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UNITED STATES
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Date of Report (Date of earliest event reported): November 5, 1999
HARRIS CORPORATION
(Exact name of registrant as specified in its
charter)
|
Delaware —————————————— (State or other jurisdiction of incorporation) |
1-3863 —————————————— (Commission File Number) |
34-0276860 —————————————— (I.R.S. Employer Identification No.) |
|
1025 West NASA Blvd., Melbourne, FL ————————————————————— |
32919 ——————— |
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (321) 727-9100
No Change
Item 1. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
On November 5, 1999, Harris Corporation (“Harris” or the “Company”) completed the spin-off of its Lanier Worldwide, Inc. (“Lanier”) subsidiary as an independent publicly traded company. Harris distributed (the “Distribution”) to its shareholders of record as of the close of business on November 1, 1999 (the “Record Date”) approximately 90% of the outstanding shares of common stock of Lanier. The Distribution was effected by means of a dividend to Harris shareholders of one share of Lanier common stock for each outstanding share of Harris common stock. Harris retained approximately ten percent (10%) of the outstanding shares of Lanier. Prior to the Distribution, Lanier was a wholly-owned subsidiary of Harris.
In connection with the Distribution, Harris and Lanier entered into an Agreement and Plan of Distribution (the “Distribution Agreement”), providing for, among other things, the principal corporate transactions required to effect the Distribution and certain other agreements governing the relationship between Harris and Lanier with respect to or as a result of the Distribution.
Pursuant to the Distribution Agreement, Lanier made a cash distribution to Harris of approximately $546 million. Additionally, Lanier and Harris settled or terminated all intercompany loans and advances. In connection with the Distribution, the consolidated debt of Harris was also reduced by about $150 million as Lanier is responsible for such debt.
In addition to the Distribution Agreement, Harris and Lanier also entered into other agreements governing the relationship between Harris and Lanier. These include a Tax Disaffiliation Agreement, an Employee Benefits and Compensation Allocation Agreement, an Intellectual Property License Agreement, a Registration Rights Agreement, and a Transition Services Agreement.
No consideration was payable by Harris shareholders for the shares of Lanier common stock, nor were they required to surrender or exchange shares of Harris common stock or take any other action in order to receive the Lanier shares.
Additional information concerning Lanier and the Distribution is contained in Lanier’s Registration Statement on Form 10/ A (Amendment No. 4) (Commission File No. 1-15139), which was declared effective by the Securities and Exchange Commission on October 25, 1999.
Harris intends to use the proceeds received in connection with the Distribution to reduce indebtedness and for other general corporate purposes, including acquisitions and repurchases of Harris’ common stock.
The foregoing description of the terms of the Distribution is qualified in its entirety by reference to the agreements which are exhibits hereto and incorporated herein by reference.
Items 3-6. Not Applicable.
1
Item 7. Financial Statements and Exhibits.
(a) Financial Statements.
None.
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated financial information presents pro forma financial information for Harris giving effect to the November 5, 1999 Distribution and the related transactions. The unaudited pro forma condensed consolidated balance sheet as of October 1, 1999 is presented as if the Distribution and related transactions had occurred as of that date. The unaudited pro forma condensed consolidated income statement for the quarter ended October 1, 1999 and for the fiscal year ended July 2, 1999 are presented as if the spin-off had occurred at the beginning of the earliest period presented.
The pro forma condensed consolidated financial statements should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Harris’ Quarterly Report on Form 10-Q for the quarterly period ended October 1, 1999 and the audited consolidated financial statements and notes thereto included in Harris’ Annual Report on Form 10-K for the fiscal year ended July 2, 1999. The pro forma information may not necessarily be indicative of what Harris’ results of operations or financial position would have been had the Distribution and related transactions been in effect for and as of the periods presented, nor is such information necessarily indicative of Harris’ results of operations or financial position for or as of any future period or date.
For fiscal 1999 and fiscal 2000 results, the Company’s semiconductor business, which was sold in August 1999, as well as the Lanier business, were classified as discontinued operations.
2
HARRIS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
October 1, 1999
| (A) | |||||||||||||
| Historical | Adjustments | Pro Forma | |||||||||||
| (Dollars in millions) | |||||||||||||
| Assets | |||||||||||||
| Current Assets | |||||||||||||
| Cash and cash equivalents | $ | 251.7 | $ | 298.2 | $ | 549.9 | |||||||
| Marketable securities | 31.8 | 15.2 | 47.0 | ||||||||||
| Receivables-net | 406.1 | — | 406.1 | ||||||||||
| Unbilled costs and accrued earnings on fixed price contracts | 168.7 | — | 168.7 | ||||||||||
| Inventories | 210.1 | — | 210.1 | ||||||||||
| Deferred income taxes | 144.8 | — | 144.8 | ||||||||||
| Total current assets | 1,213.2 | 313.4 | 1,526.6 | ||||||||||
| Other Assets | |||||||||||||
| Plant and equipment | 302.7 | — | 302.7 | ||||||||||
| Non-current notes receivable | 93.3 | — | 93.3 | ||||||||||
| Intangibles resulting from acquisitions | 82.2 | — | 82.2 | ||||||||||
| Net assets of discontinued operations | 729.2 | (698.2 | ) | 31.0 | |||||||||
| Other assets | 260.2 | — | 260.2 | ||||||||||
| $ | 2,680.8 | $ | (384.8 | ) | $ | 2,296.0 | |||||||
| Liabilities and Shareholders’ Equity | |||||||||||||
| Current Liabilities | |||||||||||||
| Short-term debt | $ | 247.8 | $ | (247.8 | ) | $ | — | ||||||
| Accounts payable | 120.1 | — | 120.1 | ||||||||||
| Compensation and benefits | 71.6 | — | 71.6 | ||||||||||
| Other accrued items | 111.0 | — | 111.0 | ||||||||||
| Unearned income and advance payments by customers | 93.4 | — | 93.4 | ||||||||||
| Income taxes | 13.0 | — | 13.0 | ||||||||||
| Total current liabilities | 656.9 | (247.8 | ) | 409.1 | |||||||||
| Other Liabilities | |||||||||||||
| Deferred income taxes | 54.3 | — | 54.3 | ||||||||||
| Long-term debt | 415.0 | — | 415.0 | ||||||||||
| Shareholders’ Equity | |||||||||||||
| Preferred Stock | — | — | — | ||||||||||
| Common Stock | 79.1 | — | 79.1 | ||||||||||
| Other capital | 267.6 | — | 267.6 | ||||||||||
| Retained earnings | 1,217.4 | (137.0 | ) | 1,080.4 | |||||||||
| Unearned compensation | (6.5 | ) | — | (6.5 | ) | ||||||||
| Accumulated comprehensive loss | (3.0 | ) | — | (3.0 | ) | ||||||||
| Total Shareholders’ Equity | 1,554.6 | (137.0 | ) | 1,417.6 | |||||||||
| $ | 2,680.8 | $ | (384.8 | ) | $ | 2,296.0 | |||||||
3
HARRIS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
For the Quarter Ended October 1, 1999
| (A) | |||||||||||||
| Historical | Adjustments | Pro Forma | |||||||||||
| (Dollars in millions except per share amounts) | |||||||||||||
| Revenue | |||||||||||||
| Revenue from product sales, rentals and services | $ | 398.8 | $ | — | $ | 398.8 | |||||||
| Costs and Expenses | |||||||||||||
| Cost of product sales, rentals and services | 299.5 | — | 299.5 | ||||||||||
| Engineering, selling and administrative expenses | 92.0 | — | 92.0 | ||||||||||
| Other income | (7.4 | ) | — | (7.4 | ) | ||||||||
| 384.1 | — | 384.1 | |||||||||||
| Operating income | 14.7 | — | 14.7 | ||||||||||
| Interest income | 1.3 | — | 1.3 | ||||||||||
| Interest expense | (1.7 | ) | — | (1.7 | ) | ||||||||
| Income from continuing operations before income taxes | 14.3 | — | 14.3 | ||||||||||
| Income taxes | 5.0 | — | 5.0 | ||||||||||
| Income from continuing operations | 9.3 | — | 9.3 | ||||||||||
| Discontinued operations net of income taxes | (8.0 | ) | (5.7 | ) | (13.7 | ) | |||||||
| Net income (loss) | $ | 1.3 | $ | (5.7 | ) | $ | (4.4 | ) | |||||
| Net income (loss) per common share | |||||||||||||
| Basic | |||||||||||||
| Continuing operations | $ | 0.12 | $ | — | $ | 0.12 | |||||||
| Discontinued operations | (0.10 | ) | (0.07 | ) | (0.17 | ) | |||||||
| $ | 0.02 | $ | (0.07 | ) | $ | (0.05 | ) | ||||||
| Diluted | |||||||||||||
| Continuing operations | $ | 0.12 | $ | — | $ | 0.12 | |||||||
| Discontinued operations | (0.10 | ) | (0.07 | ) | (0.17 | ) | |||||||
| $ | 0.02 | $ | (0.07 | ) | $ | (0.05 | ) | ||||||
| Average shares outstanding | |||||||||||||
| Basic | 79.2 | 79.2 | 79.2 | ||||||||||
| Diluted | 79.4 | 79.4 | 79.4 | ||||||||||
4
HARRIS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
For the Fiscal Year Ended July 2, 1999
| (A) | |||||||||||||
| Historical | Adjustments | Pro Forma | |||||||||||
| (Dollars in millions except per share amounts) | |||||||||||||
| Revenue | |||||||||||||
| Revenue from product sales, rentals and services | $ | 1,743.5 | $ | — | $ | 1,743.5 | |||||||
| Costs and Expenses | |||||||||||||
| Cost of product sales, rentals and services | 1,278.3 | — | 1,278.3 | ||||||||||
| Engineering, selling and administrative expenses | 384.3 | — | 384.3 | ||||||||||
| Restructuring expenses | 5.1 | — | 5.1 | ||||||||||
| Special charge for litigation costs | 20.6 | — | 20.6 | ||||||||||
| Other income | (19.3 | ) | — | (19.3 | ) | ||||||||
| 1,669.0 | — | 1,669.0 | |||||||||||
| Operating income | 74.5 | — | 74.5 | ||||||||||
| Interest income | 13.3 | — | 13.3 | ||||||||||
| Interest expense | (9.8 | ) | — | (9.8 | ) | ||||||||
| Income from continuing operations before income taxes | 78.0 | — | 78.0 | ||||||||||
| Income taxes | 28.1 | — | 28.1 | ||||||||||
| Income from continuing operations before extraordinary item | 49.9 | — | 49.9 | ||||||||||
| Discontinued operations net of income taxes | 12.4 | (64.0 | ) | (51.6 | ) | ||||||||
| Income before extraordinary item | 62.3 | (64.0 | ) | (1.7 | ) | ||||||||
| Extraordinary loss from early retirement of debt
net of income taxes |
(9.2 | ) | — | (9.2 | ) | ||||||||
| Net income (loss) | $ | 53.1 | $ | (64.0 | ) | $ | (10.9 | ) | |||||
| Net income (loss) per common share | |||||||||||||
| Basic | |||||||||||||
| Continuing operations before extraordinary item | $ | 0.63 | $ | — | $ | 0.63 | |||||||
| Discontinued operations | 0.16 | (0.81 | ) | (0.65 | ) | ||||||||
| Extraordinary loss | (0.12 | ) | — | (0.12 | ) | ||||||||
| $ | 0.67 | $ | (0.81 | ) | $ | (0.14 | ) | ||||||
| Diluted | |||||||||||||
| Continuing operations | $ | 0.63 | $ | — | $ | 0.63 | |||||||
| Discontinued operations | 0.16 | (0.81 | ) | (0.65 | ) | ||||||||
| Extraordinary loss | (0.12 | ) | — | (0.12 | ) | ||||||||
| $ | 0.67 | $ | (0.81 | ) | $ | (0.14 | ) | ||||||
| Average shares outstanding | |||||||||||||
| Basic | 79.4 | 79.4 | 79.4 | ||||||||||
| Diluted | 79.7 | 79.4 | 79.4 | ||||||||||
5
Note to Unaudited Pro Forma Financial Information
(A) Reflects the spin-off of Lanier including a payment of $546.0 million cash by Lanier to the Company. In connection with this transaction, Harris also retained approximately 10 percent of the equity interest in Lanier. The pro forma adjustment to the condensed consolidated balance sheet as of October 1, 1999 includes the effect of the receipt of cash, recording the equity investment at net realizable value and the retirement of short-term debt.
Historically, Harris has allocated interest expenses for headquarters functions from the central corporate cost centers. The historical financials reflect the removal of the allocated headquarters expenses from Lanier in discontinued operations. The interest, however, is allocated to Lanier in discontinued operations.
6
(c) Exhibits
The following documents are filed as Exhibits to this Report:
| 2.1 |
Agreement and Plan of Distribution, dated as of October 22,
1999, by and between Harris Corporation and Lanier Worldwide, Inc. |
|
| 2.2 |
Tax Disaffiliation Agreement, dated as of November 5, 1999,
by and between Harris Corporation and Lanier Worldwide, Inc. |
|
| 2.3 |
Employee Benefits and Compensation Allocation Agreement, dated as
of November 5, 1999, by and between Harris Corporation and Lanier Worldwide, Inc. |
|
| 2.4 |
Intellectual Property License Agreement, dated as of
November 5, 1999, by and between Harris Corporation and Lanier Worldwide, Inc. |
|
| 2.5 |
Registration Rights Agreement, dated November 5, 1999,
between Harris Corporation and Lanier Worldwide, Inc. |
|
| 2.6 |
Transition Services Agreement, dated as of November 5, 1999,
between Harris Corporation and Lanier Worldwide, Inc. |
Items 8-9. Not Applicable.
7
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 |
|
|
|
| Name: Bryan R. Roub |
| Title: | Senior Vice President & |
| Chief Financial Officer |
Date: November 19, 1999
8
EXHIBIT INDEX
| Exhibit No. | ||||
| Under Reg. | ||||
| S-K, Item 601 | Description | |||
| 2.1 |
Agreement and Plan of Distribution, dated as of October 22,
1999, by and between Harris Corporation and Lanier Worldwide, Inc. |
|||
| 2.2 |
Tax Disaffiliation Agreement, dated as of November 5, 1999,
by and between Harris Corporation and Lanier Worldwide, Inc. |
|||
| 2.3 |
Employee Benefits and Compensation Allocation Agreement, dated as
of November 5, 1999, by and between Harris Corporation and Lanier Worldwide, Inc. |
|||
| 2.4 |
Intellectual Property License Agreement, dated as of
November 5, 1999, by and between Harris Corporation and Lanier Worldwide, Inc. |
|||
| 2.5 |
Registration Rights Agreement, dated November 5, 1999, between
Harris Corporation and Lanier Worldwide, Inc. |
|||
| 2.6 |
Transition Services Agreement, dated as of November 5, 1999,
between Harris Corporation and Lanier Worldwide, Inc. |
|||
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