HARRIS CORP /DE/
11-K, 1999-12-23
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT
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TABLE OF CONTENTS

INDEPENDENT AUDITOR’S REPORT
Financial Statements
Statements of Net Assets Available for Benefits
Statement of Changes in Net Assets Available for Benefits With Fund Information
Notes to Financial Statements

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 Auditor’s 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 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, 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 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, 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 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 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 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’s 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, 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 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.

      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 Plan’s 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 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.

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 Plan’s 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 Plan’s 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



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