SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND
SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____ to ____
Commission file number ____
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Tracor Deferred Compensation Plan
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
Tracor, Inc.
6500 Tracor Lane
Austin, TX 78725
(512)926-2800
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Retirement Committee
Tracor, Inc.
Austin, Texas
We have audited the accompanying statement of financial condition
of the Tracor Deferred Compensation Plan (the "Plan") as of
December 31, 1996, and the related statement of income and changes
in plan equity from inception through December 31, 1996. 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 audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit 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 financial condition
of the Plan at December 31, 1996, and the income and changes in
plan equity from inception through December 31, 1996, in conformity
with generally accepted accounting principles.
June 23, 1997 /s/ Ernst & Young, LLP
<PAGE>
Tracor Deferred Compensation Plan
STATEMENT OF FINANCIAL CONDITION
December 31, 1996
ASSETS
Investment, at market:
Norwest Stable Return Fund
41,371 shares, cost $974,575 $ 975,526
Cash 323,488
----------
Plan Equity $1,299,014
==========
STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY
From Inception through December 31, 1996
Unrealized appreciation of investments $ 951
Contributions:
Employee 1,257,028
Employer 41,035
----------
Total contributions 1,298,063
----------
Net increase in plan equity 1,299,014
Plan equity at inception -
----------
Plan equity at end of period $1,299,014
==========
See notes to financial statements.
<PAGE>
Tracor Deferred Compensation Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
Note A -- Description of the Plan
The following description of the Tracor Deferred Compensation
Plan (Plan) provides general information only. Reference should
be made to the Plan document for more complete information.
Plan Sponsor
The Plan was adopted by Tracor, Inc. (Plan Sponsor or the
Company), and certain of its domestic subsidiaries (Participating
Employers) effective December 1, 1996. On this date, the Company
also established the Tracor, Inc. Nonqualified Trust (Trust) for
the purpose of conducting the activities of the Plan. The Plan
is a nonqualified deferred compensation plan which is optional to
all eligible employees. The Plan is administered by the trustee,
Norwest Bank, under the direction of the Plan Sponsor and
Participating Employers. The Plan is not a qualified plan under
the Internal Revenue Code and is not subject to the funding
requirements of Title I of the Employee Retirement Income
Security Act of 1974, as amended (ERISA). The participants have
the status of general unsecured creditors of Tracor, Inc. and the
Plan constitutes a promise by the employer to make benefit
payments in the future.
Participants
Any employee of the Plan Sponsor and Participating Employers is
eligible to participate in the Plan, if he or she qualifies under
the definition of a "highly compensated" employee in the Tracor,
Inc. 401(k) Savings Plan (Qualified Plan) and is selected by the
plan administrator.
Contributions
Participants who have elected to defer the maximum amount
permitted under the Qualified Plan may elect to defer to the Plan
an amount not greater than 50% of their compensation, as defined
by the Plan, or 100% of their incentive compensation, to the
extent that such amount exceeds the amount to be credited under
the Qualified Plan. Participants are immediately vested in their
contributions, as well as earnings on those contributions.
Participant contributions and Plan earnings are not taxable to
the participants as income, until they are withdrawn from the
plan.
The Plan Sponsor and Participating Employers contribute to
participant accounts as follows:
Tracor Aerospace Electronic 50% of the participant's contributions,
Systems, Inc. and Quality limited to 6% of participant's
Systems, Inc. compensation and discretionary
profit sharing contributions
Vitro Services Corporation Up to 50% of the participant's
contributions, limited to
5% of participant's compensation
or a profit sharing contribution
All other Participating 25% of the participant's contributions,
Employers limited to 6% of participant's
compensation
For each pay period, the Plan Sponsor and Participating Employers
contributions are reduced by any matching contributions made to
the participant's account in the Qualified Plan. Vesting for
Plan Sponsor and Participating Employer matching contributions
occurs over two to four years for Vitro Corporation and Vitro
Services Corporation, five years for Quality Systems, Inc., and
five years for Tracor Aerospace Electronic Systems, Inc. (except
for participants employed on 10/1/96 whose vesting is immediate).
Vesting for all other participants occurs immediately.
Investment Options
At December 31, 1996, there were 85 participants in the Plan, and
all assets were held in the Norwest Stable Return Fund.
Contributions made by the participants and by the Plan Sponsor or
a Participating Employer may be directed by the participant to
any of the ten investment options:
Norwest Stable Return Fund -- Invests in fixed income
securities.
Norwest Growth Equity Fund -- Invests in large company growth
stocks, small company stocks and international stocks.
Norwest Small Cap Opportunities Fund -- Invests all assets in
the Schroder U.S. Smaller Companies Portfolio, a series of
Schroder Capital Funds, itself a registered open-end
management investment company.
Vanguard Wellington Fund -- Invests 60-70% of assets in
equity securities and 30-40% in fixed income securities.
Vanguard Institutional Index Fund -- Invests in equity
securities of companies in the Standard & Poor's 500
Composite Stock Price Index. The fund holds all of the 500
underlying securities in proportion to their weighting in the
Index.
Vanguard Windsor II Fund -- Invests in equity securities of
companies that are undervalued or out-of-favor.
Vanguard International Growth Fund -- Invests in stocks of
companies based outside the United States that have
above-average growth potential. 60-70% of the fund is
invested in small- to medium-sized companies, and the
remainder is invested in liquid, large capitalization stocks.
T. Rowe Price Spectrum Income Fund -- Invests primarily in
domestic bond funds and in a foreign bond fund. Up to 25% of
fund assets may be allocated to a stock fund.
Fidelity Contrafund -- Invests in equity securities of
companies that are undervalued or out-of-favor.
Tracor Stock Fund -- Invests in Tracor, Inc. common stock.
Distributions
Participants designate their distribution period (in excess of
one plan year) in terms of age, termination of employment, or the
earlier of termination or age, and distributions may be made in a
lump-sum or in five- or ten-year annual installments.
Participants or beneficiaries are also entitled to receive a
distribution of their accounts upon death (received in five- or
ten-year annual installments depending on employment status),
disability (received in five annual installments), or hardship
withdrawal. Distribution payments are made by the Company and
are taxable to the participant when received. In the event the
Company is unable to pay its debts as they become due or is
subject to any proceedings as a debtor under the United States
Bankruptcy Code, the trustee will cease making payments from the
trust until the Company is no longer insolvent.
Termination
Although it has not expressed any intent to do so, the Board of
Directors of the Company has the right under the Plan to
discontinue its contributions at any time and to terminate the
Plan. In the event of Plan termination, participants will become
100% vested in their accounts.
Administrative Costs
During 1996, no administrative costs were incurred by the Plan.
Note B -- Significant Accounting Policies
Investments
All collective fund investments are valued at the net asset value
quoted in an active market as of the last business day of the
year.
Distributions
Distributions to participants are recorded by the Plan when
actual payment is made.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires Plan management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities. Actual results could differ
from those estimates.
Note C -- Federal Income Taxes
The Plan is an unfunded, nonqualified deferred compensation plan.
All plan assets are held in a grantor trust. The employer will not be
entitled to a deduction for a participant's deferred compensation
or for the employer contributions until such time amounts are
actually paid to the participant. Any earnings on plan assets
are taxable to the employer rather than the Plan; therefore, no
provision for income taxes has been made.
Note D -- Investments
The Plan's investments are held by a trust fund and are presented
in the following table for December 31, 1996.
<TABLE>
<S> <C> <C> <C>
Fair
Description of Investment Cost Value
------------------------- ---------- ----------
Norwest Stable Return Fund 41,371 shares, share value $23.58 $ 974,575 $ 975,526
Norwest Bank Cash and cash equivalents 323,488 323,488
---------- ----------
Total Investments $1,298,063 $1,299,014
========== ==========
</TABLE>
The net unrealized appreciation of investments in the Plan equity
by fund for the period ended December 31, 1996, is as follows:
Balance
Balance at Unrealized at End
Inception Appreciation of Period
---------- ------------ ---------
Norwest Stable Return Fund $ - $951 $951
Note E -- Subsequent Event
The deferred compensation plan of Cordant, Inc., a subsidiary of
Tracor, Inc. acquired in 1996, was merged into the Plan on
January 2, 1997. The merger increased the Plan assets by
approximately $859,000.
SIGNATURES
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 report to be signed on
its behalf by the undersigned thereunto duly authorized.
Tracor Deferred Compensation Plan
Date: June 30, 1997 By: /s/ Robert K. Floyd
-------------------
Robert K. Floyd
Chairman
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (No. 33-55624, No. 33-93186, No. 33-96474, No.
333-17409 and No. 333-27601, all on Form S-8)
pertaining to various benefit plans sponsored by Tracor, Inc. of
our report dated June 23, 1997, with respect to the financial
statements of the Tracor Deferred Compensation Plan
included in this Annual Report (Form 11-K) for the period ended
December 31, 1996.
/s/ Ernst & Young, LLP
Austin, Texas
June 27, 1997
