<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 11-K
_______________________
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 1-3863
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Harris Corporation Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Harris Corporation
1025 W. NASA Blvd.
Melbourne, Florida 32919
<PAGE> 2
HARRIS CORPORATION
RETIREMENT PLAN
Financial Statements
June 30, 1998
<PAGE> 3
HARRIS CORPORATION RETIREMENT PLAN
<TABLE>
<CAPTION>
Table of Contents
June 30, 1998 PAGE
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
INDEPENDENT AUDITOR'S REPORT...........................................................................1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits.....................................................2
Statement of Changes in Net Assets Available for Benefits With Fund Information...................3-4
Notes to Financial Statements.....................................................................5-9
</TABLE>
<PAGE> 4
INDEPENDENT AUDITOR'S REPORT
Investment Committee
Harris Corporation Retirement Plan
Melbourne, Florida
We have audited the accompanying statements of net assets available for
benefits of the Harris Corporation Retirement Plan (the "Plan") as of June
30, 1998 and 1997, and the related statement of changes in net assets
available for benefits for the year ended June 30, 1998. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 net assets available for benefits of the Plan
at June 30, 1998 and 1997, and the changes in its net assets available for
benefits for the year ended June 30, 1998, in conformity with generally
accepted accounting principles.
/s/ Bray, Beck & Koetter
Melbourne, Florida
November 12, 1998
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1
<PAGE> 5
FINANCIAL STATEMENTS
<PAGE> 6
HARRIS CORPORATION RETIREMENT PLAN
Statements of Net Assets Available for Benefits
June 30, 1998 and 1997
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<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
ASSETS
INVESTMENTS, AT FAIR VALUE (NOTE 4):
Plan interest in Harris Corporation Master Trust $2,238,332,501 $1,876,328,507
Participant loans 34,819,599 32,850,494
-------------- --------------
Total investments 2,273,152,100 1,909,179,001
RECEIVABLES:
Contributions receivable:
Harris Corporation 29,795,876 25,410,442
Participants 3,922,511 353,634
Loan payments 1,613,953 -
Accrued interest and dividends 5,437,988 7,079,360
Securities sold 17,835,383 12,213,540
-------------- --------------
Total receivables 58,605,711 45,056,976
CASH AND CASH EQUIVALENTS (NOTE 3) 76,897,460 67,625,393
-------------- --------------
Total assets 2,408,655,271 2,021,861,370
LIABILITIES
Accounts payable 5,859,595 -
Accrued expenses 1,952,000 724,124
Securities purchased 8,002,613 13,713,604
Outstanding options 3,678,574 2,386,053
-------------- --------------
Total liabilities 19,492,782 16,823,781
-------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $2,389,162,489 $2,005,037,589
============== ==============
</TABLE>
See accompanying notes to financial statements.
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2
<PAGE> 7
HARRIS CORPORATION RETIREMENT PLAN
Statement of Changes in Net Assets Available for Benefits With Fund Information
Year Ended June 30, 1998
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<TABLE>
<CAPTION>
Money Equity
Balanced Short-Term Market Income
Fund Bond Fund Fund Fund
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASES:
Plan interest in Harris Corporation
Master Trust investment income $ 170,962,901 $ 6,173,086 $ 1,121,023 $ 76,729,046
Interest income - - - -
Contributions:
Participant rollover 1,130,604 53,197 538,634 1,362,544
Employer profit sharing 7,236,260 1,609,547 520,097 5,612,835
Employer matching 2,403,308 1,637,767 411,754 6,961,426
Employee 10,578,289 2,206,341 708,766 11,735,183
------------- ------------- ------------- -------------
192,311,362 11,679,938 3,300,274 102,401,034
NET TRANSFERS (TO) FROM HARRIS CORPORATION
UNION RETIREMENT PLAN (316,175) (268,963) 3,652 (159,030)
NET PARTICIPANTS' TRANSFERS
BETWEEN FUNDS (105,150,816) (9,825,205) 9,723,549 (20,850,694)
DECREASES:
Benefits paid directly to participants 45,241,688 4,958,103 4,304,713 20,206,672
Administrative expenses 3,002,847 233,331 60,624 1,823,817
------------- ------------- ------------- -------------
48,244,535 5,191,434 4,365,337 22,030,489
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 38,599,836 (3,605,664) 8,662,138 59,360,821
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 900,018,460 93,960,209 17,136,816 374,957,907
------------- ------------- ------------- -------------
END OF YEAR $ 938,618,296 $ 90,354,545 $ 25,798,954 $ 434,318,728
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
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3
<PAGE> 8
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Equity Stable Harris
Index Value Growth Corporation International Loan
Fund Fund Fund Stock Fund Fund Fund Total
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 75,540,343 $ 13,699,158 $ 41,555,303 $ 2,176,074 $ (6,429) $ - $ 387,950,505
- - - - - 2,504,902 2,504,902
1,142,519 1,457,884 766,762 - 19,829 - 6,471,973
5,432,054 2,717,596 4,033,702 - 119,850 - 27,281,941
5,563,994 2,494,852 3,792,465 4,809,390 16,951 - 28,091,907
9,740,545 3,415,211 7,030,032 2,960,122 49,310 - 48,423,799
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
97,419,455 23,784,701 57,178,264 9,945,586 199,511 2,504,902 500,725,027
(498,082) 21,573 75,985 165,017 3,069 - (972,954)
66,831,218 44,107,127 8,513,944 (1,027,711) 7,250,371 428,217 -
11,491,023 13,630,439 7,285,086 1,230,338 6,588 964,014 109,318,664
514,697 223,236 449,037 920 - - 6,308,509
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
12,005,720 13,853,675 7,734,123 1,231,258 6,588 964,014 115,627,173
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
151,746,871 54,059,726 58,034,070 7,851,634 7,446,363 1,969,105 384,124,900
224,621,952 207,659,211 129,081,279 24,751,261 - 32,850,494 2,005,037,589
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
$ 376,368,823 $ 261,718,937 $ 187,115,349 $ 32,602,895 $ 7,446,363 $ 34,819,599 $ 2,389,162,489
=============== =============== =============== =============== =============== =============== ===============
</TABLE>
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4
<PAGE> 9
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1998 and 1997
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1. DESCRIPTION OF THE PLAN
The following description of the Harris Corporation Retirement Plan
("Plan") provides only general information. Participants should refer
to the Plan document for a more complete description of the Plan's
provisions.
General
-------
The Harris Corporation Retirement Plan is a defined contribution plan
covering substantially all domestic employees of Harris Corporation who
are not covered by a collective bargaining agreement. It is subject to
the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Contributions
-------------
The Harris Corporation Retirement Plan and the Harris Corporation Union
Retirement Plan share a common Profit-Sharing Program and Deferred
Income Savings Program. The Corporation's annual contribution to the
Profit-Sharing Program is equal to 11.5% of the Corporation's adjusted
and consolidated net income as defined under the plan documents, plus
any discretionary amount determined by the Board of Directors of the
Corporation. The Profit-Sharing contribution is allocated, in the
subsequent Plan year, among participating employees' individual account
balances based on eligible compensation. The Deferred Income Savings
Program was designed to take advantage of Internal Revenue Code Section
401(k). Under the Deferred Income Savings Program, participants may
contribute up to 12% of their regular eligible compensation to the Plan
in 1% increments. The contributions can be in pre-tax or after-tax
dollars at the participant's election. The employer contributes a
matching amount equal to 100% of the participant's contributions, to a
maximum of 6.857% of eligible compensation. Participants are eligible
to make elective contributions on a pre-tax or after-tax basis during
the first year of service. Participants become eligible to receive
allocations under the Profit-Sharing Program and matching contributions
under the Deferred Income Savings Program after completing one year of
credited service.
Payments of Benefits
--------------------
Distributions from the Plans can be made in the event of death,
disability, termination of employment or financial hardship.
Participant Loans
-----------------
The loan program permits employees to borrow against their 401(k) plan
contributions. Employees may borrow in increments of $100 from a
minimum of $500 to a maximum of $50,000, within certain limitations
established by the Plans. Payback periods range from one to 4 1/2 years
at the option of the participant. Interest rates are established by the
Corporation based on market rates. The outstanding loans have been
established as a separate fund. Principal and interest paid on the
loans are allocated to the funds consistent with the allocation of
their 401(k) plan contributions.
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5
<PAGE> 10
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1998 and 1997
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1. DESCRIPTION OF THE PLAN, CONTINUED
Vesting
-------
A participant's right to profit-sharing funds and employer matched
deferred income contributions becomes vested using a formula based upon
service, with 30% vesting after three years of credited service, an
additional 10% vesting for the fourth year, and an additional 20%
vesting for each of the three following years of credited service. At
the time of retirement, death, or termination of employment, a
participant's vested share of the Plans assets, net of any participant
loans outstanding, becomes distributable in a lump-sum payment or
through installments over a period of time as requested by the
participant and approved by the Corporate Administrative Committee.
Forfeitures
-----------
A participant who terminates employment for reasons other than
retirement or other specified circumstances and is not 100% vested,
will forfeit the non-vested portion of the Corporation's contributions
unless the participant returns to employment within five years. The
forfeited contributions reduce the cash contributions from the
Corporation. For the year ended June 30, 1998, employer contributions
were reduced by $2,157,461 from forfeited nonvested accounts.
Plan Termination
----------------
Although it has not expressed any intent to do so, Harris Corporation
has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA. In
the event of Plan termination participants will become 100 percent
vested in their accounts.
Investment Options
------------------
Upon enrollment into the Plan, a participant may direct employer,
employee, and profit sharing contributions in any of nine investment
options, except that profit sharing contributions may not be invested
in the Harris Stock Fund. The investment options are fully described in
the "Employer Summary Plan Description". Elections to change funds can
be made daily; however, amounts in the Stable Value Fund, which is
comprised of unallocated insurance contracts, cannot be transferred
directly to the Short-Term Bond Fund or the Money Market Fund.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
-------------------
The accounting records of the Plan are maintained on the accrual basis.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those
estimates.
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6
<PAGE> 11
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1998 and 1997
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Investment Valuation and Income Recognition
-------------------------------------------
The fair value of the Plan's interest in the Harris Corporation Master
Trust (the "Master Trust") is based on the beginning of year value of
the Plan's interest in the trust plus actual contributions and
allocated investment income less actual distributions and allocated
administrative expenses. Quoted market prices are used when available,
to value investments in the Master Trust. Investments for which a
quoted market value is not available are stated at fair values reported
by the trustee or investee company. Investments in unallocated
insurance contracts are stated at contract value. Participant loans are
stated at cost.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date. The net appreciation (depreciation)
in fair value of investments represents the sum of the unrealized
appreciation or depreciation in aggregate fair value of investments and
the realized gain or loss on sale of investments.
Administrative Expenses
-----------------------
Unless otherwise elected by Harris Corporation, all ordinary and
extraordinary charges and expenses incurred by the Trustee in
connection with the administration of the Plan are paid by the Trustee
from the assets of the Master Trust. In fiscal 1997, Harris Corporation
elected to pay administrative expenses such as legal fees, tax counsel
and accounting fees. During fiscal 1998, these fees and expenses were
paid by the Plan. Trustee, investment manager fees and certain
administrative expenses were paid by the Plan.
Payment of Benefits
-------------------
Benefits are recorded when paid.
3. TRANSACTIONS WITH PARTIES-IN-INTEREST
Under Department of Labor regulations for reporting and disclosure, an
employee benefit plan is required to report investment transactions and
compensation paid to a "party-in-interest".
The term "party-in-interest" is broadly defined but would include
Harris Corporation as the Plan Sponsor; Bankers Trust Company as
Trustee; and any person or corporation that renders services to the
Plan.
Included in cash and cash equivalents at June 30, 1998 and 1997 are
38,642,181 and 67,070,853, shares respectively, of BT Pyramid Directed
Account Cash Fund, with a fair value of $38,642,181 and $67,070,853. At
June 30, 1998, Investments of the Master Trust include 97,182,986
shares of BT Pyramid Broad Market Fixed Income Fund with a fair value
of $203,471,047; 198,897 shares of BT Pyramid Equity Index Fund with a
fair value of $531,147,396; and 27,800 shares of Bankers Trust Company
common stock with a fair value of $3,226,551.
At June 30, 1998 and 1997, 693,016 and 306,916 shares with a fair
market value of $30,969,499 and $25,780,944, respectively, of Harris
Corporation common stock were included in investments of the Harris
Corporation Master Trust.
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7
<PAGE> 12
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1998 and 1997
- --------------------------------------------------------------------------------
4. INTEREST IN HARRIS CORPORATION MASTER TRUST
The Harris Corporation Master Trust was established for the investment
of assets of the Plan and the Harris Corporation Union Retirement Plan.
Each participating retirement plan has an undivided interest in the
Master Trust. The assets of the Master Trust are held by Bankers Trust
Company (Trustee). At June 30, 1998 and 1997, the Plan's interest in
the net assets of the Master Trust was approximately 96.97% and 97.24%,
respectively. Investment income and administrative expenses relating to
the Master Trust are allocated to the individual plans based upon
average daily balances invested by each plan.
Investments of the Master Trust are as follows:
<TABLE>
<CAPTION>
1998 1997
---------------- ----------------
<S> <C> <C>
Fair value as determined by quoted market prices:
U.S. government securities $ 136,991,415 $ 193,034,127
Corporate debt securities 119,443,881 230,525,352
Foreign debt securities 8,105,656 10,191,484
Corporate equity securities 891,181,774 787,014,217
Morgan Stanley International Magnum Fund 73,003,976 60,206,396
BT Pyramid Broad Market Fixed Income Fund 203,471,047 -
BT Pyramid Equity Index Fund 531,147,396 -
Wells Fargo Bank Index Fund - 316,512,010
Putnam New Opportunities Fund 82,309,171 94,828,345
---------------- ----------------
2,045,654,316 1,692,311,931
Fair value as determined by investee company:
J.P. Morgan Real Estate Fund - 32,065,098
Contract value:
Unallocated insurance contracts 261,412,879 205,927,404
---------------- ----------------
$2,307,067,195 $1,930,304,433
================ ================
</TABLE>
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8
<PAGE> 13
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1998 and 1997
- --------------------------------------------------------------------------------
4. INTEREST IN HARRIS CORPORATION MASTER TRUST, CONTINUED
Investment income of the Master Trust for the year ended June 30, 1998 is
as follows:
<TABLE>
<S> <C>
Net appreciation (depreciation) in fair value as
determined by quoted market price:
U.S. government securities $ 5,553,561
Corporate debt securities 2,544,994
Foreign debt securities (607,721)
Corporate equity securities 171,954,218
Morgan Stanley International Magnum Fund 2,656,266
Wells Fargo Bank Index Fund 24,415,348
Putnam New Opportunities Fund 25,213,280
BT Pyramid Broad Market Fixed Income Fund 9,321,342
BT Pyramid Equity Index Fund 94,367,257
--------------
335,418,545
Net appreciation (depreciation) in fair value as
determined by investee company:
J.P. Morgan Real Estate Fund 1,574,312
--------------
336,992,857
Interest and dividends 61,999,493
--------------
$ 398,992,350
=============
</TABLE>
5. TAX STATUS
The plan obtained its latest determination letter on August 18, 1998, in
which the Internal Revenue Service stated that the plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. The Plan administrator believes that the Plan currently is designed
and being operated in compliance with the applicable requirements of the
Internal Revenue Code and that, therefore, the Plan qualifies under Section
401(a) and the related trust is tax-exempt as of June 30, 1998. Therefore,
no provision for income taxes has been included in the Plan's financial
statements.
6. YEAR 2000 ISSUES (UNAUDITED)
Certain software and hardware systems are time-sensitive. Older
time-sensitive systems often use a two-digit dating convention (e.g. "00"
rather than "2000") that could result in system failure and disruption of
operations as the year 2000 approaches. The Year 2000 problem will impact
the Plan Sponsor, the trustee, recordkeeper, and investment managers, as
well as their vendors and suppliers. Harris Corporation ("Company") has
determined its needs to replace or modify several of its software systems.
The Company has identified exposure in various operating and business
systems including financial and administrative functions. The Company has
also initiated communications with suppliers and other relevant third
parties to identify and minimize disruptions to the Company's operations
and to assist in resolving Year 2000 issues. However, there can be no
certainty that the systems and products of other companies on which the
Company and Plan relies will not have an adverse effect on the Company's or
Plan's operations.
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9
<PAGE> 14
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on their behalf by the undersigned
hereunto duly authorized.
Harris Corporation
Retirement Plan
/s/ Jeffrey Pratt Morrill
------------------------------
Jeffrey Pratt Morrill
Plan Administrator
Date: December 22, 1998
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the following registration
statement of the Harris Corporation Retirement Plan of our report dated November
12, 1998, with respect to the financial statements of the Harris Corporation
Retirement Plan included in this Annual Report (Form 11-K) for the year ended
June 30, 1998.
Form S-8 No. 33-50169 Harris Corporation Retirement Plan
Bray, Beck & Koetter
Melbourne, Florida
December 23, 1998
