0000950152-95-002035.txt : 19950914 0000950152-95-002035.hdr.sgml : 19950914 ACCESSION NUMBER: 0000950152-95-002035 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950908 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARRIS CORP /DE/ CENTRAL INDEX KEY: 0000202058 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 340276860 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03863 FILM NUMBER: 95572331 BUSINESS ADDRESS: STREET 1: 1025 W NASA BLVD CITY: MELBOURNE STATE: FL ZIP: 32919 BUSINESS PHONE: 4077279100 MAIL ADDRESS: STREET 1: 1025 W NASA BLVD CITY: MELBOURNE STATE: FL ZIP: 32919 FORMER COMPANY: FORMER CONFORMED NAME: HARRIS SEYBOLD CO DATE OF NAME CHANGE: 19600201 10-K 1 HARRIS CORPORATION 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1995 COMMISSION FILE NUMBER 1-3863 HARRIS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 34-0276860 -------------------------------------------------------------------------------------------------------------------- (STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
1025 W. NASA Boulevard Melbourne, Florida 32919 --------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (407) 727-9100 --------------------------------------------- (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ----------------------------------------------- Common Stock, par value $1 per share New York Stock Exchange, Inc. 7 3/4% Sinking Fund Debentures due 2001 New York Stock Exchange, Inc. Preferred Stock Purchase Rights New York Stock Exchange, Inc.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate by check mark if disclosure of delinquent filers pursuant to Section 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ The aggregate market value of the voting stock held by non-affiliates of the registrant as of August 31, 1995 is $2,222,850.00. The number of shares outstanding of the registrant's class of common stock, as of August 31, 1995 is 39,122,312. DOCUMENTS INCORPORATED BY REFERENCE Proxy Statement to be filed September 15, 1995 (Incorporated by Reference into Part III). 2 PART I ITEM 1. BUSINESS THE COMPANY Harris Corporation was incorporated in Delaware in 1926 as the successor to three companies founded in the 1890's. The executive offices of the Company are located at 1025 W. NASA Boulevard, Melbourne, Florida 32919, and the telephone number is (407) 727-9100. Harris Corporation, along with its subsidiaries (hereinafter called "Harris" or the "Company"), is a worldwide company focused on four core businesses: advanced electronic systems, semiconductors, communications and an office equipment distribution network. The Company's four core businesses were carried out during fiscal 1995 through three business sectors and a subsidiary, which correspond to its business segments used for financial reporting purposes: Communications Sector, Semiconductor Sector, Lanier Worldwide, Inc. and Electronic Systems Sector. Harris structures its operations primarily around the markets it serves. Its operating divisions, which are the basic operating units, have been organized on the basis of technology and markets. For the most part, each operating division has its own marketing, engineering, manufacturing and service organizations. Reference is made to the Note Business Segments in the Notes to Financial Statements for further information with respect to business sectors and the subsidiary. Total sales in fiscal 1995 increased to $3.4 billion from $3.3 billion a year earlier. Total sales in the United States increased 3.1 percent, and international sales, which amounted to 30 percent of the corporate total, increased 3.5 percent. Net Income increased 38.2 percent to $154.5 million from $111.8 million. Results for fiscal 1994 included an $11.5 million after-tax charge resulting from the Company's write-off of securities received from the 1990 sale of a discontinued business and a $10.1 million one-time after-tax charge for a cumulative effect of a change in accounting principle. The Company's three business sectors and the subsidiary and their principal products are as follows: Communications Sector: produces broadcast, radio-communication, and telecommunication products and systems, including transmitters and studio equipment for radio and TV, HF, VHF and UHF radio-communication equipment, microwave radios, digital telephone switches, telephone subscriber-loop equipment, and in-building paging equipment. Semiconductor Sector: produces advanced analog, digital and mixed-signal integrated circuits and discrete semiconductors for power, signal processing, data-acquisition, and logic applications for automotive systems, wireless communications, telecommunications line cards, video and imaging systems, industrial equipment, computer peripherals, and military and aerospace systems. Lanier Worldwide, Inc.: sells, services, supports and provides supplies for copying systems, facsimile systems and networks, dictation systems, optical-based electronic-image management systems, continuous recording systems and PC-based health care management systems. Electronic Systems Sector: engages in advanced research, and develops, designs and produces advanced information processing and communication systems and software for defense applications, air traffic control, avionics, satellite communications, space exploration, public safety, simulation, energy management, law enforcement, electronic systems testing, airports, and newspaper composition. The financial results shown in the tables below are presented to comply with current financial accounting standards relating to business segment reporting. Information concerning the identifiable assets of the Company's business segments is contained in the Note Business Segments in the Notes to Financial Statements. In calculating operating profit, allocations of certain expenses among the business segments involve the exercise of business judgment. Intersegment sales, which are insignificant, are accounted for at prices comparable to those paid by unaffiliated customers. 1 3 NET SALES AND OPERATING PROFIT BY BUSINESS SEGMENT (DOLLARS IN MILLIONS) NET SALES
YEAR ENDED COMMUNI- SEMI- LANIER ELECTRONIC JUNE 30 CATIONS CONDUCTOR WORLDWIDE SYSTEMS TOTAL ----------------------- ---------- -------- -------- ---------- --------- 1993................... $544.2 $590.8 $ 922.0 $1,042.1 $ 3,099.1 1994................... 628.2 635.3 943.7 1,128.9 3,336.1 1995................... 724.8 658.7 1,024.8 1,035.8 3,444.1
OPERATING PROFIT
YEAR ENDED COMMUNI- SEMI- LANIER ELECTRONIC CORPORATE INTEREST JUNE 30 CATIONS CONDUCTOR WORLDWIDE SYSTEMS EXPENSE EXPENSE TOTAL ----------------------- ------- ------- ------- ------- ------- ------- ------ 1993................... $43.9 $44.4 $ 84.2 $ 98.9 $(41.7 ) $(59.9 ) $169.8 1994................... 57.6 70.2 89.8 101.3 (67.1 )* (58.3 ) 193.5 1995................... 68.5 83.0 105.7 95.5 (49.7 ) (65.4 ) 237.6
--------------- *Corporate expense in 1994 includes a $17.8 million charge resulting from the write-off of securities received from the 1990 sale of a discontinued business. COMMUNICATIONS The Communications Sector of the Company designs, manufactures, and sells products characterized by three principal communication technologies: telecommunications, including microwave products and systems, digital telephone switches, telephone test equipment and auxiliary telecommunication products; broadcast, including radio and television products and transmission systems; and two-way radio, including high-frequency (HF), very high frequency (VHF) and ultra-high frequency (UHF) products, and complete turnkey communication systems. Sales in fiscal 1995 for this business segment increased 15.4 percent to $724.8 million from $628.2 million. The sector recorded operating profit of $68.5 million, up from $57.6 million in fiscal 1994. The sector contributed 21 percent of Company sales in fiscal 1995 and 19 percent in fiscal 1994. The sector is a worldwide supplier of voice and data digital network switches and private-branch exchanges (PBXs) to long-distance carriers, utilities, corporations and government agencies. The sector also supplies telecommunication products and systems under the Dracon trademark, including telephone test systems and tools, ISDN terminal adapters and telephone-integrated voice-paging systems for a wide variety of in-plant applications. Under the Farinon trademark, the sector is the largest producer of low- and medium-capacity analog and digital microwave systems in North America. The sector is the largest supplier of radio and television broadcast transmission equipment and radio-studio equipment in the United States. The sector's products include radio and television transmitters, antennas, and audio, remote-control and video production systems. The sector is also a leading supplier of mobile broadcast units. This sector is a leading supplier of two-way HF, VHF and UHF radio equipment and offers a comprehensive line of products and systems for long- and short-distance communications. The sector also designs and installs turnkey communication systems involving a variety of communication technologies, including HF, VHF, microwave, fiber-optics and switching systems with command and control centers. The products are sold to commercial and government customers worldwide. 2 4 Internationally, particularly in the developing and oil-producing nations, the sector designs, sells, installs and services communication systems involving radio and television broadcasting equipment and long- and short-range radios on both a product and a turnkey basis. Principal customers for products of the Communications Sector include foreign and domestic government and military agencies, commercial and industrial firms, radio and TV broadcasters, telephone companies, utilities, construction companies and oil producers. In general, these products are sold and serviced domestically directly to customers through the sales organizations of the operating divisions and through established distribution channels. Internationally, the sector markets and sells its products and services through established distribution channels. See "International Business." The backlog of unfilled orders for this segment of Harris' business was $309 million at June 30, 1995, substantially all of which is expected to be filled during the 1996 fiscal year, compared with $300 million a year earlier. SEMICONDUCTOR The Semiconductor Sector of the Company produces advanced analog, digital, power and mixed-signal integrated circuits and discrete semiconductors for data-acquisition, signal processing, logic and power applications that demand the highest levels of performance in terms of speed, precision, low power consumption and reliability, often in harsh environments. Sales in fiscal 1995 for this business segment increased 3.7 percent to $658.7 million from $635.3 million in fiscal 1994. The sector's operating profit was $83.0 million in fiscal 1995, compared with $70.2 milion in fiscal 1994. The sector contributed 19 percent of Company sales in fiscal 1995 and 1994. The sector produces discrete-power products, including MOS (metal oxide semiconductors) power devices, transistors, rectifiers, power control circuits and transient suppression products. The sector pioneered development of "intelligent-power" technology which permits the combination of analog, logic and power circuits on the same chip. Such products are widely used in automotive electronic systems, such as automotive ignition systems, anti-lock braking and engine control, and instrument display. The sector is a major supplier of devices which address the communications market through the provision of complex functions, including wireless, broadband and data conversion components. In addition, the sector is a leader in mixed-signal telecommunication line card applications, including SLICs (subscriber line interface circuits), CODECs (Coder/Decoder), and cross-point switches used in private-branch-exchange (PBX) systems and of other circuits for cellular communications, high resolution medical imaging, broadcast and interactive cable video and military radar systems. The sector is a major supplier of integrated circuits and discrete devices to the military and aerospace markets, with an emphasis on commercial and military space applications. The sector is the leading supplier of radiation-hardened circuits. The sector's custom, semicustom and standard integrated circuits are based on CMOS (complementary metal oxide semiconductor), SOS (silicon-on-sapphire), SOI (silicon-on-insulator), bipolar analog and power analog/digital process technologies. The sector is also a leading supplier of custom and semicustom integrated circuits, known as application specific integrated circuits (ASICs). These circuits are designed for high-performance military, space, automotive and industrial applications. Principal customers for the products of this sector include video imaging, computer, communication, telephone, industrial, medical and other electronic equipment manufacturers, automobile manufacturers, defense contractors and U.S. government agencies. In general, these products are sold directly to customers through a worldwide sales organization, which includes independent manufacturers' representatives, and to distributors, who, in turn, resell to their customers. Internationally, this sector also sells through distributors. See "International Business." 3 5 The integrated circuit manufacturing technology and integrated circuit industry is characterized by rapid advances in product performance technology. Harris is a party to technology exchange agreements with other companies to develop new and expanded technologies. The backlog of unfilled orders for this segment of Harris' business was $354 million at June 30, 1995, substantially all of which is expected to be filled during the 1996 fiscal year, compared with $298 million a year earlier. LANIER WORLDWIDE Lanier Worldwide, Inc. is a wholly-owned subsidiary of Harris which markets, sells, and services office equipment and business communication products on a global basis. Sales in fiscal 1995 for this business segment increased 8.6 percent to $1,024.8 million from $943.7 million in fiscal year 1994. Operating profit was $105.7 million, up from $89.8 million last year. Lanier Worldwide contributed 30 percent of Company sales in fiscal 1995 and 28 percent in 1994. Lanier Worldwide provides copying, dictation, continuous recording, facsimile systems and multi-functional devices, as new management solutions, facilities management operations and other services through a global network of direct sales and service centers and authorized dealers. Lanier Worldwide also leases certain of these products to customers on a short-term basis. Due to the nature of its business, backlog of unfilled orders is not considered significant to an understanding of this segment's business. ELECTRONIC SYSTEMS The Electronic Systems Sector of Harris is composed of several operating divisions and is engaged in advanced research, development, design and production of advanced information processing and communication systems and sub-systems for government and commercial organizations in the United States and overseas. Applications of the sector's state-of-the-art technologies include air traffic control, avionics, communications, space exploration, energy management, electronics systems testing, newspaper composition and information management systems. The Electronic Systems Sector is a major supplier of advanced-technology and electronic systems to the United States Department of Defense, the Federal Aviation Administration, National Aeronautics and Space Administration, Federal Bureau of Investigation and other federal and local government agencies, aircraft manufacturers, airports, electric utilities, newspapers and publishing houses. Sales in fiscal 1995 for this business segment decreased 8.2 percent to $1,035.8 million from $1,128.9 million in fiscal 1994. Sales in fiscal 1994 included a computer systems business which was spun off to shareholders in fiscal 1995. Excluding the sales of this business in 1994, sales decreased 2.7 percent. Operating profit of $95.5 million decreased from $101.3 million in the previous year. This sector contributed 30 percent of Company sales in fiscal 1995 and 34 percent in 1994. The sector is the leading supplier of air-traffic control communication systems. The sector is also a major supplier of custom aircraft and spaceborne communication and information processing systems, a leading supplier of terrestrial and satellite communication systems and a preeminent supplier of super-high-frequency military satellite ground terminals for the Department of Defense. The sector is a major supplier of custom ground-based systems and software designed to collect, store, retrieve, process, analyze, display and distribute information for government, defense and law enforcement applications, including meteorological data processing systems and range management information systems. The sector also provides computer controlled electronic maintenance, logistic, simulation and test systems for military aircraft, ships and ground vehicles. The sector is a worldwide supplier of energy management and distribution automation systems for electric utilities and information-processing systems for newspapers and publishing houses. 4 6 Most of the sales of this sector are made directly or indirectly to the United States government under contracts or subcontracts containing standard government clauses providing for redetermination of profits, if applicable, and for termination for the convenience of the government or for default of the contractor. These sales consist of a variety of contracts and programs with various governmental agencies, with no single program accounting for 10 percent or more of total Harris sales. The backlog of unfilled orders for this segment of Harris' business was $568 million at June 30, 1995, substantially all of which is expected to be filled during the 1996 fiscal year, compared with $530 million a year earlier. INTERNATIONAL BUSINESS In fiscal 1995, sales of products exported from the United States or manufactured abroad were $1,016 million or 29.5 percent of the corporate total, compared with $982 million or 29.4 percent of the corporate total in fiscal 1994 and $877 million (28.3 percent) in fiscal 1993. Exports from the United States, principally to Europe and Asia, totalled $525 million or 51.6 percent of the international sales in fiscal 1995, $388 million or 39.5 percent of the international sales in fiscal 1994 and $295 million or 33.7 percent in fiscal 1993 of the international sales. Foreign operations represented 14.3 percent of consolidated net sales and 22.7 percent of consolidated total assets as of June 30, 1995. Electronic products and systems are produced principally in the United States and international electronic revenues are derived primarily from exports. Semiconductor assembly facilities are located in Malaysia and Ireland and electronic products assembly facilities are located in Canada and England. International marketing activities are conducted through subsidiaries which operate in Canada, Europe, Central and South America, Asia and Australia. Reference is made to Exhibit 21 "Subsidiaries of the Registrant" for further information regarding foreign subsidiaries. Harris utilizes indirect sales channels, including dealers, distributors and sales representatives, in the marketing and sale of some lines of equipment, both domestically and internationally. These independent representatives may buy for resale, or, in some cases, solicit orders from commercial or governmental customers for direct sales by Harris. Prices to the ultimate customer in many instances may be recommended or established by the independent representative and may be on a basis which is above or below the Company's list prices. Such independent representative generally receives a discount from the Company's list prices and may mark-up such prices in setting the final sales prices paid by the customer. During the fiscal year, orders came from a large number of foreign countries, no one of which accounted for as much as five percent of total orders. Certain of Harris' exports are paid for by letters of credit, with the balance either on open account or installment note basis. Advance payments, progress payments or other similar payments received prior to or upon shipment often cover most of the related costs incurred. Performance guarantees are generally required on significant foreign government contracts. The particular economic, social and political conditions for business conducted outside the United States differ from those encountered by domestic business. Management believes that the composite business risk for the international business as a whole is somewhat greater than that faced by its domestic operations as a whole. International business may subject the Company to, among other things: the laws and regulations of foreign governments relating to investments, operations, currency exchange controls, revaluations, taxes, and fluctuations of currencies; uncertainties as to local laws and enforcement of contract and intellectual property rights; and occasional requirements for onerous contract clauses; and, in certain areas, the risk of war, rapid changes in governments and economic and political policies, the threat of international boycotts and United States anti-boycott legislation. Nevertheless, in the opinion of management, these risks are offset by the diversification of the international business and the protection provided by letters of credit and advance payments. Except for inconsequential matters involving road and utility rights-of-way, Harris has never been subjected to threat of government expropriation, either within the United States or abroad. 5 7 Financial information regarding the Company's domestic and international operations is contained in the Note Business Segments in the Notes to Financial Statements. COMPETITION; PRINCIPAL CUSTOMERS; BACKLOG The Company operates in highly competitive businesses that are sensitive to technological advances. While successful product and systems development is not necessarily dependent on total financial resources, some of Harris' competitors in each of the sectors of its business are larger and can maintain higher levels of expenditures for research and development than Harris. Harris concentrates in each of its sectors on the market opportunities which management believes are compatible with its overall technological capabilities and objectives. Principal competitive factors in these sectors are cost-effectiveness, product quality and reliability, service and ability to meet delivery schedules as well as, in international areas, the effectiveness of dealers. Sales to the U.S. government, which is the Company's only customer accounting for 10 percent or more of total sales, were 30.4 percent, 34.8 percent, and 35.7 percent of total sales in 1995, 1994 and 1993 respectively. It is not expected that Defense Department budget cutbacks will have a material effect on the profitability of the Company, due in part to the Company's efforts to diversify and reduce its reliance on defense contracts. Harris' backlog of unfilled orders was approximately $1.2 billion at June 30, 1995 and $1.1 billion at June 30, 1994. Substantially all of the backlog orders at June 30, 1995 are expected to be filled by June 30, 1996. RESEARCH AND ENGINEERING Research and engineering expenditures by Harris totaled approximately $601 million in 1995, $624 million in 1994 and $564 million in 1993. Company-sponsored research and product development costs were $134 million in 1995, $128 million in 1994 and $121 million in 1993. The balance was funded by government and commercial customers. Company-funded research is directed to the development of new products and to building technological capability in selected semiconductor, communications and electronic systems areas. Government-funded research helps strengthen and broaden the technical capabilities of Harris in its areas of interest. Almost all of the decentralized operating divisions maintain their own engineering and new product development departments, with scientific assistance provided by advanced-technology departments. Harris holds numerous patents which it considers, in the aggregate, to constitute an important asset. However, it does not consider its business or any sector to be materially dependent upon any single patent or any group of related patents. The Company is engaged in a pro-active patent licensing program and has entered into a number of license agreements which generate royalty income. Although existing license agreements have generated income in past years and will do so in the future, there can be no assurances the Company will enter into additional income producing agreements. ENVIRONMENTAL AND OTHER REGULATIONS The manufacturing facilities of Harris, in common with those of industry generally, are subject to numerous laws and regulations designed to protect the environment, particularly in regard to wastes and emissions. Harris has complied with these requirements and such compliance has not had a material adverse effect on its business or financial condition. Expenditures to protect the environment and to comply with current environmental laws and regulations over the next several years are not expected to have a material impact on the Company's competitive or financial position. If future laws and regulations contain more stringent requirements than presently anticipated, expenditures may be higher than the Company's present estimates of potential capital expenses. Waste treatment facilities and pollution control equipment have been installed to satisfy legal requirements and to achieve the Company's waste minimization and prevention goals. An estimated $.9 million was spent on environmental capital projects in fiscal 1995. The Company currently forecasts authorization for environmental-related capital projects totalling $1.2 million in fiscal 1996. Such amounts may increase in future years. The Company anticipates that capital expenditures may be required over the next several years 6 8 for compliance costs under the new Clean Air Act; however, considerable uncertainty remains with regard to estimates of such capital expenditures because the regulations have not yet been issued. EMPLOYEES As of June 30, 1995, Harris had approximately 26,600 employees. ITEM 2. PROPERTIES Harris operates approximately 29 plants and approximately 400 offices in the United States, Canada, Europe, Central and South America, Asia and Australia consisting of about 7.0 million square feet of manufacturing, administrative, engineering and office facilities that are owned and about 3.5 million square feet of sales, office and manufacturing facilities that are leased. The leased facilities are occupied under leases for terms ranging from one year to 30 years, a majority of which can be terminated or renewed at no longer than five-year intervals at Harris' option. The location of the principal manufacturing plants owned by the Company in the United States and the sectors which utilize such plants are as follows: Electronic Systems -- Malabar, Melbourne and Palm Bay, Florida; Semiconductor -- Palm Bay, Florida; Findlay, Ohio; and Mountaintop, Pennsylvania; Communications -- Novato and San Carlos, California; Quincy, Illinois; and Rochester, New York; and Lanier Worldwide -- Atlanta, Georgia. Harris considers its facilities to be suitable and adequate for the purposes for which they are used. As of June 30, 1995, the following facilities were in productive use by Harris:
SQ. FT. TOTAL SQ. FT. TOTAL SECTOR FUNCTION OWNED LEASED ------ -------- ------------- ------------- Electronic Systems Office/Manufacturing 2,866,000 457,000 Semiconductor Office/Manufacturing 2,067,000 52,000 Communications Office/Manufacturing 750,000 628,000 Lanier Worldwide Office/Manufacturing 144,000 592,000 OTHER Corporate Offices 1,188,000 121,000 Sales/Service Offices 13,700 1,690,000 ---------- ---------- TOTALS 7,028,700 3,540,000
ITEM 3. LEGAL PROCEEDINGS From time to time, as a normal incident of the nature and kind of business in which the Company is engaged, various claims or charges are asserted and litigation commenced against the Company arising from or related to product liability; patents, trademarks, or trade secrets; breach of warranty; antitrust; distribution; or contractual relations. Claimed amounts may be substantial, but may not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court awards. In the opinion of management, final judgments, if any, which might be rendered against the Company in such litigation are reserved against or would not have a material adverse effect on the financial position or the business of the Company as a whole. The Company may from time to time be, either individually or in conjunction with other major U.S. manufacturers or defense contractors, the subject of U.S. government investigations for alleged criminal or civil violations of procurement or other federal laws. No criminal charges are presently known to be filed against the Company and the Company is unable to predict the outcome of such investigations or to estimate the amounts of claims or other actions that could be instituted against it, its officers or employees as a result of such investigations. Under present government procurement regulations, indictment could result in a government contractor, such as the Company, being suspended or debarred from eligibility for awards of new government contracts for up to three years. In addition, the Company's foreign export control licenses could be suspended or revoked. The Company is currently involved in various investigations and is cooperating with the representatives of the responsible government agencies. Management does not believe that the outcome of 7 9 these investigations will have any material adverse effect on the financial position or the business of the Company as a whole. In addition, the Company is subject to numerous federal and state environmental laws and regulatory requirements and is involved from time to time in investigations or litigation of various potential environmental issues concerning the ongoing conduct of its facilities or the remediation as a result of past activities. The Company from time to time receives notices from the United States Environmental Protection Agency and equivalent state environmental agencies that it is a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the "Superfund Act") and/or equivalent state legislation. Such notices assert potential liability for cleanup costs of various sites, most of which are non-Company owned treatment or disposal sites, allegedly containing hazardous substances attributable to the Company from past operations. The Company has been named as a PRP at only 14 such sites, excluding sites as to which the Company's records disclose no involvement or as to which the Company's liability has been finally determined; the Company expects to resolve most of such exposures on a de minimis basis. The Company is also occasionally a defendant in "toxic tort" litigation involving alleged personal injury or property damage claims resulting from past hazardous waste management practices. In the opinion of management, any payments the Company may be required to make as a result of these claims will not have a material adverse effect on the financial condition or the business of the Company as a whole. In August 1991, PLS, Inc., a California software company, filed suit against the Company in California Superior Court for San Diego County alleging fraud, breach of contract and other charges in connection with a license agreement the Company had transferred in January 1990 to a third party, which thereafter filed for bankruptcy protection. In December 1992, the jury returned a verdict in favor of the plaintiff. In May 1993, the court reduced the jury award and entered judgment against the Company for $13,379,000 in compensatory damages and $53,424,700 in punitive damages, together with interest and costs of suit. The Company posted a bond to stay enforcement of the judgment and filed a notice of appeal with the California Court of Appeal. The Company is vigorously pursuing its appeal. All appellate briefs have been filed and a decision is expected mid-calendar year 1996. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 8 10 EXECUTIVE OFFICERS OF THE REGISTRANT AS OF SEPTEMBER 1, 1995.* (SEE ALSO ITEM 10 OF PART III).
EXECUTIVE BUSINESS EXPERIENCE DURING NAME AGE OFFICE HELD PAST FIVE YEARS ---- --- ----------- -------------------------- Phillip W. Farmer 57 Chairman, President and Chairman of the Board and Chief Chief Executive Officer Executive Officer since July, 1995. President since April, 1993. Chief Operating Officer 1993-95. Executive Vice President and Acting President -- Semiconductor Sector, 1991 to 1993. President -- Electronic Systems Sector, 1989 to 1991. Senior Vice President -- Sector Executive, 1988 to 1989. Vice President -- Palm Bay Operations, 1986 to 1988. Vice President -- General Manager, Government Support Systems Division, 1982 to 1986. Director since 1993. Wesley E. Cantrell 60 President and President and Chief Executive Chief Executive Officer Officer, Lanier Worldwide, Inc. Lanier Worldwide, Inc. since March, 1987. Senior Vice President -- Sector Executive, Lanier Business Products Sector, 1985 to 1987. President, Lanier Business Products, 1977 to 1987. Executive Vice President and National Sales Manager, Lanier Business Products, 1972 to 1977. Vice President, Lanier Business Products, 1966 to 1972. Employed by Lanier Business Products since 1955. John C. Garrett 52 President -- Semiconductor President -- Semiconductor Sector Sector since April, 1993. Formerly Executive Vice President, Industrial Business, Square D Company 1987 to 1993, and various general management assignments with General Electric Company 1964 to 1987.
--------------- *This listing identifies the executive officers of the Company, as defined pursuant to the Securities Exchange Act of 1934, as well as all other corporate officers. 9 11
EXECUTIVE BUSINESS EXPERIENCE DURING NAME AGE OFFICE HELD PAST FIVE YEARS ---- --- ----------- -------------------------- Allen S. Henry 55 President -- Electronic President -- Electronic Systems Systems Sector Sector since June, 1991. Vice President -- General Manager, Government Communication Systems Division, 1989 to 1991. Vice President -- Programs, Aerospace Systems Division, 1985 to 1989. Vice President -- Engineering, Aerospace Systems Division, 1983 to 1985. Vice President -- Engineering, Electronic Systems Division, 1980 to 1983. Director -- Engineering, Electronic Systems Division, April to December 1980. Employed by Harris since 1972. Guy W. Numann 63 President -- President -- Communications Sector Communications Sector since August, 1989. Senior Vice President -- Sector Executive, 1984 to 1989. Vice President -- Group Executive, RF Communications Group, 1983 to 1984. Vice President -- General Manager, RF Communications Division, 1974 to 1983. Vice President -- Engineering, RF Communications Division, 1970 to 1974. Bryan R. Roub 54 Senior Vice President -- Senior Vice President -- Finance Chief Financial Officer since July, 1984. Formerly with Midland-Ross Corporation in the capacities of Executive Vice President -- Finance, 1982 to 1984; Senior Vice President, 1981 to 1982; Vice President and Controller, 1977 to 1981; and Controller, 1973 to 1977. Robert E. Sullivan 63 Senior Vice President -- Senior Vice President -- Administration Administration since September, 1986. Formerly Senior Vice President -- Finance and Administration at Harris Graphics Corporation, 1983 to 1986. Vice President -- Controller at Harris, 1981 to 1983 and various management positions, including Vice President -- Treasurer, 1971 to 1981.
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EXECUTIVE BUSINESS EXPERIENCE DURING NAME AGE OFFICE HELD PAST FIVE YEARS ---- --- ----------- -------------------------- Richard L. Ballantyne 55 Vice President -- General Vice President -- General Counsel and Counsel and Secretary Secretary since November, 1989. Formerly Vice President -- General Counsel and Secretary, Prime Computer, Inc., 1982 to 1989. W. Peter Carney 63 Vice President -- Vice President -- Corporate Relations Corporate Relations since October, 1987. Director -- Corporate Communications, 1981 to 1987. James L. Christie 43 Vice President -- Vice President -- Internal Audit Internal Audit since August, 1992. Director -- Internal Audit, 1986 to 1992. Formerly Director -- Internal Audit and Division Controller at Harris Graphics Corporation, 1985 to 1986. Various corporate and division financial positions at Harris, 1978 to 1985. Robert W. Fay 48 Vice President -- Vice President -- Controller since Controller January, 1993. Acting Vice President -- Controller, Semiconductor Sector, 1991 to 1993. Vice President -- Treasurer, 1988 to 1993. Treasurer, 1985 to 1988. Director -- Financial Operations, Semiconductor Sector, 1984 to 1985. Controller -- Bipolar Digital Semiconductor Division, 1981 to 1984. Manager -- Corporate Finance and Cash Management, 1978 to 1981. Nick E. Heldreth 53 Vice President -- Vice President -- Human Resources Human Resources since June, 1986. Formerly Vice President -- Personnel and Industrial Relations, Commercial Products Division, Pratt & Whitney and various related assignments with United Technologies Corporation, 1974 to 1986. Herbert N. McCauley 62 Vice President -- Vice President -- Information Information Management Management since August, 1980. Director -- Management Information Systems, 1976 to 1980.
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EXECUTIVE BUSINESS EXPERIENCE DURING NAME AGE OFFICE HELD PAST FIVE YEARS ---- --- ----------- -------------------------- Ronald R. Spoehel 37 Vice President -- Vice President -- Corporate Corporate Development Development since October, 1994. Formerly, Senior Vice President, ICF Kaiser International, Inc., in various general management assignments including member of the office of the chairman, chief financial officer, and treasurer, 1990 to 1994; and, Vice President, Investment Banking, Lehman Brothers (formerly Shearson Lehman Hutton Inc.), 1985 to 1990. David S. Wasserman 52 Vice President -- Treasurer Vice President -- Treasurer since January, 1993. Vice President -- Taxes 1987 to 1993. Formerly Senior Vice President, Midland-Ross Corporation, 1979 to 1987.
There is no family relationship between any of the Company's executive officers or directors. All of the Company's executive officers are elected by and serve at the pleasure of the Board of Directors. 12 14 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Harris Corporation Common Stock, par value $1 per share (the "Common Stock"), is listed on the New York Stock Exchange, Inc. and is also traded on the Boston, Chicago, Philadelphia and Pacific Stock Exchanges and through the Intermarket Trading System. As of August 31, 1995, there were 9,845 holders of record of the Common Stock. The high and low closing prices as reported in the consolidated transaction reporting system and the dividends paid on the Common Stock for each quarterly period in the last two fiscal years are reported below:
PER SHARE AMOUNTS (IN DOLLARS) -------------------------------------------------------- QUARTERS ENDED -------------------------------------------------------- 9-30-94 12-31-94 3-31-95 6-30-95 TOTAL ----------- ----------- ----------- ----------- ----------- Fiscal 1995 Dividends................... $.31 $.31 $.31 $.31 $1.24 Stock Prices (high/low)..... 49 1/8-41 3/8 48 7/8-38 48 3/8-40 1/2 53 3/8-46 3/8
9-30-93 12-31-93 3-31-94 6-30-94 TOTAL ----------- ----------- ----------- ----------- ----------- Fiscal 1994 Dividends................... $.28 $.28 $.28 $.28 $1.12 Stock prices (high/low)..... 43 3/4-36 3/8 47 3/8-41 1/2 52 1/4-44 49-41 3/4
In August, 1995, the directors declared a quarterly cash dividend of 34 cents per share. The Company has paid cash dividends in every year since 1941. ITEM 6. SELECTED FINANCIAL DATA The following table summarizes selected financial information of Harris Corporation and its subsidiaries for each year during the five year period ended June 30, 1995. This table should be read in conjunction with other financial information of Harris, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" and financial statements included elsewhere herein.
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED JUNE 30 ------------------------------------------------------------ 1995 1994 1993 1992 1991 -------- -------- -------- -------- -------- Net sales..................... $3,444.1 $3,336.1 $3,099.1 $3,004.0 $3,040.1 Income from continuing operations before extraordinary item and cumulative effect of change in accounting principle..... 154.5 121.9 111.1 87.5 19.5 Discontinued operations....... -- -- -- (9.3) -- Extraordinary loss from early retirement of debt.......... -- -- -- (3.0) -- Cumulative effect of change in accounting principle........ -- (10.1) -- -- -- Net income.................... 154.5 111.8 111.1 75.2 19.5 Per share data: Income from continuing operations before extraordinary item and cumulative effect of change in accounting principle................ 3.95 3.07 2.82 2.24 .50 Discontinued operations..... -- -- -- (.24) -- Extraordinary loss.......... -- -- -- (.08) -- Cumulative effect of accounting change........ -- (.25) -- -- -- Net income.................. 3.95 2.82 2.82 1.92 .50 Cash dividends.............. 1.24 1.12 1.04 1.04 1.04 Net working capital........... 755.4 893.6 792.5 768.9 643.0 Total assets.................. 2,836.0 2,677.1 2,542.0 2,483.8 2,485.8 Long-term debt................ 475.9 661.7 612.0 612.5 563.3
13 15 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS The information in this review, along with Business Segment data shown on page 2, reflects the Company's continuing operations. RESULTS OF OPERATIONS FISCAL 1995 COMPARED WITH 1994 -- Sales in fiscal 1995 increased 3 percent while income before cumulative effect of change in accounting principle increased 27 percent. Income for 1994 included a $17.8 million charge ($11.5 million after income taxes) for the Corporation's write-off of securities received from a prior-year sale of a discontinued business. Semiconductor segment sales increased 4 percent despite a significant decline in defense business. Strong sales of commercial products more than offset the decline in military shipments. The segment reported a 37 percent increase in net income for the year. Segment earnings benefited from increased sales of core commercial products, continuing improvements in operating margins, and increased patent royalty income. These increases were partially offset by reduced gains from the ongoing sales of investment securities. Communications segment sales increased 15 percent and net income increased 19 percent. The increase in sales and earnings resulted from growth in the segment's radio communications, broadcast equipment, and telecommunication systems businesses. Domestic sales were up sharply for the year and international sales were maintained despite economic disruptions in certain major markets such as Mexico. Sales in the Lanier Worldwide segment increased 9 percent while net income increased 27 percent. Sales were strong in both domestic and international markets. Segment earnings benefited from the increased profitability of Lanier's European and other international operations. Electronic Systems sales and net income decreased 8 and 12 percent, respectively. Prior-year results included a computer systems business which was spun off to shareholders in the first quarter of fiscal 1995. Excluding the computer systems business from fiscal 1994 results, sales and net income decreased 3 and 9 percent, respectively. Segment results were adversely impacted by lower sales to the U.S. Government and by delays in shipments of a new energy management system. Cost of sales, rentals, and services as a percentage of sales decreased to 67.6 percent from 68.2 percent in the prior year. Continuing margin improvement in the Semiconductor and Communications segments was offset in part by a higher cost ratio in the Electronic Systems segment. Engineering, selling, and administrative expenses as a percentage of sales were 24.3 percent in fiscal 1995, compared to 24.9 percent in the prior year. Electronic Systems segment operating expenses were sharply lower due to cost reduction efforts begun in the second quarter of fiscal 1995. Corporation-sponsored research and development expenditures were 4.9 percent more than the previous year's expenditures. Interest income and interest expense were higher in fiscal 1995 due to higher interest rates. "Other-net" expense was higher in fiscal 1995 because 1994 included a $15.6 million gain from the sale of a facility. The provision for income taxes in fiscal 1995 was 35.0 percent of income before income taxes compared to 37.0 percent in fiscal 1994. The lower rate in fiscal 1995 resulted from increased tax benefits associated with foreign income. CAPITAL EXPENDITURES -- Expenditures for land, buildings, and equipment totaled $140 million in 1995, up from $117 million in the prior year. In addition, during fiscal 1995, $65 million was invested in equipment for rental to customers, up from $51 million invested in the prior year. Substantially all of this investment in rental equipment is related to Lanier Worldwide products. FISCAL 1994 COMPARED WITH 1993 -- Sales in fiscal 1994 increased 8 percent, while income before cumulative effect of change in accounting principle increased 10 percent. Income from operations for 1994 included a $17.8 million charge ($11.5 million after income taxes) for the Company's write-off of securities received from a prior-year sale of a discontinued business. Semiconductor segment sales increased 8 percent while net income was up 85 percent. Strong sales and earnings of commercial products more than offset a decline in military shipments. In 1994, the segment took 14 16 actions to streamline its manufacturing operations as a response to declining military-related sales. Segment profit margins increased in 1994 due to ongoing cost reduction programs and a larger mix of higher-value products. Results for the year included an after-tax charge of $12.1 million to establish reserves for restructuring actions completed during fiscal 1995. Restructuring actions resulted primarily from a decision to close a facility in Singapore and related employee-termination costs. Restructuring charges were partially offset by an after-tax gain of $9.9 million from the sale of a fabrication facility. The sale of this facility will not materially impact segment operations. Segment net income in both years also includes comparable gains from ongoing sales of investment securities. Communications segment sales increased 15 percent and net income increased 33 percent. Sales growth was principally in international markets. International sales accounted for 53 percent and 48 percent of total sales in 1994 and 1993, respectively. International sales in 1994 were particularly strong in rapidly developing countries such as China, Mexico, and Russia. The segment expects international sales to account for two-thirds of total segment sales within the next few years. International segment sales are transacted on terms that substantially mitigate credit and foreign currency risks. The increase in segment earnings was due to higher sales while maintaining operating expenses at prior-year levels. Lanier Worldwide segment sales increased 2 percent and net income increased 17 percent. In the United States, segment sales and net income continued their strong performance. The segment returned to profitability in Europe in the second half of 1994, as a result of restructuring efforts with special emphasis on the French, Italian, and European Headquarters operations. This turnaround occurred despite unfavorable foreign exchange rates and economic conditions that continue in many of the segment's European markets. Electronic Systems segment sales increased 8 percent while segment net income decreased 8 percent. Strong sales in the segment's air traffic control business and information systems business were responsible for the sales increase and reflect continuing diversification of the segment's product lines and markets. Changing defense priorities and federal budget pressure are expected to restrain funding of defense-related programs in the future, thereby making the segment's diversification strategy a continuing emphasis of the business. Segment net income declined due to losses incurred in its telecommunications business and costs associated with the close-down of the segment's facilities in Orlando, Florida. In the fourth quarter of 1994, the telecommunications business was downsized and moved to the Company's Communications segment. Cost of sales, rentals, and services as a percentage of sales increased to 68.2 percent from 67.3 percent in the prior year due to slightly higher cost ratios in all segments. Engineering, selling, and administrative expenses as a percentage of sales were 24.9 percent in fiscal 1994, compared to 26.5 percent in the prior year. While total operating expenses were higher than 1993, the increase in these expenses was less than the relative increase in sales. Lower marketing expenses for the Lanier Worldwide segment contributed to the 1994 lower expense ratio as this segment began to realize the savings from combining many of its marketing and distribution units. Company-sponsored research and development expenditures were 5.8 percent more than the previous year. Interest income and interest expense were slightly lower during fiscal 1994. The increase in income in the "Other-net" category resulted from a gain on the sale of a semiconductor facility, offset in part by higher provisions for doubtful accounts receivable, foreign currency losses, and reductions in gains from the sale of investment securities. The provision for income taxes in fiscal 1994 was 37.0 percent of income before income taxes compared to 34.6 percent in the prior year. The increase from the statutory rate in both years resulted from the provision for state income taxes. CAPITAL EXPENDITURES -- Expenditures for land, buildings, and equipment totaled $117 million in 1994, up from $95 million in the prior year. In addition, during fiscal 1994, $51 million was invested in equipment for rental to customers, down from $54 million invested in the prior year. Substantially all of this investment in rental equipment is related to Lanier Worldwide products. 15 17 FINANCIAL CONDITION Cash Position. At June 30, 1995, cash, and cash equivalents totaled $119 million, a decrease from $139 million at June 30, 1994. Marketable securities were $22 million at June 30, 1995. Receivables, Unbilled Costs, and Inventories. Notes and accounts receivable amounted to $824 million at June 30, 1995, compared to $798 million a year earlier. Unbilled costs and inventories increased $37 million over the prior year to $870 million. The increase in these accounts is proportionate to the increase in revenues. Borrowing Arrangements. The Company has available $500 million under revolving credit agreements until May 1, 2000. Under these agreements, $160 million was outstanding at June 30, 1995. In addition, the Company has $143 million in open bank credit lines, of which $106 million was available at June 30, 1995. Capitalization. At June 30, 1995, debt totaled $646 million, representing 34.1 percent of total capitalization (defined as the sum of total debt plus shareholders' equity). A year earlier, debt of $683 million was 36.5 percent of total capitalization. Year-end long-term debt included $150 million of 10 3/8 percent debentures due 2018, $300 million of notes payable to banks and insurance companies and $26 million of other long-term debt. In 1995, the Company issued 484,937 shares of the Common Stock to employees under the terms of the Company's stock purchase, option and incentive plans. The Company expects to maintain operating ratios, fixed-charge coverages, and balance-sheet ratios sufficient for retention of its present debt ratings. Retirement Plans. Retirement benefits for substantially all of the Company's employees are provided primarily through a retirement plan having profit-sharing and savings elements. The Company also has non-contributory defined-benefit pension plans. All obligations under the Company's retirement plans have been fully funded by the Company's contributions, the provision for which totaled $71 million during the 1995 fiscal year. The Company provides limited health-care benefits to retirees who have 10 or more years of service. In 1994, the Company adopted Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." The implementation of this accounting standard resulted in a one-time after-tax charge of $10.1 million. The ongoing impact of this accounting standard is not expected to have a material effect in future years. Impact of Foreign Exchange. Approximately 80 percent of the Company's international business is transacted in local currency environments. The impact of translating the assets and liabilities of these operations to U.S. dollars is included as a component of Shareholders' Equity. At June 30, 1995, the cumulative translation adjustment reduced Shareholders' Equity by $10 million compared to a reduction of $22 million at June 30, 1994. The Company utilizes exchange rate agreements with customers and suppliers and foreign currency hedging instruments to minimize the currency risks of international transactions. Gains and losses resulting from currency rate fluctuations did not have a material effect on the Company's result in 1995, 1994, or 1993. Impact of Inflation To the extent feasible, the Company has consistently followed the practice of adjusting its prices to reflect the impact of inflation on wages and salaries for employees and the cost of purchased materials and services. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data required by this Item are set forth in the pages indicated in Item 14(a)(1) and (2) below. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 16 18 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item, with respect to Directors of the Company, is incorporated herein by reference to the Company's Proxy Statement to be filed September 15, 1995. See also pages 8 through 11 of Part I above. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item, with respect to compensation of Directors and Executive Officers of the Company, is incorporated herein by reference to the Company's Proxy Statement to be filed September 15, 1995. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item, with respect to security ownership of certain beneficial owners and management, is incorporated herein by reference to the Company's Proxy Statement to be filed September 15, 1995. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During the fiscal year ended June 30, 1995, there existed no relationships and there were no transactions reportable under this Item. 17 19 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this report:
PAGE (1) Financial Statements: Consolidated Statement of Income -- Years ended June 30, 1995, 1994 and 1993........................................................... 23 Consolidated Statement of Retained Earnings -- Years ended June 30, 1995, 1994 and 1993.......................... 23 Consolidated Balance Sheet -- June 30, 1995 and 1994................ 24 Consolidated Statement of Cash Flows -- Years ended June 30, 1995, 1994 and 1993.......................... 25 Notes to Financial Statements....................................... 26 (2) Financial Statement Schedules: For each of the three years in the period ended June 30, 1995. Schedule II -- Valuation and Qualifying Accounts............... 33
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto. (3) Exhibits (3)(a) Restated Certificate of Incorporation of Harris Corporation (October 1986) is incorporated herein by reference to Exhibit 3 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 26, 1986. (3)(b) By-laws of Harris Corporation as in effect on the date hereof is incorporated herein by reference to Exhibit 3(b) to the Company's Annual Report on Form 10-K for the year ended June 30, 1986. (4)(a) Specimen stock certificate for the Company's Common Stock is incorporated herein by reference to Exhibit 4(c) to the Company's Registration Statement on Form S-3 filed with the Securities and Exchange Commission on September 13, 1982 (Registration Number 2-79308). (4)(b) Rights Agreement dated as of November 24, 1986, between Harris Corporation and Ameritrust Company National Association, as Rights Agent, is incorporated herein by reference to Exhibit 1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on December 9, 1986. (4)(c) Registrant by this filing agrees, upon request, to furnish to the Securities and Exchange Commission copies of financial documents evidencing long-term debt. (10) Material Contracts: *(a) Senior Executive Severance Agreements are incorporated herein by reference to Exhibit 10(a) to the Company's Annual Report on Form 10-K for the year ended June 30, 1987. *(b) Harris Corporation Annual Incentive Plan is incorporated herein by reference to Exhibit 10(b) to the Company's Annual Report on Form 10-K for the year ended June 30, 1991. *(c) Harris Corporation Stock Incentive Plan is incorporated herein by reference to Exhibit 10(c) of the Company's Annual Report on Form 10-K for the year ended June 30, 1994. *(d) Harris Corporation 1981 Stock Option Plan for Key Employees is incorporated herein by reference to Exhibit 10(d) of the Company's Annual Report on Form 10-K for the year ended June 30, 1991. 18 20 *(e) Lanier Worldwide, Inc. Key Contributor Bonus Plan. *(f) Lanier Worldwide, Inc. Long-Term Incentive Plan for Key Employees. *(g) Harris Corporation Retirement Plan. *(h) Harris Corporation Supplemental Executive Retirement Plan is incorporated by reference to Exhibit 10(h) of the Company's Annual Report on Form 10-K for the year ended June 30, 1994. (h)(i) Amendment to Harris Corporation Supplemental Executive Retirement Plan. *(i) Lanier Worldwide, Inc. Pension Plan is incorporated herein by reference to Exhibit 10(i) of the Company's Annual Report on Form 10-K for the year ended June 30, 1994. *(j) Lanier Worldwide, Inc. Savings Incentive Plan is incorporated herein by reference to Exhibit 10(j) of the Company's Annual Report on Form 10-K for the year ended June 30, 1994. *(k) Lanier Worldwide, Inc. Supplemental Executive Retirement Plan is incorporated herein by reference to Exhibit 10(k) of the Company's Annual Report on Form 10-K for the year ended June 30, 1994. *(l) Directors Retirement Plan is incorporated herein by reference to Exhibit 10(l) to the Company's Annual Report on Form 10-K for the year ended June 30, 1990. (11) Statement regarding computation of net income per share. (12) Ratio of Earning to Fixed Charges. (21) Subsidiaries of the Registrant. (23) Consent of Ernst & Young LLP. (27) Financial Data Schedule. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the last quarter of the fiscal year ended June 30, 1995. ------------------ *Management contract or compensatory plan or arrangement. 19 21 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. HARRIS CORPORATION (Registrant) Dated: September 8, 1995 By /s/ BRYAN R. ROUB Bryan R. Roub Senior Vice President-Chief Financial Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------------------------------------------------------------------------- ---------------- /s/ PHILLIP W. FARMER Chairman of the Board, President Phillip W. Farmer and Chief Executive Officer (Principal Executive Officer) /s/ BRYAN R. ROUB Senior Vice President -- Chief Bryan R. Roub Financial Officer (Principal Financial Officer) /s/ ROBERT W. FAY Vice President -- Controller Robert W. Fay (Principal Accounting Officer) /s/ ROBERT CIZIK Director Robert Cizik /s/ LESTER E. COLEMAN Director Lester E. Coleman /s/ RALPH D. DENUNZIO Director
September 8, 1995 Ralph D. DeNunzio /s/ JOSEPH L. DIONNE Director Joseph L. Dionne /s/ C. JACKSON GRAYSON, JR. Director C. Jackson Grayson, Jr. /s/ JOHN T. HARTLEY Director John T. Hartley /s/ KAREN KATEN Director Karen Katen /s/ WALTER F. RAAB Director Walter F. Raab /s/ ALEXANDER B. TROWBRIDGE Director Alexander B. Trowbridge
20 22 ANNUAL REPORT ON FORM 10-K ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA YEAR ENDED JUNE 30, 1995 HARRIS CORPORATION MELBOURNE, FLORIDA 21 23 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To Harris Directors and Shareholders: We have audited the accompanying consolidated balance sheet of Harris Corporation and subsidiaries as of June 30, 1995 and 1994, and the related consolidated statements of income, retained earnings, and cash flows for each of the three years in the period ended June 30, 1995. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits 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 consolidated financial position of Harris Corporation and subsidiaries at June 30, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in the Accounting Change note to the financial statements, effective July 1, 1993, the Corporation changed its method of accounting for postretirement benefits other than pensions. ERNST & YOUNG LLP Orlando, Florida July 27, 1995 22 24 FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME
Years ended June 30 ------------------------------------------------------------------------------------------------------- In millions except per share amounts 1995 1994 1993 ------------------------------------------------------------------------------------------------------- REVENUE Revenue from product sales and rentals $3,032.2 $2,972.0 $2,739.2 Revenue from services 411.9 364.1 359.9 Interest 36.8 33.3 34.2 ------------------------------------------------------------------------------------------------------- 3,480.9 3,369.4 3,133.3 COSTS AND EXPENSES Cost of product sales and rentals 2,075.9 2,055.7 1,872.7 Cost of services 252.6 219.1 213.3 Engineering, selling, and administrative expenses 835.8 830.8 822.2 Interest 65.4 58.3 59.9 Write-off of securities - 17.8 - Other-net 13.6 (5.8) (4.6) ------------------------------------------------------------------------------------------------------- 3,243.3 3,175.9 2,963.5 ------------------------------------------------------------------------------------------------------- Income before income taxes 237.6 193.5 169.8 Income taxes 83.1 71.6 58.7 ------------------------------------------------------------------------------------------------------- Income before cumulative effect of change in accounting principle 154.5 121.9 111.1 Cumulative effect of change in accounting principle - net of income taxes - (10.1) - ------------------------------------------------------------------------------------------------------- Net income $ 154.5 $ 111.8 $ 111.1 ======================================================================================================= Income per share: Before cumulative effect of change in accounting principle $3.95 $3.07 $2.82 Cumulative effect of change in accounting principle - (.25) - ------------------------------------------------------------------------------------------------------- Net income per share $3.95 $2.82 $2.82 ======================================================================================================= Consolidated Statement of Retained Earnings Years ended June 30 ------------------------------------------------------------------------------------------------------- In millions except per share amounts 1995 1994 1993 ------------------------------------------------------------------------------------------------------- Balance at beginning of year $943.1 $906.7 $836.4 Net income for the year 154.5 111.8 111.1 Cash dividends ($1.24 per share in 1995, $1.12 per share in 1994 and $1.04 per share in 1993) (48.2) (44.2) (40.8) Non-cash dividend (55.2) - - Treasury stock retired (24.8) (31.2) - ------------------------------------------------------------------------------------------------------- Balance at end of year $969.4 $943.1 $906.7 =======================================================================================================
See Notes to Financial Statement Harris Corporation 23 25 FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET June 30 ----------------------------------------------------------------------------------------------------- In millions 1995 1994 ----------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 119.3 $ 139.1 Marketable securities 22.3 - Receivables 657.1 647.2 Unbilled costs and accrued earnings on fixed-price contracts 374.9 369.7 Inventories 494.9 463.1 Deferred income taxes 142.2 79.2 ----------------------------------------------------------------------------------------------------- Total current assets 1,810.7 1,698.3 OTHER ASSETS Plant and equipment 581.0 551.3 Notes receivable-net 166.6 151.1 Intangibles resulting from acquisitions 166.6 166.0 Other assets 111.1 110.4 ----------------------------------------------------------------------------------------------------- $2,836.0 $2,677.1 ===================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt $ 37.7 $ 19.8 Trade accounts payable 168.7 184.5 Compensation and benefits 193.4 188.5 Other accrued items 168.4 164.9 Advance payments by customers 89.4 59.7 Unearned leasing and service income 174.6 129.3 Income taxes 90.5 57.0 Current portion of long-term debt 132.6 1.0 ----------------------------------------------------------------------------------------------------- Total current liabilities 1,055.3 804.7 OTHER LIABILITIES Deferred income taxes 56.0 22.7 Long-term debt 475.9 661.7 SHAREHOLDERS' EQUITY Preferred Stock, without par value: 1,000,000 shares authorized; none issued Common Stock, $1.00 par value: 100,000,000 shares authorized; issued and outstanding 38,877,019 shares in 1995 and 39,298,118 shares in 1994 38.9 39.3 Other capital 240.3 230.3 Retained earnings 969.4 943.1 Net unrealized gain on securities available for sale 12.2 - Unearned compensation (1.7) (3.2) Cumulative translation adjustments (10.3) (21.5) ----------------------------------------------------------------------------------------------------- Total shareholders' equity 1,248.8 1,188.0 ----------------------------------------------------------------------------------------------------- $2,836.0 $2,677.1 =====================================================================================================
See Notes to Financial Statements. 24 Harris Corporation 26 FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS Years ended June 30 ------------------------------------------------------------------------------------------------------ In millions 1995 1994 1993 ------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Income before cumulative effect of change in accounting principle $154.5 $121.9 $111.1 Adjustments to reconcile income to net cash provided by operating activities: Depreciation 155.0 145.7 150.0 Amortization 10.3 7.7 7.3 Non-current deferred income taxes 33.3 12.1 (27.8) Changes in assets and liabilities: Receivables (49.5) (43.6) 8.0 Unbilled costs and inventories (53.4) (67.4) (58.1) Trade payables and accrued liabilities (1.0) 39.7 (18.8) Advance payments and unearned income 76.0 12.9 7.8 Income taxes (35.9) (33.6) 50.6 Other (.3) (22.3) (20.8) ------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 289.0 173.1 209.3 CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for acquired business - - (25.9) Capital expenditures-net of normal disposals (194.5) (134.9) (137.1) ------------------------------------------------------------------------------------------------------ Net cash used in investing activities (194.5) (134.9) (163.0) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 750.0 302.7 362.1 Payments of borrowings (787.8) (267.1) (373.7) Cash dividends (56.6) (44.2) (40.8) Purchase of Common Stock for treasury (29.8) (36.7) - Proceeds from sale of Common Stock 8.6 13.5 10.3 ------------------------------------------------------------------------------------------------------ Net cash used in financing activities (115.6) (31.8) (42.1) ------------------------------------------------------------------------------------------------------ Effect of translation on cash and cash equivalents 1.3 1.0 3.3 ------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (19.8) 7.4 7.5 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 139.1 131.7 124.2 ------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS, END OF YEAR $119.3 $139.1 $131.7 ======================================================================================================
See Notes to Financial Statements. 25 Harris Corporation 27 Notes to Financial Statements SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION-The consolidated financial statements include the accounts of the Corporation and its subsidiaries. Significant intercompany transactions and accounts have been eliminated. CASH EQUIVALENTS-Cash equivalents are temporary cash investments with a maturity of three months or less when purchased. These investments include accrued interest and are carried at the lower of cost or market. MARKETABLE SECURITIES-Marketable securities are stated at fair value, with the unrealized gains and losses, net of tax, included as a separate component of shareholders' equity. Realized gains and losses from marketable securities are determined using the specific identification method. INVENTORIES-Inventories are priced at the lower of cost (determined by average and first-in, first-out methods) or market. PLANT AND EQUIPMENT-Plant and equipment is carried on the basis of cost. Depreciation of buildings, machinery and equipment is computed by straight-line and accelerated methods. The estimated useful lives of buildings range between 5 and 50 years. The estimated useful lives of machinery and equipment range between 3 and 10 years. Depreciation of rental equipment is computed by the straight-line method using estimated useful lives between 3 and 5 years. INTANGIBLES-Intangibles resulting from acquisitions are being amortized by the straight-line method principally over 40 years. Recoverability of intangibles is assessed using estimated undiscounted cash flows of related operations. INCOME TAXES-The Corporation follows the liability method of accounting for income taxes. REVENUE RECOGNITION-Revenue is recognized from sales other than on long-term contracts when a product is shipped, from rentals as they accrue, and from services when performed. Revenue on long-term contracts is accounted for principally by the percentage-of-completion method whereby income is recognized based on the estimated stage of completion of individual contracts. Unearned income on service contracts is amortized by the straight-line method over the term of the contracts. FUTURES AND FORWARD CONTRACTS-Gains and losses on futures and forward contracts that qualify as hedges are deferred and recognized as an adjustment of the carrying amount of the hedged asset or liability or anticipated transaction. RETIREMENT BENEFITS-The Corporation and its subsidiaries provide retirement benefits to substantially all employees primarily through a retirement plan having profit-sharing and savings elements. Contributions by the Corporation to the retirement plan are based on profits and employees' savings with no other funding requirements. The Corporation may make additional contributions to the fund at its discretion. The Corporation also has non-contributory defined-benefit pension plans which are fully funded. Retirement benefits also include an unfunded limited health-care plan for U.S.-based retirees. In 1994, the Corporation began accruing the estimated cost of retiree medical benefits during an employee's active service life. The Corporation previously expensed the cost of these benefits on a pay-as-you-go basis. UNEARNED COMPENSATION-Compensation resulting from performance shares granted under the Corporation's long-term incentive plan is amortized to expense over the vesting period of the performance shares and is adjusted for changes in the market value of the Common Stock. EARNINGS PER SHARE-Income per share is based upon the weighted average number of common shares outstanding during each year. ACCOUNTING CHANGES In 1995, the Corporation adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Under the provisions of this standard, the Corporation's marketable securities, all of which are classified as available-for-sale, are reported at fair value, with unrealized gains and losses excluded from net income. The net after-tax amount of unrealized gains and losses is reported as a separate component of shareholders' equity until realized. The cost basis of marketable securities at June 30, 1995, was $2.3 million. The amount of gross realized gains included in net income in 1995 was not material. In 1994, the Corporation adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." Health-care benefits are provided on a limited cost-sharing basis to retirees who have 10 or more years of service. The cumulative effect at July 1, 1993, of adopting this statement resulted in a one-time charge of $10.1 million net of income tax benefits of $6.4 million. The impact of this change on income before cumulative effect of change in accounting principle was not material in 1994. 26 Harris Corporation 28 NONRECURRING ITEMS In 1994, the Corporation's residual holding in a company that acquired its 1989 discontinued data-communication business became impaired due to bankruptcy proceedings. Consequently, the Corporation provided $17.8 million ($11.5 million after income taxes or 29 cents per share) to write off its interest in equity securities and promissory notes of this company. Also in 1994, the Corporation sold a Semiconductor fabrication facility for $35.5 million in cash. This sale resulted in a gain of $15.6 million ($9.9 million after income taxes or 25 cents per share) and is included in "Other-net" expense in the Consolidated Statement of Income. CONTINGENCIES RESULTING FROM DISCONTINUED OPERATION In 1993, a jury in a California state court awarded a California software company $13.4 million in compensatory damages and $85.0 million in punitive damages against the Corporation. The court reduced the punitive damages to $53.4 million, and entered judgment for the compensatory and punitive damages, together with interest and costs of suit. The suit arose from a contract between the plaintiff and a discontinued operation of the Corporation. The Corporation believes the judgment is unjustified and has appealed to the California Court of Appeals. The plaintiff has filed a separate appeal seeking reinstatement of the original punitive damage award. The appeals court is expected to render its decision by June 1996. No provisions beyond those already provided as part of prior discontinued operation charges have been made in the accompanying consolidated financial statements. Prior discontinued operation charges included legal costs the Corporation expects to incur in defending itself in this matter. RECEIVABLES
Receivables are summarized below: -------------------------------------------------------------- (In millions) 1995 1994 -------------------------------------------------------------- Accounts receivable $588.3 $581.8 Notes receivable due within one year-net 98.8 94.9 -------------------------------------------------------------- 687.1 676.7 Less allowances for collection losses 30.0 29.5 -------------------------------------------------------------- $657.1 $647.2 ============================================================== INVENTORIES AND UNBILLED COSTS Inventories are summarized below: -------------------------------------------------------------- (In millions) 1995 1994 -------------------------------------------------------------- Finished products $184.4 $185.6 Work in process 226.8 200.0 Raw materials and supplies 83.7 77.5 -------------------------------------------------------------- $494.9 $463.1 ==============================================================
Unbilled costs and accrued earnings on fixed-price contracts are net of progress payments of $240.2 million in 1995 and $206.4 million in 1994.
PLANT AND EQUIPMENT Plant and equipment are summarized below: ------------------------------------------------------------------- (In millions) 1995 1994 ------------------------------------------------------------------- Land $ 30.2 $ 30.3 Buildings 441.9 431.4 Machinery and equipment 1,133.4 1,068.8 Rental equipment 211.7 188.3 ------------------------------------------------------------------- 1,817.2 1,718.8 Less allowances for depreciation 1,236.2 1,167.5 ------------------------------------------------------------------- $ 581.0 $ 551.3 ===================================================================
INTANGIBLES Accumulated amortization of intangible assets at June 30 was $43.1 million for 1995 and $33.1 million for 1994. CREDIT ARRANGEMENTS The Corporation maintains revolving credit agreements which provide for borrowing up to $500.0 million until May 1, 2000. These agreements provide for advances under a competitive advance facility and a committed facility at various interest rates, but in no event above LIBOR plus 0.225 percent. A facility fee of 0.125 percent per annum is payable on the credit. The Corporation is not required to maintain compensating balances in connection with these agreements. Under these agreements, $160.0 million was outstanding at June 30, 1995, $150.0 million of which has been classified as long-term based on the Corporation's intent to maintain borrowings of at least that amount for the next year. The Corporation also has lines of credit for short-term financing aggregating $142.6 million from various U.S. and foreign banks, of which $105.8 million was available on June 30, 1995. These arrangements provide for borrowing at various interest rates, are reviewed annually for renewal, and may be used on such terms as the Corporation and the banks mutually agree. These lines do not require compensating balances. Short-term debt is summarized below:
------------------------------------------------------------------- (In millions) 1995 1994 ------------------------------------------------------------------- Bank notes $33.1 $14.5 Other 4.6 5.3 ------------------------------------------------------------------- $37.7 $19.8 =================================================================== LONG-TERM DEBT Long-term debt includes the following: ------------------------------------------------------------------- (In millions) 1995 1994 ------------------------------------------------------------------- Notes payable to banks $150.0 $200.0 10 3/8% debentures, due 2018 150.0 150.0 Notes payable to insurance companies 150.0 250.0 Unsecured term notes 4.5 34.5 Other 21.4 27.2 ------------------------------------------------------------------- $475.9 $661.7 ===================================================================
Harris Corporation 27 29 NOTES TO FINANCIAL STATEMENTS The weighted average interest rate for notes payable to banks was 6.2 percent in 1995 and 4.8 percent in 1994. The weighted average interest rate for notes payable to insurance companies was 9.7 percent in 1995 and 9.4 percent in 1994. Indentures and note agreements contain certain financial covenants including maintenance of at least $800.0 million of tangible net worth and total debt not to exceed 45 percent of total capital. Maturities on long-term debt for the five years following 1995 are: $132.6 million in 1996, $1.5 million in 1997, $5.6 million in 1998, $57.0 million in 1999, and $187.7 million in 2000.
SHAREHOLDERS' EQUITY Changes in shareholders' equity accounts other than retained earnings are summarized as follows: ------------------------------------------------------------------------------------------------------------------------------------ Common Net Unrealized Cumulative Stock Other Gain on Unearned Translation (In millions) Amount Capital Securities Compensation Adjustments ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT JULY 1, 1992 $39.2 $202.4 $ - $(11.5) $ 2.0 Shares issued under Stock Option Plan (299,811 shares) .3 9.7 - - - Shares granted under Stock Incentive Plans (228,750 shares) .2 6.2 - (6.5) - Compensation expense - - - 7.3 - Termination of shares granted under Stock Incentive Plans (75,192 shares) (.1) (2.3) - 2.4 - Shares sold under Employee Stock Purchase Plans (10,294 shares) - .3 - - - Foreign currency translation adjustments - - - - (15.0) ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT JUNE 30, 1993 39.6 216.3 - (8.3) (13.0) Shares issued under Stock Option Plan (315,747 shares) .3 11.1 - - - Shares granted under Stock Incentive Plans (257,909 shares) .3 9.6 - (9.8) - Compensation expense - - - 10.7 - Termination of shares granted under Stock Incentive Plans (126,638 shares) (.1) (4.1) - 4.2 - Shares sold under Employee Stock Purchase Plans (47,904 shares) - 2.1 - - - Foreign currency translation adjustments - - - - (8.5) Purchase and retirement of Common Stock for treasury (801,300 shares) (.8) (4.7) - - - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT JUNE 30, 1994 39.3 230.3 - (3.2) (21.5) Adjustment to beginning balance for change in accounting method, net of income taxes of $7.1 - - 11.1 - - Shares issued under Stock Option Plan (136,058 shares) .1 4.0 - - - Shares granted under Stock Incentive Plans (249,950 shares) .3 10.6 - (10.9) - Compensation expense - - - 11.8 - Termination and award of shares granted under Stock Incentive Plans (202,536 shares) (.2) (4.7) - .6 - Shares sold under Employee Stock Purchase Plans (98,929 shares) .1 4.4 - - - Change in unrealized gains on securities, net of income taxes of $.7 - - 1.1 - - Foreign currency translation adjustments - - - - 11.2 Purchase and retirement of Common Stock for treasury (703.500 shares) (.7) (4.3) - - - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT JUNE 30, 1995 $38.9 $240.3 $12.2 $(1.7) $(10.3) ------------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK PURCHASE RIGHTS Each outstanding share of Common Stock includes one preferred share purchase right that entitles the holder to purchase one two-hundredth share of a new series of participating preferred stock at an exercise price of $125. The rights will not be exercisable, or transferable apart from the Common Stock, until 10 days following an announcement that a person or affiliated group has acquired, or obtained the right to acquire, beneficial ownership of 20 percent or more of the Common Stock or until 10 days following an announcement of a tender or exchange offer for 30 percent or more of the Common Stock. The rights, which do not have voting rights, will be exercisable by all holders except for a holder or affiliated group beneficially owning 20 percent or more of the Common Stock. All rights will expire on November 23, 1996, and may be redeemed by the Corporation at a price of $.01 per right at any time prior to either their expiration or such time that the rights become exercisable. In the event that the Corporation is acquired in a merger or other business combination or certain other events occur, provision shall be made so that each holder of a right shall have the right to receive, upon exercise thereof at the then-current exercise price, that number of shares of common stock of the surviving company which at the time of such transaction would have a market value of two times the exercise price of the right. 28 30 NON-CASH DIVIDEND In 1995, the Corporation spun off as a tax-free dividend its computer systems business by distributing one share of Harris Computer Systems Corporation common stock for every 20 shares of the Corporation's Common Stock. Cash dividends shown in the Consolidated Statement of Cash Flows includes the $8.4 million cash balance of the Harris Computer System Corporation at the time of the spin-off; the remainder of the dividend is a non-cash transaction. STOCK OPTIONS AND AWARDS The following information relates to stock option and incentive stock awards. Option prices are 100 percent of market value on the date the options are granted. Option grants are for a maximum of ten years after dates of grant and may be exercised in installments.
-------------------------------------------------------------- Number of Option Prices Shares Per Share -------------------------------------------------------------- Exercised during the year: 1993 411,538 $14.38 to $35.69 1994 504,203 $14.38 to $38.63 1995 283,604 $23.75 to $50.50 Granted during 1995 159,994 $40.63 to $52.88 Expired during 1995 20,750 $30.88 to $52.25 Terminations during 1995 2,074 $21.88 to $48.50 Outstanding at June 30, 1994 751,926 $14.38 to $52.25 Outstanding at June 30, 1995 605,492 $21.88 to $52.88 Exercisable at June 30, 1994 581,660 $14.38 to $46.88 Exercisable at June 30, 1995 508,251 $21.88 to $51.00 ==============================================================
The Corporation has a stock incentive plan for directors and key employees. Awards under this plan may include the grant of performance shares, restricted stock, stock options, stock appreciation rights or other stock-based awards. The aggregate number of shares of Common Stock which may be awarded under the plan in each fiscal year is one percent of the total outstanding shares of Common Stock plus shares available from prior years. Performance shares outstanding were 625,551 at June 30, 1995; 735,966 at June 30, 1994; and 608,306 at June 30, 1993. Shares of Common Stock reserved for future awards under the plan were 1,046,717 at June 30, 1995; 864,970 at June 30, 1994; and 749,169 at June 30, 1993. Under the Corporation's domestic retirement plan, employees may purchase a limited amount of the Corporation's Common Stock at 70 percent of current market value. Under employee stock purchase plans, 98,929 shares were issued during fiscal 1995. Shares of Common Stock reserved for future purchases by the retirement plan were 1,361,568 at June 30, 1995. RETIREMENT PLANS Retirement and defined-benefit plans expense amounted to $71.2 million in 1995, $70.2 million in 1994, and $56.9 million in 1993. RESEARCH AND DEVELOPMENT Corporation-sponsored research and product development costs were $133.9 million in 1995, $127.7 million in 1994, and $120.6 million in 1993. INTEREST EXPENSE Total interest was $65.4 million in 1995, $58.6 million in 1994, and $60.2 million in 1993, of which $.3 million was capitalized in 1994 and 1993. Interest paid was $64.8 million in 1995, $59.0 million in 1994, and $60.8 million in 1993. LEASE COMMITMENTS Total rental expense amounted to $52.7 million in 1995, $52.9 million in 1994, and $56.1 million in 1993. Future minimum rental commitments under leases, primarily for land and buildings, amounted to approximately $185.9 million at June 30, 1995. These commitments for the years following 1995 are: 1996-$48.5 million; 1997-$36.0 million; 1998- $23.4 million; 1999-$17.7 million; 2000-$12.0 million; and $48.3 million thereafter. INCOME TAXES The provisions for income taxes are summarized as follows:
-------------------------------------------------------------- (In millions) 1995 1994 1993 -------------------------------------------------------------- Current: United States $ 89.0 $ 50.0 $ 18.6 International 19.9 11.3 20.7 State and local 11.7 4.9 6.0 -------------------------------------------------------------- 120.6 66.2 45.3 -------------------------------------------------------------- Deferred: United States (32.5) (2.8) 15.6 International (4.7) 5.6 (.4) State and local (.3) 2.6 (1.8) -------------------------------------------------------------- (37.5) 5.4 13.4 -------------------------------------------------------------- $ 83.1 $ 71.6 $ 58.7 ==============================================================
The components of deferred income tax assets (liabilities) at June 30 are as follows:
-------------------------------------------------------------------------- (In millions) 1995 1994 -------------------------------------------------------------------------- CURRENT NON-CURRENT Current Non-Current DEFERRED DEFERRED Deferred Deferred -------------------------------------------------------------------------- Completed contracts $ 7.1 $ - $(13.2) $ 20.6 Inventory valuations 13.5 - 15.8 - Accruals 117.6 7.3 73.9 8.5 Depreciation - (54.3) - (49.3) Leases (.5) (19.8) (1.0) (18.3) International tax loss carryforwards - 9.7 - 12.8 All other net 4.5 16.8 6.6 15.8 -------------------------------------------------------------------------- 142.2 (40.3) 82.1 (9.9) Valuation allowance - (15.7) (2.9) (12.8) -------------------------------------------------------------------------- $142.2 $(56.0) $ 79.2 $(22.7) ==========================================================================
Harris Corporation 29 31 NOTES TO FINANCIAL STATEMENTS A reconciliation of the the statutory United States income tax rate to the effective income tax rate follows:
-------------------------------------------------------------------- (In millions) 1995 1994 1993 -------------------------------------------------------------------- Statutory U.S. income tax rate 35.0% 35.0% 34.0% State taxes 3.1 2.6 1.6 Adjustment to prior-year accruals - - (3.1) International income (4.0) 1.2 2.2 Tax benefits related to export sales (1.4) (3.1) (1.4) Nondeductible amortization .8 .9 .7 Other items 1.5 .4 .6 -------------------------------------------------------------------- Effective income tax rate 35.0% 37.0% 34.6% ====================================================================
United States income taxes have not been provided on $440.2 million of undistributed earnings of international subsidiaries because of the Corporation's intention to reinvest these earnings. The determination of unrecognized deferred U.S. tax liability for the undistributed earnings of international subsidiaries is not practicable. Pretax income of international subsidiaries was $63.2 million in 1995, $55.9 million in 1994, and $38.2 million in 1993. Income taxes paid were $79.2 million in 1995, $80.2 million in 1994, and $24.4 million in 1993. BUSINESS SEGMENTS Descriptions of the Corporation's business segments appear on page 1. Net sales and operating profit by segment are on page 2. These pages are an integral part of these financial statements. Sales made to the U.S. government by all segments (primarily Electronic Systems segment) were 30.4 percent of total sales in 1995, 34.8 percent of total sales in 1994, and 35.7 percent of total sales in 1993. Intersegment sales, which are insignificant, are accounted for at prices comparable to unaffiliated customers. Selected information by business segment and geographical area is summarized below:
------------------------------------------------------------ (In millions) 1995 1994 1993 ------------------------------------------------------------ IDENTIFIABLE ASSETS Communications $ 442.5 $ 406.2 $ 370.5 Semiconductor 639.2 609.3 643.1 Lanier Worldwide 831.6 738.6 689.2 Electronic Systems 672.3 730.8 657.9 Corporate 250.4 192.2 181.3 ------------------------------------------------------------ $2,836.0 $2,677.1 $2,542.0 ============================================================ CAPITAL EXPENDITURES Communications $ 22.6 $ 17.5 $ 16.5 Semiconductor 80.4 43.6 27.4 Lanier Worldwide 13.0 14.1 8.9 Electronic Systems 18.6 26.5 34.5 Corporate 5.4 14.9 8.1 ------------------------------------------------------------ $ 140.0 $ 116.6 $ 95.4 ============================================================ DEPRECIATION Communications $ 14.8 $ 13.9 $ 13.1 Semiconductor 44.5 47.5 52.0 Lanier Worldwide 10.0 7.0 6.9 Electronic Systems 25.7 29.0 30.4 Corporate 10.2 6.5 6.8 ------------------------------------------------------------ $ 105.2 $ 103.9 $ 109.2 ============================================================ GEOGRAPHICAL INFORMATION U.S. operations: Net sales $2,952.4 $2,741.8 $2,517.2 Operating profit 174.4 137.6 131.6 Identifiable assets 2,191.9 2,041.2 1,951.0 International operations: Net sales $ 491.7 $ 594.3 $ 581.9 Operating profit 63.2 55.9 38.2 Identifiable assets 644.1 635.9 591.0 ============================================================
Corporate assets consist primarily of cash, cash equivalents, deferred income taxes, and plant and equipment. Export sales were approximately $524.6 million in 1995, $387.6 million in 1994, and $295.4 million in 1993. Export sales and net sales of international operations were made principally to Europe and Asia. FINANCIAL INSTRUMENTS The Corporation uses foreign exchange contracts and options to hedge intercompany accounts and off-balance-sheet foreign currency commitments. Specifically, these foreign exchange contracts offset foreign currency denominated inventory and purchase commitments from suppliers, accounts receivable from--and future committed sales to--customers, and firm committed operating expenses. Management believes the use of foreign currency financial instruments should reduce the risks that arise from doing business in international markets. Contracts are for periods consistent with the terms of the underlying transaction, generally one year or less. 30 Harris Corporation 32 At June 30, 1995, open foreign exchange contracts were $270.7 million (as described below), of which $179.9 million were to hedge off-balance-sheet commitments. Additionally, for the year ended June 30, 1995, the Corporation purchased and sold $787.8 million of foreign exchange forward and option contracts. Deferred gains and losses are included on a net basis in the Consolidated Balance Sheet as "Other assets" and are recorded in income as part of the underlying transaction when it is recognized. At June 30, 1995, the Corporation had $14.5 million in open option contracts. Total open foreign exchange contracts at June 30, 1995, are described in the table below. COMMITMENTS TO BUY FOREIGN CURRENCIES:
---------------------------------------------------------------------------------- Contract Amount --------------- Foreign Deferred Gains Maturities (In millions) Currency U.S. and (Losses) (in months) ---------------------------------------------------------------------------------- Australian Dollar 7.2 $ 5.3 $(.1) 1 to 8 Canadian Dollar 16.6 12.0 - 1 to 4 Belgian Franc 72.0 2.4 .1 1 to 5 Irish Punt 5.8 8.8 .7 1 to 12 Japanese Yen 5,271.0 61.9 .8 1 to 6 Malaysian Ringgit 103.7 40.7 1.8 1 to 6 British Pound .4 .6 - 1 German Mark 12.7 8.5 .7 7 Italian Lira 1,000.0 .6 - 3 ----------------------------------------------------------------------------------
COMMITMENTS TO SELL FOREIGN CURRENCIES:
---------------------------------------------------------------------------------- Contract Amount --------------- Foreign Deferred Gains Maturities (In millions) Currency U.S. and (Losses) (in months) ---------------------------------------------------------------------------------- Australian Dollar 6.0 $ 4.4 $ - 1 to 10 Canadian Dollar 3.5 2.5 - 1 French Franc 82.4 15.9 (1.0) 1 to 12 German Mark 74.4 50.1 (3.7) 1 to 13 Italian Lira 22,945.0 13.3 (.8) 1 to 12 Japanese Yen 624.3 6.9 (.5) 1 to 3 British Pound 23.5 36.8 (.4) 1 to 19 ----------------------------------------------------------------------------------
31 33 QUARTERLY FINANCIAL DATA (UNAUDITED) Selected quarterly financial data is summarized below.
Quarters ended ---------------------------------------------------------------------------------------------------------------------------- Dollars in millions except per share amounts 9-30-94 12-31-94 3-31-95 6-30-95 TOTAL YEAR ---------------------------------------------------------------------------------------------------------------------------- FISCAL 1995 Net sales $ 807.3 $ 863.1 $ 850.4 $ 923.3 $3,444.1 Gross profit 245.8 272.9 271.8 325.1 1,115.6 Income before income taxes 44.3 53.5 58.5 81.3 237.6 Net income 28.8 34.8 38.0 52.9 154.5 Per share: Net income .73 .88 .98 1.36 3.95 Cash dividends .31 .31 .31 .31 1.24 Stock prices (high/low) 49-1/8 - 41-3/8 48-7/8 - 38 48-3/8 - 40-1/2 53-3/8 - 46-3/8 ----------------------------------------------------------------------------------------------------------------------------
Quarters ended ---------------------------------------------------------------------------------------------------------------------------- Dollars in millions except per share amounts 9-30-93 12-31-93 3-31-94 6-30-94(1) TOTAL YEAR ---------------------------------------------------------------------------------------------------------------------------- FISCAL 1994 Net sales $ 769.1 $ 807.5 $ 838.3 $ 921.2 $3,336.1 Gross profit 248.6 257.8 259.5 295.4 1,061.3 Income before income taxes 39.8 48.4 51.0 54.3 193.5 Income before cumulative effect of change in accounting principle 24.7 30.0 33.0 34.2 121.9 Cumulative effect of change in accounting principle (10.1) - - - (10.1) Net income 14.6 30.0 33.0 34.2 111.8 Per share: Income before cumulative effect of change in accounting principle .62 .75 .83 .87 3.07 Cumulative effect of change in accounting principle (.25) - - - (.25) Net income .37 .75 .83 .87 2.82 Cash dividends .28 .28 .28 .28 1.12 Stock prices (high/low) 43-3/4 - 36-3/8 47-3/8 - 41-1/2 52-1/4 - 44 49 - 41-3/4 ---------------------------------------------------------------------------------------------------------------------------------- (1) Fiscal 1994 fourth quarter results include a $17.8 million ($11.5 million after income taxes or 29 cents per share) charge for the write-off of securities received from a prior-year sale of a discontinued business.
32 34 SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS HARRIS CORPORATION AND SUBSIDIARIES (IN THOUSANDS)
================================================================================================================= COL. A COL. B COL. C COL. D COL. E ----------------------------------------------------------------------------------------------------------------- ADDITIONS ------------------------- (1) (2) BALANCE CHARGED CHARGED AT TO COSTS TO OTHER BALANCE BEGINNING AND ACCOUNTS DEDUCTIONS-- AT END OF DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD ----------------------------------------------------------------------------------------------------------------- YEAR ENDED JUNE 30, 1995: Amounts Deducted From Respective Asset Accounts $ 7,746(B) 257(C) -------- Allowances for collection losses... $29,492 $ 7,897 $ 590(A) $ 8,003 $29,976 ======= ======= ======= ======== ======= YEAR ENDED JUNE 30, 1994: Amounts Deducted From Respective Asset Accounts $ 891(A) 6,754(B) -------- Allowances for collection losses... $28,245 $ 8,790 $ 102(C) $ 7,645 $29,492 ======= ======= ======= ======== ======= YEAR ENDED JUNE 30, 1993: Amounts Deducted From Respective Asset Accounts $ 1,028(A) 8,058(B) -------- Allowances for collection losses... $29,638 $ 7,648 $ 45(D) $ 9,086 $28,245 ======= ======= ======= ======== ======= Note A -- Foreign currency translation gains and losses. Note B -- Uncollectible accounts charged off, less recoveries on accounts previously charged off. Note C -- Amounts reclassified to other accounts in the Consolidated Balance Sheet. Note D -- Additions resulting from businesses acquired.
33 EX-10.E 2 EXHIBIT 10(E) 1 Exhibit 10(e) LANIER WORLDWIDE, INC. KEY CONTRIBUTOR BONUS PLAN ALTERNATE GENERAL INFORMATION: The Key Contributor Bonus Plan (alternate) is an annual bonus plan based on revenue growth over the previous fiscal year and actual profit-after-tax results relative to the Annual Incentive Plan (AIP) for Lanier Worldwide, Inc. and its operating units. The plan is intended to motivate and reward key contributors for their leadership and contributions within their business units. This plan is intended as an alternate to the Return on Capital Key Contributor Plan for use in instances where the company wishes to place greater emphasis on profit. PARTICIPATION ELIGIBILITY: Participants eligible for this plan are exempt, non-sales employees as approved by management. PARTICIPATION LEVELS: The bonus potential of participants in this plan is determined on an individual basis. MAXIMUM BONUS POTENTIAL: Participants in this plan may earn up to 120% of their annual target bonus if the profit and revenue growth results of their measurement unit exceed the profit and sales goals established. MEASUREMENT UNIT(S): The measurement unit for each participant in this plan must be designated. The measurement unit for a participant may be any organizational unit with an independent AIP, or any combination of such units. The unit(s) used as the measurement for an individual participant will be determined by management on the basis for the individual's sphere of influence and contribution. BONUS PAYMENTS: Up to 20% of the annual target bonus opportunity will be advanced quarterly based on results for each of the quarters. The remaining 20% will be based on total year results. Payments are made quarterly approximately six weeks following the end of the first three quarters. The final year-end payment is made following the formal audit certification for the year. Employees must be actively employed on the last day of a quarter to qualify for the bonus calculated for that time frame. 1 2 BONUS MEASUREMENT: Eighty percent (80%) of the plan is based on profit-after-tax and twenty percent (20%) on revenue growth. If the maximum quarterly bonus opportunity (i.e. 20% of annual target bonus) is not achieved in any of the first three quarters, the deficiency can be caught up in subsequent quarters based on a year-to-date calculation, provided the subsequent quarter results are one hundred percent (100%) or greater of the bonus measurement criteria. This plan provides a provision to earn in excess of the target annual bonus for exceeding the final year-end plan. This provision does not apply to quarterly calculations. In order to earn a bonus under the revenue growth measurement a minimum of 75% of the previous year's revenues must be attained. A minimum of 70% of AIP profit after tax must be achieved for a bonus payment under the profit measurement.
Revenue Growth Measurement Profit-After-Tax Measurement ----------------------------------- ----------------------------------- % of Previous Year's % of Bonus % of AIP % of Revenue Attained Earned Attained Bonus Earned ---------------- --------- ------- ------------ Under 75 -0- Under 70 -0- 75 20 70 40 80 30 75 55 85 40 80 70 90 75 85 80 95 85 90 85 100 90 95 95 110 105 100 100 120 120 105 105 Over 120 120 110 110 120 120 Over 120 120
Prorations will apply for attainment between the defined levels. The payout formula for executives may differ from the above outline, but may not exceed the percentages defined. SPECIAL PROVISIONS: New Hires: A participant's initial participation will be prorated according to the date of hire or addition to the plan. Employees who begin participation prior to or on the 15th of the month will be bonus eligible as of the first of the month in which they become a participant. Employees who begin participation on or after the 16th of the month will be eligible as of the first of the following month. Terminations: Employees must be actively employed on the last day of a quarter to qualify for the bonus calculated for that time frame. 2 3 Retirement or Death: In the event that an employee retires or dies during the year, the employee will be eligible for prorated bonus payments at the end of the last quarter worked and at the end of the fiscal year. Leaves of Absence: Employees who go on leave of absence will not be eligible for bonus beginning the first day of the month following their last day of active employment. Employees returning from leave of absence will begin eligibility on the first day of the month in which they return to work, IF they return on or before the 15th of the month. If an employee returns on the 16th or later, bonus eligibility will be reinstated on the first day of the month following the return. Promotions: In the event participation in this plan is affected by a promotion, prorations will apply. Prorations will be based on the same criteria as new hires. Demotions/Transfer: In the event a participant is demoted or transferred to a position not eligible to participate in this plan, participation for the quarter in which the demotion/transfer takes place will be prorated, provided the employee is still actively employed on the last day of the quarter. Prorations will use the same criteria as new hires to determine eligibility for the month of the position change. The twenty percent of the annual bonus based on total year results will be prorated under this same criteria and the number of months worked during the fiscal year. If a participant in the plan is demoted or transferred to a position qualilfying to participate in the plan at a lesser bonus level, participation in the plan will continue for the year with appropriate prorations based on the same criteria as new hires. The company reserves the right to adjust the total bonus payout on a final year-to-date basis (fourth quarter and final year-end payout), if the actual quarterly bonus payout computation exceeds the total year bonus payout computation by more than 10%. BONUS PERIOD: This is a fiscal year plan. Each fiscal year (July 1 to June 30) is an independent plan year. Carryovers from one fiscal year to another are not permitted. ADMINISTRATION: Participation in this plan is at the discretion of Lanier Worldwide, Inc. All interpretations and exceptions to the plan are reserved for senior management of the company. REVISIONS: This plan may be modified, replaced or canceled at any time as deemed appropriate by Lanier Worldwide management. LIMITATION: Participants in this plan may not participate in any other annual incentive plan. 3 EX-10.F 3 EXHIBIT 10(F) 1 EXHIBIT 10(f) LANIER WORLDWIDE, INC. LONG-TERM INCENTIVE PLAN FOR KEY EMPLOYEES (LTIP) (AS AMENDED SEPTEMBER 1992) I. NAME AND PURPOSE ---------------- The name of this plan is the Lanier Worldwide, Inc. Long-Term Incentive Plan for Key Employees (LTIP). The purpose of the Plan is to facilitate the attraction and retention of highly qualified key employees. II. EFFECTIVE DATE; PERFORMANCE PERIOD; DEFERRED PAYMENT PERIOD; TERM ----------------------------------------------------------------- A. The effective date of the plan shall be July 1, 1991. The Plan is composed of three-year plan cycles with performance measured over the three years of the cycle (the "Performance period"). Payouts will be made at the end of the three-year performance period. It is contemplated that a new plan cycle will start at the beginning of each fiscal year. B. The Plan shall remain in effect until terminated by the Board. III. AWARDS ------ A. Cash awards may be made from time to time to such employees of the Company and its affiliates as may be selected by the Committee upon recommendation of the Chief Executive Officer. 1 2 B. The performance measurement criteria for the LTIP will be based on the net income and return on capital objectives as stated in the approved strategic plans of Lanier. It is contemplated that, if a business unit achieves its net income and return on capital objectives, there would be 100% payout of the targeted award. Exceeding objectives would generally result in payouts above 100%, with a maximum payout of 200%. Performance below plan would likewise generally result in a reduced payment, depending on the degree of and the reasons for variation from the plan objectives. Performance significantly below plan due primarily to "internal factors" would generally result in no payment. Percentage payments would range from 0-200% in increments of 10%. Each year all eligible plan participants will be advised of their targeted award amounts, plus the strategic plan net income and return on capital objectives. C. Each award is based upon the assumption that the employee shall continue to perform substantially the same duties throughout the performance period, and such award may be reduced or increased to reflect a change in duties during the performance period. D. Awards shall be expresssed in U.S. dollar amounts. For employees ordinarily paid in currency other than U.S. dollars, the dollar amount of the award which is earned at the conclusion of the performance period shall be translated into the currency in which the recipient is ordinarily paid. The translation from the dollar amount to the local currency shall be based on a single average of the currency exchange rates at the end of each calendar quarter, as published in the WALL STREET JOURNAL, for the twelve quarters that comprise the performance period. The result of this calculation shall be ussed for the actual award payment. E. An employee may elect to defer all or a portion of his award until a specified future date or event, by giving written notification of his intent ot make such a voluntary deferral election. The election to defer part or all of the award must be made prior to the end of the second year of the performance period. During the voluntary deferral period, the deferred amounts shall accumulate interest at a rate set from time to time by the Committee. However, employees shall 2 3 have no security interest in the defered amounts, and the rights to these deferred awards shall be the same as those of general creditors of the Company. In consideration of overseas assignments, the Company may agree to defer payments until completion of the assignment. IV. RELATION TO EMPLOYEE BENEFITS PROGRAM ------------------------------------- Awards paid under the Plan shall be excluded from the employee's earning base used in determination of any payment of coverage under the Company's employee benefit programs. V. TERMINATION OF EMPLOYMENT ------------------------- A. If the employee ceases to be an employee of the Company and its affiliates prior to the expiration of the performance period: (i) for any reason other than death, disability or retirement pursuant to an established retirement plan or policy of the Corporation or of its appllicable affiliate, all awards to the employee hereunder shall be forfeited; or (ii) due to death, disability or retirement pursuant to an established retirement plan or policy of the Company or of its affiliate, he shall be eligible to receive a pro-rata proportion of the amount which would have been paid to him under any outstanding awards at the end of the performance period, such pro-rata proportion to be measured by a fraction of which the numerator is the number of months of the performance period during which the employee's employment continued, and the denominator is the full number of months of the performance period. For purposes hereof, employment for any period of a month shall be deemed employment for a full month. B. If the employee ceases to be an employee of the Company and its affiliates thereof due to death, disability or retirement pursuant to an established retirement plan or policy of the Company of its affiliates, all awards to be paid to him shall be paid thereto in the event of cessation 3 4 of employment prior to the expiration of the performance period, within a reasonable period following the expiration of the performance period. VI. TRANSFER OF EMPLOYMENT ---------------------- If the employee transfers employment from one business unit of the Company or one of its affiliates to another business unit during the performance period, such employee shall be eligible to receive an amount determined by the Committee based on such factors as the Committee in its sole discretion may deem appropriate. VII. TAX WITHHOLDING --------------- Applicable federal, state or local withholding taxes of any kind required by law to be withheld by the Company shall be withheld from payments of awards. VIII. CHANGE OF CONTROL ----------------- A. Upon a "change of control" of the Company prior to the expiration of the deferred payment period, the performance objectives applicable to the award shall be conclusively deemed to have been fully attained and the deferred payment period shall be deemed to have expired, and all outstanding awards shall be paid. B. For purposes of the Plan, a "change of control" shall mean the change of control of Harris Corporation as determined by its Board of Directors. 4 5 IX. MISCELLANEOUS ------------- A. An employee shall not assign, transfer, or encumber his rights and interests under this Plan. In the event of an employee's death or incapacity, subject to the terms of Section V hereof, the Committee shall authorize within one year after an employee's death or incapacity, the payment of an award to the employee's designated beneficiary or guardian, or, in the absence of such written designation, to the person specified by will or by the applicable laws of descent and distribution. Any such beneficiary designation may be revoked and new beneficiaries appointed by the employee by written instrument delivered to the Committee. B. This Plan (a) shall be binding upon and inure to the benefit of any successor of the Company and (b) shall be governed by the laws of the State of Florida and any applicable laws of the United Statets. No contract or right of employment shall be implied by this Plan. If any award is assumed or a new award is substituted therefor in any corporate reorganization (including, but not limited to, any transaction of the type referred to in Section 425(a) of the Internal Revenue Code of 1986, as amended), employment by such assuming or subsequent corporation or by a parent corporation of affiliate thereof, shall be considered for all purposes of this award to be employment by the Company. C. Subject to Section XI hereof, the Committee shall be authorized to make adjustments in performance award criteria and in the other terms and conditions of awards in recognition of unusual or non-recurring events affecting the Company or its financial statements or changes in applicable laws, regulations or accounting principles; provided, however, that no such adjustment shall impair the rights of any employee without his consent. The Committee may also make awards hereunder in replacement of, or as alternatives to, awards previously granted to employees. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any award in the manner and to the extent it shall deem desirable to carry it into effect. In the event the Company shall assume outstanding employee benefit awards or the right or obligation to make future such awards in connection with the acquisition of another corporation or business entity, the Committee may, in its discretion, make such adjustments in the terms of awards under the Plan as it shall deem appropriate. 5 6 D. Except as otherwise required in any applicable agreement or by the terms of the Plan, employees under the Plan shall not be required to make any payment or provide consideration for an award other than the rendering of services. E. Capitalized terms used herein shall have the meanings assigned thereto on Exhibit A hereto, which is incorporated herein by reference. X. COMMITTEE --------- The Plan shall be administered by the Committee. The Committee shall have the authority to construe the Plan, to establish, amend, and rescind rules and regulations relating to the Plan, and to make all other determinations in the judgment of the Committee necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply an omission or reconcile any inconsistency in the Plan in the manner and to the extent it shall deem expedient to carry the Plan into effect, and shall be the sole and final judge of such expediency. XI. AMENDMENT OR TERMINATION ------------------------ Until such time as a "change of control" shall have occurred, the Board may amend, suspend or terminate the Plan or any part thereof from time to time, provided that no change may be made which would impair the rights of an employee to whom awards have theretofore been granted without the consent of said employee. 6 7 EXHIBIT A DEFINITIONS ----------- BOARD shall mean the Board of Directors of the Company. CAPITAL shall mean capital as determined on a Harris Corporation Management Financial Statement basis. COMMITTEE shall mean a sub-committee of the Pension/Compensation Committee of the Board consisting of the non-employee members thereof. COMPANY shall mean Lanier Worldwide, Inc., a Delaware corporation. NET INCOME shall mean net income determined on a Harris Corporation Management Financial Statement basis. Net Income growth shall mean the sum of Net Income during the performance period less three times the base year Net Income. Average growth rate of Net Income shall be calculated on a compounded annual basis. PLAN shall mean the Lanier Worldwide, Inc. Long-Term Incentive Plan for Key Employees (LTIP). RETURN ON CAPITAL shall mean the sum of Net Income and the after-tax impact of interest expense, divided by average Capital (based on a quarterly average). The statutory U.S. income tax rate will be used in the calculation of after-tax interest. EX-10.G 4 EXHIBIT 10.G 1 EXHIBIT 10(g) AMENDMENT TO HARRIS CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN WHEREAS, the Harris Corporation Supplemental Executive Retirement Plan (the "Plan") has been established and is duly maintained; WHEREAS, pursuant to Section 8.1 of the Plan, the Plan may be amended; and WHEREAS, it is desired to clarify the provisions of the Plan applicable to deemed investments in Harris Stock; NOW THEREFORE, be it resolved that the following amendment be, and hereby is adopted, effective July 1, 1995. 1. Section 5.1 of the Plan is amended to read as follows: 5.2 INVESTMENTS. Amounts credited to the Account of a Participant shall be deemed to be invested pursuant to the Participant's investment election under the Retirement Plan. If a Participant's investment election under the Retirement Plan directs that a portion of additions to his or her account under the Retirement Plan is invested in Harris Stock, earnings and losses for a corresponding portion of additions to the Participant's SERP Account shall reflect the performance of Harris Stock; however, the Participant's SERP Account is not required to be invested in Harris Stock and the Participant shall have no right to a distribution of his or her Account in the form of Harris Stock. If a Participant who is also a participant in the Retirement Plan has no investment election in effect under the Retirement Plan, such Participant's Account shall be deemed to be invested in the Balanced Fund. If a Participant is not a participant in the Retirement Plan, the Participant may file an investment election under the SERP, directing the deemed investment of his Account in conformity with the terms of the Retirement Plan, except that Participants may not direct the investment of their SERP Account to reflect performance of Harris Stock unless they are participants in the Retirement Plan and their account under the Retirement Plan is invested in the Harris Stock Fund. A restatement of the Plan to reflect this amendment is hereby authorized. 2 IN WITNESS WHEREOF, Harris Corporation has caused this amendment to be executed and its seal to be affixed and attested by its duly authorized officers as of the effective date hereof. HARRIS CORPORATION By: /s/ D. S. Wasserman --------------------------------- Title: Vice President-Treasurer --------------------------------- - 2 - EX-10.H 5 EXHIBIT 10.H 1 EXHIBIT 10(h) July 1, 1995 HARRIS CORPORATION RETIREMENT PLAN 2 TABLE OF CONTENTS ARTICLE I DEFINITIONS 1.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 - 1.2 After-Tax Account . . . . . . . . . . . . . . . . . . . . . - 2 - 1.3 After-Tax Contributions . . . . . . . . . . . . . . . . . . - 2 - 1.4 Basic Account . . . . . . . . . . . . . . . . . . . . . . . - 2 - 1.5 Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . - 2 - 1.6 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . - 3 - 1.7 Break-in-Service . . . . . . . . . . . . . . . . . . . . . . - 3 - 1.8 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 - 1.9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . - 3 - 1.10 Consolidated Subsidiaries . . . . . . . . . . . . . . . . . - 6 - 1.11 Corporation . . . . . . . . . . . . . . . . . . . . . . . . - 6 - 1.12 Corporation Committee . . . . . . . . . . . . . . . . . . . - 6 - 1.13 Disability . . . . . . . . . . . . . . . . . . . . . . . . . - 6 - 1.14 Early Retirement Age . . . . . . . . . . . . . . . . . . . - 6 - 1.15 Employment Unit . . . . . . . . . . . . . . . . . . . . . . - 6 - 1.16 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 - 1.17 ERISA - . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 - 1.18 Excess Compensation . . . . . . . . . . . . . . . . . . . . - 7 - - i - 3 1.19 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . - 8 - 1.20 Harris Stock Fund . . . . . . . . . . . . . . . . . . . . . - 8 - 1.21 Harris Stock After-Tax Account . . . . . . . . . . . . . . . - 8 - 1.22 Harris Stock Matching Account . . . . . . . . . . . . . . . - 8 - 1.23 Harris Stock Pre-Tax Account . . . . . . . . . . . . . . . . - 8 - 1.24 Highly Compensated Employee . . . . . . . . . . . . . . . . - 8 - 1.25 Hour of Service . . . . . . . . . . . . . . . . . . . . . . - 9 - 1.26 Investment Funds . . . . . . . . . . . . . . . . . . . . . - 9 - 1.27 Layoff . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 - 1.28 Leave of Absence . . . . . . . . . . . . . . . . . . . . . - 9 - 1.29 Matching After-Tax Account . . . . . . . . . . . . . . . . . - 10 - 1.30 Matching After-Tax Contributions . . . . . . . . . . . . . - 10 - 1.31 Matching Contributions . . . . . . . . . . . . . . . . . . - 10 - 1.32 Matching Pre-Tax Account . . . . . . . . . . . . . . . . . - 10 - 1.33 Matching Pre-Tax Contributions . . . . . . . . . . . . . . . - 10 - 1.34 Military Leave . . . . . . . . . . . . . . . . . . . . . . . - 11 - 1.35 Normal Retirement Age . . . . . . . . . . . . . . . . . . . - 11 - 1.36 Participant . . . . . . . . . . . . . . . . . . . . . . . . - 11 - 1.37 Participating Company . . . . . . . . . . . . . . . . . . . - 11 - 1.38 Period of Service . . . . . . . . . . . . . . . . . . . . . - 11 - 1.39 Period of Severance . . . . . . . . . . . . . . . . . . . . - 12 - 1.40 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 - - ii - 4 1.41 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . - 12 - 1.42 Predecessor Company . . . . . . . . . . . . . . . . . . . . - 12 - 1.43 Pre-Tax Account . . . . . . . . . . . . . . . . . . . . . . - 13 - 1.44 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . - 13 - 1.45 Profit-Sharing Account . . . . . . . . . . . . . . . . . . - 13 - 1.46 Profit-Sharing Contributions . . . . . . . . . . . . . . . - 13 - 1.47 Related Company . . . . . . . . . . . . . . . . . . . . . . - 13 - 1.48 Rollover Account . . . . . . . . . . . . . . . . . . . . . . - 14 - 1.49 Savings Account . . . . . . . . . . . . . . . . . . . . . . - 14 - 1.50 Severance from Service Date . . . . . . . . . . . . . . . . - 14 - 1.51 Supplemental Account . . . . . . . . . . . . . . . . . . . - 14 - 1.52 Taxable Wage Base . . . . . . . . . . . . . . . . . . . . . - 15 - 1.53 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . - 15 - 1.54 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . - 15 - 1.55 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . - 15 - 1.56 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . - 15 - ARTICLE II PARTICIPATION 2.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 16 - 2.2 Renewal of Participation on Reemployment . . . . . . . . . . - 16 - 2.3 Periods of Service on Reemployment . . . . . . . . . . . . . - 16 - 2.4 Service with Predecessor Company . . . . . . . . . . . . . . - 17 - - iii - 5 2.5 Participation for Purposes of Rollover Contributions . . . . - 18 - ARTICLE III CONTRIBUTIONS AND ALLOCATIONS 3.1 Profit-Sharing Contributions . . . . . . . . . . . . . . . . - 19 - 3.2 Allocation of Profit-Sharing Contributions to Participants . - 22 - 3.3 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . - 23 - 3.4 Matching Pre-Tax Contributions . . . . . . . . . . . . . . . - 24 - 3.5 After-Tax Contributions . . . . . . . . . . . . . . . . . . - 25 - 3.6 Matching After-Tax Contributions . . . . . . . . . . . . . . - 25 - 3.7 Elections to Make Pre-Tax and After-Tax Contributions . . . - 26 - 3.8 Rollover Contributions . . . . . . . . . . . . . . . . . . . - 27 - 3.9 Participating Company's Obligation to Make Contributions . . - 28 - 3.10 Treatment of Forfeited Amounts . . . . . . . . . . . . . . . - 29 - 3.11 Finality of Allocations . . . . . . . . . . . . . . . . . . - 29 - ARTICLE IV LIMITATIONS ON CONTRIBUTIONS 4.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 30 - 4.2 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . - 30 - 4.3 Percentage Limitation on Pre-Tax Contributions . . . . . . . - 31 - 4.4 Percentage Limitation on After-Tax and Matching Contribution. - 31 - 4.5 Multiple Use of Alternative Limitations . . . . . . . . . . - 33 - - iv - 6 4.6 Limitations on Annual Additions . . . . . . . . . . - 33 - ARTICLE V VESTING AND FORFEITURES 5.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 36 - 5.2 Vesting on Retirement, Death or Disability . . . . . . . . . - 36 - 5.3 Vesting on Other Termination of Employment . . . . . . . . . - 36 - 5.4 Effect of In-Service Withdrawals on a Participant's Vested . - 37 - 5.5 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . - 38 - ARTICLE VI ACCOUNTS AND INVESTMENTS 6.1 Establishment of Accounts . . . . . . . . . . . . . . . . . - 40 - 6.2 Investment of Profit-Sharing Account . . . . . . . . . . . . - 41 - 6.3 Investment of Accounts Other than Profit-Sharing Account . . - 42 - 6.4 Allocation of Earnings and Losses . . . . . . . . . . . . . - 44 - 6.5 Special Rules Concerning Harris Stock Fund . . . . . . . . . - 45 - ARTICLE VII DISTRIBUTIONS 7.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 48 - 7.2 Small Benefit Cash-out . . . . . . . . . . . . . . . . . . . - 48 - 7.3 Form of Payment . . . . . . . . . . . . . . . . . . . . . . - 49 - 7.4 Time of Payment . . . . . . . . . . . . . . . . . . . . . . - 50 - - v - 7 7.5 Direct Rollover . . . . . . . . . . . . . . . . . . . . . . - 50 - 7.6 Payments on Death . . . . . . . . . . . . . . . . . . . . . - 52 - 7.7 Benefit Amount and Withholding . . . . . . . . . . . . . . . - 52 - 7.8 Order of Distributions . . . . . . . . . . . . . . . . . . . - 53 - 7.9 Statutory Requirements . . . . . . . . . . . . . . . . . . . - 53 - 7.10 Designating Beneficiaries . . . . . . . . . . . . . . . . . - 57 - 7.11 Payment of Group Insurance Premiums . . . . . . . . . . . . - 58 - 7.12 Inability to Locate Participant . . . . . . . . . . . . . . - 58 - ARTICLE VIII LOANS 8.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 60 - 8.2 Loan Administration . . . . . . . . . . . . . . . . . . . . - 60 - 8.3 Terms and Conditions of Loans . . . . . . . . . . . . . . . - 61 - 8.4 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . - 63 - 8.5 Repayment and Default . . . . . . . . . . . . . . . . . . . - 63 - 8.6 Mechanics . . . . . . . . . . . . . . . . . . . . . . . . . - 65 - 8.7 Special Powers . . . . . . . . . . . . . . . . . . . . . . . - 65 - ARTICLE IX IN-SERVICE WITHDRAWLS 9.1 At-Will Withdrawals from Savings Account and After-Tax Acco. - 67 - 9.2 Hardship Withdrawals from Pre-Tax Account . . . . . . . . . - 67 - - vi - 8 9.3 Emergency Withdrawals . . . . . . . . . . . . . . . . . . . - 69 - 9.4 Reduction of Investment Fund Balances . . . . . . . . . . . - 70 - ARTICLE X TOP-HEAVY PROVISIONS 10.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . - 71 - 10.2 Minimum Allocation . . . . . . . . . . . . . . . . . . . . . - 71 - 10.3 Minimum Vesting . . . . . . . . . . . . . . . . . . . . . . - 72 - 10.4 Definitions . . . . . . . . . . . . . . . . . . . . . . . . - 72 - ARTICLE XI ADMINISTRATION 11.1 Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . - 79 - 11.2 Corporation Committee . . . . . . . . . . . . . . . . . . . - 79 - 11.3 Powers and Duties of Committee . . . . . . . . . . . . . . . - 79 - 11.4 Actions of Committee . . . . . . . . . . . . . . . . . . . . - 79 - 11.5 Finality of Decisions . . . . . . . . . . . . . . . . . . . - 80 - 11.6 Immunities of Committee . . . . . . . . . . . . . . . . . . - 80 - 11.7 Advisers and Agents . . . . . . . . . . . . . . . . . . . . - 80 - 11.8 Committee Member who is Participant . . . . . . . . . . . . - 81 - 11.9 Information Provided by Participating Companies . . . . . . - 81 - 11.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . - 81 - 11.11 Trust Fund Available to Pay All Plan Benefits . . . . . . . - 82 - - vii - 9 ARTICLE XII AMENDMENT AND TERMINATION AND CHANGE OF CONTROL 12.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . - 83 - 12.2 Termination of Plan . . . . . . . . . . . . . . . . . . . - 84 - 12.3 Discontinuance of Contributions . . . . . . . . . . . . . - 84 - 12.4 Vesting on Termination or Discontinuance of Contributions - 84 - 12.5 Distribution on Termination . . . . . . . . . . . . . . . - 85 - 12.6 Change of Control . . . . . . . . . . . . . . . . . . . . - 85 - ARTICLE XIII MISCELLANEOUS PROVISIONS 13.1 Restrictions on Alienation; Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . . . . . - 88 - 13.2 Exclusive Benefit Requirement . . . . . . . . . . . . . . - 89 - 13.3 Return of Contributions . . . . . . . . . . . . . . . . . - 90 - 13.4 No Contract of Employment . . . . . . . . . . . . . . . . - 90 - 13.5 Payment of Benefits on Incapacity . . . . . . . . . . . . - 90 - 13.6 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . - 91 - 13.7 Construction . . . . . . . . . . . . . . . . . . . . . . . - 91 - 13.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . - 92 - 13.9 Mistaken Payments . . . . . . . . . . . . . . . . . . . . - 92 - - viii - 10 ARTICLE XIV SPECIAL PROVISIONS FOR EMPLOYEES OF HARRIS TECHNICAL SERVICES DIVISION OF HARRIS TECHNICAL SERVICES CORPORATION 14.1 Participation . . . . . . . . . . . . . . . . . . . . . . . - 93 - 14.2 Profit-Sharing Contributions . . . . . . . . . . . . . . . . - 93 - 14.3 Pre-Tax Contributions . . . . . . . . . . . . . . . . . . . - 94 - 14.4 No Matching Pre-Tax Contributions . . . . . . . . . . . . . - 94 - 14.5 No Investment in the Harris Stock Fund . . . . . . . . . . . - 94 - 14.6 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . - 94 - - ix - 11 INTRODUCTION ------------ The Harris Corporation Retirement Plan (the "Plan") is hereby amended and restated effective July 1, 1995. Those Participants in the Plan who are Employees on July 1, 1995 shall continue to participate in the Plan, as restated. Those Participants in the Plan who are not Employees on July 1, 1995 shall not be participants in the Plan, as restated, and their benefits shall be determined under the terms of the Plan that were in effect prior to July 1, 1995 unless they are reemployed as Employees by a Participating Company. The Plan and the related trust are intended to be a tax-exempt plan and trust under sections 401(a) and 501(a) of the Code, respectively. The Plan also is intended to be a profit-sharing plan that contains a qualified cash or deferred arrangement under section 401(k) of the Code. - 1 - 12 ARTICLE I DEFINITIONS ----------- 1.1 ACCOUNTS -- means all of the accounts described in section 6.1, and such other accounts that may be established on behalf of each Participant, to be credited with contributions made on behalf of a Participant, adjusted for earnings and losses as provided in the Plan and debited by Plan expenses allocable to the Accounts, distributions, withdrawals and loans to the Participant. 1.2 AFTER-TAX ACCOUNT - means the account established to record After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund. 1.3 AFTER-TAX CONTRIBUTIONS -- means the contributions described in section 3.5. 1.4 BASIC ACCOUNT -- means the account established to record the portion of the Profit-Sharing Contributions allocable to a Participant's Compensation. 1.5 BALANCED FUND -- means the Balanced Fund described in Appendix A. - 2 - Harris Retirement Plan 13 Definitions 1.6 BENEFICIARY -- means the person or persons entitled to receive any benefits payable under the Plan on account of a Participant's death. 1.7 BREAK-IN-SERVICE -- means a Period of Severance, as defined below. 1.8 CODE -- means the Internal Revenue Code of 1986, as amended from time to time. 1.9 COMPENSATION -- means the following items of remuneration which an Employee earns for work or personal services performed for a Participating Company: (a) salary or wage; (b) commission paid pursuant to a sales incentive plan; (c) overtime premium, shift differential or, additional compensation in lieu of overtime premium; (d) compensation in lieu of vacation; (e) any annual bonus or incentive compensation payable in the form of cash pursuant to the Annual Incentive Plan or any successor thereto or other similar plan adopted by the Corporation from time to time or any stock award made in lieu of an annual cash bonus or incentive compensation; - 3 - Harris Retirement Plan 14 Definitions (f) any cash bonus or incentive compensation payable in the form of cash or any stock awards made pursuant to an established plan of the Corporation or Employee's Employment Unit, including but not limited to, bonus awards, spot awards, lump sum, profit sharing, team awards and gain sharing awards; (g) any compensation of a type described in items (a) through (f) above which is paid as an employee contribution to the Plan; (h) any salary reduction contributions to a Section 125 plan maintained by a Participating Company; but excluding: (i) any extraordinary compensation of a recurring or non-recurring nature not included under items (a) to (f) above; (ii) any extraordinary compensation in the nature of bonus, commission or incentive compensation which is not paid pursuant to an established plan of the Employee's Employment Unit or pursuant to an established sales incentive plan; (iii) any bonus or special allowance paid by reason of employment in a foreign country; (iv) any award made or amount paid pursuant to the Stock Incentive Plan or any successor thereto, including, but not - 4 - Harris Retirement Plan 15 Definitions limited to, performance shares, stock options, restricted stock, SARs, or other stock-based awards or dividend equivalents; (v) severance pay or special retirement pay; (vi) retention bonuses or completion bonuses unless authorized by the appropriate officer of the Corporation in a uniform and nondiscriminatory manner; (vii) reimbursement or allowances with respect to expenses incurred in connection with employment, such as tax equalization, reimbursement for moving expenses, mileage or expense allowance or education refund. In no event does the term "Compensation" include indirect compensation such as employer paid group insurance premiums, or contributions under this or other qualified employee benefit plan, other than as a contribution described in item (g) above. Only Compensation not in excess of the amount allowed under Code section 401(a)(17), which is $150,000 for 1995, shall be taken into account. In addition, in the year in which an Employee becomes a Participant, only Compensation received after he becomes a Participant shall be taken into account. For purposes of any test imposed under any section of the Code, the Plan authorizes the use of any definition of Compensation that satisfies the requirements of such section. - 5 - Harris Retirement Plan 16 Definitions 1.10 CONSOLIDATED SUBSIDIARIES -- means those subsidiaries of the Corporation which are included in the consolidated annual financial statement for the Corporation. 1.11 CORPORATION -- means Harris Corporation. 1.12 CORPORATION COMMITTEE -- means the committee established under section 11.2. 1.13 DISABILITY -- means a disability that qualifies a Participant for disability benefits under title II or title XVI of the Federal Social Security Act, and occurs on the effective date determined by the Social Security Administration. 1.14 EARLY RETIREMENT AGE -- means age 55. 1.15 EMPLOYMENT UNIT - means any division or other readily identifiable segment of the operations of a Participating Company, for example, as identified in the annual report or such other segments as may be established for purposes of the Plan by the Corporation, in its discretion. - 6 - Harris Retirement Plan 17 Definitions 1.16 EMPLOYEE -- means an individual who is employed by a Participating Company, or division or operation thereof, designated in Appendix C either (a) within the United States or (b) outside the United States who is covered by the Corporation's current expatriate assignment policy; provided that the individual is not covered by a retirement plan which is maintained by the Participating Company pursuant to a collective bargaining agreement and which was in effect on or after July 1, 1990. With respect to a Participating Company not all of whose employees are eligible to be participants (a "Limited Participating Company"), the term "Employee" shall include those employees of the Participating Company who were Participants prior to their employment by the Limited Participating Company. Solely for Plan qualification testing, the term "Employee" includes a "leased employee" only to the extent required in section 414(n) of the Code. 1.17 ERISA -- means the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.18 EXCESS COMPENSATION -- means the portion of a Participant's Compensation that exceeds the Taxable Wage Base for the year in which the Compensation is received. - 7 - Harris Retirement Plan 18 Definitions 1.19 FISCAL YEAR -- means the fiscal year of the Corporation commencing on July 1 and ending on June 30. 1.20 HARRIS STOCK FUND -- means the Fund described in Appendix A that is designed to be invested in qualifying employer securities within the meaning of section 407 of ERISA, as it applies to an eligible individual account plan. 1.21 HARRIS STOCK AFTER-TAX ACCOUNT -- means the portion of the After-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund. 1.22 HARRIS STOCK MATCHING ACCOUNT -- means the portion of the Matching Contributions made on the Participant's behalf invested in the Harris Stock Fund. 1.23 HARRIS STOCK PRE-TAX ACCOUNT -- means the portion of the Pre-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund. 1.24 HIGHLY COMPENSATED EMPLOYEE -- means a "highly compensated employee" for a Plan Year as defined in section 414(q) of the Code, including the family aggregation rules contained therein. - 8 - Harris Retirement Plan 19 Definitions 1.25 HOUR OF SERVICE -- means each hour for which an Employee is paid or entitled to payment for the performance of duties for a Participating Company or Related Company. 1.26 INVESTMENT FUNDS -- means the funds described in Appendix A to the Plan. 1.27 LAYOFF -- means a temporary suspension of the active employment of an Employee with the understanding that the Employee will be recalled to active employment if and when his services are again required. A period of Layoff terminates, and a Participant who is not recalled is deemed to terminate employment, on the earliest of the following dates: (a) the expiration date specified in a notice of recall delivered to the Employee; (b) the first anniversary of the date the Layoff began, or (c) the election of an Employee to terminate the Layoff by written notice delivered to the Corporation. 1.28 LEAVE OF ABSENCE -- means a period of interruption of the active employment of an Employee granted by the Participating Company or Predecessor Company with the understanding that the Employee will return to active - 9 - Harris Retirement Plan 20 Definitions employment at the expiration of the period of time. A Leave of Absence is of definite duration, but may be extended by the Participating Company or Predecessor Company for additional periods. The term Leave of Absence does not include a Military Leave. 1.29 MATCHING AFTER-TAX ACCOUNT -- means the account established to record Matching After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund. 1.30 MATCHING AFTER-TAX CONTRIBUTIONS -- means the contributions made on behalf of a Participant under section 3.6. 1.31 MATCHING CONTRIBUTIONS -- means the aggregate of the Matching After-Tax Contributions and the Matching Pre-Tax Contributions. 1.32 MATCHING PRE-TAX ACCOUNT -- means the account established to record the Matching Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund. 1.33 MATCHING PRE-TAX CONTRIBUTIONS -- means the contributions made on behalf of a Participant under section 3.4. - 10 - Harris Retirement Plan 21 Definitions 1.34 MILITARY LEAVE -- means an interruption of active employment of an Employee with a Participating Company or Predecessor Company to enter the Armed Forces of the United States under such circumstances that the Employee thereby becomes entitled to reemployment rights under Federal law. Military Leave terminates on the expiration of such reemployment rights. 1.35 NORMAL RETIREMENT AGE -- means age 65. 1.36 PARTICIPANT -- means an Employee who satisfies the requirements of section 2.1. Employees who do not satisfy the requirements of Article II may, nevertheless, be Participants solely for purposes of making Rollover Contributions under section 3.8. 1.37 PARTICIPATING COMPANY -- means the Corporation and any Related Company or division or operation thereof so designated by the Corporation. Appendix C, as it may be amended from time to time, lists each Participating Company, or division thereof, whose Employees may become Participants. 1.38 PERIOD OF SERVICE -- means the period of time that begins on the Employee's employment or reemployment date, whichever is applicable, and ends on his Severance from Service Date. The Employee's employment or - 11 - Harris Retirement Plan 22 Definitions reemployment date is the date on which the Employee first performs an Hour of Service. 1.39 PERIOD OF SEVERANCE -- means the period of time commencing on the Severance from Service Date and ending on the date on which the Employee again performs an Hour of Service. 1.40 PLAN -- means the Harris Corporation Retirement Plan. 1.41 PLAN YEAR -- means the Fiscal Year. 1.42 PREDECESSOR COMPANY -- means any corporation (a) of which a Related Company is a successor by reason of having acquired all or substantially all of its business and assets by purchase, merger, consolidation or liquidation, or (b) from which a Related Company acquired a business formerly conducted by such corporation; provided, however, that in the case of any such corporation that continued to conduct a trade or business subsequent to the acquisition by a Related Company referred in (a) or (b) above, the status of such corporation as a Predecessor Company relates only to the period of time prior to the date of such acquisition. - 12 - Harris Retirement Plan 23 Definitions 1.43 PRE-TAX ACCOUNT -- means the account established to record the Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund. 1.44 PRE-TAX CONTRIBUTIONS -- means the contributions made on behalf of a Participant under section 3.3. 1.45 PROFIT-SHARING ACCOUNT -- means the account established to record the Profit-Sharing Contributions made on a Participant's behalf, and includes the Basic Account and the Supplemental Account. 1.46 PROFIT-SHARING CONTRIBUTIONS -- means the contributions described in section 3.1. 1.47 RELATED COMPANY -- means the Corporation and any corporation that is a member of a controlled group of corporations (as defined in section 414(b) of the Code) with the Corporation; any trade or business (whether or not incorporated) which is under common control (as defined in section 414(c) of the Code) with the Corporation; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in section 414(m) of the - 13 - Harris Retirement Plan 24 Definitions Code) which includes the Corporation, and any other entity required to be aggregated with the Corporation under section 414(o) of the Code. 1.48 ROLLOVER ACCOUNT -- means the account established to record the Rollover Contributions made by a Participant from another tax-qualified plan. 1.49 SAVINGS ACCOUNT -- means the account established under section 6.1(f). 1.50 SEVERANCE FROM SERVICE DATE -- means, with respect to a Related Company, the earlier of (a) the date on which the Employee quits, retires, is discharged or dies, or (b) the first anniversary of the first date of a period in which an Employee remains absent from service (with or without pay) for any reason other than quitting, retirement, discharge or death; provided that "second anniversary" shall be substituted for "first anniversary" if the absence is due to maternity or paternity reasons as defined in section 410(a)(5)(E) of the Code. The period between the first and the second anniversary shall not be a Period of Service or a Period of Severance. 1.51 SUPPLEMENTAL ACCOUNT -- means the account established to record the portion of the Profit-Sharing Contribution allocable to a Participant's Excess Compensation. - 14 - Harris Retirement Plan 25 Definitions 1.52 TAXABLE WAGE BASE -- means the maximum amount of earnings that may be considered wages under section 3121(a)(1) of the Code, except for purposes of Medicare taxes, as in effect on the first day of the Plan Year. In the case of an Employee who was a Participant for only a portion of a particular Plan Year, the Taxable Wage Base shall be multiplied by the ratio of the number of calendar months (including a fractiRon of a month as a full month) in the Plan Year during which he was a Participant to 12 months. 1.53 TRUST AGREEMENT -- means the Trust Agreement relating to the Harris Corporation Retirement Plan, entered into between the Corporation and the Trustee, as it may be amended from time to time. 1.54 TRUST FUND -- means the assets held by the Trustee in accordance with the Trust Agreement. 1.55 TRUSTEE -- means Boston Safe Deposit & Trust Company, or such successor (or successors) thereto designated by the Corporation to act as trustee under the provisions of the Trust Agreement, who shall agree to act as such by executing the Trust Agreement. 1.56 VALUATION DATE -- means the last day of each calendar month. - 15 - Harris Retirement Plan 26 ARTICLE II PARTICIPATION ------------- 2.1 IN GENERAL. An Employee shall become a Participant in the Plan on the date he completes a one-year Period of Service, provided that he is employed by a Participating Company on that date. Notwithstanding the above, and solely for purposes of making Pre-Tax Contributions and certain After-Tax Contributions, an Employee shall become a Participant in the Plan on the date he first performs an Hour of Service. 2.2 RENEWAL OF PARTICIPATION ON REEMPLOYMENT. An Employee who terminates employment after he completes a one-year Period of Service and is reemployed by a Participating Company shall become a Participant immediately on reemployment. An Employee who terminates employment before he completes a one-year Period of Service shall become a Participant as provided in section 2.1, provided that his Period of Service prior to reemployment shall be used to satisfy the one-year Period of Service requirement of section 2.1 to the extent provided under section 2.3. 2.3 PERIODS OF SERVICE ON REEMPLOYMENT. The following rules shall apply to an Employee who terminates employment before he completes a one-year Period of Service and is reemployed by a Related Company: - 16 - Harris Retirement Plan 27 Participation (a) EARLY REEMPLOYMENT. If the Employee (or Participant) is reemployed before he incurs a one-year Period of Severance, his Period of Service before he terminated employment shall be counted as service. (b) LATER REEMPLOYMENT. If the Employee (or Participant) is reemployed after he incurs a one-year Period of Severance, his Period of Service before he terminated shall be counted as service, unless his Period of Severance equals or exceeds the greater of his prior Period of Service or five years. (c) MEASURING THE TIME PERIOD FOR REEMPLOYMENT UNDER SPECIAL CIRCUMSTANCES. If an Employee terminates employment for any reason other than quitting, discharge, or retirement, and subsequently quits, is discharged, or retires, his Period of Severance shall be counted as service only if he is reemployed by a Related Company within 12 months of when he first terminated employment. 2.4 SERVICE WITH PREDECESSOR COMPANY. In the case of a corporation (other than a Related Company) which becomes a Predecessor Company by reason of the acquisition of all or substantially all of the assets and business of such corporation by a Related Company, an Employee's Period of Service shall include employment with such Predecessor Company, as provided in the corporate documents effecting the acquisition. - 17 - Harris Retirement Plan 28 Participation 2.5 PARTICIPATION FOR PURPOSES OF ROLLOVER CONTRIBUTIONS. Employees of a Participating Company who do not satisfy the requirements of section 2.1 may, nevertheless, be Participants solely for purposes of making Rollover Contributions under section 3.8. - 18 - Harris Retirement Plan 29 ARTICLE III CONTRIBUTIONS AND ALLOCATIONS ----------------------------- 3.1 PROFIT-SHARING CONTRIBUTIONS. ---------------------------- (a) BASIC. The amount of Profit-Sharing Contributions made on behalf of Participating Companies for a Fiscal Year with respect to Participants in this Plan and the Harris Corporation Union Retirement Plan shall equal 11-1/2 percent of the adjusted consolidated net income of the Corporation and its Consolidated Subsidiaries before net income taxes for such Fiscal Year as determined in subsection (d), reduced by the portion of such amount with respect to Participants' Compensation that would have been allocable under section 3.2 of this Plan or section 3.2 of the Harris Corporation Union Retirement Plan, if Compensation were determined without regard to statutory limits under section 401(a)(17) or 415 of the Code. (b) SPECIAL. The Corporation, in its discretion, may provide for an additional Profit-Sharing Contribution in a specified dollar amount or pursuant to a formula with respect to any Fiscal Year. (c) APPORTIONMENT BETWEEN THE PLAN AND THE HARRIS UNION RETIREMENT PLAN. Profit-Sharing Contributions for a Plan Year shall be apportioned for accounting and payment purposes between the Plan and the Harris Corporation Union Retirement Plan (the "Union Plan") based on the ratio of the total Compensation plus Excess Compensation for the Plan Year of - 19 - Harris Retirement Plan 30 Contributions and Allocations participants in each plan to the total Compensation plus Excess Compensation of all participants in the Plan and the Union Plan for the Plan Year. (d) ADJUSTED CONSOLIDATED NET INCOME. The adjusted consolidated net income of the Corporation and its Consolidated Subsidiaries before net income taxes shall be determined on the basis of the annual audit report prepared by the Corporation's independent public accountants by adjusting the consolidated net income shown in the report to eliminate the effect, if any, of the following items: (1) any provision for taxes on or measured by income for such years required by the laws of the United States or of any state or political subdivision thereof (including the Ohio Franchise Income Tax, whether or not in fact measured by income), or any provision for similar taxes required by the laws of any other country; (2) all items consisting of credits or deficiencies relating to taxes described in clause (1) above on or measured by income for prior Fiscal Years: (3) any provision for contributions for such Fiscal Year under this Plan or under any profit-sharing retirement plan of a Consolidated Subsidiary of the Corporation; - 20 - Harris Retirement Plan 31 Contributions and Allocations (4) all dividends received during such Fiscal Year with respect to stock of a Related Company which is not included among the Consolidated Subsidiaries; (5) gains or losses from the sale, exchange or other disposition of capital or depreciable property, as defined in the Code; (6) any income from the use of the "lifo" inventory method resulting from either a reduction in inventory or a decrease in the cost index; (7) all items of income and expense which relate directly to the conduct by a Related Company of a business (i) which was formerly conducted by a corporation which was not then a Related Company, and (ii) the net income (or loss) of which was included for the first time in determining the consolidated net income of the Corporation and its Consolidated Subsidiaries for the Fiscal Year in question; (8) all exchange adjustments resulting from translating to United States currency those year-end balance sheet items of subsidiaries which are denominated in a foreign currency; - 21 - Harris Retirement Plan 32 Contributions and Allocations (9) any item of income or expense relating to the right of any employee to receive cash upon cancellation of an unexercised stock option, and (10) the net of all items of income and expense, other than tax items described in subsection (1) and (2) above, relating to Lanier Business Products, Inc. and any subsidiary thereof which is a Related Company. 3.2 ALLOCATION OF PROFIT-SHARING CONTRIBUTIONS TO PARTICIPANTS. ----------------------------------------------------------- (a) IN GENERAL. The Profit-Sharing Contributions for a Plan Year with respect to an Employment Unit shall be allocated among eligible Participants described in subsection (c) who are employed by the Employment Unit during some part or all of the Plan Year based on the ratio of each eligible Participant's Compensation plus Excess Compensation for the Plan Year to the Compensation plus Excess Compensation of all eligible Participants for the Plan Year. (b) LIMITATION ON AMOUNT. Notwithstanding subsection (a), the amount allocated to an eligible Participant with respect to Excess Compensation shall not exceed the "base contribution percentage" by more than the lesser of (i) the base contribution percentage or (ii) 5.7% (or if greater, the percentage equal to the Old Age portion of the tax under section 3111(a) of the Code, as in effect on the first day of the Plan Year). The term "base contribution percentage" means - 22 - Harris Retirement Plan 33 Contributions and Allocations the percentage of Compensation contributed by the Participating Company with respect to each Participant's Compensation not in excess of the Participant's Taxable Wage Base. (c) LIMITATION ON ELIGIBILITY. A Participant shall be eligible to receive an allocation of Profit-Sharing Contributions for a Plan Year if (1) the Participant is employed on the last day of the Plan Year or (2) the Participant terminates employment during the Plan Year on or after Early Retirement Age or Normal Retirement Age, or due to Disability, death, Lay-off, Leave of Absence or Military Leave, or is transferred by the Corporation as a Release Employee to an entity that is not a Participating Company. 3.3 PRE-TAX CONTRIBUTIONS. ---------------------- (a) MAXIMUM ELECTION. A Participant may elect to reduce his Compensation by an amount equal to any whole percentage not to exceed 12 percent and have that amount contributed to the Plan as a Pre-Tax Contribution. A Participant's Pre-Tax Contribution to the Plan and any other plan of the Participating Company or Related Company for any calendar year shall not exceed $7,000 (as adjusted in accordance with Code section 402(g)(5) for increases in the cost of living) including the full fair market value of any Common Stock contributed as a Pre-Tax Contribution. For Pre-Tax Contributions invested in the Harris Stock Fund, the normal form of contribution shall be cash; provided, - 23 - Harris Retirement Plan 34 Contributions and Allocations however, that the Corporation, in its discretion, may make the contribution in common stock of the Corporation, which may be contributed at a discount from fair market value. (b) CONTRIBUTIONS IN EXCESS OF THE MAXIMUM. If the Pre-Tax Contribution on behalf of a Participant reaches the limit described in subsection (a), any additional contributions made during the calendar year pursuant to the Participant's election shall be deemed to be After-Tax Contributions and any Matching Pre-Tax Contributions with respect to that amount shall be deemed to be Matching After-Tax Contributions. 3.4 MATCHING PRE-TAX CONTRIBUTIONS. The Participating Company shall make a Matching Pre-Tax Contribution on behalf of each Participant who is employed by it and has completed a one-year Period of Service in the amount of 100 percent of the first six percent of the Pre-Tax Contributions made on behalf of the Participant during the Plan Year. The normal form of matching contribution for Pre-Tax Contributions invested in the Harris Stock Fund shall be in cash; provided, however, that the Corporation in its discretion, may make the contribution in common stock of the Corporation, which may be contributed at a discount from fair market value. The Trustee is authorized to purchase common stock of the Corporation in the open market, and to give effect to the discount, if - 24 - Harris Retirement Plan 35 Contributions and Allocations any, that has been established from time to time by allocating shares to Participants' Accounts in addition to the number of shares purchased on the open market by means of a given contribution. 3.5 AFTER-TAX CONTRIBUTIONS. A Participant may elect to reduce his Compensation by an amount equal to any whole percentage not to exceed 12 percent and have that amount contributed to the Plan as an After-Tax Contribution, provided that a Participant with less than a one- year Period of Service may make After-Tax Contributions only to the extent necessary pursuant to sections 3.3(b) or 4.2. A Participant who makes Pre-Tax Contributions for a Plan Year may not make After-Tax Contributions for that Plan Year other than pursuant to sections 3.3(b) or 4.2. 3.6 MATCHING AFTER-TAX CONTRIBUTIONS. The Participating Company shall make a Matching After-Tax Contribution on behalf of each Participant who is employed by one of its constituent Employment Units and has completed a one-year Period of Service in the amount of 100 percent of the first six percent of the After-Tax Contributions on behalf of the Participant, reduced by the amount of the Matching Pre-Tax Contribution made on behalf of the Participant during the Plan Year. The normal form of matching contribution for After-Tax Contributions invested in the Harris Stock Fund shall be in cash; provided, however, that the - 25 - Harris Retirement Plan 36 Contributions and Allocations Corporation in its discretion, may make the contribution in common stock of the Corporation, which may be contributed at a discount from fair market value. The Trustee is authorized to purchase common stock of the Corporation in the open market, and to give effect to the discount, if any, that has been established from time to time by allocating shares to Participants' Accounts in addition to the number of shares purchased on the open market by means of a given contribution. 3.7 ELECTIONS TO MAKE PRE-TAX AND AFTER-TAX CONTRIBUTIONS. ------------------------------------------------------ (a) WRITTEN ELECTIONS. A Participant's initial election to reduce his Compensation and have Pre-Tax Contributions and/or After-Tax Contributions made on his behalf shall be made in writing by filing the appropriate form, which shall specify the effective date of the election. The initial election shall take effect as of the first payroll period commencing immediately after the effective date of the election. (b) CHANGING ELECTIONS. A Participant may change the percentage (in increments of one percent) of future Pre-Tax Contributions and/or After-Tax Contributions made on his behalf by filing the appropriate form or by following the appropriate telephone procedures for changing elections as established by the Corporation Committee. A change may be made not more than once each month. A change of election shall become effective as of the first payroll period commencing immediately after the effective date of the election. - 26 - Harris Retirement Plan 37 Contributions and Allocations (c) TERMINATING ELECTIONS. A Participant may terminate his election to have Pre-Tax Contributions and/or After-Tax Contributions made on his behalf by filing the appropriate form. The termination election shall become effective as of the first payroll period commencing immediately after the effective date of the election. (d) CORPORATION'S DISCRETION TO LIMIT ELECTIONS. The Corporation Committee may direct that Participant elections with respect to Pre-Tax Contributions and/or After-Tax Contributions be changed in any manner the Corporation Committee, in its discretion, shall determine appropriate to preserve the qualification of the Plan under section 401(a) of the Code and as a cash or deferred arrangement under section 401(k) of the Code. 3.8 ROLLOVER CONTRIBUTIONS. Employees, with the consent of the Corporation Committee or its delegate, may at any time make a rollover contribution to the Plan. Rollover contributions shall include only (a) cash funds transferred directly from a tax-qualified plan within the meaning of section 401 of the Code, and (b) cash funds distributed from a tax-qualified plan or a conduit individual retirement account that are eligible for rollover treatment and are transferred to the Plan within 60 days of the Employee's receipt thereof. An - 27 - Harris Retirement Plan 38 Contributions and Allocations Employee may be required to establish that the transfer of amounts into a Rollover Account will not require any changes to the terms of the Plan or risk adverse consequences for the Plan or Trust. 3.9 PARTICIPATING COMPANY'S OBLIGATION TO MAKE CONTRIBUTIONS. --------------------------------------------------------- (a) CONTRIBUTIONS. Each Participating Company agrees to pay to the Trustee the contributions that are required with respect to Participants who are employed by one of its constituent Employment Units. Profit-Sharing Contributions with respect to a Fiscal Year shall be paid to the Trustee no later than the time for filing the Participating Company's federal income tax return for such Fiscal Year, including extensions. Pre-Tax Contributions and After-Tax Contributions shall be withheld and paid by the Employment Unit, and Matching Contributions shall be paid by the Participating Company to the Trustee no later than 20 days following the last day of the calendar month in which the amounts were withheld from the Participants' Compensation. (b) LIMITATION. Contributions under this Article III shall not be required to the extent they exceed the limitations of section 404 of the Code, in which case they shall be reduced to the extent allowable and necessary in the following order: (1) Profit-Sharing Contributions; (2) Matching Contributions, and (3) Pre-Tax Contributions. - 28 - Harris Retirement Plan 39 Contributions and Allocations 3.10 TREATMENT OF FORFEITED AMOUNTS. ------------------------------- (a) REDUCTION OF CONTRIBUTIONS. Forfeitures shall be allocated to Employment Units as provided in subsection (b) and used to reduce Profit-Sharing Contributions and Matching Contributions of the Participating Companies in which the Employment Units are included. (b) ALLOCATION OF FORFEITURES TO EMPLOYMENT UNITS. Forfeitures of Profit-Sharing Contributions and Matching Contributions shall be credited to the Employment Unit with which the Participant was last employed before the forfeiture occurred. 3.11 FINALITY OF ALLOCATIONS. The Corporation Committee shall give a written benefit statement to each Participant at least annually setting forth the amount of the contributions allocated to his Accounts; provided, however, that if any such Participant is deceased, such statement shall be given to his Beneficiary. Any Participant or Beneficiary claiming that an error has been made in a benefit statement shall notify the Corporation Committee in writing within 90 days following the delivery or mailing of such statement. The Corporation Committee shall review the claim and advise the Participant or Beneficiary of its decision in writing. If no such notice of error is filed, the benefit statement shall be presumed to be correct. - 29 - Harris Retirement Plan 40 ARTICLE IV LIMITATIONS ON CONTRIBUTIONS ---------------------------- 4.1 IN GENERAL. Notwithstanding any provisions of Article III to the contrary, the contributions provided for in Article III shall be limited to the extent necessary to meet the requirements of this Article IV. 4.2 PRE-TAX CONTRIBUTIONS. ---------------------- (a) TREATMENT OF CERTAIN CONTRIBUTIONS AS AFTER-TAX. If the Corporation Committee determines that a Participant's Pre-Tax Contributions for a calendar year have reached the dollar limit of section 402(g) of the Code, any additional contributions for that calendar year pursuant to the Participant's Pre-Tax Contribution election shall be deemed to be After-Tax Contributions and the Matching Contributions with respect to that amount, if any, shall be deemed to be Matching After-Tax Contributions. (b) RETURN OF EXCESS DEFERRALS. In the event that a Participant's Pre-Tax Contributions already made to the Plan for a calendar year exceed the limits of section 402(g) of the Code, the excess amount, as adjusted for income and loss, may, in the discretion of the Corporation Committee, be distributed to the Participant no later than April 15 of the following year in accordance with the requirements of section 402(g) of the Code and Treasury Regulation section 1.402(g)-1. - 30 - Harris Retirement Plan 41 Limitations on Contributions 4.3 PERCENTAGE LIMITATION ON PRE-TAX CONTRIBUTIONS. ----------------------------------------------- (a) SATISFYING THE ACTUAL DEFERRAL PERCENTAGE TEST. The Pre-Tax Contributions made on behalf of Participants with respect to a Plan Year shall satisfy the "actual deferral percentage test" of section 401(k)(3) of the Code and Treasury regulation section 1.401(k)-1(b)(2), the provisions of which are incorporated herein by reference. (b) TREATMENT OF EXCESS CONTRIBUTIONS AS AFTER-TAX. In the event it is necessary to reduce or limit the amount of any Participant's Pre-Tax Contributions, the amount of Pre-Tax Contributions made on behalf of Highly Compensated Employees shall be deemed to be After-Tax Contributions and any Matching Pre-Tax Contributions made with respect to those Contributions shall be deemed to be Matching After-Tax Contributions. The Highly Compensated Employees to whom this recharacterization is applicable shall be determined in accordance with Treasury regulation section 1.401(k)-1(f)(2), the provisions of which are incorporated herein by reference. 4.4 PERCENTAGE LIMITATION ON AFTER-TAX AND MATCHING CONTRIBUTIONS. -------------------------------------------------------------- (a) SATISFYING THE ACTUAL CONTRIBUTION PERCENTAGE TEST. The After-Tax Contributions and Matching Contributions made on behalf of Participants with respect to a Plan Year shall satisfy the "actual contribution - 31 - Harris Retirement Plan 42 Limitations on Contributions percentage test" of section 401(m)(3) of the Code and Treasury regulation section 1.401(m)-1(b), the provisions of which are incorporated herein by reference. (b) REDUCTION AND FORFEITURE OF AFTER-TAX CONTRIBUTIONS AND MATCHING CONTRIBUTIONS. In the event it is necessary to reduce or limit a Participant's After-Tax Contributions and Matching Contributions to satisfy the actual contribution percentage test, the amount of such contributions, as adjusted for income and losses, on behalf of Highly Compensated Employees shall be reduced in accordance with Treasury regulation section 1.401(m)-1(e)(2), the provisions of which are incorporated herein by reference. The amount of the After-Tax Contributions and Matching Contribution shall be returned to the Highly Compensated Employees (including return by transfer to a non-qualified deferred compensation plan, in accordance with a timely election filed by the Participant) or forfeited as follows: (1) After-Tax Contributions in excess of six percent of Compensation shall be returned, and (2) Remaining After-Tax Contributions and Matching After-Tax Contributions attributable thereto. After-Tax Contributions shall be returned. Matching After-Tax Contributions to the extent vested shall be returned and to the extent not vested shall be forfeited and used to reduce contributions in accordance with section 3.10. - 32 - Harris Retirement Plan 43 Limitations on Contributions 4.5 MULTIPLE USE OF ALTERNATIVE LIMITATIONS. Multiple use of the alternative limitations of sections 401(k)(3)(A)(iii)(II) and 401(m)(A)(ii) of the Code shall be restricted in accordance with Treasury Regulation 1.401(m)-2, the provisions of which are incorporated herein by reference. 4.6 LIMITATIONS ON ANNUAL ADDITIONS. ------------------------------- (a) THE DEFINED CONTRIBUTION LIMIT. The "annual addition," as defined herein, for any Plan Year, to a Participant's Accounts in all defined contribution plans maintained by the Participating Company or Related Company shall not exceed the lesser of (1) 25 percent of the Participant's Compensation for the Plan Year, or (2) $30,000 (as adjusted in accordance with section 415(d) of the Code). The term "annual additions" means the sum of all contributions and forfeitures allocated to a Participant's Accounts (other than his Rollover Account). (b) THE COMBINED LIMIT. If the Participant also has participated in a defined benefit plan maintained by a Related Company, the limitations of section 415(e) of the Code shall apply. If the limitations of section 415(e) are exceeded, the benefits under any defined benefit plan maintained by the Participating Company or Related Company shall be reduced before the annual additions to the Plan are reduced. (c) REDUCTION OF CONTRIBUTIONS. If the Corporation Committee determines at any time that the annual addition to any Participant's Accounts - 33 - Harris Retirement Plan 44 Limitations on Contributions exceeds such limitation for any Plan Year, the contributions on behalf of the Participant shall be reduced, to the extent necessary, in the following order: (1) Pre-Tax Contributions in excess of six percent; (2) Remaining Pre-Tax Contributions and Matching Pre-Tax Contributions attributable thereto shall be reduced proportionately; (3) Profit-Sharing Contributions; (4) After-Tax Contributions in excess of six percent; (5) Remaining After-Tax Contributions and Matching After-Tax Contributions attributable thereto shall be reduced proportionately. After-Tax Contributions and Pre-Tax Contributions, as adjusted for gains, shall be returned to the Participant (including return by transfer to a non-qualified deferred compensation plan, in accordance with a timely election filed by the Participant). Profit-Sharing Contributions and Matching Contributions, as adjusted for gains, to the extent allowable shall be held in a suspense account and allocated to the Accounts of such Participant in the next Plan Year; provided that if the Participant is not covered by the Plan in the next Plan Year, the amount shall be allocated to the remaining Participants in the Plan who are employed by the Employment Unit that employed the Participant. - 34 - Harris Retirement Plan 45 Limitations on Contributions (d) LIMITS ON LIMITS. The limits stated on this Article IV shall apply only to the extent required under the Code. Except as otherwise specifically provided in this section 4.6, all of the requirements of section 415 of the Code, and limitations thereon, including the transitional rules and grandfather rules, are incorporated herein by reference. - 35 - Harris Retirement Plan 46 ARTICLE V VESTING AND FORFEITURES ----------------------- 5.1 IN GENERAL. A Participant shall have a fully vested interest at all times in his Pre-Tax Account, After-Tax Account, Harris Stock Pre-Tax Account, Harris Stock After-Tax Account and Savings Account (other than the portion attributable to matching contributions made after October 1, 1984) and Rollover Account. 5.2 VESTING ON RETIREMENT, DEATH OR DISABILITY. A Participant shall have a fully vested interest in his Profit Sharing Account, Matching Pre-Tax Account, Matching After-Tax Account, Harris Stock Matching Account, and portion of his Savings Account attributable to matching contributions made after October 1, 1984, on termination of employment by any Related Company in the event of: (a) retirement on or after Normal Retirement Age; (b) retirement on or after Early Retirement Age; (c) retirement on or after the effective date of a Participant's Disability determination by the Social Security Administration; (d) death. 5.3 VESTING ON OTHER TERMINATION OF EMPLOYMENT. ------------------------------------------- (a) VESTING SCHEDULE. A Participant who terminates employment other than on the occurrence of one of the events described in section 5.2 shall - 36 - Harris Retirement Plan 47 Vesting and Forfeitures have a vested interest in his Profit-Sharing Account, Matching Pre-Tax Account, Matching After-Tax Account, Harris Stock Matching Account and the portion of his Savings Account attributable to matching contributions made after October 1, 1984 in accordance with the following schedule: Period of Service Vested Percentage Less than 3 years 0% 3 years but less than 4 years 30% 4 years but less than 5 years 40% 5 years but less than 6 years 60% 6 years but less than 7 years 80% 7 years or more 100% (b) COMPUTING A PARTICIPANT'S PERIOD OF SERVICE. For the purpose of determining a Participant's Period of Service under subsection (a), the rules of section 2.3 shall apply. (c) VESTING ON SALE OF BUSINESS. In the event of the sale or disposition of a business or a sale of substantially all of the assets of a trade or business, the Corporation may, in its discretion, provide for accelerated vesting with respect to those Participants affected by the sale. 5.4 EFFECT OF IN-SERVICE WITHDRAWALS ON A PARTICIPANT'S VESTED PERCENTAGE. If a Participant receives a withdrawal under Article IX or a distribution under Article VII from his Profit-Sharing Account at a time when the Participant has less than a fully vested interest in that account, the dollar amount - 37 - Harris Retirement Plan 48 Vesting and Forfeitures of his vested interest in his Profit-Sharing Account (X) shall be determined at any time by the following formula: X = P(AB + D) - D For the purpose of applying the formula, P is the Participant's vested interest in his Profit-Sharing Account at the time the determination is made, AB is the balance credited to the Profit-Sharing Account at the time the determination is made, and D is the amount of the withdrawal. 5.5 FORFEITURES. ----------- (a) TIMING OF FORFEITURE. A Participant who terminates employment with less than a fully vested interest in his Accounts shall forfeit the nonvested interest on the earlier of the date on which the Participant: (1) receives a lump sum distribution of all or a portion of the vested interest in such Accounts, provided that such distribution is made no later than the close of the second Plan Year following the year in which the Participant terminates employment; (2) incurs five consecutive one-year Periods of Severance; or (3) at any earlier date allowable under the Code. - 38 - Harris Retirement Plan 49 Vesting and Forfeitures (b) EFFECT OF PARTIAL DISTRIBUTION ON A PARTICIPANT'S VESTED PERCENTAGE. If the Participant elects to receive a lump sum distribution of less than the full amount of his vested interest, the part of his nonvested interest that shall be forfeited under subsection (a)(1) is the total nonvested interest multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator of which is the total value of his vested interest in his Accounts other than his After-Tax Account, Harris Stock After-Tax Account and Rollover Account. (c) EFFECT OF REPAYMENT OF DISTRIBUTION. If a Participant incurs a forfeiture under subsection (a)(1), then returns to employment with a Participating Company and becomes a Participant in the Plan before incurring five consecutive one-year Periods of Severance, the forfeited amount shall be restored by the Employment Unit of the Participating Company with which the Participant is reemployed. - 39 - Harris Retirement Plan 50 ARTICLE VI ACCOUNTS AND INVESTMENTS ------------------------ 6.1 ESTABLISHMENT OF ACCOUNTS. The Committee shall establish and maintain for each Participant the following Accounts showing the Participant's interest under the Plan: (a) Profit-Sharing Account, which shall consist of (1) a Basic Account to reflect the portion of Profit-Sharing Contributions allocable to the Participant's Compensation, and (2) a Supplemental Account to reflect the portion of Profit-Sharing Contributions allocable to the Participant's Excess Compensation; (b) Pre-Tax Account to reflect Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (c) After-Tax Account to reflect After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (d) Matching Pre-Tax Account to reflect Matching Pre-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; (e) Matching After-Tax Account to reflect Matching After-Tax Contributions made on the Participant's behalf other than those invested in the Harris Stock Fund; - 40 - Harris Retirement Plan 51 Accounts and Investments (f) Savings Account to reflect the Savings Contributions under the Plan as in effect prior to July 1, 1990, and the aggregate of the Participant's voluntary and required contributions to the Harris Video Systems Savings/Incentive Plan less withdrawals, as of June 30, 1990; (g) Harris Stock Pre-Tax Account to reflect the portion of the Pre-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund; (h) Harris Stock After-Tax Account to reflect the portion of the After-Tax Contributions made on the Participant's behalf invested in the Harris Stock Fund; (i) Harris Stock Matching Account to reflect the portion of the Matching Pre-Tax Contributions and Matching After-Tax Contributions made on the Participant's behalf and invested in the Harris Stock Fund, and (j) Rollover Account to reflect the Participant's Rollover Contributions. 6.2 INVESTMENT OF PROFIT-SHARING ACCOUNT. ------------------------------------- (a) IN GENERAL. Except as provided in subsection (b), the amounts allocated to a Participant's Profit-Sharing Account shall be invested in the Balanced Fund. - 41 - Harris Retirement Plan 52 Accounts and Investments (b) PARTICIPANT-DIRECTED INVESTMENTS AT AGE 55. On attaining age 55, a Participant shall be entitled to direct the investment of his Profit-Sharing Account in accordance with the procedures set out in section 6.3. The Profit-Sharing Account shall remain invested in the Balanced Fund until the Participant files an election with respect thereto in accordance with procedures set out in section 6.3. 6.3 INVESTMENT OF ACCOUNTS OTHER THAN PROFIT-SHARING ACCOUNT. Except as provided in section 6.2, effective October 1, 1993, each Participant shall have the right to direct the investment of his Accounts and future contributions to his Accounts among the Investment Funds in accordance with the following procedures and such other procedures provided in the documents pertaining to each Investment Fund: (a) WRITTEN OR TELEPHONIC DIRECTION. Each election shall be completed by filing the appropriate election form or by following the appropriate telephone procedures for direct transfer as established by the Corporation Committee. (b) ELECTIONS IN 10% INCREMENTS FOR CURRENT BALANCES. An election with respect to current account balances, including the Participant's initial election with respect to the balance arising from a Rollover Contribution, shall be made in increments of ten percent of the account balance; - 42 - Harris Retirement Plan 53 Accounts and Investments (c) ELECTIONS IN 10% INCREMENTS FOR FUTURE CONTRIBUTIONS. An election with respect to future contributions shall be made in increments of ten percent of the contribution (after the contribution is reduced by the dollar amount directed into the Harris Stock Fund), provided that the combined Pre-Tax Contributions and After-Tax Contributions invested in the Harris Stock Fund shall equal no more than one percent of Compensation. To the extent Pre-Tax Contributions and After-Tax Contributions are invested in the Harris Stock Fund, the Matching Contributions attributable thereto also shall be invested in the Harris Stock Fund; (d) CHANGING ELECTIONS. A change of election may be made at any time; provided that an election change shall become effective only on the first day of the month. To be effective on the first day of any month, a written election must be made on or before the 20th day of the preceding month, and a telephonic election must be made on or before the 25th day of the preceding month. If more than one election change is made on or before the applicable deadline, the most recent election change shall be given effect. (e) ELECTIONS APPLY TO ALL ACCOUNTS. Each of the Participant's Accounts (including his Profit-Sharing Account after the Participant has filed an initial election under section 6.2(b)) shall be invested among the Investment Funds in the same manner, such that each election by a Participant with respect to the Investment Funds shall apply to all of his Accounts in the same proportion. - 43 - Harris Retirement Plan 54 Accounts and Investments (f) INVESTMENT IN BALANCED FUND ABSENT ELECTION. A Participant's Accounts and contributions made on behalf of the Participant shall be invested in the Balanced Fund until the Participant makes a valid investment election pursuant to this section 6.3 and any other procedures established by the Corporation Committee. 6.4 ALLOCATION OF EARNINGS AND LOSSES. Earnings and losses shall be allocated at least annually. In determining a Participant's share of the earnings or losses of each of the Investment Funds as of any Valuation Date, the total earnings or losses of the particular Investment Fund, net of expenses allocable to that fund, shall be allocated among the Participants' Accounts invested in that Investment Fund based on the ratio of each Participant's Accounts to the aggregate of the Accounts of all Participants, before taking into account any contributions that are required to be but are not yet made as of the Valuation Date and before taking into account any distributions, withdrawals or loans to Participants for the period coinciding with the Valuation Date. Contributions to Accounts are not credited with earnings in the month in which they are credited to any Account. - 44 - Harris Retirement Plan 55 Accounts and Investments 6.5 SPECIAL RULES CONCERNING HARRIS STOCK FUND. Notwithstanding any other provision of sections 6.2 and 6.3 to the contrary, the following rules shall apply to investments in the Harris Stock Fund: (a) AVAILABILITY. Only a Participant with at least a one-year Period of Service may elect to invest in this fund; and only Pre-Tax Contributions, After-Tax Contributions and Matching Contributions made with respect to Compensation earned on or after October 1, 1993 may be invested in this fund. For any Plan Year, the combined Pre-Tax Contributions and After-Tax Contributions invested in this fund on behalf of a Participant in each Plan Year shall equal no more than one percent of the Participant's Compensation for such Plan Year. An election to invest in the Harris Stock Fund shall take effect as soon as administratively feasible after the election is received. (b) RESTRICTIONS ON TRANSFERS. A Participant may not transfer amounts from other Investment Funds to the Harris Stock Fund. Any contributions invested in this Fund must remain in this fund for a minimum of 36 months, provided that amounts invested in this fund may be distributed to the Participant before the expiration of the 36-month period, if the Participant is otherwise entitled to a distribution under the Plan. (c) DIVIDENDS. A Participant's allocable share of cash dividends (and other cash earnings) credited to the Harris Stock Fund, will be reinvested in the Harris Stock Fund unless the Participant elects with respect to the dividends - 45 - Harris Retirement Plan 56 Accounts and Investments credited to his Account for a quarter to invest such cash dividends (and other cash earnings) among the Investment Funds other than the Harris Stock Fund in increments of ten percent of the amount of the dividends (and other earnings). Only cash dividends (and earnings) that have been credited to the Participant's Accounts for at least one month are subject to the Participant's investment election under this subsection (c). Each election shall be completed by filing the appropriate form or by following the appropriate telephone procedures as established by the Corporation Committee, pursuant to section 6.3(d). Dividends paid in the form of stock shall be retained in a Participant's Account until liquidated, in the sole discretion of the Trustee. Such liquidated dividends shall be cash earnings subject to investment elections in accordance with this subsection of the Plan. (d) CONTRIBUTIONS. The normal form of contributions for amounts invested in the Harris Stock Fund shall be in cash; provided, however, that the Corporation, in its discretion, may make the contribution in common stock of the Corporation, which may be contributed at a discount from fair market value. The Trustee is authorized to purchase common stock of the Corporation on the open market, and to give effect to the discount, if any, that has been established from time to time by allocating shares to Participants' Accounts in addition to the number of shares purchased on the open market by means of a given contribution. - 46 - Harris Retirement Plan 57 Accounts and Investments (e) DISTRIBUTIONS. Distributions from the Harris Stock Fund shall be in the form of cash or shares of Harris Stock at the election of the Participant. Fractional shares and distributions of a de minimis amount as determined by the Corporation Committee shall be paid in cash. (f) VOTING. Participants may submit non-binding proxies to the Trustee, which will vote the shares in the Harris Stock Fund in the exercise of its sole discretion. - 47 - Harris Retirement Plan 58 ARTICLE VII ----------- DISTRIBUTIONS ------------- 7.1 IN GENERAL. A Participant shall be entitled to receive a distribution of the vested interest in his Accounts on the earlier of termination of employment or attainment of age 59 1/2, except that his Pre-Tax Contributions and Matching Pre-Tax Contributions are distributable only as allowed under section 401(k) of the Code. Distributions shall be made upon the sale or disposition of the stock in a subsidiary, or the sale or disposition of substantially all the assets of a trade or business, as provided, under the corporate documents effecting the sale or disposition and in accordance with section 401(k)(10) of the Code. A termination of employment shall not be deemed to occur for purposes of this section 7.1 and section 7.2 until the Participant is no longer employed by a Related Company. A Participant may elect to receive any amount invested in the Harris Stock Fund in the form of stock; provided that fractional shares and distributions of a de minimis amount as determined by the Corporation Committee shall be paid in cash. 7.2 SMALL BENEFIT CASH-OUT. Except as provided in section 7.5, in any case in which a Participant's vested interest in his Accounts does not (and did not at the time of any prior distributions) exceed $3,500 (or such larger amount as may be permitted by law), the vested interest shall be paid to the Participant in a lump sum as soon as reasonably practicable upon termination of employment. - 48 - Harris Retirement Plan 59 Distributions 7.3 FORM OF PAYMENT. --------------- (a) OPTIONS. In any case in which a Participant's vested interest in his Accounts exceeds the amount provided in section 7.2, the Participant (or in the event of death, his Beneficiary) may elect at any time to receive payment in: (1) a lump sum of any portion or all of the balance of the Participant's Accounts; (2) substantially equal periodic installment payments over a period of time to be elected by the Participant; (3) a combination of (a) and (b), or (4) with respect to the Participant or the Participant's spouse, a direct rollover. (b) CHANGES ALLOWED. A Participant (or, in the event of death, his Beneficiary) may change his election with respect to the form of payment at any time before or after distribution of benefits commences, subject to the provisions of section 7.9. (c) EFFECT OF FAILURE TO SPECIFY AN OPTION. If a Participant fails to file an election under this section 7.3, his benefits shall be paid in accordance with section 7.4. - 49 - Harris Retirement Plan 60 Distributions 7.4 TIME OF PAYMENT. On termination of employment, a Participant, other than one described in section 7.2, may elect that payment of benefits begin immediately or at any other time. If a Participant fails to file an election under this section 7.4 and payment of benefits has not already commenced, payment of his benefits shall commence on April 1 of the calendar year following the year in which the Participant attains 70 1/2 and shall be paid in accordance with the minimum distributions requirements of section 401(a)(9) of the Code. 7.5 DIRECT ROLLOVER. ---------------- (a) Effective January 1, 1993, a Participant or "distributee" may elect at any time to have any portion of an "eligible rollover distribution" paid in a direct rollover to the trustee or custodian of an "eligible retirement plan" specified by the Participant or distributee, whichever is applicable. Payment of a direct rollover in the form of a check payable to the trustee or custodian of an eligible retirement plan, for the benefit of the Participant or distributee, may be mailed to the Participant or distributee. (b) For purposes of this section 7.5, the following terms shall have the following meanings: (1) "Distributee" means a surviving spouse or a spouse or former spouse who is an alternate payee under a - 50 - Harris Retirement Plan 61 Distributions Qualified Domestic Relations Order defined in section 414(p) of the Code. (2) "Eligible retirement plan" means an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code that accepts an eligible rollover distribution; provided that if the distributee is a surviving spouse, an eligible retirement plan means an individual retirement account or individual retirement annuity. (3) "Eligible rollover distribution" means any distribution of all or a portion of the Participant's Accounts, other than the portion of his After-Tax Account and Harris Stock After-Tax Account attributable to After-Tax Contributions, but does not include a distribution (i) in installments over a period of ten years or more or over a period described in section 7.9(c), or (ii) to the extent the distribution is required under section 401(a)(9) of the Code. - 51 - Harris Retirement Plan 62 Distributions 7.6 PAYMENTS ON DEATH. If a Participant dies before he has received the full amount of the vested interest in his Accounts, the unpaid amount shall be paid to his Beneficiary. If the unpaid amount does not exceed $3,500, it shall be paid to the Beneficiary as soon as reasonably practicable upon the Participant's death. If the unpaid amount exceeds $3,500, it shall be paid to the Beneficiary as provided in sections 7.3, 7.4 and, if the Beneficiary is the spouse, section 7.5; provided that, if the Beneficiary fails to file an election, the unpaid amount shall be paid in a lump sum as soon as reasonably practicable after the fifth anniversary of the Participant's death. 7.7 BENEFIT AMOUNT AND WITHHOLDING. (a) VESTED AMOUNT AND ADJUSTMENTS. For purposes of this Article VII, a Participant's vested interest in his Accounts shall be determined as of the Valuation Date coinciding with or immediately following the date of the event giving rise to the distribution, plus any Profit-Sharing Contribution to which the Participant may be entitled under section 3.2 that has not yet been credited to the Participant's Profit-Sharing Account. Any unpaid amount in the Participant's Accounts shall continue to be adjusted for earnings and losses as provided in section 6.4 until it is distributed. - 52 - Harris Retirement Plan 63 Distributions (b) WITHHOLDING. The amount of any distribution shall be reduced to the extent necessary to comply with Federal, state and local income tax withholding requirements. 7.8 ORDER OF DISTRIBUTIONS. Any distribution under this Plan shall be charged against the Participant's Accounts pursuant to administrative procedures designed to maximize the tax benefits to the Participant by distributing to him first his After-Tax Contributions to the extent permitted by law. 7.9 STATUTORY REQUIREMENTS. Notwithstanding any other provisions of the Plan to the contrary, the following rules shall apply to all payments under the Plan: (a) LATEST COMMENCEMENT DATE. Unless the Participant files a written election to defer payment of benefits, benefits payments with respect to any Participant shall commence no later than the 60th day after the close of the Plan Year in which the latest of the following occurs: (1) the date on which the Participant attains Normal Retirement Age; (2) the 10th anniversary of the date on which the Participant commenced participation in the Plan, or - 53 - Harris Retirement Plan 64 Distributions (3) the date on which the Participant terminated employment. Failure to file an election under section 7.4 for payment of benefits to commence shall be deemed to be a written election to defer payment of benefits under this subsection (a). (b) REQUIRED BEGINNING DATE. Notwithstanding subsection (a) above, payment of benefits to a Participant shall commence no later than April 1 of the calendar year following the calendar year in which the Participant attains age 70 1/2. (c) MAXIMUM DURATION OF DISTRIBUTIONS. Payment of a Participant's benefit shall be made over a period not to exceed one of the following periods: (1) the life of the Participant; (2) the life of the Participant and the Participant's Beneficiary; (3) a period certain not extending beyond the life expectancy of the Participant, or (4) a period certain not extending beyond the joint and last survivor expectancy of the Participant and his Beneficiary. - 54 - Harris Retirement Plan 65 Distributions The amount to be distributed each year must be at least equal to the quotient obtained by dividing the Participant's benefit by the life expectancy of the Participant or the joint and last survivor expectancy of the Participant and his Beneficiary. Life expectancy and joint and last survivor expectancy shall be computed by the use of the return multiples contained in Treasury regulation section 1.72-9. For purposes of this computation, a Participant's and a spouse's life expectancy may be recalculated annually; however, the life expectancy of a Beneficiary, other than the Participant's spouse, may not be recalculated. If the Participant's spouse is not the Beneficiary, the method of distribution selected must ensure that at least 50 percent of the present value of the amount available for distribution is paid within the life expectancy of the Participant. (d) DISTRIBUTION AFTER THE PARTICIPANT'S DEATH. In the event a Participant who is receiving benefits dies, the remaining balance of his benefits shall be distributed at least as rapidly as under the method of distribution elected by the Participant. If a Participant dies before distribution of benefits commences, the Participant's entire interest will be distributed no later than five years after the Participant's death, except to the extent that an election is made to receive distributions in accordance with (1) or (2) below: (1) if any portion of the Participant's benefit is payable to a Beneficiary, installment distributions may be made over the life or life expectancy of the Beneficiary, - 55 - Harris Retirement Plan 66 Distributions provided that the installments commence no later than one year after the Participant's death, and (2) if the Beneficiary is the Participant's spouse, the commencement of distributions may be delayed until the date on which the Participant would have attained age 70 1/2. If the spouse dies before payments begin, subsequent distribution shall be made as if the spouse had been the Participant. For purposes of the foregoing, payments may be calculated by use of the return multiples specified in Treasury regulation section 1.72-9. Life expectancy of a spouse may be recalculated annually. However, in the case of any other Beneficiary, such life expectancy shall be calculated at the time payment first commences without further recalculation. Any amount paid to a child of the Participant shall be treated as if it had been paid to the surviving spouse if the amount becomes payable to the spouse when the child reaches the age of majority. (e) LIMIT ON LIMITS. All distributions under this section 7.9 shall be determined and made in accordance with section 401(a)(9) of the Code, including the minimum distribution incidental benefit requirement of Treasury regulation section 1.401(a)(9)-2, the provisions of which are incorporated herein by reference. - 56 - Harris Retirement Plan 67 Distributions 7.10 DESIGNATING BENEFICIARIES. -------------------------- (a) WRITTEN DESIGNATION. Each Participant may, by filing a written notice with the Corporation Committee, designate a Beneficiary or Beneficiaries to receive any benefits payable as a result of the death of the Participant. This designation may be changed by the Participant at any time by giving written notice to the Corporation Committee. Any designation of a Beneficiary other than the Participant's spouse must be consented to by the spouse in writing and witnessed by a notary public (or a representative of the Plan prior to October 1, 1993). Any consent required under this section 7.10 shall be valid only with respect to the spouse who signed it. Spousal consent shall not be required if the Participant establishes to the satisfaction of a Plan representative that such consent may not be obtained because (a) there is no spouse; (b) the spouse cannot be located, or (c) there exists such other circumstances as the Secretary of the Treasury may prescribe as excusing the requirement for such consent. A Participant may revoke any prior election without obtaining the consent of the spouse to such revocation. In the absence of a new election that meets the requirements of this section 7.10, the spouse shall be the Beneficiary. (b) DEATH PRIOR TO DESIGNATING BENEFICIARY. In the event the Participant dies with no beneficiary designation on file, the Participant's Beneficiary shall be the Participant's surviving spouse, if any, and if there is no surviving spouse, the Participant's estate. - 57 - Harris Retirement Plan 68 Distributions 7.11 PAYMENT OF GROUP INSURANCE PREMIUMS. If a retired Participant is eligible to be included in any contributory group insurance program maintained or sponsored by an Employment Unit, a retired Participant who is receiving benefits under the Plan in installments and who elects to be covered under such contributory group insurance program may direct that a specified portion of the installment payments be withheld and paid by the Trustee on his behalf to the Employment Unit as his contribution under such group insurance program. Such direction by a retired Participant shall be in writing on a form prescribed by the Corporation Committee. Any such direction may be revoked by the retired Participant not less than 15 days prior to the effective date of such revocation. Any withholding and payment of insurance costs on behalf of a retired Participant shall be made in accordance with Treasury regulation section 1.401(a)-13. 7.12 INABILITY TO LOCATE PARTICIPANT. If, when any payment becomes due, the Corporation Committee is unable to locate the Participant or Beneficiary after exercising reasonable diligence, payment shall be stopped and future payments to such individual discontinued. Any remaining unpaid benefits with respect to such Participant or Beneficiary shall be deemed to be forfeited, provided that if the Participant or Beneficiary later notifies the Corporation - 58 - Harris Retirement Plan 69 Distributions Committee of his address, to the extent required by law payment of the forfeited amount shall be reinstated by the Participating Company with which the Participant was last employed. - 59 - Harris Retirement Plan 70 ARTICLE VIII LOANS ----- 8.1 IN GENERAL. Each "party in interest," as defined in section 3(14) of ERISA, with respect to the Plan for whom a Pre-Tax Account, After-Tax Account and/or Rollover Account is maintained may request that a loan be made to him from his Pre-Tax Account, After-Tax Account and/or Rollover Account by filing an appropriate application, pursuant to procedures adopted by the Corporation Committee. All loan requests shall be approved on a reasonably equivalent basis (within the meaning of section 4975(d)(1)(A) of the Code and section 408(b)(1)(A) of ERISA), subject to the conditions set forth in this Article VIII. 8.2 LOAN ADMINISTRATION. The Corporation Committee shall be responsible for administering the loan program, but may delegate the operation of the program to the Plan's record-keeper. The procedures for applying for a loan and the basis on which loans will be approved or denied shall be described in the summary plan description for the Plan or in other documents prepared by or at the direction of the Corporation for this purpose and such additional documents are hereby incorporated by reference to the extent required by the Department of Labor. - 60 - Harris Retirement Plan 71 Loans 8.3 TERMS AND CONDITIONS OF LOANS. The terms and conditions of each loan shall be set forth in the promissory note and security agreement evidencing the loan and shall include, but not be limited to, the following: (a) MAXIMUM AMOUNT. The principal amount of a loan made under this Plan to any individual together with the outstanding principal amount of any other loan made to such individual under any other qualified plan under section 401(a) of the Code maintained by a Related Company shall not exceed the lesser of (1) 50 percent of the individual's vested interest in his Accounts, (2) $50,000 reduced by the highest outstanding balance of any previous loans from the Plan and any other plans of a Related Company during the one-year period ending immediately before the date on which the current loan is made, and (3) such amount that repayment of principal plus interest does not exceed 25 percent of the individual's gross pay. (b) MINIMUM AMOUNT. The minimum loan amount shall be $500 and all loan amounts shall be in increments of $100. - 61 - Harris Retirement Plan 72 Loans (c) PERIOD. No loan shall be made for a period less than 12 months or longer than four and one-half years or such other periods as may be established from time to time under the Corporation Committee's written loan procedures. (d) SECURITY. A loan shall be secured by the Participant's Accounts up to the amount of the outstanding balance of the loan. (e) NUMBER OF LOANS. Effective January 1, 1994, two loans shall be available under the Plan to a Participant at any time, but no third loan shall be made to an individual within 30 days following the repayment in full of a prior loan, or such other time period as may be provided from time to time under Plan procedures. (f) PARTICIPANT COVERS LOAN EXPENSES. Any loan made under the Plan shall be subject to such other terms and conditions as the Corporation Committee shall deem necessary or appropriate, including the condition that he reimburse the Plan for any state documentary stamps and other taxes, and any other reasonable expenses specified by the Corporation Committee, which the Plan incurs to extend, make and service the loan. (g) HOW TO APPLY. A loan may be initiated by following the appropriate telephonic or other procedures established by the record-keeper, as the delegate of the Corporation Committee. - 62 - Harris Retirement Plan 73 Loans 8.4 INTEREST RATE. The interest rate for a loan made under this Plan shall be fixed for the term of each loan, and shall be set as determined by the Corporation Committee on a quarterly basis at a rate which it deems reasonable at the time for a fully secured loan and which is consistent with applicable Department of Labor regulations. 8.5 REPAYMENT AND DEFAULT. ---------------------- (a) PAYMENTS. A loan made under the Plan shall require that repayment be made in substantially level installments through payroll withholding while the individual is an Employee and through such other means (not less frequently than quarterly) as the Corporation Committee deems appropriate for an individual who is not an Employee. Nevertheless, any individual who terminates employment for any reason other than retirement, discharge or lay-off must repay all of the outstanding principal balance of his loan, plus interest due, within 90 days of the date of termination. (b) PREPAYMENT. An individual may repay, at any time, all of the outstanding principal balance of his loan, plus interest due, without penalty. (c) CREDITING PAYMENTS. Principal and interest payments shall be credited to the Participant's Pre-Tax Account, After-Tax Account and/or Rollover Account and shall be invested in the same manner as Pre-Tax Contributions, After-Tax Contributions and Rollover Contributions. - 63 - Harris Retirement Plan 74 Loans (d) DEFAULT. The events of default shall be set forth in the promissory note and security agreement which evidence the loan. Such events shall include, but not be limited to, the following: (1) an individual terminates employment as an Employee for any reason and does not make payments when due, subject to a 90-day grace period; (2) the Trustee concludes that the individual no longer is a good credit risk; (3) to the extent permissible under federal law, the individual's obligation to repay the loan has been discharged through bankruptcy or any other legal process of action which did not actually result in payment in full, and (4) the individual does not make payments when due, subject to the applicable 90 day grace period. (d) EFFECT OF DEFAULT. Upon the existence or occurrence of an event of default, the loan may become due and payable in full and, if such loan is not actually repaid in full, shall be cancelled on the books and records of the Plan and the amount otherwise distributable to such individual shall be reduced, as of the date his Accounts otherwise become distributable, by the principal amount of the loan then due plus any accrued but unpaid interest. Such principal and - 64 - Harris Retirement Plan 75 Loans interest shall be determined without regard to whether the loan had been discharged through bankruptcy or any other legal process or action which did not actually result in payment in full; however, interest shall continue to accrue on such loan only to the extent permitted under applicable law. Cancellation of the amount distributable to an individual under this subsection (d) shall not occur until a distributable event occurs under the Plan. In the event a default occurs before a distributable event occurs, the Corporation Committee shall take such other steps to cure the default as it deems appropriate under the circumstances to preserve Plan assets. 8.6 MECHANICS. A loan to an individual under this Plan shall be made from his Pre-Tax Account, After-Tax Account and Rollover Account, and the loan shall be an asset of the respective accounts. For investment purposes, the principal amount of the loan shall be deducted from the Participant's Investment Funds other than the Harris Stock Fund in proportion to their value in his Accounts as of the Valuation Date immediately preceding the loan. 8.7 SPECIAL POWERS. The Corporation Committee shall have the power to take such action as it deems necessary or appropriate to stop the benefit payments to or on behalf of an individual who fails to repay a loan (without regard to whether the obligation to repay the loan had been discharged through - 65 - Harris Retirement Plan 76 Loans bankruptcy or other legal process or action) until his Pre-Tax Account, After-Tax Account and/or Rollover Account has been reduced by the principal due (without regard to such discharge) on such loan or to distribute the note which evidences such loan in full satisfaction of any interest in the Pre-Tax Account, After-Tax Account, and/or Rollover Account which is attributable to the unpaid balance of such loan. - 66 - Harris Retirement Plan 77 ARTICLE IX IN-SERVICE WITHDRAWALS ---------------------- 9.1 AT-WILL WITHDRAWALS FROM SAVINGS ACCOUNT AND AFTER-TAX ACCOUNT. (a) AVAILABILITY. Subject to section 9.4, a Participant may elect to withdraw at any time in a lump sum all or a portion of the balance in his Savings Account and After-Tax Account for any purpose by filing the appropriate election with the Local Committee. (b) LIMITATIONS. A Participant may make a withdrawal under this subsection (a) not more than once every three months. A Participant's election to make After-Tax Contributions shall be suspended, and no After-Tax Contributions or Matching After-Tax Contributions shall be credited to the Participant's Account, for a period of six months after the date of a Participant's withdrawal from the After-Tax Account. The Participant's election shall automatically be reinstated at the expiration of such six-month period, unless the Participant has filed a change of election pursuant to section 3.7. 9.2 HARDSHIP WITHDRAWALS FROM PRE-TAX ACCOUNT. (a) AVAILABILITY. Subject to section 9.4, a Participant who has taken all loans and withdrawals under section 9.1, may elect to withdraw in a lump sum up to 100 percent of his Pre-Tax Contributions, and/or his Rollover Account to satisfy an immediate and heavy financial need, by filing an election with the Corporation Committee. Withdrawals under this section 9.3 shall be - 67 - Harris Retirement Plan 78 In-Service Withdrawals authorized by the Corporation Committee in the event of financial need meeting the safe harbor standards of Treasury regulation section 1.401(k)-1(d)(2), which is incorporated herein by reference. A withdrawal shall be deemed to be made on account of an immediate and heavy financial need under those regulations if the withdrawal is for: (1) expenses for medical care previously incurred by the Participant, his spouse or any of his dependents or necessary for these persons to obtain medical care; (2) purchase (excluding mortgage payments) of a principal residence for the Participant; (3) payment of tuition and related education fees for the next 12 months of post-secondary education for the Participant, his spouse, children or dependents; (4) payment to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant's principal residence. (5) any other event determined by the Commissioner of Internal Revenue. A withdrawal shall be deemed necessary to satisfy an immediate and heavy financial need of the Participant if: - 68 - Harris Retirement Plan 79 In-Service Withdrawals (i) the withdrawal is not in excess of the amount required to meet the financial need of the Participant, including taxes and additions to tax applicable to such withdrawal, and (ii) the Participant has obtained all other distributions, withdrawals, and all nontaxable loans currently available under this Plan and any other plans maintained by a Related Company. (b) LIMITATIONS. A Participant may take a withdrawal under this section 9.2 no more than once in a six-month period. 9.3 EMERGENCY WITHDRAWALS. Subject to section 9.4, a Participant who has taken all withdrawals available under sections 9.1 and 9.2 above may elect to withdraw in a lump sum all or a portion of the balance in his Basic Account and Supplemental Account if the withdrawal otherwise satisfies the requirements of section 9.2(a). An election to withdraw under this section 9.3 is subject to the approval of the "sector executive" which shall be granted on a uniform and nondiscriminatory basis. - 69 - Harris Retirement Plan 80 In-Service Withdrawals 9.4 REDUCTION OF INVESTMENT FUND BALANCES. The Investment Funds in which a Participant's Accounts are invested, other than the Harris Stock Fund, shall be reduced proportionately to reflect the amount of the Participant's withdrawals under this Article IX, except that a Participant may not withdraw contributions invested in the Harris Stock Fund, and no more than 80 percent of the balance determined as of the Valuation Date immediately preceding the withdrawal shall be available to be withdrawn from equity and fixed income fund balances; provided that the amount remaining in the equity and fixed income funds determined as of the Valuation Date coinciding with or next following the withdrawal may be withdrawn as part of the withdrawal request. - 70 - Harris Retirement Plan 81 ARTICLE X TOP-HEAVY PROVISIONS -------------------- 10.1 IN GENERAL. Notwithstanding any other provisions of the Plan to the contrary, for any Plan Year in which this Plan is "top-heavy," as defined herein, the provisions of this Article X shall apply. If the Plan is top-heavy and then ceases to be top-heavy, except as otherwise provided in section 10.3, the provisions of this Article X shall cease to apply. 10.2 MINIMUM ALLOCATION. (a) AMOUNT. For any Plan Year for which the Plan is top-heavy, a minimum allocation shall be made for each "non-key employee" who is employed by a Participating Company on the last day of the Plan Year in an amount equal to the lesser of (1) three percent of Compensation or (2) the largest percentage of Compensation allocated to any "key employee" during the Plan Year. The minimum allocation is determined without regard to any Social Security contribution. The minimum allocation shall not apply to any non-key employee who receives a minimum contribution or minimum benefit under any other plan of a Related Company. (b) ALLOCATION. To satisfy subsection (a), the Profit-Sharing Contributions for such Plan Year first shall be allocated to all Participants employed on the last day of the Plan Year in an amount that meets the minimum - 71 - Harris Retirement Plan 82 Top-Heavy Provisions allocation amount, and any remaining Profit-Sharing Contribution then shall be allocated in accordance with section 3.2. 10.3 MINIMUM VESTING. For any Plan Year for which the Plan is top-heavy, the vested interest of a Participant who is employed by a Participating Company during any part of the Plan Year shall be determined under the following schedule: PERIOD OF SERVICE VESTED PERCENTAGE ----------------- ----------------- Less than 2 years 0% 2 years but less than 3 years 20% 3 years but less than 4 years 40% 4 years but less than 5 years 60% 5 years but less than 6 years 80% 6 years or more 100% If the Plan becomes top-heavy and ceases to be top-heavy, a Participant who have a five-year Period of Service as determined under section 5.3 may elect to have his vested interest continue to be determined under this section 10.3, notwithstanding that the Plan is no longer top-heavy. 10.4 DEFINITIONS. For purposes of this Article X, the following terms shall have the following meanings: (a) "Determination date" means the last day of the preceding Plan Year. - 72 - Harris Retirement Plan 83 Top-Heavy Provisions (b) "Determination period" means the Plan Year containing the determination date and the four preceding Plan Years. (c) "Key employee" means an Employee or former employee (and their Beneficiaries) who, at any time during the determination period, is (1) an officer of the Participating Company and has annual compensation greater than 50 percent of the dollar limitation in effect under section 415(b)(1)(A) of the Code for any such Plan Year, (2) one of the ten Employees having annual compensation in excess of the limitation in effect under section 415(c)(1)(A) of the Code and owning (or considered as owning with the meaning of section 318 of the Code) the largest interests in the Participating Company, (3) a five-percent owner (within the meaning of section 416(i)(1)(B) of the Code) of the Participating Company, or (4) a one-percent owner of the Participating Company having annual compensation from the Participating Company of more than $150,000. - 73 - Harris Retirement Plan 84 Top-Heavy Provisions The determination of "key employee" shall be made under section 416(i)(1) of the Code, the terms of which are incorporated herein by reference. (d) "Non-key employee" means any Employee who is not a key employee. (e) "Permissive aggregation group" means the "required aggregation group" and any other plans of the Participating Company which, when considered as a group with the required aggregation group, would continue to satisfy the requirements of sections 401(a)(4) and 410 of the Code. (f) "Required aggregation group" means (1) each qualified plan of the Participating Company in which at least one key employee participates or participated at any time during the determination period (regardless of whether the plan has terminated), and (2) any other qualified plan of the Participating Company which enables a plan described in (1) to meet the requirements of sections 401(a) and 410 of the Code. (g) "Top-heavy" means: (1) the top-heavy ratio for the Plan exceeds 60 percent and the Plan is not part of any required aggregation group or permissive aggregation group; (2) the Plan is part of a required aggregation group but not a permissive aggregation group and the top-heavy - 74 - Harris Retirement Plan 85 Top-Heavy Provisions ratio for the required aggregation group exceeds 60 percent; (3) the Plan is part of a required aggregation group and a permissive aggregation group and the top-heavy ratio for the permissive aggregation group exceeds 60 percent. (h) "Top-heavy ratio" means: (1) if the Participating Company or Related Company has not maintained any defined benefit plan which during the five-year period ending on the determination date had accrued benefits, the top-heavy ratio is a fraction, the numerator of which is the sum of the account balances of all key employees as of the determination date (including any part of any account balance distributed in the five-year period ending on the determination date), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the five-year period ending on the determination date). - 75 - Harris Retirement Plan 86 Top-Heavy Provisions (2) If a Related Company maintains or has maintained a defined benefit plan which during the five-year period ending on the determination date had accrued benefits, the top-heavy ratio is a fraction, the numerator of which is the sum of account balances under the defined contributions plans for all key employees (including any part of any account balance distributed in the five-year period ending on the determination date), and the present value of accrued benefits under the defined benefit plans for all key employees as of the determination date, and the denominator of which is the sum of the account balances under the defined contribution plans for all participants (including any part of any account balance distributed in the five-year period ending on the determination date), and the present value of accrued benefits under the defined benefit plans for all participants as of the determination date. (3) For purposes of (1) and (2) above, the value of account balances and the present value of accrued benefits shall be determined as of the most recent "valuation - 76 - Harris Retirement Plan 87 Top-Heavy Provisions date" that falls within or ends with the 12-month period ending on the determination date, except as provided in section 416 of the Code for the first and second plan years of a defined benefit plan. In the case of a defined benefit plan, the "present value of accrued benefits" shall be determined under the terms of the applicable defined benefit plan. The account balances and accrued benefits of a Participant who is not a key employee but who was a key employee in a prior year, or who has not been credited with at least an Hour of Service with any Participating Company maintaining the plan at any time during the five-year period ending on the determination date shall be disregarded. When aggregating plans, the value of account balances and accrued benefits shall be calculated with reference to the determination dates that fall within the same calendar year. - 77 - Harris Retirement Plan 88 Top-Heavy Provisions (4) The calculation of the top-heavy ratio shall be determined in accordance with section 416 of the Code, the provisions of which are incorporated herein by reference. (i) "Valuation date" means the last day of the Plan Year. - 78 - Harris Retirement Plan 89 ARTICLE XI ADMINISTRATION -------------- 11.1 NAMED FIDUCIARIES. The Corporation shall be the "named fiduciary" responsible for the control, management and administration of the Plan. 11.2 CORPORATION COMMITTEE. The Corporation shall establish a Corporation Committee to administer the Plan. The members of the Corporation Committee shall be appointed, and removed at any time, by the appropriate officers of the Corporation. A member of the Corporation Committee may resign at any time by giving written notice to the Corporation at least 15 days prior to the effective date of the resignation. 11.3 POWERS AND DUTIES OF COMMITTEE. The Corporation Committee shall have the powers and duties conferred on it by the terms of the Plan. The Corporation Committee may establish such rules and regulations as it deems necessary to enable it to administer the Plan. The Corporation Committee shall have the discretionary authority to determine eligibility for benefits and construe the terms of the Plan. 11.4 ACTIONS OF COMMITTEE. No formal meeting and no minutes shall be required with respect to actions taken by the Corporation Committee. - 79 - Harris Retirement Plan 90 Administration 11.5 FINALITY OF DECISIONS. All decisions and directions made by the Corporation Committee, in the discretionary exercise of its powers and duties, shall be final and binding on all parties concerned. 11.6 IMMUNITIES OF COMMITTEE. Except as otherwise provided by law, no member of the Corporation Committee shall be liable to a Participating Company or to any Participant or Beneficiary by reason of the exercise in good faith of any power or discretion vested in him by the terms of the Plan. 11.7 ADVISERS AND AGENTS. The Corporation, or the Corporation Committee, with the consent of the Corporation, may employ one or more persons to render advice with respect to any responsibility that the Corporation, or the Corporation Committee, respectively, has under the Plan. The Corporation, or the Corporation Committee, may appoint unrelated parties to carry out trustee, investment management and record-keeping responsibilities with respect to the Plan. The Corporation shall indemnify any person, including an employee of the Corporation, who is acting on behalf of the Corporation or the Corporation Committee in this capacity with respect to liability that may arise by reason of his action or failure to act concerning the Plan, excepting any willful or gross misconduct or criminal acts, to the extent required in the respective contracts governing such arrangements. - 80 - Harris Retirement Plan 91 Administration 11.8 COMMITTEE MEMBER WHO IS PARTICIPANT. A member of the Corporation Committee who also is a Participant shall have no right to vote with respect to any action that pertains solely to him as a Participant. In the event a majority of the remaining members are unable to agree as to the action to be taken with respect to the Participant, the chief executive officer of the Corporation shall appoint an impartial person to arbitrate the matter between the remaining members and to reach a decision. 11.9 INFORMATION PROVIDED BY PARTICIPATING COMPANIES. Each Participating Company and Employment Unit shall provide the Corporation, the Corporation Committee and the Trustee with complete and timely information regarding employment data for each Employee and Participant needed by the Corporation, Corporation Committee or Trustee to administer the Plan, including, but not limited to, information concerning Compensation, date of employment, date of termination of employment, reason for termination and any other information required by the Corporation, Corporation Committee, or Trustee. 11.10 EXPENSES. All reasonable and proper expenses of the Plan and the Trust, including, but not limited to, investment advisory fees, record-keeping fees, and Trustee's fees shall be paid from Participants' Accounts in a uniform and - 81 - Harris Retirement Plan 92 Administration nondiscriminatory manner, which may be ratably, unless otherwise paid by the Corporation. The Corporation may seek reimbursement of any expense which it pays that is properly payable by the Trust Fund. 11.11 TRUST FUND AVAILABLE TO PAY ALL PLAN BENEFITS. The Plan is intended to be a single plan under Treasury regulation section 1.414(1)-1(b)(1). The maintenance of Accounts as required by the terms of the Plan shall be for record-keeping purposes only. All of the Trust Fund shall be available to pay benefits to all Participants and Beneficiaries. - 82 - Harris Retirement Plan 93 ARTICLE XII AMENDMENT AND TERMINATION AND CHANGE OF CONTROL ----------------------------------------------- 12.1 AMENDMENT. The Corporation reserves the right to amend the Plan by action of its Board of Directors or the appropriate committee thereof at any time and from time to time, subject to the following limitations: (a) no amendment shall be made which vests in any Participating Company any interest in any assets of the Plan other than as specifically provided in section 12.2; (b) no amendment shall be made which would have the effect of decreasing a Participant's "accrued benefit" as proscribed in section 411(d)(6) of the Code; and (c) no amendment shall have the effect of reducing a Participant's vested interest in his Accounts. If the Plan is amended to change the vesting schedule, each Participant with at least a three-year Period of Service shall have the right to elect to have his vested interest computed without regard to the amendment. Each Participant shall be permitted to make this election during the period ending 60 days after the latest of the date (1) the amendment is adopted; (2) the amendment is effective, and (3) the Participant is issued a written notice of the amendment by the Corporation or its delegate. Amendments will normally be initiated by the Corporation Committee, approved by upper management of the Corporation, then adopted by resolution of the Retirement Plan Investment Committee of the Board of Directors. - 83 - Harris Retirement Plan 94 Amendment and Termination and Change of Control 12.2 TERMINATION OF PLAN. This Plan is intended to be permanent, and it is the expectation of the Corporation that it will continue indefinitely. However, the Corporation reserves the right to terminate the Plan by resolution of its Board of Directors or the appropriate committee thereof. In the case of a complete termination of the Plan, previously unallocated forfeitures shall be allocated as otherwise provided in the Plan. To the extent previously unallocated forfeitures cannot be allocated because all Participants have reached the limitations of section 415 of the Code, the unallocated amount shall revert back to the appropriate Participating Company, as provided in section 3.10. 12.3 DISCONTINUANCE OF CONTRIBUTIONS. The Corporation reserves the right to discontinue contributions to the Plan by amendment or by resolution of the Board of Directors or the appropriate committee thereof. 12.4 VESTING ON TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS. As of the date of the partial or complete termination of the Plan or upon the complete discontinuance of contributions to the Plan, each affected Participant shall become fully vested in his Accounts and no further allocations of contributions or forfeitures shall be made after such date on behalf of an affected Participant. - 84 - Harris Retirement Plan 95 Amendment and Termination and Change of Control 12.5 DISTRIBUTION ON TERMINATION. Upon the complete termination of the Plan, the Trustee shall distribute to each affected Participant the full amount standing to the credit of his Accounts; provided that if such amount exceeds (or at the time of any prior distribution exceeded) $3,500 and the Participant is not yet age 65, such lump sum shall not be paid without his consent. If the Participant does not consent, an annuity contract shall be purchased for and distributed to the Participant. 12.6 CHANGE OF CONTROL. (a) DEFINITION. Notwithstanding any other provisions of the Plan to the contrary, if (1) a third person, including a "group" as defined in section 12(d)(3) of the Securities Exchange Act of 1934 (or any rules or regulations thereunder), acquires shares of the Corporation having 20 percent or more of the total number of votes that may be cast for the election of directors of the Corporation; or (2) as a result of any cash tender or exchange offer, merger or other business combination of the foregoing transactions (the "Transaction"), the persons who were directors of the Corporation before the - 85 - Harris Retirement Plan 96 Amendment and Termination and Change of Control Transaction cease to constitute a majority of the Board of Directors of the Corporation or any successor to the Corporation, then during the period commencing on the date of acquisition of said voting power or control of the Board of Directors of the Corporation or any successor thereto and ending at the close of business on the next following June 30 (the "Restriction Period"), the provisions of this section 12.6 shall apply. (b) EFFECT. During the Restriction Period, the Plan may not be terminated or amended to the extent the amendment would: (1) reduce coverage under the Plan; (2) reduce the amount of Profit-Sharing Contributions required to be made for the Plan Year ending on the last day of the Restriction Period; (3) reduce the amount of After-Tax Contributions eligible for a matching contribution that a Participant is permitted to make or the amount of the Matching After-Tax Contributions required under sections 3.5 and 3.6; or (4) reduce the amount of Pre-Tax Contributions that a Participant is permitted to make or the amount of - 86 - Harris Retirement Plan 97 Amendment and Termination and Change of Control Matching Pre-Tax Contributions required under sections 3.3 and 3.4. (c) For the purpose of computing the amount of the Profit-Sharing Contributions for the twelve-month period ending on the last day of a Restriction Period, the adjusted consolidated net income of the Corporation and its Consolidated Subsidiaries before net income taxes for the Fiscal Year ending on such date is deemed to be the forecast of the consolidated net income of the Corporation and its Consolidated Subsidiaries for such Fiscal Year as set forth in the annual operating plan of the Corporation for such Fiscal Year. (d) During the Restriction Period, any person who was an Employee on the day preceding the first day of the Restriction Period shall be deemed to be an Employee so long as he is employed by a member of a "controlled group of corporations" which includes, or by a trade or business that is under common control with (as those terms are defined in sections 414(b) and (c) of the Code) the Corporation, any corporation which is the survivor of any merger or consolidation to which the Corporation was a party, or any corporation into which the Corporation has been liquidated. - 87 - Harris Retirement Plan 98 ARTICLE XIII MISCELLANEOUS PROVISIONS ------------------------ 13.1 RESTRICTIONS ON ALIENATION; QUALIFIED DOMESTIC RELATIONS ORDERS. Except as otherwise may be required for Federal, state or local income tax withholding purposes, no benefit or interest under this Plan shall be subject to assignment or alienation, either voluntarily or involuntarily. The preceding sentence shall apply to the creation, assignment or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is determined to be a Qualified Domestic Relations Order, as defined in section 414(p) of the Code. In accordance with uniform and nondiscriminatory procedures established by the Corporation Committee from time to time, the Corporation Committee upon the receipt of a domestic relations order which seeks to require the distribution of a Participant's Account in whole or in part to an "alternative payee" (as that term is defined in Code section 414(p)(8)) shall: (1) promptly notify the Participant and such "alternate payee" of the receipt of such order and of the procedure which the Corporation Committee will follow to determine whether such order constitutes a "Qualified Domestic Relations Order" within the meaning of Code section 414(p), (2) determine whether such order constitutes a "Qualified Domestic Relations Order" and notify the Participant and the "alternate payee" of the results of such determination and, - 88 - Harris Retirement Plan 99 Miscellaneous Provisions (3) if the Corporation Committee determines that such order does constitute a "Qualified Domestic Relations Order," distribute to such "alternate payee" under the terms of such order the amount called for under the order in a single sum within 60 days of the date such order is determined to constitute a Qualified Domestic Relations Order, without regard to whether a distribution would be permissible to the Participant at such time under this Plan. The determination and the distribution made by, or at the direction of, the Corporation Committee under this section 13.1 shall be final and binding on the Participant and on all other persons interested in such order. An "alternate payee" under this section 13.1 shall not be an eligible person for purposes of obtaining a loan pending the distribution of such alternate payee's entire interest under this Plan. 13.2 EXCLUSIVE BENEFIT REQUIREMENT. Except as provided in sections 12.2 and 13.3, no assets of the Plan shall revert to a Participating Company or be used for or diverted to purposes other than providing benefits to Participants and their Beneficiaries and defraying reasonable costs of administering the Plan. - 89 - Harris Retirement Plan 100 Miscellaneous Provisions 13.3 RETURN OF CONTRIBUTIONS. (a) MISTAKE OF FACT. Any contribution made by a Participating Company due to a mistake of fact shall be returned to the Participating Company within one year of the date the contribution was made. (b) NONDEDUCTIBLE CONTRIBUTIONS. In the event the deduction of a contribution made by a Participating Company is disallowed under section 404 of the Code, such contribution (to the extent disallowed) shall be returned to the Participating Company within one year of the disallowance of the deduction. 13.4 NO CONTRACT OF EMPLOYMENT. Neither the establishment and maintenance of the Plan nor the participation in the Plan by any Employee shall be construed as a contract between the Employee and any Participating Company so as to give any Employee the right to be retained by any Participating Company, or to interfere with the rights of any Participating Company to discharge the Employee at any time. 13.5 PAYMENT OF BENEFITS ON INCAPACITY. In the event the Corporation Committee determines that any person to whom a distribution is to be made is unable to care for his affairs by reason of illness or other disability, any amount distributable to such person (unless prior claim thereto shall have been made by a duly qualified guardian or other legal representative) may, in the discretion of the - 90 - Harris Retirement Plan 101 Miscellaneous Provisions Corporation Committee, be paid to such other person deemed by the Corporation Committee to be responsible for such person. Any such payment made under this section 13.5 shall constitute a complete discharge of any liability under this Plan. 13.6 MERGER. In the event of a merger or consolidation with, or transfer of assets or liabilities to any other plan, each Participant shall receive a benefit immediately after such merger, consolidation or transfer (if the Plan then terminated) which is at least equal to the benefit the Participant was entitled to receive immediately before such merger, consolidation or transfer (if the Plan had then terminated). 13.7 CONSTRUCTION. The headings and subheadings in this Plan have been inserted for convenience of reference only and are to be ignored in the construction of its provisions. Wherever appropriate, the masculine shall be read as the feminine, the plural as the singular, and the singular as the plural. References in this Plan to a section shall be to a section in this Plan unless otherwise indicated. References in this Plan to a section of the Code, ERISA or any other federal law shall also refer to the regulations issued under such section. - 91 - Harris Retirement Plan 102 Miscellaneous Provisions 13.8 GOVERNING LAW. This Plan shall be construed, to the extent to which state law is applicable, in accordance with the laws of the State of Florida. Venue for any action arising under this Plan shall be in Brevard County, Florida. 13.9 MISTAKEN PAYMENTS. If a mistake is made in favor of a Participant or Beneficiary in the payment of benefits under this Plan, the Corporation or the Trustee (acting at the Corporation direction and on behalf of the Plan) shall take such action against the Participant or Beneficiary to remedy such mistake and to make the Plan whole as the Corporation deems proper and appropriate under the circumstances, and any mistake in favor of the Plan shall promptly be corrected by, or at the direction of, the Corporation. - 92 - Harris Retirement Plan 103 ARTICLE XIV SPECIAL PROVISIONS FOR EMPLOYEES OF HARRIS TECHNICAL SERVICES DIVISION OF HARRIS TECHNICAL SERVICES CORPORATION ------------------------------------- Notwithstanding the provisions of any other Article of this Plan to the contrary, the following special provisions apply to Participants who are employees of the Harris Technical Services Division of Harris Technical Services Corporation. 14.1 PARTICIPATION. Notwithstanding section 2.1, an Employee shall become a Participant on the first day on which the Employee performs an Hour of Service. 14.2 PROFIT-SHARING CONTRIBUTIONS. (a) Notwithstanding section 3.1, a Profit-Sharing Contribution shall be made for each Plan Year on behalf of Employees of the Employment Unit consisting of the Harris Technical Services Division in an amount equal to 7 percent of before-tax M-2 profits. Ten (10) percent of the estimated Profit-Sharing Contribution for each Plan Year shall be made no later than the last day of October, January, and April of each year. The remaining Profit-Sharing Contribution for each Plan Year shall be made no later than the last day of September. (b) Notwithstanding any provision to the contrary in section 3.2, Profit-Sharing Contributions shall be allocated pro rata to each - 93 - Harris Retirement Plan 104 Miscellaneous Provisions Participant on the basis of the number of full months of his or her Period of Service completed during the Plan Year, provided that fractional months shall be aggregated. The limitation in eligibility in section 3.2(c) shall not apply. 14.3 PRE-TAX CONTRIBUTIONS. Section 3.3(a) shall apply, provided, however, that a Participant may elect to reduce his Compensation by an amount equal to any whole percentage not to exceed 15 percent and have the amount of such reduction contributed to the Plan as a Pre-Tax Contribution. 14.4 NO MATCHING PRE-TAX CONTRIBUTIONS. Notwithstanding any other provision of the Plan to the contrary, no Matching Pre-Tax Contributions will be made on behalf of Participants. 14.5 NO INVESTMENT IN THE HARRIS STOCK FUND. Notwithstanding any provision of the Plan to the contrary, Participants may not direct investments into the Harris Stock Fund. 14.6 VESTING. The Vesting Schedule in section 5.3(a) shall be replaced by the following vesting schedule: - 94 - Harris Retirement Plan 105 Miscellaneous Provisions PERIOD OF SERVICE VESTED PERCENTAGE ----------------- ----------------- Less than 1 year 0% 1 year but less than 2 years 20% 2 years but less than 3 years 40% 3 years but less than 4 years 60% 4 years but less than 5 years 80% 5 years or more 100% HARRIS CORPORATION Date: _____________________ By: _____________________ Attest: _____________________ Title: ___________________ 1026140 - 95 - Harris Retirement Plan 106 APPENDIX A INVESTMENT FUNDS. The Investment Funds available under the plan as of October 1, 1993 are as follows: (a) BALANCED FUND. Assets held in this fund will be invested in a variety of stocks, bonds, mortgages, fixed-income securities such as U.S. Treasury bills, certificates of deposit, commercial paper and real estate. (b) SHORT-TERM BOND FUND. Assets in this fund will be invested in shorter-term fixed-income securities such as government bonds, U.S. Treasury bills and notes, certificates of deposit, federal agency obligations, mortgage securities and corporate bonds. (c) MONEY MARKET FUND. Assets in this fund will be invested in a diversified portfolio of high-quality, short-term fixed instruments such as U.S. Treasury bills, federal agency obligations, commercial paper, certificates of deposit and banker's acceptances. (d) STABLE VALUE FUND. Assets held in this fund will be invested in a diversified portfolio of investment contracts and short-term, high-quality - 96 - Harris Retirement Plan 107 fixed income instruments that guarantee principal and a specified rate of return for a specified period. (e) EQUITY INCOME FUND. Assets held in this fund will be invested primarily in dividend-paying common stocks of established companies but may also be invested in convertible bonds and/or convertible preferred stock. (f) INDEXED EQUITY FUND. Assets held in this fund will be invested in a stock portfolio that mirrors the Standard & Poor's 500 Stock Index. (g) GROWTH FUND. Assets in this fund will be invested for the longer term, primarily in common stocks of companies which are currently experiencing an above-average rate of earnings growth. The fund's stock selection criteria include a requirement that each company have a five-year average performance record of sales, earnings, dividend growth, pre-tax margins, return on equity. (h) HARRIS STOCK FUND. Assets in this fund will be invested in common stock of the Corporation. The Investment Funds may be changed at any time and from time to time. - 97 - Harris Retirement Plan 108 APPENDIX B SPECIAL PROVISIONS FOR TRANSFERRED PARTICIPANTS ----------------------------------------------- The provisions of this Appendix B are effective as of January 1, 1990. (a) For purposes of this Appendix B, the following terms shall have the following meanings: (1) "TRANSFERRED PARTICIPANTS" means those former Employees whose employment with a Participating Company ceased due to a sale of the stock or assets of a Sold Operation. (2) "SOLD OPERATION" means (i) the Data Communications Division and (ii) the Chatsworth Operation. (3) "CLOSING DATE" means the date as of which the sale of the relevant Sold Operation was effective. (b) Each Transferred Participant shall be fully vested in his Accounts as of the relevant Closing Date. - 98 - Harris Retirement Plan 109 APPENDIX C PARTICIPATING COMPANIES ----------------------- As of July 1, 1995, the Related Companies that are Participating Companies are: Harris Corporation Harris Data Services Corporation R.F. Communications, Inc. Scientific Calculations, Inc. Harris Semiconductor International, Inc. Harris Technical Services Corporation Harris International Sales Corporation Harris Space Systems Corporation Harris Video Communications Systems, Inc. Harris Data Communications Division of Lanier Worldwide, Inc. Baseview Products, Inc. 1121102 - 99 - Harris Retirement Plan EX-11 6 EXHIBIT 11 1 EXHIBIT 11 COMPUTATION OF NET INCOME PER SHARE (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED JUNE 30, ---------------------------------- 1995 1994 1993 -------- -------- -------- Primary: Average shares outstanding.......................... 39,146 39,720 39,444 ======== ======== ======== Income before cumulative effect of change in accounting principle............................. $154,466 $121,880 $111,079 Cumulative effect of change in accounting principle........................................ -- (10,063) -- -------- -------- -------- Net Income.......................................... $154,466 $111,817 $111,079 ======== ======== ======== Per share amounts: Income before cumulative effect of change in accounting principle........................... $3.95 $3.07 $2.82 Cumulative effect of change in accounting principle...................................... -- (.25) -- -------- -------- -------- Total............................................ $3.95 $2.82 $2.82 ======== ======== ======== Fully diluted: Total primary average shares outstanding............ 39,146 39,720 39,444 Dilutive stock options and employee stock purchase plan shares -- based on treasury stock method using the greater of year-end market price or average market price............................. 132 154 217 -------- -------- -------- Total fully diluted average shares outstanding...... 39,278 39,874 39,661 ======== ======== ======== Per share amounts: Income before cumulative effect of change in accounting principle........................... $3.93 $3.05 $2.80 Cumulative effect of change in accounting principle...................................... -- (.25) -- -------- -------- -------- Total............................................ $3.93 $2.80 $2.80 ======== ======== ========
34 EX-12 7 EXHIBIT 12 1 EXHIBIT 12 RATIO OF EARNINGS TO FIXED CHARGES
YEARS ENDED JUNE 30, ---------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges.................... 3.88 3.56 3.17 2.47 1.11
For purposes of computing the ratio of earnings to fixed charges, Earnings are divided by Fixed Charges. Earnings represent the sum of income from continuing operations before income taxes for the Corporation and its subsidiaries plus Fixed Charges, minus interest capitalized, plus amortization of interest capitalized. Fixed Charges represent interest expense of the Corporation and its subsidiaries (including interest capitalized) plus one-third (the proportion deemed representative of the interest factor) of rents. 35 EX-21 8 EXHIBIT 21 1 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT Each of the below listed subsidiaries is 100% directly or indirectly owned by Harris Corporation except as otherwise indicated, and all are included in the consolidated financial statements.
STATE OR OTHER JURISDICTION NAME OF SUBSIDIARY OF INCORPORATION ------------------ ---------------- Harris A.B. ............................................................. Sweden Harris K.K. ............................................................. Japan Harris S.A. ............................................................. Belgium Harris S.A. de C.V. ..................................................... Mexico Harris Srl............................................................... Italy Harris Advanced Technology (Malaysia) Sdn. Bhd. ......................... Malaysia Harris Airport Systems Sdn. Bhd. ........................................ Malaysia Harris Australia Pty. Ltd. .............................................. Australia Harris Broadcast Systems (Nigeria) Limited (40% of voting securities owned)................................................................. Nigeria Harris Canada, Inc....................................................... Canada Harris Communications Honduras, S.A. de C.V. ............................ Honduras Harris Controls Australia Limited........................................ Australia Harris Data Services Corporation......................................... Delaware Harris do Brazil Limitada................................................ Brazil Harris Far East Limited.................................................. Delaware Harris Foreign Sales Corporation, Inc. .................................. Virgin Islands Harris International Sales Corporation................................... Delaware Harris Investments of Delaware, Inc. .................................... Delaware Harris Ireland Ltd....................................................... Ireland Harris Italiana, Inc. ................................................... Delaware Harris Network Support Products, Inc..................................... Texas Harris Pension Management Limited........................................ England Harris Publishing Systems Corporation.................................... Delaware Harris Semiconducteurs Sarl.............................................. France Harris Semiconductor B.V. ............................................... Netherlands Harris Semiconductor GmbH................................................ Germany Harris Semiconductor Limited............................................. England Harris Semiconductor HK, Ltd. ........................................... Hong Kong Harris Semiconductor Y.H. ............................................... Korea Harris Semiconductor, Inc. .............................................. Delaware Harris Semiconductor (Florida), Inc. .................................... Delaware Harris Semiconductor (Ohio), Inc. ....................................... Delaware Harris Semiconductor Patents, Inc. ...................................... Delaware Harris Semiconductor (Pennsylvania), Inc. ............................... Delaware Harris Semiconductor Pte. Ltd. .......................................... Singapore Harris Semiconductor (Taiwan) Ltd. ...................................... Taiwan Harris Solid-State (Malaysia) Sdn. Bhd. ................................. Malaysia Harris Southwest Properties, Inc. ....................................... Delaware Harris Space Systems Corporation......................................... Delaware Harris Systems Limited................................................... England Harris Technical Services Corporation.................................... Delaware Harris Video Communication Systems, Inc. ................................ Delaware Allied Broadcast Equipment Canada, Ltd. ................................. Canada
36 2
STATE OR OTHER JURISDICTION NAME OF SUBSIDIARY OF INCORPORATION ------------------ ---------------- American Coastal Insurance Ltd. ......................................... Bermuda Baseview Products, Inc. ................................................. Michigan Communication & Information Processing Harris S.A........................ Argentina ECCO Parent Limited...................................................... Ireland Executive Conference Center, Inc. ....................................... Georgia Guangzhou Harris Telecommunications Company Ltd. (51% of voting securities owned) ..................................................... China Lanier (Australia) Pty. Ltd. ............................................ Australia Lanier Business Products, Inc. .......................................... Georgia Lanier Financial Services, Inc. ......................................... Georgia Lanier Holdings Pty. Ltd. ............................................... Australia Lanier Holdings, Inc. ................................................... Delaware Lanier International, Inc. .............................................. Delaware Lanier Pacific Pty. Ltd. ................................................ Australia Lanier Professional Services, Inc. ...................................... Delaware Lanier Worldwide, Inc. .................................................. Delaware Lanier Leasing, Inc. .................................................... Delaware Lanier Europe, B.V. ..................................................... Netherlands Lanier United Kingdom Ltd. .............................................. England Lanier de Argentina...................................................... Argentina Lanier Canada, Inc. ..................................................... Canada Lanier de Chile, S.A. ................................................... Chile Lanier S.A. ............................................................. Colombia Lanier de El Salvador, S.A. de C.V. ..................................... El Salvador Lanier de Guatemala, S.A. ............................................... Guatemala Lanier de Dominicana, S.A. .............................................. Dominican Republic Lanier de Panama, S.A. .................................................. Panama Lanier Puerto Rico, Inc. ................................................ Puerto Rico Lanier de Costa Rica S.A. ............................................... Costa Rica Lanier France S.A. ...................................................... France Lanier Espana S.A. ...................................................... Spain Lanier Belgium S.A. ..................................................... Belgium Lanier Danmark A/S....................................................... Denmark Lanier Deutschland GmbH.................................................. Germany Lanier Italia S.p.A. .................................................... Italy Lanier Hellas AEBE....................................................... Greece Lanier Nederland B.V. ................................................... Netherlands Lanier Holdings A.G. .................................................... Switzerland Lanier Finance A.G....................................................... Switzerland Lanier (Schweiz) A.G. ................................................... Switzerland Lanier Singapore Pte. Ltd. .............................................. Singapore Lanier Norge A/S ........................................................ Norway RF Communications, Inc. ................................................. Delaware RF Communications, Inc. ................................................. New York Shenzhen Harris Telecom Co. Ltd. (55% of voting securities owned) ....... China Trident Copiers Ltd. .................................................... England Westronic Sales Corporation.............................................. Washington WSL Telecontrol Corporation.............................................. Washington
37 EX-23 9 EXHIBIT 23 1 EXHIBIT 23 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the following registration statements of Harris Corporation and in each related Prospectus of our report dated July 27, 1995, with respect to the consolidated financial statements and schedule of Harris Corporation and subsidiaries included in this Annual Report (Form 10-K) for the year ended June 30, 1995: Form S-8 No. 2-74551 Harris Corporation 1981 Stock Option Plan for Key Employees Form S-8 No. 33-50169 Harris Corporation Retirement Plan Form S-8 No. 33-50167 Harris Corporation Union Retirement Plan Form S-8 Nos. 33-37969; Harris Corporation Stock Incentive Plan 33-51171 Form S-3 No. 33-35315 Harris Corporation Medium-Term Notes
ERNST & YOUNG LLP Orlando, Florida September 8, 1995 38 EX-27 10 EXHIBIT 27
5 1,000 12-MOS JUN-30-1995 JUL-01-1994 JUN-30-1995 119,300 22,300 687,100 30,000 494,900 1,810,700 1,817,200 1,236,200 2,836,000 1,055,300 475,900 38,900 0 0 1,209,900 2,836,000 3,032,200 3,480,900 2,075,900 2,328,500 0 7,900 65,400 237,600 83,100 154,500 0 0 0 154,500 3.95 3.93