> 28
Participation
2.5 PARTICIPATION FOR PURPOSES OF ROLLOVER CONTRIBUTIONS.
Employees of a Participating Company who do not satisfy the requirements of
section 2.1 may, nevertheless, be Participants solely for purposes of making
Rollover Contributions under section 3.8.
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Harris Retirement Plan
<PAGE> 29
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
-----------------------------
3.1 PROFIT-SHARING CONTRIBUTIONS.
----------------------------
(a) BASIC. The amount of Profit-Sharing Contributions
made on behalf of Participating Companies for a Fiscal Year with respect to
Participants in this Plan and the Harris Corporation Union Retirement Plan
shall equal 11-1/2 percent of the adjusted consolidated net income of the
Corporation and its Consolidated Subsidiaries before net income taxes for such
Fiscal Year as determined in subsection (d), reduced by the portion of such
amount with respect to Participants' Compensation that would have been
allocable under section 3.2 of this Plan or section 3.2 of the Harris
Corporation Union Retirement Plan, if Compensation were determined without
regard to statutory limits under section 401(a)(17) or 415 of the Code.
(b) SPECIAL. The Corporation, in its discretion, may
provide for an additional Profit-Sharing Contribution in a specified dollar
amount or pursuant to a formula with respect to any Fiscal Year.
(c) APPORTIONMENT BETWEEN THE PLAN AND THE HARRIS UNION
RETIREMENT PLAN. Profit-Sharing Contributions for a Plan Year shall be
apportioned for accounting and payment purposes between the Plan and the Harris
Corporation Union Retirement Plan (the "Union Plan") based on the ratio of the
total Compensation plus Excess Compensation for the Plan Year of
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Harris Retirement Plan
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Contributions and Allocations
participants in each plan to the total Compensation plus Excess Compensation of
all participants in the Plan and the Union Plan for the Plan Year.
(d) ADJUSTED CONSOLIDATED NET INCOME. The adjusted
consolidated net income of the Corporation and its Consolidated Subsidiaries
before net income taxes shall be determined on the basis of the annual audit
report prepared by the Corporation's independent public accountants by
adjusting the consolidated net income shown in the report to eliminate the
effect, if any, of the following items:
(1) any provision for taxes on or measured by
income for such years required by the laws of
the United States or of any state or
political subdivision thereof (including the
Ohio Franchise Income Tax, whether or not in
fact measured by income), or any provision
for similar taxes required by the laws of any
other country;
(2) all items consisting of credits or
deficiencies relating to taxes described in
clause (1) above on or measured by income for
prior Fiscal Years:
(3) any provision for contributions for such
Fiscal Year under this Plan or under any
profit-sharing retirement plan of a
Consolidated Subsidiary of the Corporation;
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Harris Retirement Plan
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Contributions and Allocations
(4) all dividends received during such Fiscal
Year with respect to stock of a Related
Company which is not included among the
Consolidated Subsidiaries;
(5) gains or losses from the sale, exchange or
other disposition of capital or depreciable
property, as defined in the Code;
(6) any income from the use of the "lifo"
inventory method resulting from either a
reduction in inventory or a decrease in the
cost index;
(7) all items of income and expense which relate
directly to the conduct by a Related Company
of a business (i) which was formerly
conducted by a corporation which was not then
a Related Company, and (ii) the net income
(or loss) of which was included for the first
time in determining the consolidated net
income of the Corporation and its
Consolidated Subsidiaries for the Fiscal Year
in question;
(8) all exchange adjustments resulting from
translating to United States currency those
year-end balance sheet items of subsidiaries
which are denominated in a foreign currency;
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<PAGE> 32
Contributions and Allocations
(9) any item of income or expense relating to the
right of any employee to receive cash upon
cancellation of an unexercised stock option,
and
(10) the net of all items of income and expense,
other than tax items described in subsection
(1) and (2) above, relating to Lanier
Business Products, Inc. and any subsidiary
thereof which is a Related Company.
3.2 ALLOCATION OF PROFIT-SHARING CONTRIBUTIONS TO PARTICIPANTS.
-----------------------------------------------------------
(a) IN GENERAL. The Profit-Sharing Contributions for a
Plan Year with respect to an Employment Unit shall be allocated among eligible
Participants described in subsection (c) who are employed by the Employment
Unit during some part or all of the Plan Year based on the ratio of each
eligible Participant's Compensation plus Excess Compensation for the Plan Year
to the Compensation plus Excess Compensation of all eligible Participants for
the Plan Year.
(b) LIMITATION ON AMOUNT. Notwithstanding subsection
(a), the amount allocated to an eligible Participant with respect to Excess
Compensation shall not exceed the "base contribution percentage" by more than
the lesser of (i) the base contribution percentage or (ii) 5.7% (or if greater,
the percentage equal to the Old Age portion of the tax under section 3111(a) of
the Code, as in effect on the first day of the Plan Year). The term "base
contribution percentage" means
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Harris Retirement Plan
<PAGE> 33
Contributions and Allocations
the percentage of Compensation contributed by the Participating Company with
respect to each Participant's Compensation not in excess of the Participant's
Taxable Wage Base.
(c) LIMITATION ON ELIGIBILITY. A Participant shall be
eligible to receive an allocation of Profit-Sharing Contributions for a Plan
Year if (1) the Participant is employed on the last day of the Plan Year or (2)
the Participant terminates employment during the Plan Year on or after Early
Retirement Age or Normal Retirement Age, or due to Disability, death, Lay-off,
Leave of Absence or Military Leave, or is transferred by the Corporation as a
Release Employee to an entity that is not a Participating Company.
3.3 PRE-TAX CONTRIBUTIONS.
----------------------
(a) MAXIMUM ELECTION. A Participant may elect to reduce
his Compensation by an amount equal to any whole percentage not to exceed 12
percent and have that amount contributed to the Plan as a Pre-Tax Contribution.
A Participant's Pre-Tax Contribution to the Plan and any other plan of the
Participating Company or Related Company for any calendar year shall not exceed
$7,000 (as adjusted in accordance with Code section 402(g)(5) for increases in
the cost of living) including the full fair market value of any Common Stock
contributed as a Pre-Tax Contribution. For Pre-Tax Contributions invested in
the Harris Stock Fund, the normal form of contribution shall be cash; provided,
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Contributions and Allocations
however, that the Corporation, in its discretion, may make the contribution in
common stock of the Corporation, which may be contributed at a discount from
fair market value.
(b) CONTRIBUTIONS IN EXCESS OF THE MAXIMUM. If the
Pre-Tax Contribution on behalf of a Participant reaches the limit described in
subsection (a), any additional contributions made during the calendar year
pursuant to the Participant's election shall be deemed to be After-Tax
Contributions and any Matching Pre-Tax Contributions with respect to that
amount shall be deemed to be Matching After-Tax Contributions.
3.4 MATCHING PRE-TAX CONTRIBUTIONS. The Participating Company
shall make a Matching Pre-Tax Contribution on behalf of each Participant who is
employed by it and has completed a one-year Period of Service in the amount of
100 percent of the first six percent of the Pre-Tax Contributions made on
behalf of the Participant during the Plan Year. The normal form of matching
contribution for Pre-Tax Contributions invested in the Harris Stock Fund shall
be in cash; provided, however, that the Corporation in its discretion, may make
the contribution in common stock of the Corporation, which may be contributed
at a discount from fair market value. The Trustee is authorized to purchase
common stock of the Corporation in the open market, and to give effect to the
discount, if
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Harris Retirement Plan
<PAGE> 35
Contributions and Allocations
any, that has been established from time to time by allocating shares to
Participants' Accounts in addition to the number of shares purchased on the
open market by means of a given contribution.
3.5 AFTER-TAX CONTRIBUTIONS. A Participant may elect to reduce
his Compensation by an amount equal to any whole percentage not to exceed 12
percent and have that amount contributed to the Plan as an After-Tax
Contribution, provided that a Participant with less than a one- year Period of
Service may make After-Tax Contributions only to the extent necessary pursuant
to sections 3.3(b) or 4.2. A Participant who makes Pre-Tax Contributions for a
Plan Year may not make After-Tax Contributions for that Plan Year other than
pursuant to sections 3.3(b) or 4.2.
3.6 MATCHING AFTER-TAX CONTRIBUTIONS. The Participating Company
shall make a Matching After-Tax Contribution on behalf of each Participant who
is employed by one of its constituent Employment Units and has completed a
one-year Period of Service in the amount of 100 percent of the first six
percent of the After-Tax Contributions on behalf of the Participant, reduced by
the amount of the Matching Pre-Tax Contribution made on behalf of the
Participant during the Plan Year. The normal form of matching contribution for
After-Tax Contributions invested in the Harris Stock Fund shall be in cash;
provided, however, that the
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Harris Retirement Plan
<PAGE> 36
Contributions and Allocations
Corporation in its discretion, may make the contribution in common stock of
the Corporation, which may be contributed at a discount from fair market value.
The Trustee is authorized to purchase common stock of the Corporation in the
open market, and to give effect to the discount, if any, that has been
established from time to time by allocating shares to Participants' Accounts in
addition to the number of shares purchased on the open market by means of a
given contribution.
3.7 ELECTIONS TO MAKE PRE-TAX AND AFTER-TAX CONTRIBUTIONS.
------------------------------------------------------
(a) WRITTEN ELECTIONS. A Participant's initial election
to reduce his Compensation and have Pre-Tax Contributions and/or After-Tax
Contributions made on his behalf shall be made in writing by filing the
appropriate form, which shall specify the effective date of the election. The
initial election shall take effect as of the first payroll period commencing
immediately after the effective date of the election.
(b) CHANGING ELECTIONS. A Participant may change the
percentage (in increments of one percent) of future Pre-Tax Contributions
and/or After-Tax Contributions made on his behalf by filing the appropriate
form or by following the appropriate telephone procedures for changing
elections as established by the Corporation Committee. A change may be made
not more than once each month. A change of election shall become effective as
of the first payroll period commencing immediately after the effective date of
the election.
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Contributions and Allocations
(c) TERMINATING ELECTIONS. A Participant may terminate
his election to have Pre-Tax Contributions and/or After-Tax Contributions made
on his behalf by filing the appropriate form. The termination election shall
become effective as of the first payroll period commencing immediately after
the effective date of the election.
(d) CORPORATION'S DISCRETION TO LIMIT ELECTIONS. The
Corporation Committee may direct that Participant elections with respect to
Pre-Tax Contributions and/or After-Tax Contributions be changed in any manner
the Corporation Committee, in its discretion, shall determine appropriate to
preserve the qualification of the Plan under section 401(a) of the Code and as
a cash or deferred arrangement under section 401(k) of the Code.
3.8 ROLLOVER CONTRIBUTIONS. Employees, with the consent of the
Corporation Committee or its delegate, may at any time make a rollover
contribution to the Plan. Rollover contributions shall include only (a) cash
funds transferred directly from a tax-qualified plan within the meaning of
section 401 of the Code, and (b) cash funds distributed from a tax-qualified
plan or a conduit individual retirement account that are eligible for rollover
treatment and are transferred to the Plan within 60 days of the Employee's
receipt thereof. An
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Harris Retirement Plan
<PAGE> 38
Contributions and Allocations
Employee may be required to establish that the transfer of amounts into a
Rollover Account will not require any changes to the terms of the Plan or risk
adverse consequences for the Plan or Trust.
3.9 PARTICIPATING COMPANY'S OBLIGATION TO MAKE CONTRIBUTIONS.
---------------------------------------------------------
(a) CONTRIBUTIONS. Each Participating Company agrees to
pay to the Trustee the contributions that are required with respect to
Participants who are employed by one of its constituent Employment Units.
Profit-Sharing Contributions with respect to a Fiscal Year shall be paid to the
Trustee no later than the time for filing the Participating Company's federal
income tax return for such Fiscal Year, including extensions. Pre-Tax
Contributions and After-Tax Contributions shall be withheld and paid by the
Employment Unit, and Matching Contributions shall be paid by the Participating
Company to the Trustee no later than 20 days following the last day of the
calendar month in which the amounts were withheld from the Participants'
Compensation.
(b) LIMITATION. Contributions under this Article III
shall not be required to the extent they exceed the limitations of section 404
of the Code, in which case they shall be reduced to the extent allowable and
necessary in the following order: (1) Profit-Sharing Contributions; (2)
Matching Contributions, and (3) Pre-Tax Contributions.
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Contributions and Allocations
3.10 TREATMENT OF FORFEITED AMOUNTS.
-------------------------------
(a) REDUCTION OF CONTRIBUTIONS. Forfeitures shall be
allocated to Employment Units as provided in subsection (b) and used to reduce
Profit-Sharing Contributions and Matching Contributions of the Participating
Companies in which the Employment Units are included.
(b) ALLOCATION OF FORFEITURES TO EMPLOYMENT UNITS.
Forfeitures of Profit-Sharing Contributions and Matching Contributions shall be
credited to the Employment Unit with which the Participant was last employed
before the forfeiture occurred.
3.11 FINALITY OF ALLOCATIONS. The Corporation Committee shall give
a written benefit statement to each Participant at least annually setting forth
the amount of the contributions allocated to his Accounts; provided, however,
that if any such Participant is deceased, such statement shall be given to his
Beneficiary. Any Participant or Beneficiary claiming that an error has been
made in a benefit statement shall notify the Corporation Committee in writing
within 90 days following the delivery or mailing of such statement. The
Corporation Committee shall review the claim and advise the Participant or
Beneficiary of its decision in writing. If no such notice of error is filed,
the benefit statement shall be presumed to be correct.
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Harris Retirement Plan
<PAGE> 40
ARTICLE IV
LIMITATIONS ON CONTRIBUTIONS
----------------------------
4.1 IN GENERAL. Notwithstanding any provisions of Article III to
the contrary, the contributions provided for in Article III shall be limited to
the extent necessary to meet the requirements of this Article IV.
4.2 PRE-TAX CONTRIBUTIONS.
----------------------
(a) TREATMENT OF CERTAIN CONTRIBUTIONS AS AFTER-TAX. If
the Corporation Committee determines that a Participant's Pre-Tax Contributions
for a calendar year have reached the dollar limit of section 402(g) of the
Code, any additional contributions for that calendar year pursuant to the
Participant's Pre-Tax Contribution election shall be deemed to be After-Tax
Contributions and the Matching Contributions with respect to that amount, if
any, shall be deemed to be Matching After-Tax Contributions.
(b) RETURN OF EXCESS DEFERRALS. In the event that a
Participant's Pre-Tax Contributions already made to the Plan for a calendar
year exceed the limits of section 402(g) of the Code, the excess amount, as
adjusted for income and loss, may, in the discretion of the Corporation
Committee, be distributed to the Participant no later than April 15 of the
following year in accordance with the requirements of section 402(g) of the
Code and Treasury Regulation section 1.402(g)-1.
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<PAGE> 41
Limitations on Contributions
4.3 PERCENTAGE LIMITATION ON PRE-TAX CONTRIBUTIONS.
-----------------------------------------------
(a) SATISFYING THE ACTUAL DEFERRAL PERCENTAGE TEST. The
Pre-Tax Contributions made on behalf of Participants with respect to a Plan
Year shall satisfy the "actual deferral percentage test" of section 401(k)(3)
of the Code and Treasury regulation section 1.401(k)-1(b)(2), the provisions of
which are incorporated herein by reference.
(b) TREATMENT OF EXCESS CONTRIBUTIONS AS AFTER-TAX. In
the event it is necessary to reduce or limit the amount of any Participant's
Pre-Tax Contributions, the amount of Pre-Tax Contributions made on behalf of
Highly Compensated Employees shall be deemed to be After-Tax Contributions and
any Matching Pre-Tax Contributions made with respect to those Contributions
shall be deemed to be Matching After-Tax Contributions. The Highly Compensated
Employees to whom this recharacterization is applicable shall be determined in
accordance with Treasury regulation section 1.401(k)-1(f)(2), the provisions of
which are incorporated herein by reference.
4.4 PERCENTAGE LIMITATION ON AFTER-TAX AND MATCHING CONTRIBUTIONS.
--------------------------------------------------------------
(a) SATISFYING THE ACTUAL CONTRIBUTION PERCENTAGE TEST.
The After-Tax Contributions and Matching Contributions made on behalf of
Participants with respect to a Plan Year shall satisfy the "actual contribution
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Harris Retirement Plan
<PAGE> 42
Limitations on Contributions
percentage test" of section 401(m)(3) of the Code and Treasury regulation
section 1.401(m)-1(b), the provisions of which are incorporated herein by
reference.
(b) REDUCTION AND FORFEITURE OF AFTER-TAX CONTRIBUTIONS
AND MATCHING CONTRIBUTIONS. In the event it is necessary to reduce or limit a
Participant's After-Tax Contributions and Matching Contributions to satisfy the
actual contribution percentage test, the amount of such contributions, as
adjusted for income and losses, on behalf of Highly Compensated Employees shall
be reduced in accordance with Treasury regulation section 1.401(m)-1(e)(2), the
provisions of which are incorporated herein by reference. The amount of the
After-Tax Contributions and Matching Contribution shall be returned to the
Highly Compensated Employees (including return by transfer to a non-qualified
deferred compensation plan, in accordance with a timely election filed by the
Participant) or forfeited as follows:
(1) After-Tax Contributions in excess of six
percent of Compensation shall be returned, and
(2) Remaining After-Tax Contributions and Matching
After-Tax Contributions attributable thereto.
After-Tax Contributions shall be returned.
Matching After-Tax Contributions to the extent
vested shall be returned and to the extent not
vested shall be forfeited and used to reduce
contributions in accordance with section 3.10.
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Harris Retirement Plan
<PAGE> 43
Limitations on Contributions
4.5 MULTIPLE USE OF ALTERNATIVE LIMITATIONS. Multiple use of the
alternative limitations of sections 401(k)(3)(A)(iii)(II) and 401(m)(A)(ii) of
the Code shall be restricted in accordance with Treasury Regulation 1.401(m)-2,
the provisions of which are incorporated herein by reference.
4.6 LIMITATIONS ON ANNUAL ADDITIONS.
-------------------------------
(a) THE DEFINED CONTRIBUTION LIMIT. The "annual
addition," as defined herein, for any Plan Year, to a Participant's Accounts in
all defined contribution plans maintained by the Participating Company or
Related Company shall not exceed the lesser of (1) 25 percent of the
Participant's Compensation for the Plan Year, or (2) $30,000 (as adjusted in
accordance with section 415(d) of the Code). The term "annual additions" means
the sum of all contributions and forfeitures allocated to a Participant's
Accounts (other than his Rollover Account).
(b) THE COMBINED LIMIT. If the Participant also has
participated in a defined benefit plan maintained by a Related Company, the
limitations of section 415(e) of the Code shall apply. If the limitations of
section 415(e) are exceeded, the benefits under any defined benefit plan
maintained by the Participating Company or Related Company shall be reduced
before the annual additions to the Plan are reduced.
(c) REDUCTION OF CONTRIBUTIONS. If the Corporation
Committee determines at any time that the annual addition to any Participant's
Accounts
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Harris Retirement Plan
<PAGE> 44
Limitations on Contributions
exceeds such limitation for any Plan Year, the contributions on behalf of the
Participant shall be reduced, to the extent necessary, in the following order:
(1) Pre-Tax Contributions in excess of six
percent;
(2) Remaining Pre-Tax Contributions and Matching
Pre-Tax Contributions attributable thereto
shall be reduced proportionately;
(3) Profit-Sharing Contributions;
(4) After-Tax Contributions in excess of six
percent;
(5) Remaining After-Tax Contributions and
Matching After-Tax Contributions attributable
thereto shall be reduced proportionately.
After-Tax Contributions and Pre-Tax Contributions, as adjusted for
gains, shall be returned to the Participant (including return by transfer to a
non-qualified deferred compensation plan, in accordance with a timely election
filed by the Participant). Profit-Sharing Contributions and Matching
Contributions, as adjusted for gains, to the extent allowable shall be held in
a suspense account and allocated to the Accounts of such Participant in the
next Plan Year; provided that if the Participant is not covered by the Plan in
the next Plan Year, the amount shall be allocated to the remaining Participants
in the Plan who are employed by the Employment Unit that employed the
Participant.
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Harris Retirement Plan
<PAGE> 45
Limitations on Contributions
(d) LIMITS ON LIMITS. The limits stated on this Article
IV shall apply only to the extent required under the Code. Except as otherwise
specifically provided in this section 4.6, all of the requirements of section
415 of the Code, and limitations thereon, including the transitional rules and
grandfather rules, are incorporated herein by reference.
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Harris Retirement Plan
<PAGE> 46
ARTICLE V
VESTING AND FORFEITURES
-----------------------
5.1 IN GENERAL. A Participant shall have a fully vested interest
at all times in his Pre-Tax Account, After-Tax Account, Harris Stock Pre-Tax
Account, Harris Stock After-Tax Account and Savings Account (other than the
portion attributable to matching contributions made after October 1, 1984) and
Rollover Account.
5.2 VESTING ON RETIREMENT, DEATH OR DISABILITY. A Participant
shall have a fully vested interest in his Profit Sharing Account, Matching
Pre-Tax Account, Matching After-Tax Account, Harris Stock Matching Account, and
portion of his Savings Account attributable to matching contributions made
after October 1, 1984, on termination of employment by any Related Company in
the event of:
(a) retirement on or after Normal Retirement Age;
(b) retirement on or after Early Retirement Age;
(c) retirement on or after the effective date of a
Participant's Disability determination by the Social Security Administration;
(d) death.
5.3 VESTING ON OTHER TERMINATION OF EMPLOYMENT.
-------------------------------------------
(a) VESTING SCHEDULE. A Participant who terminates
employment other than on the occurrence of one of the events described in
section 5.2 shall
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Harris Retirement Plan
<PAGE> 47
Vesting and Forfeitures
have a vested interest in his Profit-Sharing Account, Matching Pre-Tax Account,
Matching After-Tax Account, Harris Stock Matching Account and the portion of
his Savings Account attributable to matching contributions made after October
1, 1984 in accordance with the following schedule:
Period of Service Vested Percentage
Less than 3 years 0%
3 years but less than 4 years 30%
4 years but less than 5 years 40%
5 years but less than 6 years 60%
6 years but less than 7 years 80%
7 years or more 100%
(b) COMPUTING A PARTICIPANT'S PERIOD OF SERVICE. For
the purpose of determining a Participant's Period of Service under subsection
(a), the rules of section 2.3 shall apply.
(c) VESTING ON SALE OF BUSINESS. In the event of the
sale or disposition of a business or a sale of substantially all of the assets
of a trade or business, the Corporation may, in its discretion, provide for
accelerated vesting with respect to those Participants affected by the sale.
5.4 EFFECT OF IN-SERVICE WITHDRAWALS ON A PARTICIPANT'S VESTED
PERCENTAGE. If a Participant receives a withdrawal under Article IX or a
distribution under Article VII from his Profit-Sharing Account at a time when
the Participant has less than a fully vested interest in that account, the
dollar amount
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Harris Retirement Plan
<PAGE> 48
Vesting and Forfeitures
of his vested interest in his Profit-Sharing Account (X) shall be determined at
any time by the following
formula: X = P(AB + D) - D
For the purpose of applying the formula, P is the Participant's
vested interest in his Profit-Sharing Account at the time the determination is
made, AB is the balance credited to the Profit-Sharing Account at the time the
determination is made, and D is the amount of the withdrawal.
5.5 FORFEITURES.
-----------
(a) TIMING OF FORFEITURE. A Participant who
terminates employment with less than a fully vested interest in his Accounts
shall forfeit the nonvested interest on the earlier of the date on which the
Participant:
(1) receives a lump sum distribution of all
or a portion of the vested interest in
such Accounts, provided that such
distribution is made no later than the
close of the second Plan Year following
the year in which the Participant
terminates employment;
(2) incurs five consecutive one-year Periods
of Severance; or
(3) at any earlier date allowable under the
Code.
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Vesting and Forfeitures
(b) EFFECT OF PARTIAL DISTRIBUTION ON A PARTICIPANT'S
VESTED PERCENTAGE. If the Participant elects to receive a lump sum
distribution of less than the full amount of his vested interest, the part of
his nonvested interest that shall be forfeited under subsection (a)(1) is the
total nonvested interest multiplied by a fraction, the numerator of which is
the amount of the distribution and the denominator of which is the total value
of his vested interest in his Accounts other than his After-Tax Account, Harris
Stock After-Tax Account and Rollover Account.
(c) EFFECT OF REPAYMENT OF DISTRIBUTION. If a
Participant incurs a forfeiture under subsection (a)(1), then returns to
employment with a Participating Company and becomes a Participant in the Plan
before incurring five consecutive one-year Periods of Severance, the forfeited
amount shall be restored by the Employment Unit of the Participating Company
with which the Participant is reemployed.
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Harris Retirement Plan
<PAGE> 50
ARTICLE VI
ACCOUNTS AND INVESTMENTS
------------------------
6.1 ESTABLISHMENT OF ACCOUNTS. The Committee shall establish
and maintain for each Participant the following Accounts showing the
Participant's interest under the Plan:
(a) Profit-Sharing Account, which shall consist of
(1) a Basic Account to reflect the portion of
Profit-Sharing Contributions allocable to
the Participant's Compensation, and
(2) a Supplemental Account to reflect the
portion of Profit-Sharing Contributions
allocable to the Participant's Excess
Compensation;
(b) Pre-Tax Account to reflect Pre-Tax Contributions
made on the Participant's behalf other than those invested in the Harris Stock
Fund;
(c) After-Tax Account to reflect After-Tax
Contributions made on the Participant's behalf other than those invested in the
Harris Stock Fund;
(d) Matching Pre-Tax Account to reflect Matching
Pre-Tax Contributions made on the Participant's behalf other than those
invested in the Harris Stock Fund;
(e) Matching After-Tax Account to reflect Matching
After-Tax Contributions made on the Participant's behalf other than those
invested in the Harris Stock Fund;
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Harris Retirement Plan
<PAGE> 51
Accounts and Investments
(f) Savings Account to reflect the Savings
Contributions under the Plan as in effect prior to July 1, 1990, and the
aggregate of the Participant's voluntary and required contributions to the
Harris Video Systems Savings/Incentive Plan less withdrawals, as of June 30,
1990;
(g) Harris Stock Pre-Tax Account to reflect the
portion of the Pre-Tax Contributions made on the Participant's behalf invested
in the Harris Stock Fund;
(h) Harris Stock After-Tax Account to reflect the
portion of the After-Tax Contributions made on the Participant's behalf
invested in the Harris Stock Fund;
(i) Harris Stock Matching Account to reflect the
portion of the Matching Pre-Tax Contributions and Matching After-Tax
Contributions made on the Participant's behalf and invested in the Harris Stock
Fund, and
(j) Rollover Account to reflect the Participant's
Rollover Contributions.
6.2 INVESTMENT OF PROFIT-SHARING ACCOUNT.
-------------------------------------
(a) IN GENERAL. Except as provided in subsection
(b), the amounts allocated to a Participant's Profit-Sharing Account shall be
invested in the Balanced Fund.
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Accounts and Investments
(b) PARTICIPANT-DIRECTED INVESTMENTS AT AGE 55. On
attaining age 55, a Participant shall be entitled to direct the investment of
his Profit-Sharing Account in accordance with the procedures set out in section
6.3. The Profit-Sharing Account shall remain invested in the Balanced Fund
until the Participant files an election with respect thereto in accordance with
procedures set out in section 6.3.
6.3 INVESTMENT OF ACCOUNTS OTHER THAN PROFIT-SHARING ACCOUNT.
Except as provided in section 6.2, effective October 1, 1993, each Participant
shall have the right to direct the investment of his Accounts and future
contributions to his Accounts among the Investment Funds in accordance with the
following procedures and such other procedures provided in the documents
pertaining to each Investment Fund:
(a) WRITTEN OR TELEPHONIC DIRECTION. Each election
shall be completed by filing the appropriate election form or by following the
appropriate telephone procedures for direct transfer as established by the
Corporation Committee.
(b) ELECTIONS IN 10% INCREMENTS FOR CURRENT BALANCES.
An election with respect to current account balances, including the
Participant's initial election with respect to the balance arising from a
Rollover Contribution, shall be made in increments of ten percent of the
account balance;
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Accounts and Investments
(c) ELECTIONS IN 10% INCREMENTS FOR FUTURE
CONTRIBUTIONS. An election with respect to future contributions shall be made
in increments of ten percent of the contribution (after the contribution is
reduced by the dollar amount directed into the Harris Stock Fund), provided
that the combined Pre-Tax Contributions and After-Tax Contributions invested in
the Harris Stock Fund shall equal no more than one percent of Compensation. To
the extent Pre-Tax Contributions and After-Tax Contributions are invested in
the Harris Stock Fund, the Matching Contributions attributable thereto also
shall be invested in the Harris Stock Fund;
(d) CHANGING ELECTIONS. A change of election may be
made at any time; provided that an election change shall become effective only
on the first day of the month. To be effective on the first day of any month,
a written election must be made on or before the 20th day of the preceding
month, and a telephonic election must be made on or before the 25th day of the
preceding month. If more than one election change is made on or before the
applicable deadline, the most recent election change shall be given effect.
(e) ELECTIONS APPLY TO ALL ACCOUNTS. Each of the
Participant's Accounts (including his Profit-Sharing Account after the
Participant has filed an initial election under section 6.2(b)) shall be
invested among the Investment Funds in the same manner, such that each election
by a Participant with respect to the Investment Funds shall apply to all of his
Accounts in the same proportion.
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Accounts and Investments
(f) INVESTMENT IN BALANCED FUND ABSENT ELECTION. A
Participant's Accounts and contributions made on behalf of the Participant
shall be invested in the Balanced Fund until the Participant makes a valid
investment election pursuant to this section 6.3 and any other procedures
established by the Corporation Committee.
6.4 ALLOCATION OF EARNINGS AND LOSSES. Earnings and losses
shall be allocated at least annually. In determining a Participant's share of
the earnings or losses of each of the Investment Funds as of any Valuation
Date, the total earnings or losses of the particular Investment Fund, net of
expenses allocable to that fund, shall be allocated among the Participants'
Accounts invested in that Investment Fund based on the ratio of each
Participant's Accounts to the aggregate of the Accounts of all Participants,
before taking into account any contributions that are required to be but are
not yet made as of the Valuation Date and before taking into account any
distributions, withdrawals or loans to Participants for the period coinciding
with the Valuation Date. Contributions to Accounts are not credited with
earnings in the month in which they are credited to any Account.
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Accounts and Investments
6.5 SPECIAL RULES CONCERNING HARRIS STOCK FUND.
Notwithstanding any other provision of sections 6.2 and 6.3 to the contrary,
the following rules shall apply to investments in the Harris Stock Fund:
(a) AVAILABILITY. Only a Participant with at least a
one-year Period of Service may elect to invest in this fund; and only Pre-Tax
Contributions, After-Tax Contributions and Matching Contributions made with
respect to Compensation earned on or after October 1, 1993 may be invested in
this fund. For any Plan Year, the combined Pre-Tax Contributions and After-Tax
Contributions invested in this fund on behalf of a Participant in each Plan
Year shall equal no more than one percent of the Participant's Compensation for
such Plan Year. An election to invest in the Harris Stock Fund shall take
effect as soon as administratively feasible after the election is received.
(b) RESTRICTIONS ON TRANSFERS. A Participant may not
transfer amounts from other Investment Funds to the Harris Stock Fund. Any
contributions invested in this Fund must remain in this fund for a minimum of
36 months, provided that amounts invested in this fund may be distributed to
the Participant before the expiration of the 36-month period, if the
Participant is otherwise entitled to a distribution under the Plan.
(c) DIVIDENDS. A Participant's allocable share of
cash dividends (and other cash earnings) credited to the Harris Stock Fund,
will be reinvested in the Harris Stock Fund unless the Participant elects with
respect to the dividends
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Accounts and Investments
credited to his Account for a quarter to invest such cash dividends (and other
cash earnings) among the Investment Funds other than the Harris Stock Fund in
increments of ten percent of the amount of the dividends (and other earnings).
Only cash dividends (and earnings) that have been credited to the Participant's
Accounts for at least one month are subject to the Participant's investment
election under this subsection (c). Each election shall be completed by filing
the appropriate form or by following the appropriate telephone procedures as
established by the Corporation Committee, pursuant to section 6.3(d).
Dividends paid in the form of stock shall be retained in a Participant's
Account until liquidated, in the sole discretion of the Trustee. Such
liquidated dividends shall be cash earnings subject to investment elections in
accordance with this subsection of the Plan.
(d) CONTRIBUTIONS. The normal form of contributions
for amounts invested in the Harris Stock Fund shall be in cash; provided,
however, that the Corporation, in its discretion, may make the contribution in
common stock of the Corporation, which may be contributed at a discount from
fair market value. The Trustee is authorized to purchase common stock of the
Corporation on the open market, and to give effect to the discount, if any,
that has been established from time to time by allocating shares to
Participants' Accounts in addition to the number of shares purchased on the
open market by means of a given contribution.
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Accounts and Investments
(e) DISTRIBUTIONS. Distributions from the Harris
Stock Fund shall be in the form of cash or shares of Harris Stock at the
election of the Participant. Fractional shares and distributions of a de
minimis amount as determined by the Corporation Committee shall be paid in
cash.
(f) VOTING. Participants may submit non-binding
proxies to the Trustee, which will vote the shares in the Harris Stock Fund in
the exercise of its sole discretion.
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ARTICLE VII
-----------
DISTRIBUTIONS
-------------
7.1 IN GENERAL. A Participant shall be entitled to receive a
distribution of the vested interest in his Accounts on the earlier of
termination of employment or attainment of age 59 1/2, except that his Pre-Tax
Contributions and Matching Pre-Tax Contributions are distributable only as
allowed under section 401(k) of the Code. Distributions shall be made upon the
sale or disposition of the stock in a subsidiary, or the sale or disposition of
substantially all the assets of a trade or business, as provided, under the
corporate documents effecting the sale or disposition and in accordance with
section 401(k)(10) of the Code. A termination of employment shall not be
deemed to occur for purposes of this section 7.1 and section 7.2 until the
Participant is no longer employed by a Related Company. A Participant may
elect to receive any amount invested in the Harris Stock Fund in the form of
stock; provided that fractional shares and distributions of a de minimis amount
as determined by the Corporation Committee shall be paid in cash.
7.2 SMALL BENEFIT CASH-OUT. Except as provided in section
7.5, in any case in which a Participant's vested interest in his Accounts does
not (and did not at the time of any prior distributions) exceed $3,500 (or such
larger amount as may be permitted by law), the vested interest shall be paid to
the Participant in a lump sum as soon as reasonably practicable upon
termination of employment.
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Distributions
7.3 FORM OF PAYMENT.
---------------
(a) OPTIONS. In any case in which a Participant's
vested interest in his Accounts exceeds the amount provided in section 7.2, the
Participant (or in the event of death, his Beneficiary) may elect at any time
to receive payment in:
(1) a lump sum of any portion or all of the
balance of the Participant's Accounts;
(2) substantially equal periodic installment
payments over a period of time to be elected
by the Participant;
(3) a combination of (a) and (b), or
(4) with respect to the Participant or the
Participant's spouse, a direct rollover.
(b) CHANGES ALLOWED. A Participant (or, in the event
of death, his Beneficiary) may change his election with respect to the form of
payment at any time before or after distribution of benefits commences, subject
to the provisions of section 7.9.
(c) EFFECT OF FAILURE TO SPECIFY AN OPTION. If a
Participant fails to file an election under this section 7.3, his benefits
shall be paid in accordance with section 7.4.
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7.4 TIME OF PAYMENT. On termination of employment, a
Participant, other than one described in section 7.2, may elect that payment of
benefits begin immediately or at any other time. If a Participant fails to
file an election under this section 7.4 and payment of benefits has not already
commenced, payment of his benefits shall commence on April 1 of the calendar
year following the year in which the Participant attains 70 1/2 and shall be
paid in accordance with the minimum distributions requirements of section
401(a)(9) of the Code.
7.5 DIRECT ROLLOVER.
----------------
(a) Effective January 1, 1993, a Participant or
"distributee" may elect at any time to have any portion of an "eligible
rollover distribution" paid in a direct rollover to the trustee or custodian of
an "eligible retirement plan" specified by the Participant or distributee,
whichever is applicable. Payment of a direct rollover in the form of a check
payable to the trustee or custodian of an eligible retirement plan, for the
benefit of the Participant or distributee, may be mailed to the Participant or
distributee.
(b) For purposes of this section 7.5, the following
terms shall have the following meanings:
(1) "Distributee" means a surviving spouse or a
spouse or former spouse who is an alternate
payee under a
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Distributions
Qualified Domestic Relations Order defined
in section 414(p) of the Code.
(2) "Eligible retirement plan" means an
individual retirement account described
in section 408(a) of the Code, an
individual retirement annuity described
in section 408(b) of the Code, an annuity
plan described in section 403(a) of the
Code, or a qualified trust described in
section 401(a) of the Code that accepts
an eligible rollover distribution;
provided that if the distributee is a
surviving spouse, an eligible retirement
plan means an individual retirement
account or individual retirement annuity.
(3) "Eligible rollover distribution" means
any distribution of all or a portion of
the Participant's Accounts, other than
the portion of his After-Tax Account and
Harris Stock After-Tax Account
attributable to After-Tax Contributions,
but does not include a distribution (i)
in installments over a period of ten
years or more or over a period described
in section 7.9(c), or (ii) to the extent
the distribution is required under
section 401(a)(9) of the Code.
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Distributions
7.6 PAYMENTS ON DEATH. If a Participant dies before he has
received the full amount of the vested interest in his Accounts, the unpaid
amount shall be paid to his Beneficiary. If the unpaid amount does not exceed
$3,500, it shall be paid to the Beneficiary as soon as reasonably practicable
upon the Participant's death. If the unpaid amount exceeds $3,500, it shall be
paid to the Beneficiary as provided in sections 7.3, 7.4 and, if the
Beneficiary is the spouse, section 7.5; provided that, if the Beneficiary fails
to file an election, the unpaid amount shall be paid in a lump sum as soon as
reasonably practicable after the fifth anniversary of the Participant's death.
7.7 BENEFIT AMOUNT AND WITHHOLDING.
(a) VESTED AMOUNT AND ADJUSTMENTS. For purposes of
this Article VII, a Participant's vested interest in his Accounts shall be
determined as of the Valuation Date coinciding with or immediately following
the date of the event giving rise to the distribution, plus any Profit-Sharing
Contribution to which the Participant may be entitled under section 3.2 that
has not yet been credited to the Participant's Profit-Sharing Account. Any
unpaid amount in the Participant's Accounts shall continue to be adjusted for
earnings and losses as provided in section 6.4 until it is distributed.
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Distributions
(b) WITHHOLDING. The amount of any distribution
shall be reduced to the extent necessary to comply with Federal, state and
local income tax withholding requirements.
7.8 ORDER OF DISTRIBUTIONS. Any distribution under this Plan
shall be charged against the Participant's Accounts pursuant to administrative
procedures designed to maximize the tax benefits to the Participant by
distributing to him first his After-Tax Contributions to the extent permitted
by law.
7.9 STATUTORY REQUIREMENTS. Notwithstanding any other
provisions of the Plan to the contrary, the following rules shall apply to all
payments under the Plan:
(a) LATEST COMMENCEMENT DATE. Unless the Participant
files a written election to defer payment of benefits, benefits payments with
respect to any Participant shall commence no later than the 60th day after the
close of the Plan Year in which the latest of the following occurs:
(1) the date on which the Participant attains
Normal Retirement Age;
(2) the 10th anniversary of the date on which
the Participant commenced participation
in the Plan, or
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Distributions
(3) the date on which the Participant
terminated employment.
Failure to file an election under section 7.4 for payment of benefits to
commence shall be deemed to be a written election to defer payment of benefits
under this subsection (a).
(b) REQUIRED BEGINNING DATE. Notwithstanding
subsection (a) above, payment of benefits to a Participant shall commence no
later than April 1 of the calendar year following the calendar year in which
the Participant attains age 70 1/2.
(c) MAXIMUM DURATION OF DISTRIBUTIONS. Payment of a
Participant's benefit shall be made over a period not to exceed one of the
following periods:
(1) the life of the Participant;
(2) the life of the Participant and the
Participant's Beneficiary;
(3) a period certain not extending beyond the
life expectancy of the Participant, or
(4) a period certain not extending beyond the
joint and last survivor expectancy of the
Participant and his Beneficiary.
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Distributions
The amount to be distributed each year must be at least equal to the
quotient obtained by dividing the Participant's benefit by the life expectancy
of the Participant or the joint and last survivor expectancy of the Participant
and his Beneficiary. Life expectancy and joint and last survivor expectancy
shall be computed by the use of the return multiples contained in Treasury
regulation section 1.72-9. For purposes of this computation, a Participant's
and a spouse's life expectancy may be recalculated annually; however, the life
expectancy of a Beneficiary, other than the Participant's spouse, may not be
recalculated. If the Participant's spouse is not the Beneficiary, the method
of distribution selected must ensure that at least 50 percent of the present
value of the amount available for distribution is paid within the life
expectancy of the Participant.
(d) DISTRIBUTION AFTER THE PARTICIPANT'S DEATH. In
the event a Participant who is receiving benefits dies, the remaining balance
of his benefits shall be distributed at least as rapidly as under the method of
distribution elected by the Participant. If a Participant dies before
distribution of benefits commences, the Participant's entire interest will be
distributed no later than five years after the Participant's death, except to
the extent that an election is made to receive distributions in accordance with
(1) or (2) below:
(1) if any portion of the Participant's
benefit is payable to a Beneficiary,
installment distributions may be made
over the life or life expectancy of the
Beneficiary,
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Distributions
provided that the installments commence
no later than one year after the
Participant's death, and
(2) if the Beneficiary is the Participant's
spouse, the commencement of distributions
may be delayed until the date on which the
Participant would have attained age 70
1/2. If the spouse dies before payments
begin, subsequent distribution shall be
made as if the spouse had been the
Participant.
For purposes of the foregoing, payments may be calculated by use of
the return multiples specified in Treasury regulation section 1.72-9. Life
expectancy of a spouse may be recalculated annually. However, in the case of
any other Beneficiary, such life expectancy shall be calculated at the time
payment first commences without further recalculation. Any amount paid to a
child of the Participant shall be treated as if it had been paid to the
surviving spouse if the amount becomes payable to the spouse when the child
reaches the age of majority.
(e) LIMIT ON LIMITS. All distributions under this
section 7.9 shall be determined and made in accordance with section 401(a)(9)
of the Code, including the minimum distribution incidental benefit requirement
of Treasury regulation section 1.401(a)(9)-2, the provisions of which are
incorporated herein by reference.
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Distributions
7.10 DESIGNATING BENEFICIARIES.
--------------------------
(a) WRITTEN DESIGNATION. Each Participant may, by
filing a written notice with the Corporation Committee, designate a Beneficiary
or Beneficiaries to receive any benefits payable as a result of the death of
the Participant. This designation may be changed by the Participant at any
time by giving written notice to the Corporation Committee. Any designation of
a Beneficiary other than the Participant's spouse must be consented to by the
spouse in writing and witnessed by a notary public (or a representative of the
Plan prior to October 1, 1993). Any consent required under this section 7.10
shall be valid only with respect to the spouse who signed it. Spousal consent
shall not be required if the Participant establishes to the satisfaction of a
Plan representative that such consent may not be obtained because (a) there is
no spouse; (b) the spouse cannot be located, or (c) there exists such other
circumstances as the Secretary of the Treasury may prescribe as excusing the
requirement for such consent. A Participant may revoke any prior election
without obtaining the consent of the spouse to such revocation. In the absence
of a new election that meets the requirements of this section 7.10, the spouse
shall be the Beneficiary.
(b) DEATH PRIOR TO DESIGNATING BENEFICIARY. In the
event the Participant dies with no beneficiary designation on file, the
Participant's Beneficiary shall be the Participant's surviving spouse, if any,
and if there is no surviving spouse, the Participant's estate.
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7.11 PAYMENT OF GROUP INSURANCE PREMIUMS. If a retired
Participant is eligible to be included in any contributory group insurance
program maintained or sponsored by an Employment Unit, a retired Participant
who is receiving benefits under the Plan in installments and who elects to be
covered under such contributory group insurance program may direct that a
specified portion of the installment payments be withheld and paid by the
Trustee on his behalf to the Employment Unit as his contribution under such
group insurance program. Such direction by a retired Participant shall be in
writing on a form prescribed by the Corporation Committee. Any such direction
may be revoked by the retired Participant not less than 15 days prior to the
effective date of such revocation. Any withholding and payment of insurance
costs on behalf of a retired Participant shall be made in accordance with
Treasury regulation section 1.401(a)-13.
7.12 INABILITY TO LOCATE PARTICIPANT. If, when any payment
becomes due, the Corporation Committee is unable to locate the Participant or
Beneficiary after exercising reasonable diligence, payment shall be stopped and
future payments to such individual discontinued. Any remaining unpaid benefits
with respect to such Participant or Beneficiary shall be deemed to be
forfeited, provided that if the Participant or Beneficiary later notifies the
Corporation
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Distributions
Committee of his address, to the extent required by law payment of the
forfeited amount shall be reinstated by the Participating Company with which
the Participant was last employed.
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ARTICLE VIII
LOANS
-----
8.1 IN GENERAL. Each "party in interest," as defined in
section 3(14) of ERISA, with respect to the Plan for whom a Pre-Tax Account,
After-Tax Account and/or Rollover Account is maintained may request that a loan
be made to him from his Pre-Tax Account, After-Tax Account and/or Rollover
Account by filing an appropriate application, pursuant to procedures adopted by
the Corporation Committee. All loan requests shall be approved on a reasonably
equivalent basis (within the meaning of section 4975(d)(1)(A) of the Code and
section 408(b)(1)(A) of ERISA), subject to the conditions set forth in this
Article VIII.
8.2 LOAN ADMINISTRATION. The Corporation Committee shall be
responsible for administering the loan program, but may delegate the operation
of the program to the Plan's record-keeper. The procedures for applying for a
loan and the basis on which loans will be approved or denied shall be described
in the summary plan description for the Plan or in other documents prepared by
or at the direction of the Corporation for this purpose and such additional
documents are hereby incorporated by reference to the extent required by the
Department of Labor.
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Loans
8.3 TERMS AND CONDITIONS OF LOANS. The terms and conditions
of each loan shall be set forth in the promissory note and security agreement
evidencing the loan and shall include, but not be limited to, the following:
(a) MAXIMUM AMOUNT. The principal amount of a loan
made under this Plan to any individual together with the outstanding principal
amount of any other loan made to such individual under any other qualified plan
under section 401(a) of the Code maintained by a Related Company shall not
exceed the lesser of
(1) 50 percent of the individual's vested
interest in his Accounts,
(2) $50,000 reduced by the highest
outstanding balance of any previous loans
from the Plan and any other plans of a
Related Company during the one-year
period ending immediately before the date
on which the current loan is made, and
(3) such amount that repayment of principal
plus interest does not exceed 25 percent
of the individual's gross pay.
(b) MINIMUM AMOUNT. The minimum loan amount shall be $500 and all loan
amounts shall be in increments of $100.
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(c) PERIOD. No loan shall be made for a period less
than 12 months or longer than four and one-half years or such other periods as
may be established from time to time under the Corporation Committee's written
loan procedures.
(d) SECURITY. A loan shall be secured by the
Participant's Accounts up to the amount of the outstanding balance of the loan.
(e) NUMBER OF LOANS. Effective January 1, 1994, two
loans shall be available under the Plan to a Participant at any time, but no
third loan shall be made to an individual within 30 days following the
repayment in full of a prior loan, or such other time period as may be provided
from time to time under Plan procedures.
(f) PARTICIPANT COVERS LOAN EXPENSES. Any loan made
under the Plan shall be subject to such other terms and conditions as the
Corporation Committee shall deem necessary or appropriate, including the
condition that he reimburse the Plan for any state documentary stamps and other
taxes, and any other reasonable expenses specified by the Corporation
Committee, which the Plan incurs to extend, make and service the loan.
(g) HOW TO APPLY. A loan may be initiated by
following the appropriate telephonic or other procedures established by the
record-keeper, as the delegate of the Corporation Committee.
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Loans
8.4 INTEREST RATE. The interest rate for a loan made under
this Plan shall be fixed for the term of each loan, and shall be set as
determined by the Corporation Committee on a quarterly basis at a rate which it
deems reasonable at the time for a fully secured loan and which is consistent
with applicable Department of Labor regulations.
8.5 REPAYMENT AND DEFAULT.
----------------------
(a) PAYMENTS. A loan made under the Plan shall
require that repayment be made in substantially level installments through
payroll withholding while the individual is an Employee and through such other
means (not less frequently than quarterly) as the Corporation Committee deems
appropriate for an individual who is not an Employee. Nevertheless, any
individual who terminates employment for any reason other than retirement,
discharge or lay-off must repay all of the outstanding principal balance of his
loan, plus interest due, within 90 days of the date of termination.
(b) PREPAYMENT. An individual may repay, at any
time, all of the outstanding principal balance of his loan, plus interest due,
without penalty.
(c) CREDITING PAYMENTS. Principal and interest
payments shall be credited to the Participant's Pre-Tax Account, After-Tax
Account and/or Rollover Account and shall be invested in the same manner as
Pre-Tax Contributions, After-Tax Contributions and Rollover Contributions.
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Loans
(d) DEFAULT. The events of default shall be set forth in
the promissory note and security agreement which evidence the loan. Such
events shall include, but not be limited to, the following:
(1) an individual terminates employment as an
Employee for any reason and does not make
payments when due, subject to a 90-day grace
period;
(2) the Trustee concludes that the individual no
longer is a good credit risk;
(3) to the extent permissible under federal law,
the individual's obligation to repay the loan
has been discharged through bankruptcy or
any other legal process of action which did
not actually result in payment in full, and
(4) the individual does not make payments when
due, subject to the applicable 90 day grace
period.
(d) EFFECT OF DEFAULT. Upon the existence or occurrence
of an event of default, the loan may become due and payable in full and, if
such loan is not actually repaid in full, shall be cancelled on the books and
records of the Plan and the amount otherwise distributable to such individual
shall be reduced, as of the date his Accounts otherwise become distributable,
by the principal amount of the loan then due plus any accrued but unpaid
interest. Such principal and
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interest shall be determined without regard to whether the loan had been
discharged through bankruptcy or any other legal process or action which did
not actually result in payment in full; however, interest shall continue to
accrue on such loan only to the extent permitted under applicable law.
Cancellation of the amount distributable to an individual under this subsection
(d) shall not occur until a distributable event occurs under the Plan. In the
event a default occurs before a distributable event occurs, the Corporation
Committee shall take such other steps to cure the default as it deems
appropriate under the circumstances to preserve Plan assets.
8.6 MECHANICS. A loan to an individual under this Plan shall
be made from his Pre-Tax Account, After-Tax Account and Rollover Account, and
the loan shall be an asset of the respective accounts. For investment
purposes, the principal amount of the loan shall be deducted from the
Participant's Investment Funds other than the Harris Stock Fund in proportion
to their value in his Accounts as of the Valuation Date immediately preceding
the loan.
8.7 SPECIAL POWERS. The Corporation Committee shall have the
power to take such action as it deems necessary or appropriate to stop the
benefit payments to or on behalf of an individual who fails to repay a loan
(without regard to whether the obligation to repay the loan had been discharged
through
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Loans
bankruptcy or other legal process or action) until his Pre-Tax Account,
After-Tax Account and/or Rollover Account has been reduced by the principal due
(without regard to such discharge) on such loan or to distribute the note which
evidences such loan in full satisfaction of any interest in the Pre-Tax
Account, After-Tax Account, and/or Rollover Account which is attributable to
the unpaid balance of such loan.
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ARTICLE IX
IN-SERVICE WITHDRAWALS
----------------------
9.1 AT-WILL WITHDRAWALS FROM SAVINGS ACCOUNT AND AFTER-TAX
ACCOUNT.
(a) AVAILABILITY. Subject to section 9.4, a
Participant may elect to withdraw at any time in a lump sum all or a portion
of the balance in his Savings Account and After-Tax Account for any purpose by
filing the appropriate election with the Local Committee.
(b) LIMITATIONS. A Participant may make a withdrawal
under this subsection (a) not more than once every three months. A
Participant's election to make After-Tax Contributions shall be suspended, and
no After-Tax Contributions or Matching After-Tax Contributions shall be
credited to the Participant's Account, for a period of six months after the
date of a Participant's withdrawal from the After-Tax Account. The
Participant's election shall automatically be reinstated at the expiration of
such six-month period, unless the Participant has filed a change of election
pursuant to section 3.7.
9.2 HARDSHIP WITHDRAWALS FROM PRE-TAX ACCOUNT.
(a) AVAILABILITY. Subject to section 9.4, a
Participant who has taken all loans and withdrawals under section 9.1, may
elect to withdraw in a lump sum up to 100 percent of his Pre-Tax Contributions,
and/or his Rollover Account to satisfy an immediate and heavy financial need,
by filing an election with the Corporation Committee. Withdrawals under this
section 9.3 shall be
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In-Service Withdrawals
authorized by the Corporation Committee in the event of financial need meeting
the safe harbor standards of Treasury regulation section 1.401(k)-1(d)(2),
which is incorporated herein by reference. A withdrawal shall be deemed to be
made on account of an immediate and heavy financial need under those
regulations if the withdrawal is for:
(1) expenses for medical care previously
incurred by the Participant, his spouse
or any of his dependents or necessary for
these persons to obtain medical care;
(2) purchase (excluding mortgage payments) of
a principal residence for the
Participant;
(3) payment of tuition and related education
fees for the next 12 months of
post-secondary education for the
Participant, his spouse, children or
dependents;
(4) payment to prevent the eviction of the
Participant from his principal residence
or foreclosure on the mortgage of the
Participant's principal residence.
(5) any other event determined by the
Commissioner of Internal Revenue.
A withdrawal shall be deemed necessary to satisfy an immediate and
heavy financial need of the Participant if:
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In-Service Withdrawals
(i) the withdrawal is not in excess
of the amount required to meet
the financial need of the
Participant, including taxes and
additions to tax applicable to
such withdrawal, and
(ii) the Participant has obtained all
other distributions,
withdrawals, and all nontaxable
loans currently available under
this Plan and any other plans
maintained by a Related Company.
(b) LIMITATIONS. A Participant may take a withdrawal
under this section 9.2 no more than once in a six-month period.
9.3 EMERGENCY WITHDRAWALS. Subject to section 9.4, a
Participant who has taken all withdrawals available under sections 9.1 and 9.2
above may elect to withdraw in a lump sum all or a portion of the balance in
his Basic Account and Supplemental Account if the withdrawal otherwise
satisfies the requirements of section 9.2(a). An election to withdraw under
this section 9.3 is subject to the approval of the "sector executive" which
shall be granted on a uniform and nondiscriminatory basis.
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In-Service Withdrawals
9.4 REDUCTION OF INVESTMENT FUND BALANCES. The Investment
Funds in which a Participant's Accounts are invested, other than the Harris
Stock Fund, shall be reduced proportionately to reflect the amount of the
Participant's withdrawals under this Article IX, except that a Participant may
not withdraw contributions invested in the Harris Stock Fund, and no more than
80 percent of the balance determined as of the Valuation Date immediately
preceding the withdrawal shall be available to be withdrawn from equity and
fixed income fund balances; provided that the amount remaining in the equity
and fixed income funds determined as of the Valuation Date coinciding with or
next following the withdrawal may be withdrawn as part of the withdrawal
request.
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ARTICLE X
TOP-HEAVY PROVISIONS
--------------------
10.1 IN GENERAL. Notwithstanding any other provisions of the
Plan to the contrary, for any Plan Year in which this Plan is "top-heavy," as
defined herein, the provisions of this Article X shall apply. If the Plan is
top-heavy and then ceases to be top-heavy, except as otherwise provided in
section 10.3, the provisions of this Article X shall cease to apply.
10.2 MINIMUM ALLOCATION.
(a) AMOUNT. For any Plan Year for which the Plan is
top-heavy, a minimum allocation shall be made for each "non-key employee" who
is employed by a Participating Company on the last day of the Plan Year in an
amount equal to the lesser of (1) three percent of Compensation or (2) the
largest percentage of Compensation allocated to any "key employee" during the
Plan Year. The minimum allocation is determined without regard to any Social
Security contribution. The minimum allocation shall not apply to any non-key
employee who receives a minimum contribution or minimum benefit under any other
plan of a Related Company.
(b) ALLOCATION. To satisfy subsection (a), the
Profit-Sharing Contributions for such Plan Year first shall be allocated to all
Participants employed on the last day of the Plan Year in an amount that meets
the minimum
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Top-Heavy Provisions
allocation amount, and any remaining Profit-Sharing Contribution then shall be
allocated in accordance with section 3.2.
10.3 MINIMUM VESTING. For any Plan Year for which the Plan is
top-heavy, the vested interest of a Participant who is employed by a
Participating Company during any part of the Plan Year shall be determined
under the following schedule:
PERIOD OF SERVICE VESTED PERCENTAGE
----------------- -----------------
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
If the Plan becomes top-heavy and ceases to be top-heavy, a
Participant who have a five-year Period of Service as determined under section
5.3 may elect to have his vested interest continue to be determined under this
section 10.3, notwithstanding that the Plan is no longer top-heavy.
10.4 DEFINITIONS. For purposes of this Article X, the
following terms shall have the following meanings:
(a) "Determination date" means the last day of the
preceding Plan Year.
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Top-Heavy Provisions
(b) "Determination period" means the Plan Year
containing the determination date and the four preceding Plan Years.
(c) "Key employee" means an Employee or former
employee (and their Beneficiaries) who, at any time during the determination
period, is
(1) an officer of the Participating Company
and has annual compensation greater than
50 percent of the dollar limitation in
effect under section 415(b)(1)(A) of the
Code for any such Plan Year,
(2) one of the ten Employees having annual
compensation in excess of the limitation
in effect under section 415(c)(1)(A) of
the Code and owning (or considered as
owning with the meaning of section 318 of
the Code) the largest interests in the
Participating Company,
(3) a five-percent owner (within the meaning
of section 416(i)(1)(B) of the Code) of
the Participating Company, or
(4) a one-percent owner of the Participating
Company having annual compensation from
the Participating Company of more than
$150,000.
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Top-Heavy Provisions
The determination of "key employee" shall be made under section
416(i)(1) of the Code, the terms of which are incorporated herein by reference.
(d) "Non-key employee" means any Employee who is not
a key employee.
(e) "Permissive aggregation group" means the
"required aggregation group" and any other plans of the Participating Company
which, when considered as a group with the required aggregation group, would
continue to satisfy the requirements of sections 401(a)(4) and 410 of the Code.
(f) "Required aggregation group" means (1) each
qualified plan of the Participating Company in which at least one key employee
participates or participated at any time during the determination period
(regardless of whether the plan has terminated), and (2) any other qualified
plan of the Participating Company which enables a plan described in (1) to meet
the requirements of sections 401(a) and 410 of the Code.
(g) "Top-heavy" means:
(1) the top-heavy ratio for the Plan exceeds
60 percent and the Plan is not part of
any required aggregation group or
permissive aggregation group;
(2) the Plan is part of a required
aggregation group but not a permissive
aggregation group and the top-heavy
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Top-Heavy Provisions
ratio for the required aggregation group
exceeds 60 percent;
(3) the Plan is part of a required
aggregation group and a permissive
aggregation group and the top-heavy ratio
for the permissive aggregation group
exceeds 60 percent.
(h) "Top-heavy ratio" means:
(1) if the Participating Company or Related
Company has not maintained any defined
benefit plan which during the five-year
period ending on the determination date
had accrued benefits, the top-heavy ratio
is a fraction, the numerator of which is
the sum of the account balances of all
key employees as of the determination
date (including any part of any account
balance distributed in the five-year
period ending on the determination date),
and the denominator of which is the sum
of all account balances (including any
part of any account balance distributed
in the five-year period ending on the
determination date).
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Top-Heavy Provisions
(2) If a Related Company maintains or has
maintained a defined benefit plan which
during the five-year period ending on the
determination date had accrued benefits,
the top-heavy ratio is a fraction, the
numerator of which is the sum of account
balances under the defined contributions
plans for all key employees (including
any part of any account balance
distributed in the five-year period
ending on the determination date), and
the present value of accrued benefits
under the defined benefit plans for all
key employees as of the determination
date, and the denominator of which is the
sum of the account balances under the
defined contribution plans for all
participants (including any part of any
account balance distributed in the
five-year period ending on the
determination date), and the present
value of accrued benefits under the
defined benefit plans for all
participants as of the determination
date.
(3) For purposes of (1) and (2) above, the
value of account balances and the present
value of accrued benefits shall be
determined as of the most recent
"valuation
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Top-Heavy Provisions
date" that falls within or ends with
the 12-month period ending on the
determination date, except as provided in
section 416 of the Code for the first and
second plan years of a defined benefit
plan. In the case of a defined benefit
plan, the "present value of accrued
benefits" shall be determined under the
terms of the applicable defined benefit
plan. The account balances and accrued
benefits of a Participant who is not a
key employee but who was a key employee
in a prior year, or who has not been
credited with at least an Hour of Service
with any Participating Company
maintaining the plan at any time during
the five-year period ending on the
determination date shall be disregarded.
When aggregating plans, the value of
account balances and accrued benefits
shall be calculated with reference to the
determination dates that fall within the
same calendar year.
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Top-Heavy Provisions
(4) The calculation of the top-heavy ratio
shall be determined in accordance with
section 416 of the Code, the provisions
of which are incorporated herein by
reference.
(i) "Valuation date" means the last day of the Plan
Year.
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ARTICLE XI
ADMINISTRATION
--------------
11.1 NAMED FIDUCIARIES. The Corporation shall be the "named
fiduciary" responsible for the control, management and administration of the
Plan.
11.2 CORPORATION COMMITTEE. The Corporation shall establish a
Corporation Committee to administer the Plan. The members of the Corporation
Committee shall be appointed, and removed at any time, by the appropriate
officers of the Corporation. A member of the Corporation Committee may resign
at any time by giving written notice to the Corporation at least 15 days prior
to the effective date of the resignation.
11.3 POWERS AND DUTIES OF COMMITTEE. The Corporation Committee
shall have the powers and duties conferred on it by the terms of the Plan. The
Corporation Committee may establish such rules and regulations as it deems
necessary to enable it to administer the Plan. The Corporation Committee shall
have the discretionary authority to determine eligibility for benefits and
construe the terms of the Plan.
11.4 ACTIONS OF COMMITTEE. No formal meeting and no minutes
shall be required with respect to actions taken by the Corporation Committee.
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Administration
11.5 FINALITY OF DECISIONS. All decisions and directions made
by the Corporation Committee, in the discretionary exercise of its powers and
duties, shall be final and binding on all parties concerned.
11.6 IMMUNITIES OF COMMITTEE. Except as otherwise provided by
law, no member of the Corporation Committee shall be liable to a Participating
Company or to any Participant or Beneficiary by reason of the exercise in good
faith of any power or discretion vested in him by the terms of the Plan.
11.7 ADVISERS AND AGENTS. The Corporation, or the Corporation
Committee, with the consent of the Corporation, may employ one or more persons
to render advice with respect to any responsibility that the Corporation, or
the Corporation Committee, respectively, has under the Plan. The Corporation,
or the Corporation Committee, may appoint unrelated parties to carry out
trustee, investment management and record-keeping responsibilities with respect
to the Plan. The Corporation shall indemnify any person, including an employee
of the Corporation, who is acting on behalf of the Corporation or the
Corporation Committee in this capacity with respect to liability that may arise
by reason of his action or failure to act concerning the Plan, excepting any
willful or gross misconduct or criminal acts, to the extent required in the
respective contracts governing such arrangements.
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Administration
11.8 COMMITTEE MEMBER WHO IS PARTICIPANT. A member of the
Corporation Committee who also is a Participant shall have no right to vote
with respect to any action that pertains solely to him as a Participant. In
the event a majority of the remaining members are unable to agree as to the
action to be taken with respect to the Participant, the chief executive officer
of the Corporation shall appoint an impartial person to arbitrate the matter
between the remaining members and to reach a decision.
11.9 INFORMATION PROVIDED BY PARTICIPATING COMPANIES. Each
Participating Company and Employment Unit shall provide the Corporation, the
Corporation Committee and the Trustee with complete and timely information
regarding employment data for each Employee and Participant needed by the
Corporation, Corporation Committee or Trustee to administer the Plan,
including, but not limited to, information concerning Compensation, date of
employment, date of termination of employment, reason for termination and any
other information required by the Corporation, Corporation Committee, or
Trustee.
11.10 EXPENSES. All reasonable and proper expenses of the Plan
and the Trust, including, but not limited to, investment advisory fees,
record-keeping fees, and Trustee's fees shall be paid from Participants'
Accounts in a uniform and
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Administration
nondiscriminatory manner, which may be ratably, unless otherwise paid by the
Corporation. The Corporation may seek reimbursement of any expense which it
pays that is properly payable by the Trust Fund.
11.11 TRUST FUND AVAILABLE TO PAY ALL PLAN BENEFITS. The Plan
is intended to be a single plan under Treasury regulation section
1.414(1)-1(b)(1). The maintenance of Accounts as required by the terms of the
Plan shall be for record-keeping purposes only. All of the Trust Fund shall be
available to pay benefits to all Participants and Beneficiaries.
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ARTICLE XII
AMENDMENT AND TERMINATION AND CHANGE OF CONTROL
-----------------------------------------------
12.1 AMENDMENT. The Corporation reserves the right to amend
the Plan by action of its Board of Directors or the appropriate committee
thereof at any time and from time to time, subject to the following
limitations:
(a) no amendment shall be made which vests in any
Participating Company any interest in any assets of the Plan other than as
specifically provided in section 12.2;
(b) no amendment shall be made which would have the
effect of decreasing a Participant's "accrued benefit" as proscribed in section
411(d)(6) of the Code; and
(c) no amendment shall have the effect of reducing a
Participant's vested interest in his Accounts. If the Plan is amended to
change the vesting schedule, each Participant with at least a three-year Period
of Service shall have the right to elect to have his vested interest computed
without regard to the amendment. Each Participant shall be permitted to make
this election during the period ending 60 days after the latest of the date (1)
the amendment is adopted; (2) the amendment is effective, and (3) the
Participant is issued a written notice of the amendment by the Corporation or
its delegate.
Amendments will normally be initiated by the Corporation Committee,
approved by upper management of the Corporation, then adopted by resolution of
the Retirement Plan Investment Committee of the Board of Directors.
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Amendment and Termination and Change of Control
12.2 TERMINATION OF PLAN. This Plan is intended to be
permanent, and it is the expectation of the Corporation that it will continue
indefinitely. However, the Corporation reserves the right to terminate the
Plan by resolution of its Board of Directors or the appropriate committee
thereof. In the case of a complete termination of the Plan, previously
unallocated forfeitures shall be allocated as otherwise provided in the Plan.
To the extent previously unallocated forfeitures cannot be allocated because
all Participants have reached the limitations of section 415 of the Code, the
unallocated amount shall revert back to the appropriate Participating Company,
as provided in section 3.10.
12.3 DISCONTINUANCE OF CONTRIBUTIONS. The Corporation reserves
the right to discontinue contributions to the Plan by amendment or by
resolution of the Board of Directors or the appropriate committee thereof.
12.4 VESTING ON TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS.
As of the date of the partial or complete termination of the Plan or upon the
complete discontinuance of contributions to the Plan, each affected
Participant shall become fully vested in his Accounts and no further
allocations of contributions or forfeitures shall be made after such date on
behalf of an affected Participant.
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Amendment and Termination and Change of Control
12.5 DISTRIBUTION ON TERMINATION. Upon the complete
termination of the Plan, the Trustee shall distribute to each affected
Participant the full amount standing to the credit of his Accounts; provided
that if such amount exceeds (or at the time of any prior distribution exceeded)
$3,500 and the Participant is not yet age 65, such lump sum shall not be paid
without his consent. If the Participant does not consent, an annuity contract
shall be purchased for and distributed to the Participant.
12.6 CHANGE OF CONTROL.
(a) DEFINITION. Notwithstanding any other provisions
of the Plan to the contrary, if
(1) a third person, including a "group" as
defined in section 12(d)(3) of the
Securities Exchange Act of 1934
(or any rules or regulations thereunder),
acquires shares of the Corporation having
20 percent or more of the total number of
votes that may be cast for the election
of directors of the Corporation; or
(2) as a result of any cash tender or
exchange offer, merger or other business
combination of the foregoing transactions
(the "Transaction"), the persons who were
directors of the Corporation before the
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Amendment and Termination and Change of Control
Transaction cease to constitute a
majority of the Board of Directors of the
Corporation or any successor to the
Corporation,
then during the period commencing on the date of acquisition of said voting
power or control of the Board of Directors of the Corporation or any successor
thereto and ending at the close of business on the next following June 30 (the
"Restriction Period"), the provisions of this section 12.6 shall apply.
(b) EFFECT. During the Restriction Period, the Plan
may not be terminated or amended to the extent the amendment would:
(1) reduce coverage under the Plan;
(2) reduce the amount of Profit-Sharing
Contributions required to be made for the
Plan Year ending on the last day of the
Restriction Period;
(3) reduce the amount of After-Tax
Contributions eligible for a matching
contribution that a Participant is
permitted to make or the amount of the
Matching After-Tax Contributions required
under sections 3.5 and 3.6; or
(4) reduce the amount of Pre-Tax
Contributions that a Participant is
permitted to make or the amount of
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Amendment and Termination and Change of Control
Matching Pre-Tax Contributions required
under sections 3.3 and 3.4.
(c) For the purpose of computing the amount of the
Profit-Sharing Contributions for the twelve-month period ending on the last day
of a Restriction Period, the adjusted consolidated net income of the
Corporation and its Consolidated Subsidiaries before net income taxes for the
Fiscal Year ending on such date is deemed to be the forecast of the
consolidated net income of the Corporation and its Consolidated Subsidiaries
for such Fiscal Year as set forth in the annual operating plan of the
Corporation for such Fiscal Year.
(d) During the Restriction Period, any person who was
an Employee on the day preceding the first day of the Restriction Period shall
be deemed to be an Employee so long as he is employed by a member of a
"controlled group of corporations" which includes, or by a trade or business
that is under common control with (as those terms are defined in sections
414(b) and (c) of the Code) the Corporation, any corporation which is the
survivor of any merger or consolidation to which the Corporation was a party,
or any corporation into which the Corporation has been liquidated.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
------------------------
13.1 RESTRICTIONS ON ALIENATION; QUALIFIED DOMESTIC RELATIONS
ORDERS. Except as otherwise may be required for Federal, state or local income
tax withholding purposes, no benefit or interest under this Plan shall be
subject to assignment or alienation, either voluntarily or involuntarily. The
preceding sentence shall apply to the creation, assignment or recognition of a
right to any benefit payable with respect to a Participant pursuant to a
domestic relations order, unless such order is determined to be a Qualified
Domestic Relations Order, as defined in section 414(p) of the Code. In
accordance with uniform and nondiscriminatory procedures established by the
Corporation Committee from time to time, the Corporation Committee upon the
receipt of a domestic relations order which seeks to require the distribution
of a Participant's Account in whole or in part to an "alternative payee" (as
that term is defined in Code section 414(p)(8)) shall:
(1) promptly notify the Participant and such
"alternate payee" of the receipt of such order and of the procedure which the
Corporation Committee will follow to determine whether such order constitutes a
"Qualified Domestic Relations Order" within the meaning of Code section 414(p),
(2) determine whether such order constitutes a
"Qualified Domestic Relations Order" and notify the Participant and the
"alternate payee" of the results of such determination and,
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Miscellaneous Provisions
(3) if the Corporation Committee determines that such
order does constitute a "Qualified Domestic Relations Order," distribute to
such "alternate payee" under the terms of such order the amount called for
under the order in a single sum within 60 days of the date such order is
determined to constitute a Qualified Domestic Relations Order, without regard
to whether a distribution would be permissible to the Participant at such time
under this Plan.
The determination and the distribution made by, or at the direction
of, the Corporation Committee under this section 13.1 shall be final and
binding on the Participant and on all other persons interested in such order.
An "alternate payee" under this section 13.1 shall not be an eligible person
for purposes of obtaining a loan pending the distribution of such alternate
payee's entire interest under this Plan.
13.2 EXCLUSIVE BENEFIT REQUIREMENT. Except as provided in
sections 12.2 and 13.3, no assets of the Plan shall revert to a Participating
Company or be used for or diverted to purposes other than providing benefits to
Participants and their Beneficiaries and defraying reasonable costs of
administering the Plan.
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Miscellaneous Provisions
13.3 RETURN OF CONTRIBUTIONS.
(a) MISTAKE OF FACT. Any contribution made by a
Participating Company due to a mistake of fact shall be returned to the
Participating Company within one year of the date the contribution was made.
(b) NONDEDUCTIBLE CONTRIBUTIONS. In the event the
deduction of a contribution made by a Participating Company is disallowed under
section 404 of the Code, such contribution (to the extent disallowed) shall be
returned to the Participating Company within one year of the disallowance of
the deduction.
13.4 NO CONTRACT OF EMPLOYMENT. Neither the establishment and
maintenance of the Plan nor the participation in the Plan by any Employee shall
be construed as a contract between the Employee and any Participating Company
so as to give any Employee the right to be retained by any Participating
Company, or to interfere with the rights of any Participating Company to
discharge the Employee at any time.
13.5 PAYMENT OF BENEFITS ON INCAPACITY. In the event the
Corporation Committee determines that any person to whom a distribution is to
be made is unable to care for his affairs by reason of illness or other
disability, any amount distributable to such person (unless prior claim thereto
shall have been made by a duly qualified guardian or other legal
representative) may, in the discretion of the
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Miscellaneous Provisions
Corporation Committee, be paid to such other person deemed by the Corporation
Committee to be responsible for such person. Any such payment made under this
section 13.5 shall constitute a complete discharge of any liability under this
Plan.
13.6 MERGER. In the event of a merger or consolidation with,
or transfer of assets or liabilities to any other plan, each Participant shall
receive a benefit immediately after such merger, consolidation or transfer (if
the Plan then terminated) which is at least equal to the benefit the
Participant was entitled to receive immediately before such merger,
consolidation or transfer (if the Plan had then terminated).
13.7 CONSTRUCTION. The headings and subheadings in this Plan
have been inserted for convenience of reference only and are to be ignored in
the construction of its provisions. Wherever appropriate, the masculine shall
be read as the feminine, the plural as the singular, and the singular as the
plural. References in this Plan to a section shall be to a section in this
Plan unless otherwise indicated. References in this Plan to a section of the
Code, ERISA or any other federal law shall also refer to the regulations issued
under such section.
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Miscellaneous Provisions
13.8 GOVERNING LAW. This Plan shall be construed, to the
extent to which state law is applicable, in accordance with the laws of the
State of Florida. Venue for any action arising under this Plan shall be in
Brevard County, Florida.
13.9 MISTAKEN PAYMENTS. If a mistake is made in favor of a
Participant or Beneficiary in the payment of benefits under this Plan, the
Corporation or the Trustee (acting at the Corporation direction and on behalf
of the Plan) shall take such action against the Participant or Beneficiary to
remedy such mistake and to make the Plan whole as the Corporation deems proper
and appropriate under the circumstances, and any mistake in favor of the Plan
shall promptly be corrected by, or at the direction of, the Corporation.
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ARTICLE XIV
SPECIAL PROVISIONS FOR
EMPLOYEES OF
HARRIS TECHNICAL SERVICES DIVISION OF
HARRIS TECHNICAL SERVICES CORPORATION
-------------------------------------
Notwithstanding the provisions of any other Article of this Plan to
the contrary, the following special provisions apply to Participants who are
employees of the Harris Technical Services Division of Harris Technical
Services Corporation.
14.1 PARTICIPATION. Notwithstanding section 2.1, an Employee
shall become a Participant on the first day on which the Employee performs an
Hour of Service.
14.2 PROFIT-SHARING CONTRIBUTIONS. (a) Notwithstanding section
3.1, a Profit-Sharing Contribution shall be made for each Plan Year on behalf
of Employees of the Employment Unit consisting of the Harris Technical Services
Division in an amount equal to 7 percent of before-tax M-2 profits. Ten (10)
percent of the estimated Profit-Sharing Contribution for each Plan Year shall
be made no later than the last day of October, January, and April of each year.
The remaining Profit-Sharing Contribution for each Plan Year shall be made no
later than the last day of September. (b) Notwithstanding any provision to the
contrary in section 3.2, Profit-Sharing Contributions shall be allocated pro
rata to each
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Miscellaneous Provisions
Participant on the basis of the number of full months of his or her Period of
Service completed during the Plan Year, provided that fractional months shall
be aggregated. The limitation in eligibility in section 3.2(c) shall not
apply.
14.3 PRE-TAX CONTRIBUTIONS. Section 3.3(a) shall apply,
provided, however, that a Participant may elect to reduce his Compensation by
an amount equal to any whole percentage not to exceed 15 percent and have the
amount of such reduction contributed to the Plan as a Pre-Tax Contribution.
14.4 NO MATCHING PRE-TAX CONTRIBUTIONS. Notwithstanding any
other provision of the Plan to the contrary, no Matching Pre-Tax Contributions
will be made on behalf of Participants.
14.5 NO INVESTMENT IN THE HARRIS STOCK FUND. Notwithstanding
any provision of the Plan to the contrary, Participants may not direct
investments into the Harris Stock Fund.
14.6 VESTING. The Vesting Schedule in section 5.3(a) shall be
replaced by the following vesting schedule:
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Miscellaneous Provisions
PERIOD OF SERVICE VESTED PERCENTAGE
----------------- -----------------
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
HARRIS CORPORATION
Date: _____________________ By: _____________________
Attest: _____________________ Title: ___________________
1026140
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APPENDIX A
INVESTMENT FUNDS. The Investment Funds available under the plan as of October
1, 1993 are as follows:
(a) BALANCED FUND. Assets held in this fund will be invested in a
variety of stocks, bonds, mortgages, fixed-income securities such as
U.S. Treasury bills, certificates of deposit, commercial paper and
real estate.
(b) SHORT-TERM BOND FUND. Assets in this fund will be invested in
shorter-term fixed-income securities such as government bonds, U.S.
Treasury bills and notes, certificates of deposit, federal agency
obligations, mortgage securities and corporate bonds.
(c) MONEY MARKET FUND. Assets in this fund will be invested in a
diversified portfolio of high-quality, short-term fixed instruments
such as U.S. Treasury bills, federal agency obligations, commercial
paper, certificates of deposit and banker's acceptances.
(d) STABLE VALUE FUND. Assets held in this fund will be invested in a
diversified portfolio of investment contracts and short-term,
high-quality
- 96 - Harris Retirement Plan
<PAGE> 107
fixed income instruments that guarantee principal and a specified
rate of return for a specified period.
(e) EQUITY INCOME FUND. Assets held in this fund will be invested
primarily in dividend-paying common stocks of established companies
but may also be invested in convertible bonds and/or convertible
preferred stock.
(f) INDEXED EQUITY FUND. Assets held in this fund will be invested in a
stock portfolio that mirrors the Standard & Poor's 500 Stock Index.
(g) GROWTH FUND. Assets in this fund will be invested for the longer
term, primarily in common stocks of companies which are currently
experiencing an above-average rate of earnings growth. The fund's
stock selection criteria include a requirement that each company
have a five-year average performance record of sales, earnings,
dividend growth, pre-tax margins, return on equity.
(h) HARRIS STOCK FUND. Assets in this fund will be invested in common
stock of the Corporation.
The Investment Funds may be changed at any time and from time to time.
- 97 - Harris Retirement Plan
<PAGE> 108
APPENDIX B
SPECIAL PROVISIONS FOR TRANSFERRED PARTICIPANTS
-----------------------------------------------
The provisions of this Appendix B are effective as of January 1,
1990.
(a) For purposes of this Appendix B, the following terms
shall have the following meanings:
(1) "TRANSFERRED PARTICIPANTS" means those
former Employees whose employment with a
Participating Company ceased due to a
sale of the stock or assets of a Sold
Operation.
(2) "SOLD OPERATION" means (i) the Data
Communications Division and (ii) the
Chatsworth Operation.
(3) "CLOSING DATE" means the date as of which
the sale of the relevant Sold Operation
was effective.
(b) Each Transferred Participant shall be fully vested
in his Accounts as of the relevant Closing Date.
- 98 - Harris Retirement Plan
<PAGE> 109
APPENDIX C
PARTICIPATING COMPANIES
-----------------------
As of July 1, 1995, the Related Companies that are Participating
Companies are:
Harris Corporation
Harris Data Services Corporation
R.F. Communications, Inc.
Scientific Calculations, Inc.
Harris Semiconductor International, Inc.
Harris Technical Services Corporation
Harris International Sales Corporation
Harris Space Systems Corporation
Harris Video Communications Systems, Inc.
Harris Data Communications Division of Lanier Worldwide,
Inc.
Baseview Products, Inc.
1121102
- 99 - Harris Retirement Plan
<PAGE> 1
EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Primary:
Average shares outstanding.......................... 39,146 39,720 39,444
======== ======== ========
Income before cumulative effect of change in
accounting principle............................. $154,466 $121,880 $111,079
Cumulative effect of change in accounting
principle........................................ -- (10,063) --
-------- -------- --------
Net Income.......................................... $154,466 $111,817 $111,079
======== ======== ========
Per share amounts:
Income before cumulative effect of change in
accounting principle........................... $3.95 $3.07 $2.82
Cumulative effect of change in accounting
principle...................................... -- (.25) --
-------- -------- --------
Total............................................ $3.95 $2.82 $2.82
======== ======== ========
Fully diluted:
Total primary average shares outstanding............ 39,146 39,720 39,444
Dilutive stock options and employee stock purchase
plan shares -- based on treasury stock method
using the greater of year-end market price or
average market price............................. 132 154 217
-------- -------- --------
Total fully diluted average shares outstanding...... 39,278 39,874 39,661
======== ======== ========
Per share amounts:
Income before cumulative effect of change in
accounting principle........................... $3.93 $3.05 $2.80
Cumulative effect of change in accounting
principle...................................... -- (.25) --
-------- -------- --------
Total............................................ $3.93 $2.80 $2.80
======== ======== ========
</TABLE>
34
<PAGE> 1
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.................... 3.88 3.56 3.17 2.47 1.11
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, Earnings
are divided by Fixed Charges. Earnings represent the sum of income from
continuing operations before income taxes for the Corporation and its
subsidiaries plus Fixed Charges, minus interest capitalized, plus amortization
of interest capitalized. Fixed Charges represent interest expense of the
Corporation and its subsidiaries (including interest capitalized) plus one-third
(the proportion deemed representative of the interest factor) of rents.
35
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Each of the below listed subsidiaries is 100% directly or indirectly owned
by Harris Corporation except as otherwise indicated, and all are included in the
consolidated financial statements.
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION
NAME OF SUBSIDIARY OF INCORPORATION
------------------ ----------------
<S> <C>
Harris A.B. ............................................................. Sweden
Harris K.K. ............................................................. Japan
Harris S.A. ............................................................. Belgium
Harris S.A. de C.V. ..................................................... Mexico
Harris Srl............................................................... Italy
Harris Advanced Technology (Malaysia) Sdn. Bhd. ......................... Malaysia
Harris Airport Systems Sdn. Bhd. ........................................ Malaysia
Harris Australia Pty. Ltd. .............................................. Australia
Harris Broadcast Systems (Nigeria) Limited (40% of voting securities
owned)................................................................. Nigeria
Harris Canada, Inc....................................................... Canada
Harris Communications Honduras, S.A. de C.V. ............................ Honduras
Harris Controls Australia Limited........................................ Australia
Harris Data Services Corporation......................................... Delaware
Harris do Brazil Limitada................................................ Brazil
Harris Far East Limited.................................................. Delaware
Harris Foreign Sales Corporation, Inc. .................................. Virgin Islands
Harris International Sales Corporation................................... Delaware
Harris Investments of Delaware, Inc. .................................... Delaware
Harris Ireland Ltd....................................................... Ireland
Harris Italiana, Inc. ................................................... Delaware
Harris Network Support Products, Inc..................................... Texas
Harris Pension Management Limited........................................ England
Harris Publishing Systems Corporation.................................... Delaware
Harris Semiconducteurs Sarl.............................................. France
Harris Semiconductor B.V. ............................................... Netherlands
Harris Semiconductor GmbH................................................ Germany
Harris Semiconductor Limited............................................. England
Harris Semiconductor HK, Ltd. ........................................... Hong Kong
Harris Semiconductor Y.H. ............................................... Korea
Harris Semiconductor, Inc. .............................................. Delaware
Harris Semiconductor (Florida), Inc. .................................... Delaware
Harris Semiconductor (Ohio), Inc. ....................................... Delaware
Harris Semiconductor Patents, Inc. ...................................... Delaware
Harris Semiconductor (Pennsylvania), Inc. ............................... Delaware
Harris Semiconductor Pte. Ltd. .......................................... Singapore
Harris Semiconductor (Taiwan) Ltd. ...................................... Taiwan
Harris Solid-State (Malaysia) Sdn. Bhd. ................................. Malaysia
Harris Southwest Properties, Inc. ....................................... Delaware
Harris Space Systems Corporation......................................... Delaware
Harris Systems Limited................................................... England
Harris Technical Services Corporation.................................... Delaware
Harris Video Communication Systems, Inc. ................................ Delaware
Allied Broadcast Equipment Canada, Ltd. ................................. Canada
</TABLE>
36
<PAGE> 2
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION
NAME OF SUBSIDIARY OF INCORPORATION
------------------ ----------------
<S> <C>
American Coastal Insurance Ltd. ......................................... Bermuda
Baseview Products, Inc. ................................................. Michigan
Communication & Information Processing Harris S.A........................ Argentina
ECCO Parent Limited...................................................... Ireland
Executive Conference Center, Inc. ....................................... Georgia
Guangzhou Harris Telecommunications Company Ltd. (51% of voting
securities owned) ..................................................... China
Lanier (Australia) Pty. Ltd. ............................................ Australia
Lanier Business Products, Inc. .......................................... Georgia
Lanier Financial Services, Inc. ......................................... Georgia
Lanier Holdings Pty. Ltd. ............................................... Australia
Lanier Holdings, Inc. ................................................... Delaware
Lanier International, Inc. .............................................. Delaware
Lanier Pacific Pty. Ltd. ................................................ Australia
Lanier Professional Services, Inc. ...................................... Delaware
Lanier Worldwide, Inc. .................................................. Delaware
Lanier Leasing, Inc. .................................................... Delaware
Lanier Europe, B.V. ..................................................... Netherlands
Lanier United Kingdom Ltd. .............................................. England
Lanier de Argentina...................................................... Argentina
Lanier Canada, Inc. ..................................................... Canada
Lanier de Chile, S.A. ................................................... Chile
Lanier S.A. ............................................................. Colombia
Lanier de El Salvador, S.A. de C.V. ..................................... El Salvador
Lanier de Guatemala, S.A. ............................................... Guatemala
Lanier de Dominicana, S.A. .............................................. Dominican Republic
Lanier de Panama, S.A. .................................................. Panama
Lanier Puerto Rico, Inc. ................................................ Puerto Rico
Lanier de Costa Rica S.A. ............................................... Costa Rica
Lanier France S.A. ...................................................... France
Lanier Espana S.A. ...................................................... Spain
Lanier Belgium S.A. ..................................................... Belgium
Lanier Danmark A/S....................................................... Denmark
Lanier Deutschland GmbH.................................................. Germany
Lanier Italia S.p.A. .................................................... Italy
Lanier Hellas AEBE....................................................... Greece
Lanier Nederland B.V. ................................................... Netherlands
Lanier Holdings A.G. .................................................... Switzerland
Lanier Finance A.G....................................................... Switzerland
Lanier (Schweiz) A.G. ................................................... Switzerland
Lanier Singapore Pte. Ltd. .............................................. Singapore
Lanier Norge A/S ........................................................ Norway
RF Communications, Inc. ................................................. Delaware
RF Communications, Inc. ................................................. New York
Shenzhen Harris Telecom Co. Ltd. (55% of voting securities owned) ....... China
Trident Copiers Ltd. .................................................... England
Westronic Sales Corporation.............................................. Washington
WSL Telecontrol Corporation.............................................. Washington
</TABLE>
37
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the following registration
statements of Harris Corporation and in each related Prospectus of our report
dated July 27, 1995, with respect to the consolidated financial statements and
schedule of Harris Corporation and subsidiaries included in this Annual Report
(Form 10-K) for the year ended June 30, 1995:
<TABLE>
<S> <C> <C> <C>
Form S-8 No. 2-74551 Harris Corporation 1981 Stock Option Plan for Key
Employees
Form S-8 No. 33-50169 Harris Corporation Retirement Plan
Form S-8 No. 33-50167 Harris Corporation Union Retirement Plan
Form S-8 Nos. 33-37969; Harris Corporation Stock Incentive Plan
33-51171
Form S-3 No. 33-35315 Harris Corporation Medium-Term Notes
</TABLE>
ERNST & YOUNG LLP
Orlando, Florida
September 8, 1995
38
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 119,300
<SECURITIES> 22,300
<RECEIVABLES> 687,100
<ALLOWANCES> 30,000
<INVENTORY> 494,900
<CURRENT-ASSETS> 1,810,700
<PP&E> 1,817,200
<DEPRECIATION> 1,236,200
<TOTAL-ASSETS> 2,836,000
<CURRENT-LIABILITIES> 1,055,300
<BONDS> 475,900
<COMMON> 38,900
0
0
<OTHER-SE> 1,209,900
<TOTAL-LIABILITY-AND-EQUITY> 2,836,000
<SALES> 3,032,200
<TOTAL-REVENUES> 3,480,900
<CGS> 2,075,900
<TOTAL-COSTS> 2,328,500
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 7,900
<INTEREST-EXPENSE> 65,400
<INCOME-PRETAX> 237,600
<INCOME-TAX> 83,100
<INCOME-CONTINUING> 154,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 154,500
<EPS-PRIMARY> 3.95
<EPS-DILUTED> 3.93
</TABLE>
