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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, 1999
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 |
HARRIS CORPORATION
RETIREMENT PLAN
Financial Statements
June 30, 1999
HARRIS CORPORATION RETIREMENT PLAN
Table of Contents
June 30, 1999
Page | |||||
Independent Auditors Report | 1 | ||||
Financial Statements: | |||||
Statements of Net Assets Available for Benefits | 3 | ||||
Statement of Changes in Net Assets Available for Benefits With Fund Information | 4-5 | ||||
Notes to Financial Statements | 6-11 |
INDEPENDENT AUDITORS 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, 1999 and 1998, and the related statement of changes in net assets available for benefits with fund information for the year ended June 30, 1999. These financial statements are the responsibility of the Plans 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, 1999 and 1998, and the changes in its net assets available for benefits for the year ended June 30, 1999, in conformity with generally accepted accounting principles.
Bray, Beck & Koetter Melbourne, Florida November 23, 1999 |
Financial Statements
2
HARRIS CORPORATION RETIREMENT PLAN
Statements of Net Assets Available for Benefits
June 30, 1999 and 1998
1999 | 1998 | |||||||||
ASSETS | ||||||||||
Investments, at fair value (Note 4): | ||||||||||
Plan interest in Harris Corporation Master Trust | $ | 2,523,521,342 | $ | 2,238,332,501 | ||||||
Participant loans | 32,387,655 | 34,819,599 | ||||||||
Total investments | 2,555,908,997 | 2,273,152,100 | ||||||||
Receivables: | ||||||||||
Contributions receivable: | ||||||||||
Harris Corporation | 22,332,310 | 29,795,876 | ||||||||
Participants | 3,500,786 | 3,922,511 | ||||||||
Loan payments | 1,439,907 | 1,613,953 | ||||||||
Accrued interest and dividends | 5,430,158 | 5,437,988 | ||||||||
Securities sold | 17,887,431 | 17,835,383 | ||||||||
Total receivables | 50,590,592 | 58,605,711 | ||||||||
Cash and cash equivalents (Note 3) | 55,450,282 | 76,897,460 | ||||||||
Total assets | 2,661,949,871 | 2,408,655,271 | ||||||||
LIABILITIES | ||||||||||
Accounts payable | 7,648,413 | 5,859,595 | ||||||||
Accrued expenses | 2,464,626 | 1,952,000 | ||||||||
Securities purchased | 16,032,636 | 8,002,613 | ||||||||
Outstanding options | 1,003,807 | 3,678,574 | ||||||||
Total liabilities | 27,149,482 | 19,492,782 | ||||||||
Net assets available for benefits | $ | 2,634,800,389 | $ | 2,389,162,489 | ||||||
See accompanying notes to financial statements.
3
HARRIS CORPORATION RETIREMENT PLAN
Statement of Changes in Net Assets Available for
Benefits With Fund Information
Year Ended June 30, 1999
Money | Equity | |||||||||||||||||
Balanced | Short-Term | Market | Income | |||||||||||||||
Fund | Bond Fund | Fund | Fund | |||||||||||||||
Increases: | ||||||||||||||||||
Plan interest in Harris Corporation | ||||||||||||||||||
Master Trust investment income | $ | 124,575,589 | $ | 4,894,737 | $ | 1,912,298 | $ | 41,963,500 | ||||||||||
Interest income | | | | | ||||||||||||||
Contributions: | ||||||||||||||||||
Participant rollover | 551,249 | 140,142 | 95,043 | 262,969 | ||||||||||||||
Employer profit sharing | 5,204,318 | 1,076,031 | 439,608 | 3,440,780 | ||||||||||||||
Employer matching | 4,957,256 | 1,407,218 | 418,813 | 4,824,628 | ||||||||||||||
Employee | 9,393,483 | 1,990,421 | 759,481 | 8,821,033 | ||||||||||||||
144,681,895 | 9,508,549 | 3,625,243 | 59,312,910 | |||||||||||||||
Net transfers (to) from Harris Corporation | ||||||||||||||||||
Union Retirement Plan | (3,478,964 | ) | 307,754 | 2,477,629 | (15,636,847 | ) | ||||||||||||
Net participants transfers between funds | (83,333,295 | ) | 3,547,754 | 22,084,208 | (120,001,609 | ) | ||||||||||||
Decreases: | ||||||||||||||||||
Benefits paid directly to participants | 53,315,937 | 7,103,812 | 11,497,286 | 22,180,638 | ||||||||||||||
Administrative expenses | 3,148,706 | 283,346 | 102,468 | 1,585,328 | ||||||||||||||
56,464,643 | 7,387,158 | 11,599,754 | 23,765,966 | |||||||||||||||
Net increase (decrease) in net assets available for benefits | 1,404,993 | 5,976,899 | 16,587,326 | (100,091,512 | ) | |||||||||||||
Net assets available for benefits: | ||||||||||||||||||
Beginning of year | 938,618,296 | 90,354,545 | 25,798,954 | 434,318,728 | ||||||||||||||
End of year | $ | 940,023,289 | $ | 96,331,444 | $ | 42,386,280 | $ | 334,227,216 | ||||||||||
See accompanying notes to financial statements.
4
Equity | Stable | Harris | ||||||||||||||||
Index | Value | Growth | Corporation | |||||||||||||||
Fund | Fund | Fund | Stock Fund | |||||||||||||||
Increases: | ||||||||||||||||||
Plan interest in Harris Corporation Master Trust investment income | $ | 81,627,868 | $ | 19,922,091 | $ | 47,134,261 | $ | (1,916,761 | ) | |||||||||
Interest income | | | | | ||||||||||||||
Contributions: | ||||||||||||||||||
Participant rollover | 789,678 | 240,818 | 547,561 | | ||||||||||||||
Employer profit sharing | 4,655,154 | 1,865,278 | 3,637,636 | | ||||||||||||||
Employer matching | 5,437,443 | 2,294,081 | 3,774,157 | 5,075,027 | ||||||||||||||
Employee | 10,455,255 | 3,702,101 | 7,638,262 | 2,968,851 | ||||||||||||||
102,965,398 | 28,024,369 | 62,731,877 | 6,127,117 | |||||||||||||||
Net transfers (to) from Harris Corporation | ||||||||||||||||||
Union Retirement Plan | 8,621,709 | (1,722,634 | ) | 9,215,929 | 65,086 | |||||||||||||
Net participants transfers between funds | 16,991,058 | 115,786,580 | 44,438,285 | (1,088,382 | ) | |||||||||||||
Decreases: | ||||||||||||||||||
Benefits paid directly to participants | 23,472,461 | 29,446,986 | 13,928,749 | 1,669,712 | ||||||||||||||
Administrative expenses | 1,188,013 | 493,529 | 874,460 | 1,271 | ||||||||||||||
24,660,474 | 29,940,515 | 14,803,209 | 1,670,983 | |||||||||||||||
Net increase (decrease) in net assets available for benefits | 103,917,691 | 112,147,800 | 101,582,882 | 3,432,838 | ||||||||||||||
Net assets available for benefits: | ||||||||||||||||||
Beginning of year | 376,368,823 | 261,718,937 | 187,115,349 | 32,602,895 | ||||||||||||||
End of year | $ | 480,286,514 | $ | 373,866,737 | $ | 288,698,231 | $ | 36,035,733 | ||||||||||
[Additional columns below]
[Continued from above table, first column(s) repeated]
International | Loan | |||||||||||||
Fund | Fund | Total | ||||||||||||
Increases: | ||||||||||||||
Plan interest in Harris Corporation Master Trust investment income | $ | (270,408 | ) | $ | | $ | 319,843,175 | |||||||
Interest income | | 1,496,623 | 1,496,623 | |||||||||||
Contributions: | ||||||||||||||
Participant rollover | 52,085 | | 2,679,545 | |||||||||||
Employer profit sharing | 139,257 | | 20,458,062 | |||||||||||
Employer matching | 150,451 | | 28,339,074 | |||||||||||
Employee | 358,516 | | 46,087,403 | |||||||||||
429,901 | 1,496,623 | 418,903,882 | ||||||||||||
Net transfers (to) from Harris Corporation | ||||||||||||||
Union Retirement Plan | 262,069 | 93,942 | 205,673 | |||||||||||
Net participants transfers between funds | 2,746,646 | (1,171,245 | ) | | ||||||||||
Decreases: | ||||||||||||||
Benefits paid directly to participants | 320,904 | 2,851,264 | 165,787,749 | |||||||||||
Administrative expenses | 6,785 | | 7,683,906 | |||||||||||
327,689 | 2,851,264 | 173,471,655 | ||||||||||||
Net increase (decrease) in net assets available for benefits | 3,110,927 | (2,431,944 | ) | 245,637,900 | ||||||||||
Net assets available for benefits: | ||||||||||||||
Beginning of year | 7,446,363 | 34,819,599 | 2,389,162,489 | |||||||||||
End of year | $ | 10,557,290 | $ | 32,387,655 | $ | 2,634,800,389 | ||||||||
5
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1999 and 1998
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 Plans 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 Corporations annual contribution to the Profit-Sharing Program is equal to 11.5% of the Corporations 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 participants election. The employer contributes a matching amount equal to 100% of the participants 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 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 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. |
6
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1999 and 1998
1. Description of the Plan, continued
Vesting
A participants 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 participants 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 Corporations 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, 1999, employer contributions were reduced by $3,742,398 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. |
7
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1999 and 1998
2. Summary of Significant Accounting Policies, continued
Investment Valuation and Income Recognition
The fair value of the Plans interest in the Harris Corporation Master Trust (the Master Trust) is based on the beginning of year value of the Plans 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. |
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. |
Investments of the Master Trust at June 30 include the following: |
1999 | 1998 | |||||||||||||||
Shares | Fair Value | Shares | Fair Value | |||||||||||||
BT Pyramid Broad Market Fixed Income Fund | 107,258,171 | $ | 231,708,754 | 97,182,986 | $ | 203,471,047 | ||||||||||
BT Pyramid Equity Index Fund | 197,986 | 649,181,888 | 198,897 | 531,147,396 | ||||||||||||
Bankers Trust Company common stock | | | 27,800 | 3,226,551 | ||||||||||||
Harris Corporation common stock | 942,183 | 36,921,796 | 693,016 | 30,969,499 |
8
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1999 and 1998
3. Transactions with Parties-in-Interest, continued
Cash and cash equivalents at June 30 includes (but is not limited to) the following: |
1999 | 1998 | |||||||||||||||
Shares | Fair Value | Shares | Fair Value | |||||||||||||
BT Pyramid Directed Account Cash Fund | 36,377,091 | $ | 36,377,091 | 38,642,181 | $ | 38,642,181 |
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, 1999 and 1998, the Plans interest in the net assets of the Master Trust was approximately 96.94% and 96.97%, 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:
1999 | 1998 | ||||||||||
Fair value as determined by quoted market prices: | |||||||||||
U.S. government securities | $ | 145,430,356 | $ | 136,991,415 | |||||||
Corporate debt securities | 118,559,105 | 119,443,881 | |||||||||
Foreign debt securities | 3,426,807 | 8,105,656 | |||||||||
Corporate equity securities | 963,401,968 | 891,181,774 | |||||||||
Morgan Stanley International Magnum Fund | 76,388,635 | 73,003,976 | |||||||||
Putnam New Opportunities Fund | 56,766,848 | 82,309,171 | |||||||||
1,363,973,719 | 1,311,035,873 | ||||||||||
Fair value as determined by investee company: | |||||||||||
BT Pyramid Broad Market Fixed Income Fund | 231,708,754 | 203,471,047 | |||||||||
BT Pyramid Equity Index Fund | 649,181,888 | 531,147,396 | |||||||||
880,890,642 | 734,618,443 | ||||||||||
Contract value: | |||||||||||
Unallocated insurance contracts | 358,207,264 | 261,412,879 | |||||||||
Totals Master Trust | $ | 2,603,071,625 | $ | 2,307,067,195 | |||||||
Plan interest in Master Trust | $ | 2,523,521,342 | $ | 2,238,332,501 | |||||||
9
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1999 and 1998
4. Interest in Harris Corporation Master Trust, continued
Investment income of the Master Trust for the year ended June 30, 1999 is as follows: |
Net appreciation (depreciation) in fair value as determined by quoted market price: | |||||
U.S. government securities | $ | (2,980,701 | ) | ||
Corporate debt securities | (987,949 | ) | |||
Foreign debt securities | (243,118 | ) | |||
Corporate equity securities | 149,962,397 | ||||
Morgan Stanley International Magnum Fund | (3,198,259 | ) | |||
Putnam New Opportunities Fund | 8,723,770 | ||||
151,276,140 | |||||
Net appreciation (depreciation) in fair value as determined by investee company: | |||||
BT Pyramid Broad Market Fixed Income Fund | 4,367,131 | ||||
BT Pyramid Equity Index Fund | 114,958,006 | ||||
119,325,137 | |||||
Interest and dividends | 59,087,752 | ||||
Totals Master Trust | $ | 329,689,029 | |||
Plan interest in Master Trust | $ | 319,843,175 | |||
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, 1999. Therefore, no provision for income taxes has been included in the Plans 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 Companys 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 Companys or Plans operations. |
10
HARRIS CORPORATION RETIREMENT PLAN
Notes to Financial Statements
June 30, 1999 and 1998
7. Subsequent Events
Semiconductor business sale
In August 1999, Harris Corporation sold its Semiconductor business to Intersil Corporation. Substantially all employees of Harris Semiconductor were offered positions with Intersil. In October 1999 approximately $308 million, representing the value of the Harris Semiconductor employees participant accounts, was transferred from the Master Trust to T. Rowe Price, the Intersil Plans trustee, custodian, and recordkeeper. Intersil also became the plan sponsor of the Harris Corporation Union Retirement Plan effective with the sale. The assets of the Union plan, approximately $85 million, were also transferred to T. Rowe Price in October 1999. |
Lanier Worldwide, Inc. stock dividend
On November 5, 1999 Harris Corporation distributed one share of Lanier Worldwide, Inc. common stock for each share of Harris Corporation common stock owned to shareholders of record on November 1, 1999. Lanier Worldwide, Inc. common stock distributed to the Plans Harris Corporation Stock Fund was immediately sold with the proceeds of the sale used to purchase additional shares of Harris Corporation common stock. |
11
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, 1999
|