<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 Union 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
UNION RETIREMENT PLAN
Financial Statements
June 30, 1998
<PAGE> 3
HARRIS CORPORATION UNION 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 Union Retirement Plan
Melbourne, Florida
We have audited the accompanying statements of net assets available for benefits
of the Harris Corporation Union 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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<PAGE> 5
FINANCIAL STATEMENTS
<PAGE> 6
HARRIS CORPORATION UNION 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 $68,734,694 $53,975,926
Participant loans 2,261,039 1,862,671
----------- -----------
Total investments 70,995,733 55,838,597
RECEIVABLES:
Contribution receivable from:
Harris Corporation 964,637 1,532,194
Participants 99,592 --
Loan payments 84,309 --
Accrued interest and dividends 242,686 272,488
Securities sold 641,977 805,783
----------- -----------
Total receivables 2,033,201 2,610,465
CASH AND CASH EQUIVALENTS (NOTE 3) 2,151,472 1,118,378
----------- -----------
Total assets 75,180,406 59,567,440
LIABILITIES
Accrued expenses 67,307 18,583
Securities purchased 218,168 550,261
Outstanding options 224,521 61,405
----------- -----------
Total liabilities 509,996 630,249
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $74,670,410 $58,937,191
=========== ===========
</TABLE>
See accompanying notes to financial statements.
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2
<PAGE> 7
HARRIS CORPORATION UNION 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 $ 4,498,450 $ 684,350 $ 14,439 $ 1,989,676
Interest income -- -- -- --
Contributions:
Participant rollover 284,382 89,561 14,028 183,797
Employer profit-sharing 245,268 202,922 9,956 130,917
Employer matching 349,931 342,588 13,253 372,505
Employee 586,479 419,943 19,638 537,669
------------ ------------ ------------ ------------
5,964,510 1,739,364 71,314 3,214,564
NET TRANSFERS (TO) FROM HARRIS CORPORATION
RETIREMENT PLAN 316,153 268,963 (3,652) 159,008
NET PARTICIPANTS' TRANSFERS
BETWEEN FUNDS (2,260,802) (1,736,714) 150,107 2,088
DECREASES:
Benefits paid directly to participants 1,096,452 479,210 225,921 116,423
Administrative expenses 76,007 26,880 780 48,249
------------ ------------ ------------ ------------
1,172,459 506,090 226,701 164,672
------------ ------------ ------------ ------------
NET INCREASE IN NET
ASSETS AVAILABLE FOR BENEFITS 2,847,402 (234,477) (8,932) 3,210,988
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 23,377,313 10,230,363 308,370 8,697,967
------------ ------------ ------------ ------------
END OF YEAR $ 26,224,715 $ 9,995,886 $ 299,438 $ 11,908,955
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
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3
<PAGE> 8
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<TABLE>
<CAPTION>
Equity Stable Harris
Index Value Growth Corporation International Loan
Fund Fund Fund Stock Fund Fund Fund Total
- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<C> <C> <C> <C> <C> <C> <C>
$ 2,319,718 $ 447,516 $ 976,762 $ 109,505 $ 1,429 $ -- $11,041,845
-- -- -- -- -- 149,929 149,929
239,385 312,397 30,140 -- -- -- 1,153,690
117,658 100,338 77,970 -- 2,244 -- 887,273
249,436 201,843 146,620 244,111 807 -- 1,921,094
357,598 253,729 216,736 135,518 1,238 -- 2,528,548
- ----------- ----------- ----------- ----------- ----------- ----------- -----------
3,283,795 1,315,823 1,448,228 489,134 5,718 149,929 17,682,379
498,050 (21,465) (76,017) (165,017) (3,069) -- 972,954
2,116,487 1,078,283 144,246 3,346 184,656 318,303 --
206,440 302,378 219,641 22,236 -- 69,864 2,738,565
12,954 7,955 10,691 33 -- -- 183,549
- ----------- ----------- ----------- ----------- ----------- ----------- -----------
219,394 310,333 230,332 22,269 -- 69,864 2,922,114
- ----------- ----------- ----------- ----------- ----------- ----------- -----------
5,678,938 2,062,308 1,286,125 305,194 187,305 398,368 15,733,219
3,591,868 6,660,510 3,051,428 1,156,701 -- 1,862,671 58,937,191
- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 9,270,806 $ 8,722,818 $ 4,337,553 $ 1,461,895 $ 187,305 $ 2,261,039 $74,670,410
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
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4
<PAGE> 9
HARRIS CORPORATION UNION 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 Union 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 Union Retirement Plan is a defined contribution plan
covering all domestic employees of Harris Corporation 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 Union Retirement Plan and the Harris Corporation
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 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. Participants are eligible to make elective contributions on a
pre-tax or after-tax basis during the first year of service.
Payment of Benefits
-------------------
Distributions from the Plan 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
Plan. 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 UNION 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
Plan 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 $4,427
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 UNION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1998 and 1997
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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 distribution 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 Trust fund. 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
1,081,108 and 1,118,378 shares, respectively, of BT Pyramid Directed
Account Cash Fund, with a fair value of $1,081,108 and $ 1,118,378,
respectively. 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, 643,016 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 UNION 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 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. At
June 30, 1998 and 1997, the Plan's interest in the net assets of the Master
Trust was approximately 3.03% and 2.67%, 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 UNION 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. INCOME TAX STATUS
The plan obtained its latest determination letter on September 29, 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 and the plan's tax counsel believe that the
plan is currently 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 ISSUE (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
and is in the process of replacing or outsourcing many of its
time-sensitive 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 Union 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 Union Retirement Plan of our report dated
November 12, 1998, with respect to the financial statements of the Harris
Corporation Union Retirement Plan included in this Annual Report (Form 11-K)
for the year ended June 30, 1998.
Form S-8 No 33-50167 Harris Corporation Union Retirement Plan
Bray, Beck & Koetter
Melbourne, Florida
December 23, 1998
