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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended December 31, 1993 Commission File Number 1-3863
HARRIS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 34-0276860
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(State of Incorporation) (IRS Employer Identification No.)
1025 West NASA Boulevard
Melbourne, Florida 32919
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(Address of principal executive offices)
(407) 727-9100
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(Registrant's telephone number)
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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_____
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
39,812,156 Shares
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PART I. FINANCIAL INFORMATION
HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
The following information for the quarters ended December 31, 1993 and December
25, 1992, has not been examined by independent accountants, but in the opinion
of management reflects all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the results for the indicated
periods. The results of operations for the quarter ended December 31, 1993 are
not necessarily indicative of the results for the full fiscal year.
Quarter Ended Two Quarters Ended
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December 31, December 25, December 31, December 25,
1993 1992 1993 1992
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(In millions, except per share amounts)
Revenue
Revenue from sales, rentals
and services $807.5 $768.8 $1,576.6 $1,496.4
Interest 9.1 8.7 17.3 16.8
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816.6 777.5 1,593.9 1,513.2
Costs and Expenses
Cost of sales, rentals and
services 550.6 519.3 1,072.8 1,014.6
Engineering, selling and
administrative expenses 201.9 202.4 405.8 397.0
Interest 14.5 15.3 28.7 30.1
Other - net 1.2 .3 (1.6) (.6)
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Income before income taxes 48.4 40.2 88.2 72.1
Income taxes 18.4 14.8 33.5 26.0
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Income before cumulative effect of
change in accounting principle 30.0 25.4 54.7 46.1
Cumulative effect of change in
accounting principle - - (10.1) -
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Net Income $ 30.0 $ 25.4 $ 44.6 $ 46.1
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Income per share before cumulative effect
of change in accounting principle $.75 $.64 $1.37 $1.17
Cumulative effect of change in
accounting principle - - (.25) -
---- ---- ----- -----
Net Income Per Common Share (Primary) $.75 $.64 $1.12 $1.17
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Cash Dividends Paid Per Common Share $.28 $.26 $.56 $.52
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HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
December 31, June 30,
1993 1993
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ASSETS (In millions)
Current Assets
Cash and cash equivalents $ 48.8 $ 131.7
Trade accounts and notes receivable - net, less allowance
for collection losses of $27,200,000 at December 31, 1993
and $28,200,000 at June 30, 1993 603.2 607.6
Unbilled costs and accrued earnings on fixed price contracts
based on percentage-of-completion accounting, less progress
payments of $175,400,000 at December 31, 1993 and
$162,300,000 at June 30, 1993 365.8 320.9
Inventories:
Work in process and finished products 414.6 383.0
Raw materials and supplies 53.9 61.4
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468.5 444.4
Deferred income taxes 86.7 66.0
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Total Current Assets 1,573.0 1,570.6
Plant and equipment, less allowances for depreciation of
$1,161,300,000 at December 31, 1993 and $1,128,500,000 at
June 30, 1993 566.7 564.1
Notes receivable - net 152.5 147.2
Intangibles resulting from acquisitions 162.0 162.8
Other assets 101.5 97.3
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$2,555.7 $2,542.0
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 104.5 $ 35.2
Trade accounts payable 138.5 169.4
Compensation and benefits 148.3 168.0
Other accrued items 141.0 150.6
Advance payments and unearned income 168.1 176.1
Income taxes 68.0 77.4
Current portion of long-term debt .4 1.4
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Total Current Liabilities 768.8 778.1
Deferred income taxes 12.8 10.6
Long-term debt 612.0 612.0
Shareholders' Equity
Capital stock:
Preferred Stock, without par value:
Authorized - 1,000,000 shares; issued - none - -
Common Stock, par value $1 per share:
Authorized - 100,000,000 shares; issued 39,812,156 shares
at December 31, 1993 and 39,604,496 at June 30, 1993 39.8 39.6
Other capital 228.1 216.3
Retained earnings 924.9 906.7
Unearned compensation (8.0) (8.3)
Cumulative translation adjustments (22.7) (13.0)
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Total Shareholders' Equity 1,162.1 1,141.3
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$2,555.7 $2,542.0
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HARRIS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Two Quarters Ended
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December 31, December 25,
1993 1992
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(In millions)
Cash flows from operating activities
Income before cumulative effect of change
in accounting principle $ 54.7 $ 46.1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of plant and equipment 77.7 77.7
Non-current deferred income tax 2.2 .1
Cumulative effect of change in accounting
principle (10.1) -
(Increase) decrease in:
Accounts and notes receivable (1.0) 27.7
Unbilled costs and inventories (69.0) (39.6)
Other assets (7.1) (12.1)
Increase (decrease) in:
Trade payables and accrued expenses (60.2) (79.1)
Advance payments and unearned income (7.9) (3.3)
Income taxes (30.0) 15.4
Other (3.0) 1.0
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Net cash used in operating activities (53.7) (33.9)
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Cash flows from investing activities
Capital expenditures-net of
normal disposals (79.6) (67.5)
Cash paid for acquired business - (25.9)
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Net cash used in investing activities (79.6) (93.4)
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Cash flows from financing activities
Increase (decrease) in short-term debt 68.3 2.6
Increase (decrease) in long-term debt - (.1)
Proceeds from sale of Common Stock 7.3 4.1
Purchase of Common Stock for treasury (5.5) -
Cash dividends (22.2) (20.4)
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Net cash provided by (used in) financing activities 47.9 (13.8)
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Effect of exchange rate changes on cash and cash
equivalents 2.5 (4.9)
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Net decrease in cash and cash equivalents $(82.9) $(78.2)
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
Note A -- Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all information and
footnotes necessary for a complete presentation of financial position, results
of operations, and changes in cash flows in conformity with generally accepted
accounting principles.
Note B -- Postretirement Benefits Other Than Pensions
For the quarter ended September 30, 1993, 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 that had 10 or more years
of service. This adoption resulted in a one-time charge of $10,100,000 ($.25
per share), net of income tax credits of $6,400,000.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Sales for the second quarter and the first two quarters increased five percent
from the same periods a year ago. Income before cumulative effect of change in
accounting principle increased 18 percent in the second quarter and 19 percent
for the first two quarters compared to the respective prior year periods.
The Semiconductor segment posted a substantial improvement in earnings for the
quarter and year-to-date on moderately higher sales. Second quarter and
year-to-date net income for this segment included gains from the ongoing sales
of investment securities in both the current and prior fiscal years. Sales and
net income increased slightly in the second quarter and year-to-date in the
Electronic Systems segment. The Communications segment's earnings were
substantially higher for both periods due to significantly higher sales of
digital telephone products and improved profit margins on broadcast products.
Lanier Worldwide's net income and sales decreased moderately in the second
quarter when compared to the prior period. Year-to-date net income, however,
was significantly higher on relatively unchanged sales due to reduced losses in
Europe.
Cost of sales as a percentage of net sales increased to 68.2 percent in the
second quarter and 68.0 percent in the first two quarters of this year compared
to 67.5 percent and 67.8 percent for the respective periods last year. The
increase is due primarily to decreased gross margins in the Lanier Worldwide
segment.
Engineering, selling, and administrative expenses as a percentage of net sales
decreased to 25.0 percent in the second quarter and 25.7 percent year-to-date,
compared to 26.3 percent and 26.5 percent for the same periods in the prior
year. The decrease is due to lower expenses in the Semiconductor and
Communications segments.
Interest expense is lower in the quarter and year-to-date due to lower interest
rates. "Other-net" includes gains from the sale of investment securities for
all periods presented.
The provision for income taxes as a percentage of pre-tax income was 38.0
percent in the second quarter and first two quarters of this year compared to
36.8 percent for the second quarter and 36.0 percent for the first two quarters
of the prior year. The increases from the statutory federal tax rate of 35
percent during the current year and 34 percent in the prior year were primarily
due to the provision for state income taxes.
Income before cumulative effect of change in accounting principle as a
percentage of sales was 3.7 percent and 3.5 percent for the quarter and
year-to-date, respectively, compared to 3.3 percent and 3.1 percent in the same
periods last year for the previously stated reasons.
Working capital increased $11.7 million from $792.5 million at June 30, 1993 to
$804.2 million at the end of the second quarter. The Corporation anticipates
that the requirements for funds to finance operations during the remainder of
the fiscal year will be met by cash flow from operations.
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PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(10)(a) Trust Agreement dated January 7, 1994 between Harris
Corporation and Boston Safe Deposit and Trust Company.
(11) Statement re: computation of per share earnings.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARRIS CORPORATION
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(Registrant)
Date: February 11, 1994 By: /s/ Bryan R. Roub
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Bryan R. Roub
Senior Vice President and
Chief Financial Officer