1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
--------------------
Date of Report (Date of earliest
event reported): August 13, 1999
---------------
HARRIS CORPORATION
----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-3863 34-0276860
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1025 West NASA Blvd., Melbourne, FL 32919
- ------------------------------------------------------ ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 727-9100
No Change
-------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
2
Item 1. Not Applicable.
Item 2. Acquisition or Disposition of Assets.
------------------------------------
On August 13, 1999, Harris Corporation ("Harris" or the
"Company") completed the previously announced sale of substantially all of its
semiconductor business. Harris sold its semiconductor business to Intersil
Corporation and its affiliates. Intersil Corporation is a newly formed company
owned by Sterling Holding Company, LLC, a Citicorp Venture Capital Ltd.
investment portfolio company, along with certain management investors, and
affiliates of Credit Suisse First Boston Corporation.
The Harris assets disposed of consisted primarily of land,
buildings, equipment, inventory, receivables, technology and other assets
related to the operation of the semiconductor business.
In addition to acquiring a 10 percent equity interest in
Intersil for which Harris paid $9 million, Harris received cash of $520 million,
a promissory note of $90 million and certain liabilities were assumed by
Intersil. Harris has also retained certain receivables and rights in certain
patents. Harris recorded an after-tax loss of $61.3 million in fiscal 1999 for
the disposal of its entire semiconductor business including the portion sold to
Intersil.
Harris intends to use the proceeds of the sale to reduce
indebtedness and for other general corporate purposes.
The information which is set forth in the Company's News
Release dated August 16, 1999, is incorporated herein by reference.
The foregoing description of the terms of the transaction is qualified
in its entirety by reference to the Amended and Restated Master Agreement dated
as of June 2, 1999, a copy of which is attached as Exhibit 2.1.
Items 3-6. Not Applicable.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements.
None.
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed
consolidated financial information presents pro forma financial information for
the Company giving effect to the August 13, 1999 sale of its semiconductor
business to Intersil. The unaudited pro forma condensed consolidated balance
sheet as of April 2, 1999 is presented as if the transaction had occurred as of
that date. The unaudited pro forma condensed consolidated income statement for
the three quarters ended April 2, 1999 and the for the
3
fiscal year ended July 3, 1998 are presented as if the disposition transaction
had occurred at the beginning of the earliest period presented.
The pro forma condensed consolidated financial
statements should be read in conjunction with the unaudited condensed
consolidated financial statements and notes thereto included in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended April 2, 1999 and
the audited consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K/A for the fiscal year ended July 3, 1998.
The pro forma information may not necessarily be indicative of what the
Company's results of operations or financial position would have been had the
transaction been in effect as of and for the periods presented, nor is such
information necessarily indicative of the Company's results of operations or
financial position for any future period or date.
For fiscal 1999 results, the semiconductor business,
as well as the Company's Lanier subsidiary, will be classified as discontinued
operations.
4
HARRIS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
APRIL 2, 1999
(Dollars in millions)
Historical Adjustments Pro Forma
---------- ----------- ---------
(A)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 116.1 $ 511.0 $ 627.1
Marketable securities 17.4 (5.0) 12.4
Receivables-net 891.0 (99.6) 791.4
Unbilled costs and accrued earnings on fixed price contracts 202.9 -- 202.9
Inventories 579.0 (156.3) 422.7
Deferred income taxes 195.8 -- 195.8
---------- ---------- ----------
Total current assets 2,002.2 250.1 2,252.3
OTHER ASSETS
Plant and equipment 962.9 (420.7) 542.2
Intangibles resulting from acquisitions 276.9 (46.1) 230.8
Other assets 618.3 42.2 660.5
---------- ---------- ----------
$ 3,860.3 $ (174.5) $ 3,685.8
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 366.5 -- $ 366.5
Accounts payable 197.8 $ (24.5) 173.3
Compensation and benefits 208.3 (21.0) 187.3
Other accrued items 245.8 (39.3) 206.5
Unearned income and advance payments by customers 187.5 (0.1) 187.4
Income taxes 49.1 (12.0) 37.1
Current portion of long-term debt 58.1 (0.2) 57.9
---------- ---------- ----------
Total current liabilities 1,313.1 (97.1) 1,216.0
OTHER LIABILITIES
Deferred income taxes 132.7 (24.8) 107.9
Long-term debt 774.8 (3.9) 770.9
SHAREHOLDERS' EQUITY
Preferred Stock -- -- --
Common Stock 79.8 -- 79.8
Other capital 271.2 -- 271.2
Retained earnings 1,340.8 (50.5) 1,290.3
Unearned compensation (8.1) -- (8.1)
Accumulated comprehensive loss (44.0) 1.8 (42.2)
---------- ---------- ----------
Total Shareholders' Equity 1,639.7 (48.7) 1,591.0
---------- ---------- ----------
$ 3,860.3 $ (174.5) $ 3,685.8
========== ========== ==========
5
HARRIS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
APRIL 2, 1999
(Dollars in millions except per share amounts)
Historical Adjustments Pro Forma
----------- ----------- -----------
(A)
REVENUE
Revenue from product sales, rentals,
and services $ 2,757.4 $ (380.9) $ 2,376.5
Interest 39.8 -- 39.8
----------- ----------- -----------
2,797.2 (380.9) 2,416.3
COSTS AND EXPENSES
Cost of product sales, rentals
and services 1,876.6 (246.0) 1,630.6
Engineering, selling and administrative
expenses 693.0 (95.5) 597.5
Loss from sale of Semiconductor business -- 53.5 53.5
Restructuring expenses (11.0) -- (11.0)
Special charge for litigation costs 20.6 -- 20.6
Interest 63.9 (24.8) 39.1
Other-net (31.6) 14.4 (17.2)
----------- ----------- -----------
Income before income taxes 185.7 (82.5) 103.2
Income taxes 63.1 (9.7) 53.4
----------- ----------- -----------
Net income (loss) $ 122.6 $ (72.8) $ 49.8
=========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE
Basic $ 1.54 $ (0.92) $ 0.63
============ =========== ===========
Diluted $ 1.54 $ (0.91) $ 0.62
============ =========== ===========
AVERAGE SHARES OUTSTANDING
Basic 79.5 79.5 79.5
=========== =========== ===========
Diluted 79.8 79.8 79.8
=========== =========== ===========
6
HARRIS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE FISCAL YEAR ENDED JULY 3, 1998
(Dollars in millions except per share amounts)
Historical Adjustments Pro Forma
----------- ----------- -----------
(A)
REVENUE
Revenue from product sales, rentals,
and services $ 3,877.4 $ (565.4) $ 3,312.0
Interest 48.9 -- 48.9
----------- ----------- -----------
3,926.3 (565.4) 3,360.9
COSTS AND EXPENSES
Cost of product sales, rentals
and services 2,616.2 (295.7) 2,320.5
Engineering, selling and administrative
expenses 979.3 (173.7) 805.6
Restructuring expenses 83.8 (59.2) 24.6
Interest 73.2 (29.0) 44.2
Other-net (26.2) (1.5) (27.7)
----------- ----------- -----------
Income from continuing operations
before income taxes 200.0 (6.3) 193.7
Income taxes 67.0 3.0 70.0
----------- ----------- -----------
Net income (loss) $ 133.0 $ (9.3) $ 123.7
=========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE
Basic $ 1.68 $ (0.12) $ 1.56
=========== =========== ===========
Diluted $ 1.66 $ (0.12) $ 1.55
=========== =========== ===========
AVERAGE SHARES OUTSTANDING
Basic 79.3 79.3 79.3
=========== =========== ===========
Diluted 80.0 80.0 80.0
=========== =========== ===========
7
NOTE TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(A) Reflects the disposition of the Company's semiconductor business
for a total consideration of $610.0 million, which included cash of $520.0
million, a promissory note of $90.0 million and the assumption of certain
liabilities. The adjustment reflects the Company's intention to sell this note
for cash. The pro forma adjustments assume that the note has a fair value of
$80.0 million. In connection with this transaction, the Company also retained a
10 percent equity interest in the Intersil Corporation, for which it paid $9.0
million. The pro forma adjustment to the condensed consolidated balance sheet as
of April 2, 1999 includes the effect of the receipt of cash, recording of the
note and equity investment at net realizable value and assignment of certain
liabilities as agreed upon. Included in retained earnings is the resulting
estimated loss to be recognized on the disposition, net of applicable income
taxes as if the disposition transaction occurred on April 2, 1998. The actual
loss on disposition when recorded in the fourth quarter of fiscal 1999 differed
based on the actual carrying value of the net assets as of July 2, 1999 and
determination of final divestiture costs. The estimated loss to be recognized on
the disposition transaction has been excluded from the pro forma condensed
consolidated statement of operations for the year ended July 3, 1998.
Historically, the Company has allocated certain expenses for
headquarter functions from central corporate cost centers. The pro forma
adjustment reflects the removal of these allocated expenses from the Intersil
business and the add back to the Company.
(c) Exhibits.
The following documents are filed as an Exhibits to
this Report:
2.1 Amended and Restated Master Agreement, dated
as of June 2, 1999 among Harris Corporation,
Intersil Holding Corporation and Intersil
Corporation.
99. Press Release, dated August 16, 1999,
announcing that Harris has completed the
previously announced sale of its
semiconductor business.
Items 8-9. Not Applicable.
8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HARRIS CORPORATION
By: /s/ Bryan R. Roub
------------------------------------
Name: Bryan R. Roub
Title: Senior Vice President &
Chief Financial Officer
Date: August 25, 1999
9
EXHIBIT INDEX
Exhibit No.
Under Reg.
S-K, Item 601 Description
- -------------------- ---------------------------------------------------
The following documents are filed as an Exhibits to this Report:
2.1 Amended and Restated Master Agreement, dated as of
June 2, 1999 among Harris Corporation, Intersil
Holding Corporation and Intersil Corporation.
99. Press Release, dated August 16, 1999, announcing
that Harris has completed the previously announced
sale of its semiconductor business.