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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest
event reported): July 14, 1998
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HARRIS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-3863 34-0276860
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1025 West NASA Blvd., Melbourne, FL 32919
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 727-9100
No Change
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(Former name or former address, if changed since last report.)
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Items 1-4. Not Applicable.
Item 5. OTHER EVENTS.
On July 20, 1998, Harris Corporation announced that it is
implementing restructuring actions to improve its competitiveness and financial
performance in its semiconductor sector and other segments. The actions will
result in a restructuring charge and other one-time charges totaling $142
million pre-tax against fiscal 1998 fourth-quarter earnings. A copy of the
press release is filed herewith as Exhibit 99(a) and is incorporated herein by
reference.
On July 14, 1998, Harris Corporation announced that its Lanier
Worldwide, Inc. subsidiary had completed its previously announced acquisition of
the assets of the Copying Systems Business Unit of the Agfa-Gevaert Group, which
is a member of the Bayer Group, Leverkusen, Germany. The acquisition doubles
Lanier's presence and market share in the European office equipment market. A
copy of the press release is filed herewith as Exhibit 99(b) and is incorporated
herein by reference.
Item 6. Not Applicable.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following documents are filed as Exhibits to this Report:
99(a). Press Release, dated July 20, 1998, announcing the
restructuring of the semiconductor business and other
segments.
99(b). Press Release, dated July 14, 1998, announcing the completion
of the acquisition of the Copying Systems Business Unit of the
Agfa-Gevaert Group.
Items 8-9. Not Applicable.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HARRIS CORPORATION
By: /s/ Bryan R. Roub
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Name: Bryan R. Roub
Title: Senior Vice President & Chief Financial Officer
Date: July 21, 1998
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EXHIBIT INDEX
Exhibit No.
Under Reg. S-K,
Item 601 Description
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99(a) Press Release, dated July 20, 1998, announcing the
restructuring of the semiconductor business and other
segments.
99(b) Press Release, dated July 14, 1998, announcing the
completion of the acquisition of the Copying Systems
Business Unit of the Agfa-Gevaert Group.
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Exhibit 99(a)
NEWS
[HARRIS CORPORATION LOGO] ------------------------------------------------------
Harris Corporation
Melbourne, Florida 32919
407-727-9100
HARRIS CORPORATION ANNOUNCES RESTRUCTURING ACTIONS TO IMPROVE
COMPETITIVENESS AND FINANCIAL PERFORMANCE IN SEMICONDUCTOR SEGMENT
AND OTHER PARTS OF ITS BUSINESS
MELBOURNE, Florida, July 20, 1998 -- Harris Corporation, responding
primarily to continued weakness in the semiconductor market, is implementing a
restructuring program to enhance its competitiveness and to improve financial
performance.
The company announced it will take a restructuring charge and other
one-time charges totaling $142 million pretax against fiscal 1998 fourth-quarter
earnings, which are scheduled to be announced July 29. The actions include a
reduction of 2,300 people -- or 8 percent of its worldwide workforce - with
about 1,900 of the people coming from the company's semiconductor operation.
Without the charge, the company expects fourth-quarter earnings to meet or
exceed analyst mean consensus estimates of $.86 per share.
"We are continuing to experience difficult market conditions in the
semiconductor industry. As a result, the ongoing market weakness and
significant price erosion make it necessary to further reduce our cost
structure," said Phillip W. Farmer, chairman, president and CEO of Harris.
"Over the last year, management has made great progress towards reducing costs,
improving operating efficiencies and processes, and focusing on product lines
where we see growth opportunities for the future.
"Industry conditions, however, demand further action. Accordingly, the
company is taking a $90 million restructuring charge in order to significantly
reduce costs in its commodity product lines, particularly logic; consolidate
administrative, technical, sales and marketing functions; and optimize
manufacturing facilities. Once completed, these actions will reduce annual
operating costs in the range of $70 to $80 million, much of which will occur in
time to benefit fiscal 1999," Mr. Farmer said.
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"Harris' semiconductor business has performed well during difficult times.
These actions will help it remain profitable in the near term and be
well-positioned when the industry eventually turns around. Meanwhile, we are
concentrating on our core competencies to develop new products for communication
and power-control applications to ensure that our semiconductor business is a
long-term growth engine for Harris.
"We also are taking modest, but important actions in Harris' other
businesses to adjust to the current business environment," Mr. Farmer explained.
In Lanier, Communications and Electronic Systems, the company is taking
combined charges totaling $52 million. The charges represent one-time measures
to reduce overhead costs and to exit three small product lines and a program,
none of which the company believes has the potential to be a strong contributor
to future growth.
In the company's Lanier office products business, Mr. Farmer said severe
pricing pressures in the U.S., driven by the weak Yen, make it necessary to
implement measures to reduce overhead costs and prevent further margin erosion.
A $9 million restructuring charge will make it possible to reduce annual
operating costs by approximately $11 million, primarily through a workforce
reduction of about 300 people in U.S. operations. He noted that Lanier's
international operations are performing well and will be boosted by the recent
acquisition of Agfa-Gevaert's European Copying Systems Business Unit. Lanier
finalized the acquisition earlier this month, doubling its presence and market
size in Europe.
In the communications business, the company will exit its wireless analog
base station business, which it acquired from NovAtel in fiscal 1996, and merge
the remaining digital product line into its existing microwave radio business.
The company also will exit its WireFree(TM) wireless telephone product line,
developed for in-building usage. Finally, overhead costs will be reduced. These
steps total $23 million in restructuring charges. "Harris continues to focus its
efforts on the fast-growing segments of its communications business-such as
digital television and microwave radio systems-where the company already
provides leading-edge products and services," Mr. Farmer said.
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Similarly, in the aerospace and defense businesses, the company is
providing a $12 million reserve for additional contract costs associated with an
international program, which is nearing completion, and $8 million in connection
with the pending sale of the state and local portion of its vehicle monitoring
product line. Mr. Farmer noted that the company's core defense business remains
profitable and that several new initiatives show great promise. For example, the
sector recently won several programs in the commercial space arena and formed
its third joint venture with General Electric Company.
"These steps conclude a wide-ranging review of Harris' four businesses and
the competitive environments in which they operate. We believe that these
actions will ensure near-term growth in profits, as well as add further strength
to an already strong long-term outlook for the company," Mr. Farmer said. "The
workforce reductions will be difficult. However, for the company, these actions
are necessary to enable us to fulfill our commitment to provide continuing
growth for shareholders and employees in a competitive worldwide marketplace."
Harris Corporation, with fiscal 1997 sales of more than $3.8 billion, is an
international communications and electronics company that provides a wide range
of products and services, such as wireless personal communications, digital
television (including HDTV), health care information, automotive electronics,
transportation, business information, defense communications and information,
and Lanier office products.
This press release contains forward-looking statements made in reliance
upon the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve a number of assumptions, risks
and uncertainties that could cause actual results of the company to differ
materially from those matters expressed in or implied by such forward-looking
statements. The Company's consolidated results and the forward-looking
statements could be affected by, among other things, general economic conditions
in the markets in which the Company operates; ability to execute management's
internal operating plans (specifically management's announced
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restructuring plan which includes employee reductions, cost reductions in its
commodity semiconductor product lines, particularly logic, consolidations of
administration, technical, sales and marketing functions, and manufacturing
facilities, and the successful exit of several product lines and a program);
fluctuation in foreign currency exchange rates and the effectiveness of the
Company's currency hedging program; worldwide demand and product pricing for
integrated semiconductor circuits, particularly power products; reductions in
the U.S. and worldwide defense and space budgets; effect of continuing
consolidation in the U.S. defense industry on the Company's business with the
U.S. government; the Company's ability to recover costs incurred on fixed price
contracts; continued development and market acceptance of new products,
especially digital broadcast products and semiconductor wireless products;
continued success of the Company's patent licensing programs, particularly as it
relates to the Semiconductor and Communications segments; and the successful
resolution of patent infringement and other general litigation. Harris disclaims
any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise.
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Note: A conference call for the investment community will be held at 8:30 a.m.,
Eastern Standard Time, on Tuesday, July 21, 1998. On the conference call will be
Phillip W. Farmer, Chairman, President and CEO, Bryan R. Roub, Senior Vice
President and CFO and Pamela M. Padgett, Vice President - Investor Relations.
Participants can access the call by dialing 913-981-5508. A taped replay of the
call will be made available.
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Exhibit 99(b)
NEWS
[HARRIS CORPORATION LOGO] ------------------------------------------------------
Harris Corporation CONTACT: Jim Burke
Melbourne, Florida 32919 Director
407-727-9100 Media Relations
407-727-9126
HARRIS CORPORATION DOUBLES PRESENCE IN EUROPEAN OFFICE
EQUIPMENT MARKET WITH AGFA COPYING SYSTEMS ACQUISITION
MELBOURNE, FL/ATLANTA, GA, July 14, 1998 - Harris Corporation's Lanier
Worldwide subsidiary has doubled its presence and market share in the
multi-billion dollar European office equipment market by concluding the purchase
of the assets of Agfa Copying Systems Business Unit from the Agfa-Gevaert Group
- - located in Mortsel, Belgium -- which is a member of the Bayer Group,
Leverkusen, Germany. Harris announced its intent to purchase the business unit
on April 22, 1998.
Lanier Worldwide, with fiscal 1997 sales of $1.2 billion, operates a
network of 1,600 sales and service offices in more than 100 countries. Agfa's
Copying Systems Business Unit, with 1997 annual sales of more than $250 million,
is a marketing, distribution and services business, mostly in Europe, with
additional activities in Africa and the Middle East.
"The European office equipment market represents a strong growth
opportunity for Lanier. Combining the two companies' extensive sales and service
networks with Lanier's global account management program will enable us to
provide a wider range of products and services not only to a broader base of
customers in Europe, but to their international affiliates as well," said Wesley
E. Cantrell, president and CEO of Lanier.
Along with expanding Lanier's presence and market share in Europe, the
acquisition broadens the company's product offerings.
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"Lanier has developed a worldwide reputation for excellence in digital and
analog copying and facsimile systems, while Agfa has established a clear
leadership position in color and analog copying throughout Europe, Africa and
the Middle East," Mr. Cantrell said. "Since color and digital copying represent
some of the true growth areas in our industry. So, from a product standpoint,
this acquisition positions us perfectly to meet the emerging needs of customers
around the world."
LANIER WORLDWIDE, INC.
Lanier is one of the world's largest providers and designers of document
management solutions and services that lower the cost of document creation,
distribution, replication and retention, while enhancing customer productivity.
Lanier's wide array of tailored DOCutivity(R) solutions includes digital
multifunction devices, color and digital copiers, electronic document management
solutions and analogue copiers.
Lanier employs more than 10,000 people at more than 1,600 sales and service
centers in more than 100 countries, with annual revenues in excess of US$1.2
billion. The company offers its customers advanced office solutions and a unique
customer-focused philosophy called 'Customer Vision(R)'. This company-wide
commitment calls for all Lanier employees to see the company's business through
customers' eyes--and to exceed customer expectations at every opportunity.
HARRIS CORPORATION
Harris Corporation, with worldwide sales of more than $3.8 billion, is an
international communications and electronics company that provides a wide range
of products and services, such as wireless and personal communications, digital
television (HDTV), health care information, multimedia communications,
automotive electronics, transportation, business information, defense
communications and information, and Lanier office systems.
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