þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
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Delaware
(State or other jurisdiction of incorporation or organization)
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34-0276860
(I.R.S. Employer Identification No.)
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1025 West NASA Boulevard
Melbourne, Florida
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32919
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
Common Stock, par value $1.00 per share
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Name of each exchange on which registered
New York Stock Exchange
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page No.
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Part I:
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Part II:
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Part III:
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Part IV:
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ITEM 16. Form 10-K Summary
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Signatures
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ITEM 1.
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BUSINESS.
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•
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Communication Systems, serving markets in tactical communications and defense products, including tactical ground and airborne radio communications solutions and night vision technology, and in public safety networks;
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•
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Electronic Systems, providing electronic warfare, avionics, and command, control, communications, computers, intelligence, surveillance and reconnaissance (“C4ISR”) solutions for the defense industry and air traffic management (“ATM”) solutions for the civil aviation industry; and
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•
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Space and Intelligence Systems, providing intelligence, space protection, geospatial, complete Earth observation, universe exploration, positioning, navigation and timing (“PNT”), and environmental solutions for national security, defense, civil and commercial customers, using advanced sensors, antennas and payloads, as well as ground processing and information analytics.
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•
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Our widely deployed Single Channel Ground and Airborne Radio System (“SINCGARS”) family of backpack, vehicular-mounted, handheld and airborne radios currently used by U.S. and allied military forces — these Combat Net Radios, over 600,000 of which have been purchased and deployed worldwide, operate in the very
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•
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Our multiband manpack radio, the AN/PRC-117G, which is National Security Agency (“NSA”) Type-1-certified for narrowband communications, as well as for wideband communications using our Harris-developed Adaptive Networking Wideband waveform and the U.S. military Joint Tactical Radio System (“JTRS”) Soldier Radio Waveform and Mobile User Objective System (“MUOS”) waveform, which provides connectivity to DoD’s next-generation MUOS satellite system;
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•
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Our 2-channel vehicular radio system, the AN/VRC-118, which uses the DoD-developed Wideband Networking Waveform and was selected as the U.S. Army’s solution for its JTRS Mid-Tier Networking Vehicular Radio program;
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•
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Our multiband handheld radios, the AN/PRC-152, which is a widely fielded JTRS-approved software-defined handheld radio, and the AN/PRC-152A, which adds wideband, networked communications capability and supports both a full range of narrowband legacy waveforms and wideband networking waveforms in a handheld platform;
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•
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Our multi-channel manpack radio, the AN/PRC-158, which is a commercially developed, NSA Type-1-certified radio offering two channels integrated into the same chassis;
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•
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Our wideband rifleman team radio, the RF-330E, which is the commercially developed U.S. variant of our widely fielded international soldier personal radio;
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•
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Our wideband ground radio family for international customers, the RF-7850x, which covers all echelons of the battlefield with soldier handheld, vehicular and fixed-site radio products;
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•
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Our wideband high frequency (“HF”) manpack radios, the NSA Type-1-certified RF-300H for the U.S. military and the RF-7800H for international customers, which are wideband-capable tactical HF radios that are smaller, lighter and deliver data faster than prior generations of HF radios and can serve as an alternative for beyond-line-of-sight transmission of classified images, maps and other large data files in circumstances where satellite communication (“SATCOM”) is denied;
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•
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Our single-channel airborne radios, which include the NSA Type-1-certified RF-300M-DL Small Secure Data Link multiband radio for integration in size, weight and power-constrained environments, as well as the ARC-201D and ARC-201E radios for DoD and international very high frequency network interoperability; and
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•
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Our multi-channel airborne radios, which include the RF-7850A for interoperability with our RF-7800 family of international ground radios, as well as a 2-channel airborne radio platform we provide to ViaSat, Inc. to be built into the KOR-24A multi-channel, Link-16 Small Tactical Terminal.
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•
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A 10-year (5-year base, 5 option years), multi-award Indefinite Delivery Indefinite Quantity (“IDIQ”) contract from the U.S. Army in fiscal 2015 for rifleman radios and associated services under the HMS program;
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•
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A 10-year (5-year base, one 5-year option), multi-award IDIQ contract from the U.S. Army in fiscal 2016 for multi-channel manpack radios under the HMS program;
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A 6-year, single-award IDIQ contract from SOCOM in fiscal 2016 for a new integrated 2-channel handheld tactical radio;
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•
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A 5-year, single-award follow-on foreign military sales IDIQ contract from the U.S. Army Communications-Electronics Command (“CECOM”) in fiscal 2016 to supply secure tactical communication solutions;
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•
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A 5-year, single-award foreign military sales IDIQ contract from CECOM in fiscal 2016 to supply SINCGARS tactical solutions;
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•
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A 5-year, single-award IDIQ contract from the U.S. Defense Logistics Agency in fiscal 2017 to provide tactical radio spare parts to the U.S. Army and federal civilian agencies;
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•
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A 10-year (5-year base, one 5-year option), multi-award IDIQ contract from the U.S. Air Force in fiscal 2017 for cryptographic and information assurance products; and
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•
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A 6-year, single-award IDIQ contract from SOCOM in fiscal 2017 to supply next-generation multi-channel multiband manpack radios to enable superior communications for U.S. Special Operations Forces.
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Deploying digital trunked, statewide, multi-agency systems for the States of Florida, Maine and Nevada;
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Deploying large, wide-area and multi-state LMR systems for some of the largest utility companies in the U.S.;
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•
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Deploying for the DoD-National Capitol Region network in the Washington, D.C. area a wide-area, IP-based P25 network that links nearly 20 military bases, providing wireless communications for military bases throughout the National Capitol Region, and that allows interoperability with local public safety agencies to provide one integrated regional network;
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•
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Designing and building the Alberta First Responders Radio Communications System for public safety communications within the 256,000 square-mile Province of Alberta, Canada; and
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•
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Designing, deploying and maintaining an APCO P25 system for the New York Metropolitan Transportation Authority Police to connect their police operations throughout 14 counties in New York and Connecticut and to help them support more than 14 million daily commuters.
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Transforming voice-based ATC to automated ATM under the Data Communications Integrated Services (“Datacomm”) program (including the Data Communications Network Service component);
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Delivering systems for modern Voice Over Internet Protocol (“VoIP”) communications among air traffic controllers, pilots and ground personnel under the National Airspace System (“NAS”) Voice System contract;
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Designing and implementing a system that provides real-time weather information across the NAS under the Common Support Services Weather program;
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Providing enterprise-wide data sharing for critical information such as flight planning, traffic flow, surface radar and weather under a NAS Enterprise Messaging Service IDIQ contract for the Systems-Wide Information Management program; and
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Designing, building and operating a nationwide system of radio communications, telecommunications networks, IT and software to deliver highly accurate, networked, real-time surveillance data to the automated systems of the FAA,
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Providing geospatial content management and imagery products for two of three regions for the Foundation GEOINT Content Management (“FGCM”) program under two 5-year, single-award IDIQ contracts awarded in fiscal 2014 by the NGA; and
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Developing software for faster and more efficient search and retrieval of data from intelligence systems under a 5-year, single-award IDIQ contract awarded in fiscal 2017 by the NGA.
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Our commercial tool suite to enable customers to extract information from geospatial imagery products, which consists of our Jagwire™ web-based geospatial data management software that quickly discovers data, transforms it into information and delivers it to decision makers, even in low bandwidth environments; and our ENVI® image analysis software that analyzes virtually any geospatial data type;
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Our geospatial marketplace, which offers online access to geospatial imagery and data, off-the-shelf data products such as digital elevation models and orthomosaics, and customized geospatial products for visual simulation databases or to meet customer-specific project requirements; and
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•
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Our unique, Company-owned high-value commercial information for commercial and civil government markets, such as data from our Geiger-mode light detection and ranging (“LiDAR”) sensor that measures distance by illuminating a target with a laser, making large-scale and high-density point-cloud images possible at affordable prices.
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ITEM 1A.
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RISK FACTORS.
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Disrupt the proper functioning of these networks and systems and, therefore, our operations and/or those of certain of our customers;
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Result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours, our customers or our employees, including trade secrets, which could be used to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;
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•
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Compromise national security and other sensitive government functions;
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Require significant management attention and resources to remedy the damages that result;
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Subject us to claims for contract breach, damages, credits, penalties or termination; and
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Damage our reputation with our customers (particularly agencies of the U.S. Government) and the public generally.
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The U.S. Government could reduce or delay its spending on, or reprioritize its spending away from, the government programs in which we participate;
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The U.S. Government may be unable to complete its budget process before the end of its fiscal year on September 30 and thus would be required either to shut down or be funded pursuant to a “continuing resolution” that authorizes agencies of the U.S. Government to continue operations but does not authorize new spending initiatives, either of which could result in reduced or delayed orders or payments for products and services we
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U.S. Government spending could be impacted by sequestration or alternate arrangements, which increases the uncertainty as to, and the difficulty in predicting, U.S. Government spending priorities and levels; and
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We may experience declines in revenue, profitability and cash flows as a result of reduced or delayed orders or payments or other factors caused by economic difficulties of our customers and prospective customers, including U.S. Federal, state and local governments.
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Currency exchange controls, fluctuations of currency and currency revaluations;
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The laws, regulations and policies of foreign governments relating to investments and operations, as well as U.S. laws affecting the activities of U.S. companies abroad, including the Foreign Corrupt Practices Act (“FCPA”);
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Import and export licensing requirements and regulations, as well as unforeseen changes in export controls and other trade regulations;
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Changes in regulatory requirements, including business or operating license requirements, imposition of tariffs or embargoes;
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Uncertainties and restrictions concerning the availability of funding, credit or guarantees;
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Risk of non-payment or delayed payment by foreign governments;
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Contractual obligations to non-U.S. customers may include specific in-country purchases, investments, manufacturing agreements or financial or other support arrangements or obligations, known as offset obligations, that may extend over several years, may require teaming with local companies and may result in significant penalties if not satisfied;
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The complexity and necessity of using, and disruptions involving our, international dealers, distributors, sales representatives and consultants;
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•
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The difficulties of managing a geographically dispersed organization and culturally diverse workforces, including compliance with local laws and practices;
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•
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Difficulties associated with repatriating cash generated or held abroad in a tax-efficient manner and changes in tax laws;
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•
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Uncertainties as to local laws and enforcement of contract and intellectual property rights and occasional requirements for onerous contract terms;
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•
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Rapid changes in government, economic and political policies, political or civil unrest, acts of terrorism or the threat of international boycotts or U.S. anti-boycott legislation; and
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Increased risk of an incident resulting in damage or destruction to our facilities or products or resulting in injury or loss of life to our employees, subcontractors or other third parties.
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Identify emerging technological trends in our current and target markets;
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•
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Develop and maintain competitive products, systems, services and technologies;
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Enhance our offerings by adding innovative hardware, software or other features that differentiate our products, systems, services and technologies from those of our competitors; and
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Develop, manufacture and bring to market cost-effective offerings quickly.
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Difficulty in identifying and evaluating potential acquisitions, including the risk that our due diligence does not identify or fully assess valuation issues, potential liabilities or other acquisition risks;
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•
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Difficulty and expense in integrating newly acquired businesses and operations, including combining product and service offerings, and in entering into new markets in which we are not experienced, in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures, and the risk that we encounter significant unanticipated costs or other problems associated with integration;
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•
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Difficulty and expense in consolidating and rationalizing IT infrastructure, which may include multiple legacy systems from various acquisitions and integrating software code;
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Challenges in achieving strategic objectives, cost savings and other benefits expected from acquisitions;
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Risk that our markets do not evolve as anticipated and that the strategic acquisitions and divestitures do not prove to be those needed to be successful in those markets;
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•
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Risk that we assume significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties;
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•
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Risk that indemnification related to divested businesses that we may be required to provide to acquirers of such businesses or that applicable purchase price adjustments related to such divestitures may be significant and could negatively impact our business;
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Risk that we are not able to complete strategic divestitures on satisfactory terms and conditions, including non-competition arrangements applicable to certain of our business lines, or within expected timeframes;
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Potential loss of key employees or customers of the businesses acquired or to be divested; and
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Risk of diverting the attention of senior management from our existing operations.
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The jurisdictions in which profits are determined to be earned and taxed;
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•
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Adjustments to estimated taxes upon finalization of various tax returns;
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•
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Increases in expenses not fully deductible for tax purposes, including write-offs of acquired in-process R&D and impairment of goodwill or other long-term assets in connection with acquisitions;
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•
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Changes in available tax credits;
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•
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Changes in share-based compensation expense;
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•
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Changes in the valuation of our deferred tax assets and liabilities;
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•
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Changes in domestic or international tax laws or the interpretation of such tax laws; and
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•
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The resolution of issues arising from tax audits with various tax authorities.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS.
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ITEM 2.
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PROPERTIES.
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Segment
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Approximate
Total Sq. Ft.
Owned
|
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Approximate
Total Sq. Ft.
Leased
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Approximate
Total
Sq. Ft.
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|||
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(In millions)
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|||||||
Communication Systems
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1.5
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0.8
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2.3
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Electronic Systems
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2.0
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1.6
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3.6
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Space and Intelligence Systems
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2.5
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0.8
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3.3
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Corporate
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0.4
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0.1
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0.5
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Total
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6.4
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3.3
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9.7
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ITEM 3.
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LEGAL PROCEEDINGS.
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ITEM 4.
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MINE SAFETY DISCLOSURES.
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Name and Age
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Position Currently Held and Past Business Experience
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William M. Brown, 54
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Chairman, President and Chief Executive Officer since April 2014. President and Chief Executive Officer from November 2011 to April 2014. Formerly with United Technologies Corporation (“UTC”), as Senior Vice President, Corporate Strategy and Development from April 2011 to October 2011; as President of UTC’s Fire & Security division from 2006 to 2011; and in U.S. and international roles at UTC’s Carrier Corporation from 2000 to 2006, including President of the Carrier Asia Pacific Operations; and as Director, Corporate Strategy and Business Development from 1997 to 2000. Before joining UTC in 1997, Mr. Brown worked for McKinsey & Company as a senior engagement manager, and prior to that, at Air Products and Chemicals, Inc. as a project engineer.
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Robert L. Duffy, 50
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Senior Vice President, Human Resources and Administration since July 2012. Formerly with UTC, as Vice President, Human Resources for UTC’s Sikorsky aircraft operation from 2010 to 2011; and in similar roles within UTC’s Fire & Security, Carrier, Hamilton Sundstrand and Pratt & Whitney operations from 1998 to 2009. Before joining UTC in 1998, Mr. Duffy held human resource management positions with Royal Dutch Shell and James River Corporation.
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Sheldon J. Fox, 58
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Senior Vice President, Operations and Information Technology since August 2017. Senior Vice President, Integration and Engineering from July 2015 to August 2017. Group President, Government Communications Systems from June 2010 to July 2015. President, National Intelligence Programs, Government Communications Systems from December 2007 to May 2010. President, Defense Programs, Government Communications Systems from May 2007 to December 2007. Vice President and General Manager, Department of Defense Programs, Government Communications Systems Division from July 2006 to April 2007. Vice President of Programs, Department of Defense Communications Systems, Government Communications Systems Division from July 2005 to June 2006. Mr. Fox joined Harris in 1984.
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William H. Gattle, 56
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President, Space and Intelligence Systems since July 2015. Vice President and General Manager, National Intelligence Programs, Government Communications Systems from June 2013 to July 2015. Vice President, Aerospace Systems, Government Communications Systems from June 2012 to June 2013. Vice President, Space Communication Systems, Government Communications Systems from January 2009 to June 2012. Mr. Gattle joined Harris in 1987.
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Rahul Ghai, 45
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Senior Vice President and Chief Financial Officer since February 2016. Vice President, Finance-Integration from March 2015 to February 2016. Formerly with Aetna Inc., as Vice President, Financial Planning and Integration from August 2013 to February 2015; and Chief Financial Officer for Aetna International from May 2012 to August 2013. Before joining Aetna, Mr. Ghai held positions at UTC from 2000 to 2012, including as Vice President-Financial Planning and Analysis and Treasury for UTC’s Hamilton Sundstrand division (January 2012 to May 2012); Vice President-Financial Planning and Analysis and Operations Finance for UTC’s Fire & Security division (2009-2011); Chief Financial Officer, Americas, Fire & Security Services (2007-2009); and Director, Global Operations Finance, Fire & Security (2005-2007).
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Dana A. Mehnert, 55
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Senior Vice President, Chief Global Business Development Officer since July 2015. Group President, RF Communications from May 2009 to July 2015. President, RF Communications from July 2006 to May 2009. Vice President and General Manager — Government Products Business, RF Communications from July 2005 to July 2006. Vice President and General Manager — Business Development and Operations, RF Communications from January 2005 to July 2005. Vice President — Defense Operations, RF Communications from January 2004 to January 2005. Vice President — International Operations, RF Communications from November 2001 to January 2004. Vice President/Managing Director — International Government Sales Operations for Harris’ regional sales organization from September 1999 to November 2001. Vice President — Marketing and International Sales, RF Communications from August 1997 to September 1999. Vice President — Worldwide Marketing, RF Communications from July 1996 to July 1997. Vice President — International Sales, RF Communications from November 1995 to June 1996. Mr. Mehnert joined Harris in 1984.
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Name and Age
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Position Currently Held and Past Business Experience
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Scott T. Mikuen, 55
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Senior Vice President, General Counsel and Secretary since February 2013. Vice President, General Counsel and Secretary from October 2010 to February 2013. Vice President, Associate General Counsel and Secretary from October 2004 to October 2010. Vice President — Counsel, Corporate and Commercial Operations and Assistant Secretary from November 2000 to October 2004. Mr. Mikuen joined Harris in 1996 as Finance Counsel.
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Todd A. Taylor, 44
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Vice President, Principal Accounting Officer since May 2015. Vice President from April 2015 to May 2015. Formerly with Molex, Inc., as Vice President, Chief Accounting Officer and Corporate Controller from September 2012 to April 2015, Director of Finance and Corporate Controller from September 2010 to September 2012 and Director of Accounting from June 2008 to September 2010; with PricewaterhouseCoopers, as Internal Audit Advisory Director from March 2003 to June 2008; and with Wells Fargo, as Internal Controls Manager from September 1999 to February 2003. Mr. Taylor began his career in public accounting with RSM McGladrey in 1996.
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Christopher D. Young, 57
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President, Communication Systems since July 2015. Previously with Exelis (formerly known as ITT Defense and Information Solutions) as President, Geospatial Systems and Executive Vice President, Exelis from October 2011 to July 2015 and President and General Manager of ITT Space Systems Division from April 2006 to October 2011. Mr. Young first joined ITT Defense and Information Solutions in 1982 where he assumed positions of increasing responsibility.
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Edward J. Zoiss, 52
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President, Electronic Systems since July 2015. Vice President and General Manager, Defense Programs, Government Communications Systems from June 2013 to July 2015. Vice President, C4ISR Electronics, Government Communications Systems from June 2012 to June 2013; Vice President, Advanced Programs and Technology, Government Communications Systems from July 2010 to June 2012. Mr. Zoiss joined Harris in 1995.
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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High
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Low
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Cash
Dividends
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High
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Low
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Cash
Dividends
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||||||||||||
Fiscal 2017
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Fiscal 2016
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||||||||||||
First Quarter
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$
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94.09
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$
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80.78
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$
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0.53
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First Quarter
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$
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84.78
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$
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70.10
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$
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0.50
|
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Second Quarter
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$
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107.54
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|
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$
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88.89
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|
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0.53
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|
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Second Quarter
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$
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89.78
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|
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$
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73.72
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|
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0.50
|
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||
Third Quarter
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$
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113.00
|
|
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$
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99.13
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|
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0.53
|
|
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Third Quarter
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$
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89.35
|
|
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$
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70.97
|
|
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0.50
|
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||
Fourth Quarter
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$
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114.32
|
|
|
$
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106.18
|
|
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0.53
|
|
|
Fourth Quarter
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$
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84.75
|
|
|
$
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73.32
|
|
|
0.50
|
|
||
|
|
|
|
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$
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2.12
|
|
|
|
|
|
|
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$
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2.00
|
|
HARRIS FISCAL YEAR END
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||
Harris
|
$
|
100
|
|
$
|
121
|
|
$
|
191
|
|
$
|
201
|
|
$
|
219
|
|
$
|
295
|
|
S&P 500
|
$
|
100
|
|
$
|
121
|
|
$
|
150
|
|
$
|
163
|
|
$
|
168
|
|
$
|
198
|
|
S&P 500 Aerospace & Defense
|
$
|
100
|
|
$
|
132
|
|
$
|
174
|
|
$
|
188
|
|
$
|
211
|
|
$
|
271
|
|
Period*
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Total number of
shares purchased
|
Average price
paid per share
|
Total number of
shares purchased as
part of publicly
announced plans or
programs (1) |
Maximum
approximate
dollar value
of shares that may
yet be purchased
under the plans
or programs
(1)
|
||||||
Month No. 1
|
|
|
|
|
||||||
(April 1, 2017-April 28, 2017)
|
|
|
|
|
||||||
Repurchase Programs
|
—
|
|
—
|
|
—
|
|
|
$1,223,390,297
|
|
|
Employee Transactions
(3)
|
34,592
|
|
|
$111.92
|
|
—
|
|
—
|
|
|
Month No. 2
|
|
|
|
|
||||||
(April 29, 2017-May 26, 2017)
|
|
|
|
|
||||||
Repurchase Programs
(2)
|
2,209,175
|
|
(2)
|
2,209,175
|
|
|
$973,390,297
|
|
||
Employee Transactions
(3)
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18,904
|
|
|
$109.25
|
|
—
|
|
—
|
|
|
Month No. 3
|
|
|
|
|
||||||
(May 27, 2017-June 30, 2017)
|
|
|
|
|
||||||
Repurchase Programs
|
—
|
|
—
|
|
—
|
|
|
$973,390,297
|
|
|
Employee Transactions
(3)
|
16,941
|
|
|
$110.35
|
|
—
|
|
—
|
|
|
Total
|
2,279,612
|
|
|
2,209,175
|
|
|
$973,390,297
|
|
*
|
Periods represent our fiscal months.
|
(1)
|
On August 26, 2013, we announced that on August 23, 2013, our Board of Directors approved a share repurchase program (our “2013 Repurchase Program”) authorizing us to repurchase up to $1 billion in shares of our common stock through open-market transactions, private transactions, transactions structured through investment banking institutions or any combination thereof. On February 2, 2017, we announced that on January 26, 2017, our Board of Directors approved a new share repurchase program (our “2017 Repurchase Program”) authorizing us to repurchase up to $1 billion in shares of our common stock through open-market transactions, private transactions, transactions structured through investment banking institutions or any combination thereof. Our 2017 Repurchase Program does not have a stated expiration date and is in addition to our 2013 Repurchase Program, which also did not have a stated expiration date. Our repurchases during the quarter ended June 30, 2017 used the entire remaining dollar amount of the authorization under our 2013 Repurchase Program and a portion of the dollar amount of the authorization under our 2017 Repurchase Program. As of June 30, 2017,
$973,390,297
(as reflected in the table above) was the approximate dollar amount of our common stock that may yet be purchased under our 2017 Repurchase Program.
|
(2)
|
On May 5, 2017, we entered into a fixed-dollar ASR agreement (“May ASR”), pursuant to which, on May 5, 2017 we paid $250 million and received from the counterparty an initial delivery of 1,931,818 shares of our common stock based on a price of $110.00 per share, representing approximately 85 percent of the total number of shares of our common stock we expect to repurchase under the May ASR. The specific total number of shares we ultimately repurchase under the May ASR will be based on the average of the daily volume-weighted average price per share of our common stock during the term of the transaction, less a discount, and subject to adjustments pursuant to the terms and conditions of the May ASR. Upon settlement of the May ASR, we may receive additional shares of our common stock from the counterparty or, under certain limited circumstances, be required to deliver shares of our common stock to the counterparty. Settlement of the May ASR is expected to occur no later than the end of the first quarter of fiscal 2018. On May 11, 2017, the second tranche of a fixed-dollar ASR agreement to repurchase an unspecified total number of shares of our common stock for $350 million that we entered into on February 6, 2017 (“February ASR”) settled, and we received from the counterparty 277,357 additional shares of our common stock. In total, we repurchased 3,207,236 shares of our common stock pursuant to the February ASR at an average price of $109.13 per share.
|
(3)
|
Represents a combination of (a) shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of performance share units, restricted stock units or restricted shares that vested during the quarter or (b) performance share units, restricted stock units or restricted shares returned to us upon retirement or employment termination of employees. Our equity incentive plans provide that the value of shares delivered to us to pay the exercise price of options or to cover tax withholding obligations shall be the closing price of our common stock on the date the relevant transaction occurs.
|
ITEM 6.
|
SELECTED FINANCIAL DATA.
|
|
Fiscal Years Ended
|
||||||||||||||||||
|
2017
(1)
|
|
2016
(2)
|
|
2015
(3)
|
|
2014
|
|
2013
(4)
|
||||||||||
|
(In millions, except per share amounts)
|
||||||||||||||||||
Results of Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue from product sales and services
|
$
|
5,900
|
|
|
$
|
5,992
|
|
|
$
|
3,885
|
|
|
$
|
3,622
|
|
|
$
|
3,828
|
|
Cost of product sales and services
|
3,811
|
|
|
3,900
|
|
|
2,370
|
|
|
2,189
|
|
|
2,371
|
|
|||||
Interest expense
|
172
|
|
|
183
|
|
|
130
|
|
|
94
|
|
|
109
|
|
|||||
Income from continuing operations before income taxes
|
905
|
|
|
884
|
|
|
396
|
|
|
642
|
|
|
569
|
|
|||||
Income taxes
|
267
|
|
|
273
|
|
|
109
|
|
|
202
|
|
|
168
|
|
|||||
Income from continuing operations
|
638
|
|
|
611
|
|
|
287
|
|
|
440
|
|
|
401
|
|
|||||
Discontinued operations, net of income taxes
|
(85
|
)
|
|
(287
|
)
|
|
47
|
|
|
94
|
|
|
(292
|
)
|
|||||
Net income
|
553
|
|
|
324
|
|
|
334
|
|
|
534
|
|
|
109
|
|
|||||
Noncontrolling interests, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|||||
Net income attributable to Harris Corporation
|
553
|
|
|
324
|
|
|
334
|
|
|
535
|
|
|
113
|
|
|||||
Average shares outstanding (diluted)
|
124.3
|
|
|
125.0
|
|
|
106.8
|
|
|
107.3
|
|
|
111.2
|
|
|||||
Per Share Data (Diluted):
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
5.12
|
|
|
$
|
4.87
|
|
|
$
|
2.67
|
|
|
$
|
4.08
|
|
|
$
|
3.58
|
|
Income (loss) from discontinued operations, net of income taxes
|
(0.68
|
)
|
|
(2.28
|
)
|
|
0.44
|
|
|
0.87
|
|
|
(2.57
|
)
|
|||||
Net income
|
4.44
|
|
|
2.59
|
|
|
3.11
|
|
|
4.95
|
|
|
1.01
|
|
|||||
Cash dividends
|
2.12
|
|
|
2.00
|
|
|
1.88
|
|
|
1.68
|
|
|
1.48
|
|
|||||
Financial Position at Fiscal Year-End:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net working capital
(5)
|
$
|
147
|
|
|
$
|
643
|
|
|
$
|
909
|
|
|
$
|
877
|
|
|
$
|
651
|
|
Net property, plant and equipment
|
904
|
|
|
924
|
|
|
1,031
|
|
|
576
|
|
|
499
|
|
|||||
Long-term debt, net
|
3,396
|
|
|
4,120
|
|
|
5,053
|
|
|
1,564
|
|
|
1,564
|
|
|||||
Total assets
|
10,090
|
|
|
12,009
|
|
|
13,127
|
|
|
4,919
|
|
|
4,845
|
|
|||||
Equity
|
2,928
|
|
|
3,057
|
|
|
3,402
|
|
|
1,825
|
|
|
1,561
|
|
|||||
Book value per share
|
24.48
|
|
|
24.53
|
|
|
27.51
|
|
|
17.30
|
|
|
14.60
|
|
(1)
|
Results for fiscal 2017 included a
$51 million
after-tax (
$.41
per diluted common share) charge for Exelis acquisition-related and other items.
|
(2)
|
Results for fiscal 2016 included: (i)
$121 million
for integration and other costs associated with our acquisition of Exelis in the fourth quarter of fiscal 2015, including
$11 million
for amortization of a step-up in inventory; (ii)
$33 million
of charges for restructuring and other items; (iii) a net liability reduction of
$101 million
for certain post-employment benefit plans; and (iv) a
$10 million
net gain on the sale of Aerostructures. Income taxes on the above items were $8 million. Income from continuing operations included an after-tax impact of $34 million or $.27 per diluted common share from the above items.
|
(3)
|
Results for fiscal 2015 included results of Exelis following the close of the acquisition on May 29, 2015 and a $205 million after-tax ($1.91 per diluted share) charge for transaction, financing, integration, restructuring and other costs, primarily related to our acquisition of Exelis.
|
(4)
|
Results for fiscal 2013 included a $71 million after-tax ($.64 per diluted share) charge, net of government cost reimbursement, for Company-wide restructuring and other actions, including prepayment of long-term debt, asset impairments, a write-off of capitalized software, facility consolidation, workforce reductions and other associated costs.
|
(5)
|
Net working capital decreased in fiscal 2017 compared with fiscal 2016 primarily due to a $172 million increase in current portion of long-term debt and a $161 million decrease associated with net working capital of discontinued operations.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
•
|
Business Considerations
— a general description of our business; the value drivers of our business; fiscal
2017
results of operations and liquidity and capital resources key indicators; and industry-wide opportunities, challenges and risks that are relevant to us in defense, government and commercial markets.
|
•
|
Operations Review
— an analysis of our consolidated results of operations and of the results in each of our business segments, to the extent the segment operating results are helpful to an understanding of our business as a whole, for the three years presented in our financial statements.
|
•
|
Liquidity, Capital Resources and Financial Strategies
— an analysis of cash flows, funding of pension plans, common stock repurchases, dividends, capital structure and resources, contractual obligations, off-balance sheet arrangements, commercial commitments, financial risk management, impact of foreign exchange and impact of inflation.
|
•
|
Critical Accounting Policies and Estimates
— a discussion of accounting policies and estimates that require the most judgment and a discussion of accounting pronouncements that have been issued but not yet implemented by us and their potential impact on our financial position, results of operations and cash flows.
|
•
|
Forward-Looking Statements and Factors that May Affect Future Results
— cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from our historical results or our current expectations or projections.
|
•
|
Communication Systems, serving markets in tactical communications and defense products, including tactical ground and airborne radio communications solutions and night vision technology, and in public safety networks;
|
•
|
Electronic Systems, providing electronic warfare, avionics and C4ISR solutions for the defense industry and ATM solutions for the civil aviation industry; and
|
•
|
Space and Intelligence Systems, providing intelligence, space protection, geospatial, complete Earth observation, universe exploration, PNT, and environmental solutions for national security, defense, civil and commercial customers, using advanced sensors, antennas and payloads, as well as ground processing and information analytics.
|
•
|
Growing revenue across all three business segments;
|
•
|
Driving flawless execution while maintaining margins through operational excellence; and
|
•
|
Maximizing cash flow with balanced capital deployment while continuing to invest for the future.
|
•
|
Revenue decreased
2 percent
to
$5.9 billion
in fiscal
2017
from
$6.0 billion
in fiscal
2016
;
|
•
|
Income from continuing operations increased
4 percent
to
$638 million
in fiscal
2017
from
$611 million
in fiscal
2016
;
|
•
|
Income from continuing operations per diluted common share increased
5 percent
to
$5.12
in fiscal
2017
from
$4.87
in fiscal
2016
, reflecting both the increase in income from continuing operations as noted above and fewer diluted common shares outstanding due to repurchases of shares of common stock under our repurchase program during the third and fourth quarters of fiscal 2017; and
|
•
|
Income from continuing operations as a percentage of revenue increased to
11 percent
in fiscal
2017
from
10 percent
in fiscal
2016
.
|
•
|
Net cash provided by operating activities decreased to
$569 million
in fiscal
2017
from
$924 million
in fiscal
2016
primarily due to a $400 million voluntary contribution to our defined benefit plans in the fourth quarter of fiscal 2017;
|
•
|
Return on invested capital (defined as after-tax operating income from continuing operations divided by the two-point average of invested capital at the beginning and end of the fiscal year, where invested capital equals equity plus debt, less cash and cash equivalents) increased to
11 percent
in fiscal
2017
from
10 percent
in fiscal
2016
;
|
•
|
Return on average equity (defined as income from continuing operations divided by the two-point average of equity at the beginning and end of the fiscal year) increased to
21 percent
in fiscal
2017
from
19 percent
in fiscal
2016
;
|
•
|
Our consolidated total indebtedness to total capital ratio at
June 30, 2017
was
58 percent
, compared to our 65 percent covenant limitation under our senior unsecured revolving credit facility;
|
•
|
Our cash used for net repayment of borrowings decreased to
$499 million
(including retiring $575 million of debt) in fiscal
2017
from
$669 million
in fiscal
2016
; and
|
•
|
Our unfunded defined benefit plans liability decreased
$1.0 billion
in fiscal 2017 to
$1.3 billion
at
June 30, 2017
compared to
$2.3 billion
at
July 1, 2016
.
|
|
Fiscal Years Ended
|
||||||||||||||||
|
2017
|
|
2016
|
|
2017/2016
Percent Increase/ (Decrease) |
|
2015
|
|
2016/2015
Percent Increase/ (Decrease) |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
(Dollars in millions, except per share amounts)
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Communication Systems
|
$
|
1,753
|
|
|
$
|
1,864
|
|
|
(6
|
%)
|
|
$
|
1,836
|
|
|
2
|
%
|
Electronic Systems
|
2,251
|
|
|
2,233
|
|
|
1
|
%
|
|
1,019
|
|
|
119
|
%
|
|||
Space and Intelligence Systems
|
1,902
|
|
|
1,899
|
|
|
—
|
%
|
|
1,007
|
|
|
89
|
%
|
|||
Corporate eliminations
|
(6
|
)
|
|
(4
|
)
|
|
*
|
|
|
23
|
|
|
*
|
|
|||
Total revenue
|
5,900
|
|
|
5,992
|
|
|
(2
|
%)
|
|
3,885
|
|
|
54
|
%
|
|||
Cost of product sales and services:
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of product sales
|
(3,029
|
)
|
|
(3,136
|
)
|
|
(3
|
%)
|
|
(1,946
|
)
|
|
61
|
%
|
|||
% of revenue from product sales
|
65
|
%
|
|
65
|
%
|
|
|
|
59
|
%
|
|
|
|||||
Cost of services
|
(782
|
)
|
|
(764
|
)
|
|
2
|
%
|
|
(424
|
)
|
|
80
|
%
|
|||
% of revenue from services
|
63
|
%
|
|
65
|
%
|
|
|
|
70
|
%
|
|
|
|||||
Total cost of product sales and services
|
(3,811
|
)
|
|
(3,900
|
)
|
|
(2
|
%)
|
|
(2,370
|
)
|
|
65
|
%
|
|||
% of total revenue
|
65
|
%
|
|
65
|
%
|
|
|
|
61
|
%
|
|
|
|||||
Gross margin
|
2,089
|
|
|
2,092
|
|
|
—
|
%
|
|
1,515
|
|
|
38
|
%
|
|||
% of total revenue
|
35
|
%
|
|
35
|
%
|
|
|
|
39
|
%
|
|
|
|||||
Engineering, selling and administrative expenses
|
(1,016
|
)
|
|
(1,037
|
)
|
|
(2
|
%)
|
|
(883
|
)
|
|
17
|
%
|
|||
% of total revenue
|
17
|
%
|
|
17
|
%
|
|
|
|
23
|
%
|
|
|
|||||
Non-operating income (loss)
|
2
|
|
|
10
|
|
|
*
|
|
|
(108
|
)
|
|
*
|
|
|||
Net interest expense
|
(170
|
)
|
|
(181
|
)
|
|
(6
|
%)
|
|
(128
|
)
|
|
41
|
%
|
|||
Income from continuing operations before income taxes
|
905
|
|
|
884
|
|
|
2
|
%
|
|
396
|
|
|
123
|
%
|
|||
Income taxes
|
(267
|
)
|
|
(273
|
)
|
|
(2
|
%)
|
|
(109
|
)
|
|
150
|
%
|
|||
Effective tax rate
|
30
|
%
|
|
31
|
%
|
|
|
|
28
|
%
|
|
|
|||||
Income from continuing operations
|
$
|
638
|
|
|
$
|
611
|
|
|
4
|
%
|
|
$
|
287
|
|
|
113
|
%
|
% of total revenue
|
11
|
%
|
|
10
|
%
|
|
|
|
7
|
%
|
|
|
|||||
Income from continuing operations per diluted common share
|
$
|
5.12
|
|
|
$
|
4.87
|
|
|
5
|
%
|
|
$
|
2.67
|
|
|
82
|
%
|
|
|
•
|
The adoption of the accounting standard issued by the Financial Accounting Standards Board (“FASB”) that changed the accounting for certain aspects of stock options and other share-based compensation and resulted in a $23 million income tax benefit, as discussed in
Note 2: Accounting Changes or Recent Accounting Pronouncements
in the Notes;
|
•
|
Several differences between GAAP and tax accounting related to investments; and
|
•
|
Additional deductions and additional research credits claimed on our fiscal 2016 tax return compared with our recorded estimates at the end of fiscal 2016.
|
•
|
Settlement of several items for amounts that were lower than previously recorded estimates;
|
•
|
Legislation enacted in the second quarter of fiscal 2016 that restored the U.S. Federal income tax credit for qualifying R&D expenses for calendar year 2015 and made the credit permanent for the periods following December 31, 2015;
|
•
|
Recognition of a tax loss, net of valuation allowances, upon the divestiture of Aerostructures;
|
•
|
State tax reductions resulting from our integration of Exelis operations; and
|
•
|
Several differences between GAAP and tax accounting related to investments.
|
|
2017
|
|
2016
|
|
2017/2016
Percent Increase/ (Decrease) |
|
2015
|
|
2016/2015
Percent Increase/ (Decrease) |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
(Dollars in millions)
|
||||||||||||||||
Revenue
|
$
|
1,753
|
|
|
$
|
1,864
|
|
|
(6
|
%)
|
|
$
|
1,836
|
|
|
2
|
%
|
Cost of product sales and services
|
(895
|
)
|
|
(941
|
)
|
|
(5
|
%)
|
|
(890
|
)
|
|
6
|
%
|
|||
Gross margin
|
858
|
|
|
923
|
|
|
(7
|
%)
|
|
946
|
|
|
(2
|
%)
|
|||
% of revenue
|
49
|
%
|
|
50
|
%
|
|
|
|
52
|
%
|
|
|
|||||
ESA expenses
|
(334
|
)
|
|
(401
|
)
|
|
(17
|
%)
|
|
(393
|
)
|
|
2
|
%
|
|||
% of revenue
|
19
|
%
|
|
22
|
%
|
|
|
|
21
|
%
|
|
|
|||||
Segment operating income
|
$
|
524
|
|
|
$
|
522
|
|
|
—
|
%
|
|
$
|
553
|
|
|
(6
|
%)
|
% of revenue
|
30
|
%
|
|
28
|
%
|
|
|
|
30
|
%
|
|
|
|
2017
|
|
2016
|
|
2017/2016
Percent Increase/ (Decrease) |
|
2015
|
|
2016/2015
Percent Increase/ (Decrease) |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
(Dollars in millions)
|
||||||||||||||||
Revenue
|
$
|
2,251
|
|
|
$
|
2,233
|
|
|
1
|
%
|
|
$
|
1,019
|
|
|
119
|
%
|
Cost of product sales and services
|
(1,562
|
)
|
|
(1,569
|
)
|
|
—
|
%
|
|
(736
|
)
|
|
113
|
%
|
|||
Gross margin
|
689
|
|
|
664
|
|
|
4
|
%
|
|
283
|
|
|
135
|
%
|
|||
% of revenue
|
31
|
%
|
|
30
|
%
|
|
|
|
28
|
%
|
|
|
|||||
ESA expenses
|
(225
|
)
|
|
(234
|
)
|
|
(4
|
%)
|
|
(120
|
)
|
|
95
|
%
|
|||
% of revenue
|
10
|
%
|
|
10
|
%
|
|
|
|
12
|
%
|
|
|
|||||
Segment operating income
|
$
|
464
|
|
|
$
|
430
|
|
|
8
|
%
|
|
$
|
163
|
|
|
164
|
%
|
% of revenue
|
21
|
%
|
|
19
|
%
|
|
|
|
16
|
%
|
|
|
|
2017
|
|
2016
|
|
2017/2016
Percent Increase/ (Decrease) |
|
2015
|
|
2016/2015
Percent Increase/ (Decrease) |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
(Dollars in millions)
|
||||||||||||||||
Revenue
|
$
|
1,902
|
|
|
$
|
1,899
|
|
|
—
|
%
|
|
$
|
1,007
|
|
|
89
|
%
|
Cost of product sales and services
|
(1,360
|
)
|
|
(1,393
|
)
|
|
(2
|
%)
|
|
(715
|
)
|
|
95
|
%
|
|||
Gross margin
|
542
|
|
|
506
|
|
|
7
|
%
|
|
292
|
|
|
73
|
%
|
|||
% of revenue
|
28
|
%
|
|
27
|
%
|
|
|
|
29
|
%
|
|
|
|||||
ESA expenses
|
(231
|
)
|
|
(218
|
)
|
|
6
|
%
|
|
(156
|
)
|
|
40
|
%
|
|||
% of revenue
|
12
|
%
|
|
11
|
%
|
|
|
|
15
|
%
|
|
|
|||||
Segment operating income
|
$
|
311
|
|
|
$
|
288
|
|
|
8
|
%
|
|
$
|
136
|
|
|
112
|
%
|
% of revenue
|
16
|
%
|
|
15
|
%
|
|
|
|
14
|
%
|
|
|
|
|
2017
|
|
2016
|
|
2017/2016
Percent Increase/ (Decrease) |
|
2015
|
|
2016/2015
Percent Increase/ (Decrease) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
(Dollars in millions)
|
||||||||||||||||
Unallocated corporate expense
|
$
|
114
|
|
|
$
|
71
|
|
|
61
|
%
|
|
$
|
201
|
|
|
(65
|
%)
|
|
Amortization of intangible assets from Exelis Inc. acquisition
|
109
|
|
|
109
|
|
|
—
|
%
|
|
9
|
|
|
*
|
|
||||
Corporate eliminations
|
3
|
|
|
5
|
|
|
(40
|
%)
|
|
10
|
|
|
(50
|
%)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Years Ended
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(Dollars in millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
569
|
|
|
$
|
924
|
|
|
$
|
854
|
|
Net cash provided by (used in) investing activities
|
870
|
|
|
(1
|
)
|
|
(3,284
|
)
|
|||
Net cash provided by (used in) financing activities
|
(1,438
|
)
|
|
(893
|
)
|
|
2,373
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(4
|
)
|
|
(24
|
)
|
|
(23
|
)
|
|||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
(3
|
)
|
|
6
|
|
|
(80
|
)
|
|||
Cash and cash equivalents, beginning of year
|
487
|
|
|
481
|
|
|
561
|
|
|||
|
|
|
|
|
|
||||||
Cash and cash equivalents, end of year
|
$
|
484
|
|
|
$
|
487
|
|
|
$
|
481
|
|
•
|
$650 million in a 3-year tranche due May 29, 2018, and
|
•
|
$650 million in a 5-year tranche due May 29, 2020.
|
•
|
$500 million of 1.999% Notes due April 27, 2018,
|
•
|
$400 million of 2.700% Notes due April 27, 2020,
|
•
|
$600 million of 3.832% Notes due April 27, 2025,
|
•
|
$400 million of 4.854% Notes due April 27, 2035 and
|
•
|
$500 million of 5.054% Notes due April 27, 2045.
|
|
|
|
|
Obligations Due by Fiscal Year
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Total
|
|
2018
|
|
2019
and
2020
|
|
2021
and
2022
|
|
After
2022
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(Dollars in millions)
|
||||||||||||||||||
Long-term debt
|
$
|
3,945
|
|
|
$
|
556
|
|
|
$
|
658
|
|
|
$
|
806
|
|
|
$
|
1,925
|
|
|
Purchase obligations
(1)
|
1,019
|
|
|
847
|
|
|
151
|
|
|
21
|
|
|
—
|
|
||||||
Operating lease commitments
|
283
|
|
|
60
|
|
|
96
|
|
|
69
|
|
|
58
|
|
||||||
Interest on long-term debt
|
1,883
|
|
|
145
|
|
|
267
|
|
|
208
|
|
|
1,263
|
|
||||||
Minimum pension contributions
(2)
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total contractual cash obligations
(3)
|
$
|
7,131
|
|
|
$
|
1,609
|
|
|
$
|
1,172
|
|
|
$
|
1,104
|
|
|
$
|
3,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Any obligation under certain guarantee contracts;
|
•
|
A retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets;
|
•
|
Any obligation, including a contingent obligation, under certain derivative instruments; and
|
•
|
Any obligation, including a contingent obligation, under a material variable interest in an unconsolidated entity that is held by, and material to, the registrant, where such entity provides financing, liquidity, market risk or credit risk support to the registrant, or engages in leasing, hedging or R&D services with the registrant.
|
|
|
|
Expiration of Commitments
by Fiscal Year
|
||||||||||||||||
|
Total
|
|
2018
|
|
2019
|
|
2020
|
|
After 2020
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||
Surety bonds used for:
|
|
|
|
|
|
|
|
|
|
||||||||||
Bids
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Performance
|
491
|
|
|
423
|
|
|
27
|
|
|
41
|
|
|
—
|
|
|||||
|
498
|
|
|
430
|
|
|
27
|
|
|
41
|
|
|
—
|
|
|||||
Standby letters of credit used for:
|
|
|
|
|
|
|
|
|
|
||||||||||
Down payments
|
93
|
|
|
36
|
|
|
47
|
|
|
—
|
|
|
10
|
|
|||||
Performance
|
148
|
|
|
93
|
|
|
24
|
|
|
2
|
|
|
29
|
|
|||||
Warranty
|
42
|
|
|
32
|
|
|
1
|
|
|
—
|
|
|
9
|
|
|||||
|
283
|
|
|
161
|
|
|
72
|
|
|
2
|
|
|
48
|
|
|||||
Total commitments
|
$
|
781
|
|
|
$
|
591
|
|
|
$
|
99
|
|
|
$
|
43
|
|
|
$
|
48
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Favorable adjustments
|
$
|
118
|
|
|
$
|
187
|
|
|
$
|
114
|
|
Unfavorable adjustments
|
(104
|
)
|
|
(119
|
)
|
|
(60
|
)
|
|||
Net operating income adjustments
|
$
|
14
|
|
|
$
|
68
|
|
|
$
|
54
|
|
Obligation assumptions as of:
|
June 30, 2017
|
|
July 1, 2016
|
Discount rate
|
3.76%
|
|
3.62%
|
Rate of future compensation increase
|
2.76%
|
|
2.75%
|
|
|
|
|
Cost assumptions for fiscal years:
|
2017
|
|
2016
|
Discount rate to determine service cost
|
3.80%
|
|
4.06%
|
Discount rate to determine interest cost
|
2.94%
|
|
4.06%
|
Expected return on plan assets
|
7.65%
|
|
7.91%
|
Rate of future compensation increase
|
2.75%
|
|
2.76%
|
|
Increase/(Decrease)
in Pension Expense |
||||||
|
25 Basis
Point Increase |
|
25 Basis
Point Decrease |
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Long-term rate of return on assets used to determine net periodic benefit cost
|
$
|
(11.8
|
)
|
|
$
|
11.8
|
|
Discount rate used to determine net periodic benefit cost
|
$
|
8.1
|
|
|
$
|
(8.6
|
)
|
•
|
We depend on U.S. Government customers for a significant portion of our revenue, and the loss of these relationships, a reduction in U.S. Government funding or a change in U.S. Government spending priorities could have an adverse impact on our business, financial condition, results of operations and cash flows.
|
•
|
We depend significantly on U.S. Government contracts, which often are only partially funded, subject to immediate termination, and heavily regulated and audited. The termination or failure to fund, or negative audit findings for, one or more of these contracts could have an adverse impact on our business, financial condition, results of operations and cash flows.
|
•
|
We could be negatively impacted by a security breach, through cyber attack, cyber intrusion or otherwise, or other significant disruption of our IT networks and related systems or of those we operate for certain of our customers.
|
•
|
The U.S. Government’s budget deficit, the national debt and sequestration could have an adverse impact on our business, financial condition, results of operations and cash flows.
|
•
|
The level of returns on defined benefit plan assets, changes in interest rates and other factors could affect our earnings and cash flows in future periods.
|
•
|
We enter into fixed-price contracts that could subject us to losses in the event of cost overruns or a significant increase in inflation.
|
•
|
We use estimates in accounting for many of our programs and changes in our estimates could adversely affect our future financial results.
|
•
|
We derive a significant portion of our revenue from international operations and are subject to the risks of doing business internationally, including fluctuations in currency exchange rates.
|
•
|
Our reputation and ability to do business may be impacted by the improper conduct of our employees, agents or business partners.
|
•
|
We may not be successful in obtaining the necessary export licenses to conduct certain operations abroad, and Congress may prevent proposed sales to certain foreign governments.
|
•
|
Our future success will depend on our ability to develop new products, systems, services and technologies that achieve market acceptance in our current and future markets.
|
•
|
We participate in markets that are often subject to uncertain economic conditions, which makes it difficult to estimate growth in our markets and, as a result, future income and expenditures.
|
•
|
We cannot predict the consequences of future geo-political events, but they may adversely affect the markets in which we operate, our ability to insure against risks, our operations or our profitability.
|
•
|
We have made, and may continue to make, strategic acquisitions and divestitures that involve significant risks and uncertainties.
|
•
|
Disputes with our subcontractors and the inability of our subcontractors to perform, or our key suppliers to timely deliver our components, parts or services, could cause our products or services to be produced or delivered in an untimely or unsatisfactory manner.
|
•
|
Third parties have claimed in the past and may claim in the future that we are infringing directly or indirectly upon their intellectual property rights, and third parties may infringe upon our intellectual property rights.
|
•
|
The outcome of litigation or arbitration in which we are involved from time to time is unpredictable and an adverse decision in any such matter could have a material adverse effect on our financial condition, results of operations and cash flows.
|
•
|
We face certain significant risk exposures and potential liabilities that may not be covered adequately by insurance or indemnity.
|
•
|
Changes in our effective tax rate may have an adverse effect on our results of operations.
|
•
|
Our level of indebtedness and our ability to make payments on or service our indebtedness and our unfunded defined benefit plans liability may adversely affect our financial and operating activities or our ability to incur additional debt.
|
•
|
A downgrade in our credit ratings could materially adversely affect our business.
|
•
|
Unforeseen environmental issues could have a material adverse effect on our business, financial condition, results of operations and cash flows.
|
•
|
We have significant operations in locations that could be materially and adversely impacted in the event of a natural disaster or other significant disruption.
|
•
|
Changes in future business or other market conditions could cause business investments and/or recorded goodwill or other long-term assets to become impaired, resulting in substantial losses and write-downs that would adversely affect our results of operations.
|
•
|
Some of our workforce is represented by labor unions, so our business could be harmed in the event of a prolonged work stoppage.
|
•
|
We must attract and retain key employees, and failure to do so could seriously harm us.
|
•
|
We may be responsible for U.S. Federal income tax liabilities that relate to the spin-off of Vectrus completed by Exelis.
|
•
|
In connection with the Vectrus spin-off, Vectrus indemnified Exelis for certain liabilities and Exelis indemnified Vectrus for certain liabilities. This indemnity may not be sufficient to insure us against the full amount of the liabilities assumed by Vectrus and Vectrus may be unable to satisfy its indemnification obligations to us in the future.
|
•
|
The Vectrus spin-off may expose us to potential liabilities arising out of state and Federal fraudulent conveyance laws and legal distribution requirements.
|
•
|
The ITT spin-off of Exelis may expose us to potential liabilities arising out of state and Federal fraudulent conveyance laws and legal distribution requirements.
|
•
|
If we are required to indemnify ITT or Xylem in connection with the ITT spin-off of Exelis, we may need to divert cash to meet those obligations and our financial results could be negatively impacted.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
|
Page
|
Consolidated Statement of Income — Fiscal Years ended June 30, 2017; July 1, 2016; and July 3, 2015
|
|
Consolidated Statement of Comprehensive Income (Loss) — Fiscal Years ended Ju
ne 30, 2017; July 1, 2016; and July 3, 2015
|
|
Consolidated Balance Sheet — Ju
ne 30, 2017 and July 1, 2016
|
|
Consolidated Statement of Cash Flows — Fiscal Years ended Ju
ne 30, 2017; July 1, 2016; and July 3, 2015
|
|
Consolidated Statement of Equity — Fiscal Years ended Ju
ne 30, 2017; July 1, 2016; and July 3, 2015
|
|
Schedule II — Valuation and Qualifying Accounts — Fiscal Years ended Ju
ne 30, 2017; July 1, 2016; and July 3, 2015
|
|
Fiscal Years Ended
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In millions, except per share amounts)
|
||||||||||
Revenue from product sales and services
|
|
|
|
|
|
||||||
Revenue from product sales
|
$
|
4,667
|
|
|
$
|
4,814
|
|
|
$
|
3,278
|
|
Revenue from services
|
1,233
|
|
|
1,178
|
|
|
607
|
|
|||
|
5,900
|
|
|
5,992
|
|
|
3,885
|
|
|||
Cost of product sales and services
|
|
|
|
|
|
||||||
Cost of product sales
|
(3,029
|
)
|
|
(3,136
|
)
|
|
(1,946
|
)
|
|||
Cost of services
|
(782
|
)
|
|
(764
|
)
|
|
(424
|
)
|
|||
|
(3,811
|
)
|
|
(3,900
|
)
|
|
(2,370
|
)
|
|||
Engineering, selling and administrative expenses
|
(1,016
|
)
|
|
(1,037
|
)
|
|
(883
|
)
|
|||
Non-operating income (loss)
|
2
|
|
|
10
|
|
|
(108
|
)
|
|||
Interest income
|
2
|
|
|
2
|
|
|
2
|
|
|||
Interest expense
|
(172
|
)
|
|
(183
|
)
|
|
(130
|
)
|
|||
Income from continuing operations before income taxes
|
905
|
|
|
884
|
|
|
396
|
|
|||
Income taxes
|
(267
|
)
|
|
(273
|
)
|
|
(109
|
)
|
|||
Income from continuing operations
|
638
|
|
|
611
|
|
|
287
|
|
|||
Discontinued operations, net of income taxes
|
(85
|
)
|
|
(287
|
)
|
|
47
|
|
|||
Net income
|
$
|
553
|
|
|
$
|
324
|
|
|
$
|
334
|
|
Net income per common share
|
|
|
|
|
|
||||||
Basic
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
5.19
|
|
|
$
|
4.91
|
|
|
$
|
2.70
|
|
Discontinued operations
|
(0.69
|
)
|
|
(2.30
|
)
|
|
0.45
|
|
|||
|
$
|
4.50
|
|
|
$
|
2.61
|
|
|
$
|
3.15
|
|
Diluted
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
5.12
|
|
|
$
|
4.87
|
|
|
$
|
2.67
|
|
Discontinued operations
|
(0.68
|
)
|
|
(2.28
|
)
|
|
0.44
|
|
|||
|
$
|
4.44
|
|
|
$
|
2.59
|
|
|
$
|
3.11
|
|
|
Fiscal Years Ended
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(In millions)
|
||||||||||
Net income
|
$
|
553
|
|
|
$
|
324
|
|
|
$
|
334
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation loss, net of income taxes
|
(34
|
)
|
|
(69
|
)
|
|
(69
|
)
|
|||
Net unrealized gain (loss) on hedging derivatives, net of income taxes
|
1
|
|
|
1
|
|
|
(19
|
)
|
|||
Amortization of gain on treasury lock, net of income taxes
|
—
|
|
|
—
|
|
|
2
|
|
|||
Net unrecognized gain (loss) on postretirement obligations, net of income taxes
|
200
|
|
|
(411
|
)
|
|
85
|
|
|||
Other comprehensive income (loss), net of income taxes
|
167
|
|
|
(479
|
)
|
|
(1
|
)
|
|||
Total comprehensive income (loss)
|
$
|
720
|
|
|
$
|
(155
|
)
|
|
$
|
333
|
|
|
June 30,
2017 |
|
July 1,
2016 |
||||
|
|
|
|
||||
|
(In millions, except shares)
|
||||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
484
|
|
|
$
|
487
|
|
Receivables
|
623
|
|
|
674
|
|
||
Inventories
|
841
|
|
|
867
|
|
||
Income taxes receivable
|
24
|
|
|
75
|
|
||
Other current assets
|
101
|
|
|
124
|
|
||
Current assets of discontinued operations
|
—
|
|
|
397
|
|
||
Total current assets
|
2,073
|
|
|
2,624
|
|
||
Non-current Assets
|
|
|
|
||||
Property, plant and equipment
|
904
|
|
|
924
|
|
||
Goodwill
|
5,366
|
|
|
5,352
|
|
||
Other intangible assets
|
1,104
|
|
|
1,231
|
|
||
Non-current deferred income taxes
|
409
|
|
|
549
|
|
||
Other non-current assets
|
234
|
|
|
252
|
|
||
Non-current assets of discontinued operations
|
—
|
|
|
1,077
|
|
||
Total non-current assets
|
8,017
|
|
|
9,385
|
|
||
|
$
|
10,090
|
|
|
$
|
12,009
|
|
Liabilities and Equity
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Short-term debt
|
$
|
80
|
|
|
$
|
15
|
|
Accounts payable
|
540
|
|
|
494
|
|
||
Compensation and benefits
|
140
|
|
|
165
|
|
||
Other accrued items
|
317
|
|
|
379
|
|
||
Advance payments and unearned income
|
252
|
|
|
294
|
|
||
Income taxes payable
|
31
|
|
|
4
|
|
||
Current portion of long-term debt
|
554
|
|
|
382
|
|
||
Current liabilities of discontinued operations
|
12
|
|
|
248
|
|
||
Total current liabilities
|
1,926
|
|
|
1,981
|
|
||
Non-current Liabilities
|
|
|
|
||||
Defined benefit plans
|
1,278
|
|
|
2,296
|
|
||
Long-term debt, net
|
3,396
|
|
|
4,120
|
|
||
Non-current deferred income taxes
|
34
|
|
|
4
|
|
||
Other long-term liabilities
|
507
|
|
|
506
|
|
||
Non-current liabilities of discontinued operations
|
21
|
|
|
45
|
|
||
Total non-current liabilities
|
5,236
|
|
|
6,971
|
|
||
Equity
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
||||
Preferred stock, without par value; 1,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 119,628,884 shares at June 30, 2017 and 124,643,407 shares at July 1, 2016
|
120
|
|
|
125
|
|
||
Other capital
|
1,741
|
|
|
2,096
|
|
||
Retained earnings
|
1,343
|
|
|
1,330
|
|
||
Accumulated other comprehensive loss
|
(276
|
)
|
|
(495
|
)
|
||
Total shareholders’ equity
|
2,928
|
|
|
3,056
|
|
||
Noncontrolling interests
|
—
|
|
|
1
|
|
||
Total equity
|
2,928
|
|
|
3,057
|
|
||
|
$
|
10,090
|
|
|
$
|
12,009
|
|
|
Fiscal Years Ended
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
553
|
|
|
$
|
324
|
|
|
$
|
334
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
183
|
|
|
229
|
|
|
233
|
|
|||
Amortization of intangible assets from Exelis Inc. acquisition
|
128
|
|
|
132
|
|
|
11
|
|
|||
Share-based compensation
|
42
|
|
|
39
|
|
|
37
|
|
|||
Qualified pension plan contributions
|
(589
|
)
|
|
(174
|
)
|
|
(1
|
)
|
|||
Pension income
|
(97
|
)
|
|
(26
|
)
|
|
(1
|
)
|
|||
Net liability reduction for certain post-employment benefit plans
|
—
|
|
|
(101
|
)
|
|
—
|
|
|||
Settlement of Exelis Inc. excess pension plan
|
—
|
|
|
(244
|
)
|
|
—
|
|
|||
Impairment of goodwill and other assets
|
240
|
|
|
367
|
|
|
46
|
|
|||
(Gain) loss on sales of businesses, net
|
14
|
|
|
(10
|
)
|
|
(9
|
)
|
|||
Adjustment to loss on sales of businesses, net
|
—
|
|
|
20
|
|
|
—
|
|
|||
Loss on prepayment of long-term debt
|
—
|
|
|
—
|
|
|
118
|
|
|||
(Increase) decrease in:
|
|
|
|
|
|
||||||
Accounts and notes receivable
|
111
|
|
|
192
|
|
|
(17
|
)
|
|||
Inventories
|
28
|
|
|
(28
|
)
|
|
20
|
|
|||
Increase (decrease) in:
|
|
|
|
|
|
||||||
Accounts payable
|
18
|
|
|
(10
|
)
|
|
68
|
|
|||
Advance payments and unearned income
|
(42
|
)
|
|
(96
|
)
|
|
(48
|
)
|
|||
Income taxes
|
131
|
|
|
199
|
|
|
(2
|
)
|
|||
Other
|
(151
|
)
|
|
111
|
|
|
65
|
|
|||
Net cash provided by operating activities
|
569
|
|
|
924
|
|
|
854
|
|
|||
Investing Activities
|
|
|
|
|
|
||||||
Net cash paid for acquired businesses
|
—
|
|
|
—
|
|
|
(3,186
|
)
|
|||
Cash paid for fixed income securities
|
—
|
|
|
(19
|
)
|
|
—
|
|
|||
Net additions of property, plant and equipment
|
(119
|
)
|
|
(152
|
)
|
|
(148
|
)
|
|||
Proceeds from sales of businesses, net
|
1,014
|
|
|
181
|
|
|
50
|
|
|||
Adjustment to proceeds from sales of businesses, net
|
(25
|
)
|
|
(11
|
)
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
870
|
|
|
(1
|
)
|
|
(3,284
|
)
|
|||
Financing Activities
|
|
|
|
|
|
||||||
Proceeds from borrowings, net of issuance costs
|
85
|
|
|
61
|
|
|
3,683
|
|
|||
Repayments of borrowings
|
(584
|
)
|
|
(730
|
)
|
|
(954
|
)
|
|||
Proceeds from exercises of employee stock options
|
54
|
|
|
44
|
|
|
47
|
|
|||
Repurchases of common stock
|
(710
|
)
|
|
—
|
|
|
(150
|
)
|
|||
Cash dividends
|
(262
|
)
|
|
(252
|
)
|
|
(198
|
)
|
|||
Other financing activities
|
(21
|
)
|
|
(16
|
)
|
|
(55
|
)
|
|||
Net cash provided by (used in) financing activities
|
(1,438
|
)
|
|
(893
|
)
|
|
2,373
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(4
|
)
|
|
(24
|
)
|
|
(23
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
(3
|
)
|
|
6
|
|
|
(80
|
)
|
|||
Cash and cash equivalents, beginning of year
|
487
|
|
|
481
|
|
|
561
|
|
|||
Cash and cash equivalents, end of year
|
$
|
484
|
|
|
$
|
487
|
|
|
$
|
481
|
|
|
Common
Stock
|
|
Other
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions, except per share amounts)
|
||||||||||||||||||||||
Balance at June 27, 2014
|
$
|
106
|
|
|
$
|
509
|
|
|
$
|
1,226
|
|
|
$
|
(15
|
)
|
|
$
|
(1
|
)
|
|
$
|
1,825
|
|
Net income
|
—
|
|
|
—
|
|
|
334
|
|
|
—
|
|
|
—
|
|
|
334
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Shares issued under stock incentive plans
|
1
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
||||||
Shares issued to acquire new businesses
|
19
|
|
|
1,508
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,527
|
|
||||||
Share-based compensation expense
|
—
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
||||||
Equity issuance costs
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
||||||
Repurchases and retirement of common stock
|
(2
|
)
|
|
(60
|
)
|
|
(104
|
)
|
|
—
|
|
|
—
|
|
|
(166
|
)
|
||||||
Cash dividends ($1.88 per share)
|
—
|
|
|
—
|
|
|
(198
|
)
|
|
—
|
|
|
—
|
|
|
(198
|
)
|
||||||
Other activity related to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||||
Balance at July 3, 2015
|
124
|
|
|
2,031
|
|
|
1,258
|
|
|
(16
|
)
|
|
5
|
|
|
3,402
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
324
|
|
|
—
|
|
|
—
|
|
|
324
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(479
|
)
|
|
—
|
|
|
(479
|
)
|
||||||
Shares issued under stock incentive plans
|
1
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
||||||
Share-based compensation expense
|
—
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
||||||
Repurchases and retirement of common stock
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
||||||
Cash dividends ($2.00 per share)
|
—
|
|
|
—
|
|
|
(252
|
)
|
|
—
|
|
|
—
|
|
|
(252
|
)
|
||||||
Other activity related to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Balance at July 1, 2016
|
125
|
|
|
2,096
|
|
|
1,330
|
|
|
(495
|
)
|
|
1
|
|
|
3,057
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
553
|
|
|
—
|
|
|
—
|
|
|
553
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
167
|
|
|
—
|
|
|
167
|
|
||||||
Net accumulated foreign currency loss reclassified to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
||||||
Shares issued under stock incentive plans
|
1
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54
|
|
||||||
Share-based compensation expense
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
||||||
Repurchases and retirement of common stock
|
(6
|
)
|
|
(410
|
)
|
|
(278
|
)
|
|
—
|
|
|
—
|
|
|
(694
|
)
|
||||||
Forward contract component of accelerated share repurchase
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
||||||
Cash dividends ($2.12 per share)
|
—
|
|
|
—
|
|
|
(262
|
)
|
|
—
|
|
|
—
|
|
|
(262
|
)
|
||||||
Other activity related to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Balance at June 30, 2017
|
$
|
120
|
|
|
$
|
1,741
|
|
|
$
|
1,343
|
|
|
$
|
(276
|
)
|
|
$
|
—
|
|
|
$
|
2,928
|
|
•
|
Level 1 — Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 — Observable inputs other than quoted prices included within Level 1, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are observable or are derived principally from, or corroborated by, observable market data by correlation or other means.
|
•
|
Level 3 — Unobservable inputs that are supported by little or no market activity, are significant to the fair value of the assets or liabilities, and reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability developed using the best information available in the circumstances.
|
Segment
|
|
Average Warranty Period
|
Communication Systems
|
|
One to five years
|
Electronic Systems
|
|
One to two years
|
Space and Intelligence Systems
|
|
60 days to two years
|
•
|
$146 million
of financing costs, primarily consisting of
$118 million
of charges associated with our optional redemption on May 27, 2015 of our
5.95%
Notes due December 1, 2017 and
6.375%
Notes due June 15, 2019 (see
Note 21: Non-Operating Income (Loss)
for additional information) and
$18 million
of debt issuance costs related to financing commitments for a senior unsecured bridge loan facility (see
Note 18: Interest Expense
for additional information);
|
•
|
$65 million
of restructuring costs as referenced in the discussion above of fiscal 2015 restructuring charges;
|
•
|
$34 million
of integration costs, recognized as incurred;
|
•
|
$23 million
of transaction costs, recognized as incurred; and
|
•
|
$13 million
of other costs, including impairments of capitalized software (see “Long-Lived Assets, Including Finite-Lived Intangible Assets” in this Note above for additional information).
|
•
|
We recognized
$23 million
(
$.18
per diluted share) of income tax benefit in our Consolidated Statement of Income for fiscal 2017; and
|
•
|
We classified
$23 million
of cash flows resulting from excess tax benefits related to employee share-based awards as net cash provided by operating activities in our Consolidated Statement of Cash Flows for fiscal 2017.
|
•
|
Completing an accounting guidance gap analysis, consisting of a review of significant revenue streams and representative contracts to determine potential changes to our existing accounting policies and potential impacts to our consolidated financial statements;
|
•
|
Completing an inventory of our outstanding contracts and revenue streams;
|
•
|
Drafting a Company-wide revenue recognition policy reflecting the requirements of the new standard and tailored to our businesses;
|
•
|
Providing Company-wide training to affected employees, including in the areas of accounting, finance, contracts, tax and segment management;
|
•
|
Applying the five-step model of the new standard to our contracts and revenue streams to evaluate the quantitative and qualitative impacts the new standard will have on our consolidated financial statements, accounting and operating policies, accounting systems, internal control structure and business practices; and
|
•
|
Initiating the process of reviewing the additional disclosure requirements of the new standard and the potential impact on our accounting systems and internal control structure.
|
•
|
The number of distinct performance obligations within our contractual arrangements;
|
•
|
Contract modifications;
|
•
|
The potential impact to timing of revenue recognition for certain non-U.S. Government contracts based on existing contractual language; and
|
•
|
Estimation and recognition of variable consideration for contracts to provide services.
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(In millions)
|
||||||||||
Revenue from product sales and services
|
$
|
1,039
|
|
|
$
|
1,529
|
|
|
$
|
1,245
|
|
|
Cost of product sales and services
|
(885
|
)
|
|
(1,286
|
)
|
|
(1,025
|
)
|
||||
Engineering, selling and administrative expenses
|
(91
|
)
|
|
(150
|
)
|
|
(123
|
)
|
||||
Impairment of goodwill and other assets
|
(240
|
)
|
|
(367
|
)
|
|
(16
|
)
|
||||
Non-operating loss, net
(1)
|
(7
|
)
|
|
(4
|
)
|
|
—
|
|
||||
Income (loss) before income taxes
|
(184
|
)
|
|
(278
|
)
|
|
81
|
|
||||
Loss on sale of discontinued operations, net
(2)
|
(11
|
)
|
|
(21
|
)
|
|
—
|
|
||||
Income tax benefit (expense), net
(3)
|
110
|
|
|
12
|
|
|
(34
|
)
|
||||
Discontinued operations, net of income taxes
|
$
|
(85
|
)
|
|
$
|
(287
|
)
|
|
$
|
47
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
July 1, 2016
|
||||
|
|
|
|
|
||||
|
|
(In millions)
|
||||||
Assets
|
|
|
|
|||||
Receivables
|
$
|
—
|
|
|
$
|
263
|
|
|
Inventories
|
—
|
|
|
97
|
|
|||
Other current assets
|
—
|
|
|
37
|
|
|||
Current assets of discontinued operations
|
$
|
—
|
|
|
$
|
397
|
|
|
Property, plant and equipment
|
$
|
—
|
|
|
$
|
91
|
|
|
Goodwill
|
—
|
|
|
623
|
|
|||
Non-current deferred income taxes
|
—
|
|
|
47
|
|
|||
Other intangible assets
|
—
|
|
|
311
|
|
|||
Other non-current assets
|
—
|
|
|
5
|
|
|||
Non-current assets of discontinued operations
|
$
|
—
|
|
|
$
|
1,077
|
|
|
Liabilities
|
|
|
|
|||||
Accounts payable
|
$
|
—
|
|
|
$
|
109
|
|
|
Advance payments and unearned income
|
—
|
|
|
25
|
|
|||
Other current liabilities
(1)
|
12
|
|
|
114
|
|
|||
Current liabilities of discontinued operations
|
$
|
12
|
|
|
$
|
248
|
|
|
Non-current liabilities of discontinued operations
(2)
|
$
|
21
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
Fiscal Years Ended
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Depreciation and amortization
|
$
|
39
|
|
|
$
|
78
|
|
|
$
|
84
|
|
Capital expenditures
|
4
|
|
|
19
|
|
|
34
|
|
|||
Significant noncash items:
|
|
|
|
|
|
||||||
Impairment of goodwill and other assets
|
(240
|
)
|
|
(367
|
)
|
|
(16
|
)
|
|||
Loss on sale of discontinued operations, net
|
(11
|
)
|
|
(21
|
)
|
|
—
|
|
|
Fiscal Years Ended
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue from product sales and services
|
$
|
895
|
|
|
$
|
1,168
|
|
|
$
|
781
|
|
Cost of product sales and services
|
(777
|
)
|
|
(1,002
|
)
|
|
(665
|
)
|
|||
Engineering, selling and administrative expenses
|
(68
|
)
|
|
(84
|
)
|
|
(64
|
)
|
|||
Impairment of goodwill and other assets
|
(240
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Non-operating loss
|
(9
|
)
|
|
—
|
|
|
—
|
|
|||
Income (loss) before income taxes
|
(199
|
)
|
|
82
|
|
|
50
|
|
|||
Loss on sale of discontinued operation
|
(28
|
)
|
|
—
|
|
|
—
|
|
|||
Income tax benefit (expense)
|
69
|
|
|
(30
|
)
|
|
(16
|
)
|
|||
Discontinued operations, net of income taxes
|
$
|
(158
|
)
|
|
$
|
52
|
|
|
$
|
34
|
|
|
June 30, 2017
|
|
July 1, 2016
|
|||||
|
|
|
|
|||||
|
(In millions)
|
|||||||
Assets
|
|
|
|
|||||
Receivables
|
$
|
—
|
|
|
$
|
196
|
|
|
Inventories
|
—
|
|
|
83
|
|
|||
Other current assets
|
—
|
|
|
6
|
|
|||
Current assets of discontinued operations
|
$
|
—
|
|
|
$
|
285
|
|
|
Property, plant and equipment
|
$
|
—
|
|
|
$
|
18
|
|
|
Goodwill
|
—
|
|
|
487
|
|
|||
Other intangible assets
|
—
|
|
|
287
|
|
|||
Non-current deferred income taxes
|
—
|
|
|
4
|
|
|||
Other non-current assets
|
—
|
|
|
2
|
|
|||
Non-current assets of discontinued operations
|
$
|
—
|
|
|
$
|
798
|
|
|
Liabilities
|
|
|
|
|||||
Accounts payable
|
$
|
—
|
|
|
$
|
98
|
|
|
Advance payments and unearned income
|
—
|
|
|
20
|
|
|||
Other current liabilities
|
2
|
|
|
40
|
|
|||
Current liabilities of discontinued operations
|
$
|
2
|
|
|
$
|
158
|
|
|
Non-current liabilities of discontinued operations
|
$
|
—
|
|
|
$
|
13
|
|
|
Fiscal Years Ended
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue from product sales and services
|
$
|
144
|
|
|
$
|
361
|
|
|
$
|
464
|
|
Cost of product sales and services
|
(108
|
)
|
|
(284
|
)
|
|
(360
|
)
|
|||
Engineering, selling and administrative expenses
|
(23
|
)
|
|
(66
|
)
|
|
(59
|
)
|
|||
Impairment of goodwill and other assets
|
—
|
|
|
(367
|
)
|
|
(14
|
)
|
|||
Non-operating income
|
4
|
|
|
—
|
|
|
—
|
|
|||
Income (loss) before income taxes
|
17
|
|
|
(356
|
)
|
|
31
|
|
|||
Gain on sale of discontinued operation
|
14
|
|
|
—
|
|
|
—
|
|
|||
Income tax benefit (expense)
|
41
|
|
|
38
|
|
|
(18
|
)
|
|||
Discontinued operations, net of income taxes
|
$
|
72
|
|
|
$
|
(318
|
)
|
|
$
|
13
|
|
|
June 30, 2017
|
|
July 1, 2016
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Assets
|
|
|
|
||||
Receivables
|
$
|
—
|
|
|
$
|
67
|
|
Inventories
|
—
|
|
|
14
|
|
||
Other current assets
|
—
|
|
|
31
|
|
||
Current assets of discontinued operations
|
$
|
—
|
|
|
$
|
112
|
|
Property, plant and equipment
|
$
|
—
|
|
|
$
|
73
|
|
Goodwill
|
—
|
|
|
136
|
|
||
Other intangible assets
|
—
|
|
|
24
|
|
||
Non-current deferred income taxes
|
—
|
|
|
43
|
|
||
Other non-current assets
|
—
|
|
|
3
|
|
||
Non-current assets of discontinued operations
|
$
|
—
|
|
|
$
|
279
|
|
Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
—
|
|
|
$
|
11
|
|
Advance payments and unearned income
|
—
|
|
|
5
|
|
||
Other current liabilities
|
6
|
|
|
44
|
|
||
Current liabilities of discontinued operations
|
$
|
6
|
|
|
$
|
60
|
|
Non-current liabilities of discontinued operations
|
$
|
14
|
|
|
$
|
26
|
|
|
Fiscal Years Ended
|
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Revenue from product sales and services
|
$
|
60
|
|
|
$
|
8
|
|
Income before income taxes
|
5
|
|
|
—
|
|
||
Net gain on sale of business
|
10
|
|
|
—
|
|
Date of acquisition
|
May 29, 2015
|
|
|
Cash consideration paid for Exelis outstanding common stock
|
$
|
3,128
|
|
Cash consideration paid for Exelis outstanding stock options
|
125
|
|
|
Cash consideration paid for Exelis outstanding restricted stock units
|
38
|
|
|
Cash consideration paid for dividends to Exelis shareholders
|
21
|
|
|
Total cash consideration paid
|
3,312
|
|
|
Less cash acquired
|
(130
|
)
|
|
Net cash consideration paid
|
3,182
|
|
|
Fair value of Harris common stock issued for Exelis common stock
|
1,527
|
|
|
Total net purchase price paid
|
$
|
4,709
|
|
|
2015
|
||
|
|
||
|
(In millions)
|
||
Revenue from product sales and services — as reported
|
$
|
3,885
|
|
Revenue from product sales and services — pro forma
|
$
|
6,285
|
|
Income from continuing operations — as reported
|
$
|
287
|
|
Income from continuing operations — pro forma
|
$
|
384
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Accounts receivable
|
$
|
368
|
|
|
$
|
398
|
|
Unbilled costs and accrued earnings on cost-plus contracts
|
258
|
|
|
280
|
|
||
|
626
|
|
|
678
|
|
||
Less allowances for collection losses
|
(3
|
)
|
|
(4
|
)
|
||
|
$
|
623
|
|
|
$
|
674
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Unbilled costs and accrued earnings on fixed-price contracts
|
$
|
454
|
|
|
$
|
436
|
|
Finished products
|
96
|
|
|
129
|
|
||
Work in process
|
96
|
|
|
110
|
|
||
Raw materials and supplies
|
195
|
|
|
192
|
|
||
|
$
|
841
|
|
|
$
|
867
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Land
|
$
|
43
|
|
|
$
|
43
|
|
Software capitalized for internal use
|
141
|
|
|
113
|
|
||
Buildings
|
617
|
|
|
592
|
|
||
Machinery and equipment
|
1,270
|
|
|
1,185
|
|
||
|
2,071
|
|
|
1,933
|
|
||
Less accumulated depreciation and amortization
|
(1,167
|
)
|
|
(1,009
|
)
|
||
|
$
|
904
|
|
|
$
|
924
|
|
|
|
Communication
Systems |
|
Electronic
Systems |
|
Space and
Intelligence Systems |
|
Critical Networks
(2)
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
Balance at July 3, 2015
—
as reported
|
$
|
760
|
|
|
$
|
1,718
|
|
|
$
|
1,446
|
|
|
$
|
2,424
|
|
|
$
|
6,348
|
|
|
Decrease from reclassification to assets of discontinued operations
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(943
|
)
|
|
(943
|
)
|
||||||
Transfer of goodwill in segment realignment
|
—
|
|
|
1,481
|
|
|
—
|
|
|
(1,481
|
)
|
|
—
|
|
||||||
Balance at July 3, 2015
— after reallocation
|
760
|
|
|
3,199
|
|
|
1,446
|
|
|
—
|
|
|
5,405
|
|
||||||
Goodwill decrease from divestitures
(3)
|
—
|
|
|
(61
|
)
|
|
—
|
|
|
—
|
|
|
(61
|
)
|
||||||
Currency translation adjustments
|
7
|
|
|
(46
|
)
|
|
(1
|
)
|
|
—
|
|
|
(40
|
)
|
||||||
Other (including adjustments to previously estimated fair value of assets acquired and liabilities assumed)
|
14
|
|
|
1
|
|
|
33
|
|
|
—
|
|
|
48
|
|
||||||
Balance at July 1, 2016
|
781
|
|
|
3,093
|
|
|
1,478
|
|
|
—
|
|
|
5,352
|
|
||||||
Currency translation adjustments
|
2
|
|
|
(4
|
)
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
||||||
Other
|
2
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||||
Balance at June 30, 2017
|
$
|
785
|
|
|
$
|
3,104
|
|
|
$
|
1,477
|
|
|
$
|
—
|
|
|
$
|
5,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Customer relationships
|
$
|
1,205
|
|
|
$
|
233
|
|
|
$
|
972
|
|
|
$
|
1,206
|
|
|
$
|
139
|
|
|
$
|
1,067
|
|
Developed technologies
|
208
|
|
|
101
|
|
|
107
|
|
|
209
|
|
|
82
|
|
|
127
|
|
||||||
Contract backlog
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
|
—
|
|
||||||
Trade names
|
58
|
|
|
34
|
|
|
24
|
|
|
55
|
|
|
19
|
|
|
36
|
|
||||||
Other
|
2
|
|
|
1
|
|
|
1
|
|
|
9
|
|
|
8
|
|
|
1
|
|
||||||
Total intangible assets
|
$
|
1,473
|
|
|
$
|
369
|
|
|
$
|
1,104
|
|
|
$
|
1,504
|
|
|
$
|
273
|
|
|
$
|
1,231
|
|
|
Total
|
||
|
(In millions)
|
||
Fiscal Years:
|
|
||
2018
|
$
|
116
|
|
2019
|
115
|
|
|
2020
|
102
|
|
|
2021
|
101
|
|
|
2022
|
101
|
|
|
Thereafter
|
569
|
|
|
Total
|
$
|
1,104
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Balance at beginning of fiscal year
|
$
|
32
|
|
|
$
|
36
|
|
Warranty provision for sales
|
14
|
|
|
20
|
|
||
Settlements
|
(16
|
)
|
|
(19
|
)
|
||
Other, including adjustments for acquisitions and foreign currency translation
|
(4
|
)
|
|
(5
|
)
|
||
Balance at end of fiscal year
|
$
|
26
|
|
|
$
|
32
|
|
|
2017
|
|
2016
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Variable-rate term loans:
|
|
|
|
||||
3-year tranche, due May 29, 2018
|
$
|
36
|
|
|
$
|
300
|
|
5-year tranche, due May 29, 2020
|
269
|
|
|
318
|
|
||
Total variable-rate term loans
|
305
|
|
|
618
|
|
||
Fixed-rate debt:
|
|
|
|
||||
4.25% notes, due October 1, 2016
|
—
|
|
|
250
|
|
||
1.999% notes, due April 27, 2018
|
500
|
|
|
500
|
|
||
2.7% notes, due April 27, 2020
|
400
|
|
|
400
|
|
||
4.4% notes, due December 15, 2020
|
400
|
|
|
400
|
|
||
5.55% notes, due October 1, 2021
|
400
|
|
|
400
|
|
||
3.832% notes, due April 27, 2025
|
600
|
|
|
600
|
|
||
7.0% debentures, due January 15, 2026
|
100
|
|
|
100
|
|
||
6.35% debentures, due February 1, 2028
|
26
|
|
|
26
|
|
||
4.854% notes, due April 27, 2035
|
400
|
|
|
400
|
|
||
6.15% notes, due December 15, 2040
|
300
|
|
|
300
|
|
||
5.054% notes, due April 27, 2045
|
500
|
|
|
500
|
|
||
Other
|
14
|
|
|
—
|
|
||
Total fixed-rate debt
|
3,640
|
|
|
3,876
|
|
||
Total debt
|
3,945
|
|
|
4,494
|
|
||
Current portion of long-term debt
|
(556
|
)
|
|
(380
|
)
|
||
Plus: current portion of unamortized debt issuance costs
|
2
|
|
|
—
|
|
||
Less: current portion of unamortized bond premium
|
—
|
|
|
(2
|
)
|
||
Total current portion of long-term debt
|
(554
|
)
|
|
(382
|
)
|
||
Total long-term debt
|
3,391
|
|
|
4,112
|
|
||
Plus: unamortized bond premium
|
29
|
|
|
38
|
|
||
Less: unamortized discounts
|
(2
|
)
|
|
(3
|
)
|
||
Less: unamortized debt issuance costs
|
(22
|
)
|
|
(27
|
)
|
||
Total long-term debt, net
|
$
|
3,396
|
|
|
$
|
4,120
|
|
•
|
$500 million
in aggregate principal amount of
1.999%
Notes due April 27, 2018 (the “New 2018 Notes”),
|
•
|
$400 million
in aggregate principal amount of
2.700%
Notes due April 27, 2020 (the “New 2020 Notes”),
|
•
|
$600 million
in aggregate principal amount of
3.832%
Notes due April 27, 2025 (the “New 2025 Notes”),
|
•
|
$400 million
in aggregate principal amount of
4.854%
Notes due April 27, 2035 (the “New 2035 Notes”), and
|
•
|
$500 million
in aggregate principal amount of
5.054%
Notes due April 27, 2045 (the “New 2045 Notes” and collectively with the New 2018 Notes, New 2020 Notes, New 2025 Notes and New 2035 Notes, the “New Notes”).
|
|
|
June 30, 2017
|
|
July 1, 2016
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(In millions)
|
||||||||||||||
Long-term debt (including current portion)
(1)
|
$
|
3,950
|
|
|
$
|
4,252
|
|
|
$
|
4,502
|
|
|
$
|
4,873
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The fair value was estimated using a market approach based on quoted market prices for our debt traded in the secondary market. If our long-term debt in our balance sheet were measured at fair value, it would be categorized in Level 2 of the fair value hierarchy.
|
|
|
Total
|
|
Level 1
|
||||
|
|
|
|
|
||||
|
|
(In millions)
|
||||||
Assets
|
|
|
|
|||||
Deferred compensation plan investments:
(1)
|
|
|
|
|||||
Equity security
|
$
|
37
|
|
|
$
|
37
|
|
|
Investments Measured at NAV:
|
|
|
|
|||||
Corporate-owned life insurance
|
25
|
|
|
|
||||
Equity fund
|
50
|
|
|
|
||||
Total
|
75
|
|
|
|
||||
Total fair value of deferred compensation plan assets
|
$
|
112
|
|
|
|
|||
|
|
|
|
|
||||
Liabilities
|
|
|
|
|||||
Deferred compensation plan liabilities:
(2)
|
|
|
|
|||||
Equity securities and mutual funds
|
$
|
46
|
|
|
$
|
46
|
|
|
Investments Measured at NAV:
|
|
|
|
|||||
Common/collective trusts and guaranteed investment contracts
|
80
|
|
|
|
||||
Total fair value of deferred compensation plan liabilities
|
$
|
126
|
|
|
|
|||
|
|
|
|
|
(1)
|
Represents investments held in a Rabbi Trust associated with our non-qualified deferred compensation plans, which we include in the “Other current assets” and “Other non-current assets” line items in our Consolidated Balance Sheet.
|
(2)
|
Primarily represents obligations to pay benefits under certain non-qualified deferred compensation plans, which we include in the “Compensation and benefits” and “Other long-term liabilities” line items in our Consolidated Balance Sheet. Under these plans, participants designate investment options (including money market, stock and fixed-income funds), which serve as the basis for measurement of the notional value of their accounts.
|
|
June 30, 2017
|
|
July 1, 2016
|
||||||||||||||||||||
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits |
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
|
(In millions)
|
||||||||||||||||||||
Fair value of plan assets
|
$
|
4,921
|
|
|
$
|
212
|
|
|
$
|
5,133
|
|
|
$
|
4,273
|
|
|
$
|
216
|
|
|
$
|
4,489
|
|
Projected benefit obligation
|
(6,140
|
)
|
|
(265
|
)
|
|
(6,405
|
)
|
|
(6,471
|
)
|
|
(311
|
)
|
|
(6,782
|
)
|
||||||
Funded status
|
(1,219
|
)
|
|
(53
|
)
|
|
(1,272
|
)
|
|
(2,198
|
)
|
|
(95
|
)
|
|
(2,293
|
)
|
||||||
Amounts reported within:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other non-current assets
|
9
|
|
|
—
|
|
|
9
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||
Compensation and benefits
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||
Defined benefit plans
|
$
|
(1,226
|
)
|
|
$
|
(52
|
)
|
|
$
|
(1,278
|
)
|
|
$
|
(2,201
|
)
|
|
$
|
(95
|
)
|
|
$
|
(2,296
|
)
|
|
June 30, 2017
|
|
July 1, 2016
|
||||||||||||||||||||
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
|
(In millions)
|
||||||||||||||||||||
Net actuarial loss (gain)
|
$
|
262
|
|
|
$
|
(28
|
)
|
|
$
|
234
|
|
|
$
|
546
|
|
|
$
|
11
|
|
|
$
|
557
|
|
Net prior service cost (credit)
|
2
|
|
|
(1
|
)
|
|
1
|
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
||||||
|
$
|
264
|
|
|
$
|
(29
|
)
|
|
$
|
235
|
|
|
$
|
549
|
|
|
$
|
10
|
|
|
$
|
559
|
|
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(In millions)
|
|
(In millions)
|
||||||||||||||||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Benefit obligation at beginning of fiscal year
|
$
|
6,471
|
|
|
$
|
311
|
|
|
$
|
6,782
|
|
|
$
|
6,493
|
|
|
$
|
445
|
|
|
$
|
6,938
|
|
|
Service cost
|
58
|
|
|
1
|
|
|
59
|
|
|
75
|
|
|
1
|
|
|
76
|
|
|||||||
Interest cost
|
184
|
|
|
8
|
|
|
192
|
|
|
245
|
|
|
13
|
|
|
258
|
|
|||||||
Actuarial loss (gain)
|
(160
|
)
|
|
(32
|
)
|
|
(192
|
)
|
|
303
|
|
|
(2
|
)
|
|
301
|
|
|||||||
Prior service cost (credit)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
(121
|
)
|
|
(118
|
)
|
|||||||
Benefits paid
|
(376
|
)
|
|
(22
|
)
|
|
(398
|
)
|
|
(358
|
)
|
|
(24
|
)
|
|
(382
|
)
|
|||||||
Settlements
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(244
|
)
|
|
—
|
|
|
(244
|
)
|
|||||||
Special termination benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||||
Expenses paid
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|||||||
Curtailments
(3)(4)
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|||||||
Foreign exchange
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||||||
Benefit obligation at end of fiscal year
|
$
|
6,140
|
|
|
$
|
265
|
|
|
$
|
6,405
|
|
|
$
|
6,471
|
|
|
$
|
311
|
|
|
$
|
6,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
We divested IT Services during fiscal 2017, which resulted in a curtailment under the Salaried Retiree Medical Plan.
|
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(In millions)
|
|
(In millions)
|
||||||||||||||||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Plan assets at beginning of fiscal year
|
$
|
4,273
|
|
|
$
|
216
|
|
|
$
|
4,489
|
|
|
$
|
4,500
|
|
|
$
|
257
|
|
|
$
|
4,757
|
|
|
Actual return on plan assets
|
470
|
|
|
22
|
|
|
492
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||||||
Employer contributions
|
591
|
|
|
(4
|
)
|
|
587
|
|
|
420
|
|
|
1
|
|
|
421
|
|
|||||||
Benefits paid
|
(376
|
)
|
|
(22
|
)
|
|
(398
|
)
|
|
(358
|
)
|
|
(25
|
)
|
|
(383
|
)
|
|||||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
(244
|
)
|
|
—
|
|
|
(244
|
)
|
|||||||
Expenses paid
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|||||||
Foreign exchange loss
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
(16
|
)
|
|
—
|
|
|
(16
|
)
|
|||||||
Other
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(16
|
)
|
|||||||
Plan assets at end of fiscal year
|
$
|
4,921
|
|
|
$
|
212
|
|
|
$
|
5,133
|
|
|
$
|
4,273
|
|
|
$
|
216
|
|
|
$
|
4,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Funded status at end of fiscal year
|
$
|
(1,219
|
)
|
|
$
|
(53
|
)
|
|
$
|
(1,272
|
)
|
|
$
|
(2,198
|
)
|
|
$
|
(95
|
)
|
|
$
|
(2,293
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2017 |
|
July 1,
2016 |
||||
|
(In millions)
|
|
(In millions)
|
||||
Projected benefit obligation
|
$
|
6,061
|
|
|
$
|
6,390
|
|
Accumulated benefit obligation
|
6,061
|
|
|
6,379
|
|
||
Fair value of plan assets
|
4,833
|
|
|
4,187
|
|
|
|
Pension
|
|
Other Benefits
|
||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
Net periodic benefit income
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Service cost
|
$
|
58
|
|
|
$
|
75
|
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
Interest cost
|
184
|
|
|
245
|
|
|
23
|
|
|
8
|
|
|
13
|
|
|
2
|
|
|||||||
Expected return on plan assets
|
(340
|
)
|
|
(347
|
)
|
|
(32
|
)
|
|
(17
|
)
|
|
(18
|
)
|
|
(2
|
)
|
|||||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(13
|
)
|
|||||||
Amortization of net actuarial loss
|
1
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
6
|
|
|||||||
Net periodic benefit income
|
(97
|
)
|
|
(26
|
)
|
|
(1
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
(6
|
)
|
|||||||
Effect of curtailments, settlements or special termination benefits
(2)
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(121
|
)
|
|
—
|
|
|||||||
Total net periodic benefit income
|
$
|
(97
|
)
|
|
$
|
(25
|
)
|
|
$
|
(1
|
)
|
|
$
|
(8
|
)
|
|
$
|
(129
|
)
|
|
$
|
(6
|
)
|
|
Other changes in plan assets and benefit obligations recognized in other comprehensive loss (income)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net actuarial loss (gain)
|
$
|
(284
|
)
|
|
$
|
645
|
|
|
$
|
(117
|
)
|
|
$
|
(38
|
)
|
|
$
|
15
|
|
|
$
|
(5
|
)
|
|
Prior service cost (credit)
(2)
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(121
|
)
|
|
(19
|
)
|
|||||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
126
|
|
|
13
|
|
|||||||
Amortization of net actuarial loss
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(6
|
)
|
|||||||
Total change recognized in other comprehensive loss (income)
|
(285
|
)
|
|
647
|
|
|
(118
|
)
|
|
(38
|
)
|
|
18
|
|
|
(17
|
)
|
|||||||
Total impact from net periodic benefit cost and changes in other comprehensive loss (income)
|
$
|
(382
|
)
|
|
$
|
622
|
|
|
$
|
(119
|
)
|
|
$
|
(46
|
)
|
|
$
|
(111
|
)
|
|
$
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligation assumptions as of:
|
June 30, 2017
|
|
July 1, 2016
|
|
|
|||
Discount rate
|
3.76
|
%
|
|
3.62
|
%
|
|
|
|
Rate of future compensation increase
|
2.76
|
%
|
|
2.75
|
%
|
|
|
|
|
|
|
|
|
|
|||
Cost assumptions for fiscal years:
|
2017
|
|
2016
|
|
2015
|
|||
Discount rate to determine service cost
|
3.80
|
%
|
|
4.06
|
%
|
|
3.77
|
%
|
Discount rate to determine interest cost
|
2.94
|
%
|
|
4.06
|
%
|
|
3.77
|
%
|
Expected return on plan assets
|
7.65
|
%
|
|
7.91
|
%
|
|
7.93
|
%
|
Rate of future compensation increase
|
2.75
|
%
|
|
2.76
|
%
|
|
2.76
|
%
|
Obligation assumptions as of:
|
June 30, 2017
|
|
July 1, 2016
|
|
|
|||
Discount rate
|
3.63
|
%
|
|
3.41
|
%
|
|
|
|
Rate of future compensation increase
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|||
Cost assumptions for fiscal year:
|
2017
|
|
2016
|
|
2015
|
|||
Discount rate to determine service cost
|
3.52
|
%
|
|
3.86
|
%
|
|
3.57
|
%
|
Discount rate to determine interest cost
|
2.60
|
%
|
|
3.86
|
%
|
|
3.57
|
%
|
Rate of future compensation increase
|
N/A
|
|
|
2.75
|
%
|
|
2.75
|
%
|
|
Target Asset
Allocation
|
|||||
Equity investments
|
45
|
%
|
—
|
|
75
|
%
|
Fixed income investments
|
20
|
%
|
—
|
|
42
|
%
|
Hedge funds
|
5
|
%
|
—
|
|
15
|
%
|
Cash and cash equivalents
|
0
|
%
|
—
|
|
10
|
%
|
•
|
Domestic and international equities, which include common and preferred shares, domestic listed and foreign listed equity securities, open-ended and closed-ended mutual funds and exchange traded funds, are generally valued at the closing price reported on the major market exchanges on which the individual securities are traded at the measurement date. Because these assets are traded predominantly on liquid, widely traded public exchanges, equity securities are categorized as Level 1 assets.
|
•
|
Private equity funds, which include buy-out, mezzanine, venture capital, distressed asset and secondary funds, are typically limited partnership investment structures. Private equity valuations are based on the valuation of the underlying investments, which include inputs such as cost, operating results, discounted future cash flows and market-based comparable data. Private equity funds generally have liquidity restrictions that extend for ten or more years. Valuations are largely based on unobservable inputs and short-term liquidity is restricted; consequently, private equity is categorized as Level 3 assets. At
June 30, 2017
and
July 1, 2016
, our defined benefit plans had future unfunded commitments totaling
$157 million
and
$178 million
, respectively, related to private equity fund investments.
|
•
|
Hedge funds, which include equity long/short, event-driven and fixed-income arbitrage and global macro funds, are typically limited partnership investment structures. Limited partnership interests in hedge funds are primarily valued using a market approach based on NAV calculated by the funds and are not publicly available. Hedge funds that permit redemption on a quarterly or more frequent basis with
90
or fewer days notice are generally categorized as Level 2 assets. All other hedge funds are categorized as Level 3 assets.
|
•
|
Fixed income investments, which include U.S. Government securities and investment and non-investment grade corporate bonds, are generally valued using pricing models that use verifiable, observable market data such as interest rates, benchmark yield curves and credit spreads, bids provided by brokers or dealers, or quoted prices of securities with similar characteristics. Fixed income investments are categorized as Level 2 assets.
|
•
|
Other is primarily comprised of guaranteed insurance contracts valued at book value, which approximates fair value, calculated using the prior-year balance adjusted for investment returns and changes in cash flows.
|
•
|
Cash and cash equivalents are primarily comprised of short-term money market funds valued at cost, which approximates fair value, or valued at quoted market prices of identical instruments. Cash and currency are categorized as Level 1 assets; cash equivalents, such as money market funds or short-term commingled funds, are categorized as Level 2 assets.
|
•
|
Certain investments that are valued using the NAV per share (or its equivalent) as a practical expedient are not categorized in the fair value hierarchy and are included in the table to permit reconciliation of the fair value hierarchy to the aggregate postretirement benefit plan assets.
|
|
June 30, 2017
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(In millions)
|
||||||||||||||
Asset Category
|
|
|
|
|
|
|
|
||||||||
Equities:
|
|
|
|
|
|
|
|
||||||||
Domestic equities
|
$
|
1,062
|
|
|
$
|
1,032
|
|
|
$
|
30
|
|
|
$
|
—
|
|
International equities
|
838
|
|
|
834
|
|
|
4
|
|
|
—
|
|
||||
Alternative investments:
|
|
|
|
|
|
|
|
||||||||
Private equity funds
|
489
|
|
|
—
|
|
|
—
|
|
|
489
|
|
||||
Hedge funds
|
242
|
|
|
—
|
|
|
—
|
|
|
242
|
|
||||
Commodities and real estate
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
Fixed income:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
611
|
|
|
—
|
|
|
611
|
|
|
—
|
|
||||
Government securities
|
241
|
|
|
—
|
|
|
241
|
|
|
—
|
|
||||
Other
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Cash and cash equivalents
|
597
|
|
|
1
|
|
|
596
|
|
|
—
|
|
||||
Total
|
4,115
|
|
|
$
|
1,867
|
|
|
$
|
1,482
|
|
|
$
|
766
|
|
|
Investments Measured at NAV
|
|
|
|
|
|
|
|
||||||||
Equity funds
|
632
|
|
|
|
|
|
|
|
|||||||
Fixed income funds
|
288
|
|
|
|
|
|
|
|
|||||||
Total Investments Measured at NAV
|
920
|
|
|
|
|
|
|
|
|||||||
Receivables, net
|
98
|
|
|
|
|
|
|
|
|||||||
Total fair value of plan assets
|
$
|
5,133
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
|
July 1, 2016
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(In millions)
|
||||||||||||||
Asset Category
|
|
|
|
|
|
|
|
||||||||
Equities:
|
|
|
|
|
|
|
|
||||||||
Domestic equities
|
$
|
1,097
|
|
|
$
|
1,070
|
|
|
$
|
27
|
|
|
$
|
—
|
|
International equities
|
455
|
|
|
452
|
|
|
3
|
|
|
—
|
|
||||
Alternative investments:
|
|
|
|
|
|
|
|
||||||||
Private equity funds
|
664
|
|
|
—
|
|
|
—
|
|
|
664
|
|
||||
Hedge funds
|
329
|
|
|
—
|
|
|
47
|
|
|
282
|
|
||||
Commodities and real estate
|
36
|
|
|
—
|
|
|
—
|
|
|
36
|
|
||||
Fixed income:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
557
|
|
|
—
|
|
|
557
|
|
|
—
|
|
||||
Government securities
|
166
|
|
|
—
|
|
|
166
|
|
|
—
|
|
||||
Other
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Cash and cash equivalents
|
197
|
|
|
31
|
|
|
166
|
|
|
—
|
|
||||
Total
|
$
|
3,503
|
|
|
$
|
1,553
|
|
|
$
|
966
|
|
|
$
|
984
|
|
Investments Measured at NAV
|
|
|
|
|
|
|
|
||||||||
Equity funds
|
582
|
|
|
|
|
|
|
|
|||||||
Fixed income funds
|
405
|
|
|
|
|
|
|
|
|||||||
Total Investments Measured at NAV
|
987
|
|
|
|
|
|
|
|
|||||||
Payables, net
|
(1
|
)
|
|
|
|
|
|
|
|||||||
Total fair value of plan assets
|
$
|
4,489
|
|
|
|
|
|
|
|
|
Private
Equity Funds, Commodities and Real Estate |
|
Hedge
Funds |
|
International Equities
|
|
Other
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
(In millions)
|
|
|
|
|
||||||||||
Level 3 balance — July 3, 2015
|
$
|
931
|
|
|
$
|
338
|
|
|
$
|
145
|
|
|
$
|
13
|
|
|
$
|
1,427
|
|
Realized gains (losses), net
|
109
|
|
|
(8
|
)
|
|
127
|
|
|
1
|
|
|
229
|
|
|||||
Unrealized losses, net
|
(121
|
)
|
|
(20
|
)
|
|
(137
|
)
|
|
(3
|
)
|
|
(281
|
)
|
|||||
Sales, net
|
(219
|
)
|
|
(28
|
)
|
|
(135
|
)
|
|
(9
|
)
|
|
(391
|
)
|
|||||
Level 3 balance — July 1, 2016
|
700
|
|
|
282
|
|
|
—
|
|
|
2
|
|
|
984
|
|
|||||
Realized gains (losses), net
|
78
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
55
|
|
|||||
Unrealized gains (losses), net
|
(71
|
)
|
|
49
|
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|||||
Sales, net
|
(185
|
)
|
|
(66
|
)
|
|
—
|
|
|
—
|
|
|
(251
|
)
|
|||||
Level 3 balance — June 30, 2017
|
$
|
522
|
|
|
$
|
242
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
766
|
|
|
Pension
|
|
Other
Benefits
(1)
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Fiscal Years:
|
|
|
|
|
|
||||||
2018
|
$
|
391
|
|
|
$
|
26
|
|
|
$
|
417
|
|
2019
|
384
|
|
|
26
|
|
|
410
|
|
|||
2020
|
386
|
|
|
25
|
|
|
411
|
|
|||
2021
|
386
|
|
|
25
|
|
|
411
|
|
|||
2022
|
386
|
|
|
24
|
|
|
410
|
|
|||
2023 — 2027
|
1,891
|
|
|
102
|
|
|
1,993
|
|
(1)
|
Projected payments for Other Benefits reflect gross payments from the Company, excluding subsidies, which are expected to approximate
10 percent
of gross payments.
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Total expense
|
$
|
42
|
|
|
$
|
36
|
|
|
$
|
33
|
|
Included in:
|
|
|
|
|
|
||||||
Cost of product sales and services
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Engineering, selling and administrative expenses
|
39
|
|
|
32
|
|
|
30
|
|
|||
Income from continuing operations
|
42
|
|
|
36
|
|
|
33
|
|
|||
Tax effect on share-based compensation expense
|
(16
|
)
|
|
(14
|
)
|
|
(13
|
)
|
|||
Total share-based compensation expense after-tax
|
$
|
26
|
|
|
$
|
22
|
|
|
$
|
20
|
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
|
|
|
|
|||
Expected dividends
|
2.4
|
%
|
|
2.5
|
%
|
|
2.7
|
%
|
Expected volatility
|
21.8
|
%
|
|
23.0
|
%
|
|
24.3
|
%
|
Risk-free interest rates
|
1.2
|
%
|
|
1.5
|
%
|
|
1.7
|
%
|
Expected term (years)
|
5.03
|
|
|
5.05
|
|
|
5.02
|
|
|
Shares
|
|
Weighted
Average
Exercise
Price
Per Share
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic Value
|
|||||
|
|
|
|
|
(In years)
|
|
(In millions)
|
|||||
Stock options outstanding July 1, 2016
|
4,935,845
|
|
|
$
|
62.28
|
|
|
|
|
|
||
Stock options forfeited or expired
|
(272,129
|
)
|
|
$
|
81.23
|
|
|
|
|
|
||
Stock options granted
|
1,230,480
|
|
|
$
|
90.88
|
|
|
|
|
|
||
Stock options exercised
|
(984,054
|
)
|
|
$
|
54.81
|
|
|
|
|
|
||
Stock options outstanding June 30, 2017
|
4,910,142
|
|
|
$
|
69.89
|
|
|
7.23
|
|
$
|
192.41
|
|
Stock options exercisable June 30, 2017
|
2,313,860
|
|
|
$
|
55.09
|
|
|
5.83
|
|
$
|
124.92
|
|
|
Shares
|
|
Weighted-
Average
Grant-Date
Fair Value
Per Share
|
|||
Nonvested stock options July 1, 2016
|
2,683,709
|
|
|
$
|
12.64
|
|
Stock options granted
|
1,230,480
|
|
|
$
|
13.82
|
|
Stock options vested
|
(1,317,907
|
)
|
|
$
|
12.59
|
|
Nonvested stock options June 30, 2017
|
2,596,282
|
|
|
$
|
13.23
|
|
|
Shares
|
|
Weighted-
Average
Grant
Price
Per Share
|
|||
Restricted stock and restricted stock units outstanding at July 1, 2016
|
411,875
|
|
|
$
|
71.07
|
|
Restricted stock and restricted stock units granted
|
99,155
|
|
|
$
|
94.60
|
|
Restricted stock and restricted stock units vested
|
(222,667
|
)
|
|
$
|
63.90
|
|
Restricted stock and restricted stock units forfeited
|
(27,399
|
)
|
|
$
|
82.52
|
|
Restricted stock and restricted stock units outstanding at June 30, 2017
|
260,964
|
|
|
$
|
84.92
|
|
|
Shares
|
|
Weighted-
Average
Grant
Price
Per Share
|
|||
Performance share units outstanding at July 1, 2016
|
681,731
|
|
|
$
|
68.67
|
|
Performance share units granted
|
374,907
|
|
|
$
|
84.40
|
|
Performance share units vested
|
(352,366
|
)
|
|
$
|
59.32
|
|
Performance share units forfeited
|
(70,537
|
)
|
|
$
|
80.99
|
|
Performance share units outstanding at June 30, 2017
|
633,735
|
|
|
$
|
81.81
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions, except per share amounts)
|
||||||||||
Income from continuing operations
|
$
|
638
|
|
|
$
|
611
|
|
|
$
|
287
|
|
Adjustments for participating securities outstanding
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Income from continuing operations used in per basic and diluted common share calculations (A)
|
$
|
636
|
|
|
$
|
609
|
|
|
$
|
286
|
|
Basic weighted average common shares outstanding (B)
|
122.6
|
|
|
123.8
|
|
|
105.7
|
|
|||
Impact of dilutive share-based awards
|
1.7
|
|
|
1.2
|
|
|
1.1
|
|
|||
Diluted weighted average common shares outstanding (C)
|
124.3
|
|
|
125.0
|
|
|
106.8
|
|
|||
Income from continuing operations per basic common share (A)/(B)
|
$
|
5.19
|
|
|
$
|
4.91
|
|
|
$
|
2.70
|
|
Income from continuing operations per diluted common share (A)/(C)
|
$
|
5.12
|
|
|
$
|
4.87
|
|
|
$
|
2.67
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(In millions)
|
||||||||||
Loss on prepayment of long-term debt
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(118
|
)
|
|
Gain on sales of businesses
|
—
|
|
|
10
|
|
|
9
|
|
||||
Adjustment to gain on sale of business
|
2
|
|
|
—
|
|
|
—
|
|
||||
Net income related to intellectual property matters
|
—
|
|
|
—
|
|
|
1
|
|
||||
|
$
|
2
|
|
|
$
|
10
|
|
|
$
|
(108
|
)
|
|
|
|
|
|
|
|
|
(1)
|
The loss in fiscal 2015 reflected charges associated with our optional redemption on May 27, 2015 of the entire outstanding
$400 million
principal amount of our
5.95%
Notes due December 1, 2017 and the entire outstanding
$350 million
principal amount of our
6.375%
Notes due June 15, 2019.
|
|
|
2017
(1)
|
|
2016
(2)
|
||||
|
|
|
|
|
||||
|
|
(In millions)
|
||||||
Foreign currency translation, net of income taxes of $1 million and $29 million at June 30, 2017 and July 1, 2016, respectively
|
$
|
(113
|
)
|
|
$
|
(131
|
)
|
|
Net unrealized loss on hedging derivatives, net of income taxes of $11 million at June 30, 2017 and July 1, 2016
|
(17
|
)
|
|
(18
|
)
|
|||
Unrecognized postretirement obligations, net of income taxes of
$89
million and $213 million at June 30, 2017 and July 1, 2016, respectively
|
(146
|
)
|
|
(346
|
)
|
|||
|
|
$
|
(276
|
)
|
|
$
|
(495
|
)
|
|
|
|
|
|
(1)
|
Accumulated foreign currency translation losses of
$52 million
(net of income taxes of
$14 million
) were reclassified to earnings in fiscal 2017 as a result of the divestitures of CapRock and IT Services and are included in “Discontinued operations, net of income taxes” in our Consolidated Statement of Income.
|
(2)
|
Reclassifications out of accumulated other comprehensive loss in fiscal 2016 were not material.
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
United States
|
$
|
117
|
|
|
$
|
(36
|
)
|
|
$
|
114
|
|
International
|
9
|
|
|
6
|
|
|
1
|
|
|||
State and local
|
6
|
|
|
(11
|
)
|
|
8
|
|
|||
|
132
|
|
|
(41
|
)
|
|
123
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
United States
|
126
|
|
|
279
|
|
|
(21
|
)
|
|||
International
|
1
|
|
|
(3
|
)
|
|
8
|
|
|||
State and local
|
8
|
|
|
38
|
|
|
(1
|
)
|
|||
|
135
|
|
|
314
|
|
|
(14
|
)
|
|||
|
$
|
267
|
|
|
$
|
273
|
|
|
$
|
109
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Continuing operations
|
$
|
267
|
|
|
$
|
273
|
|
|
$
|
109
|
|
Discontinued operations
|
(110
|
)
|
|
(12
|
)
|
|
34
|
|
|||
Total income tax provision
|
$
|
157
|
|
|
$
|
261
|
|
|
$
|
143
|
|
|
2017
|
|
2016
|
|
2015
|
|||
U.S. statutory income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State taxes
|
1.0
|
|
|
1.8
|
|
|
0.6
|
|
International income
|
(1.3
|
)
|
|
(1.2
|
)
|
|
(3.2
|
)
|
Nondeductible goodwill
|
—
|
|
|
0.9
|
|
|
2.2
|
|
Research and development tax credit
|
(2.0
|
)
|
|
(2.3
|
)
|
|
(2.1
|
)
|
Change in valuation allowance
|
(0.2
|
)
|
|
(2.6
|
)
|
|
—
|
|
U.S. production activity benefit
|
(0.5
|
)
|
|
(0.4
|
)
|
|
(3.8
|
)
|
Adoption of stock-based compensation ASU
|
(2.6
|
)
|
|
—
|
|
|
—
|
|
Cash repatriation
|
—
|
|
|
—
|
|
|
1.7
|
|
Settlement of tax audits
|
—
|
|
|
(0.3
|
)
|
|
(2.1
|
)
|
Other items
|
0.1
|
|
|
—
|
|
|
(0.8
|
)
|
Effective income tax rate
|
29.5
|
%
|
|
30.9
|
%
|
|
27.5
|
%
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Balance at beginning of fiscal year
|
$
|
63
|
|
|
$
|
124
|
|
|
$
|
72
|
|
Additions based on tax positions taken during current fiscal year
|
52
|
|
|
7
|
|
|
5
|
|
|||
Additions based on tax positions taken during prior fiscal years
|
—
|
|
|
9
|
|
|
5
|
|
|||
Additions for tax positions related to acquired entities
|
—
|
|
|
—
|
|
|
68
|
|
|||
Decreases based on tax positions taken during prior fiscal years
|
(25
|
)
|
|
(73
|
)
|
|
(8
|
)
|
|||
Decreases from lapse in statutes of limitations
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Decreases from settlements
|
—
|
|
|
(3
|
)
|
|
(17
|
)
|
|||
Balance at end of fiscal year
|
$
|
90
|
|
|
$
|
63
|
|
|
$
|
124
|
|
•
|
Communication Systems, serving markets in tactical communications and defense products, including tactical ground and airborne radio communications solutions and night vision technology, and in public safety networks;
|
•
|
Electronic Systems, providing electronic warfare, avionics, and command, control, communications, computers, intelligence, surveillance and reconnaissance solutions for the defense industry and ATM solutions for the civil aviation industry; and
|
•
|
Space and Intelligence Systems, providing intelligence, space protection, geospatial, complete Earth observation, universe exploration, positioning, navigation and timing, and environmental solutions for national security, defense, civil and commercial customers, using advanced sensors, antennas and payloads, as well as ground processing and information analytics.
|
|
2017
|
|
2016
|
|||||
|
|
|
|
|||||
|
(In millions)
|
|||||||
|
|
|
|
|||||
Communication Systems
|
$
|
1,534
|
|
|
$
|
1,667
|
|
|
Electronic Systems
|
4,094
|
|
|
4,094
|
|
|||
Space and Intelligence Systems
|
2,117
|
|
|
2,149
|
|
|||
Corporate
(1)(2)
|
2,345
|
|
|
4,099
|
|
|||
|
$
|
10,090
|
|
|
$
|
12,009
|
|
|
|
|
|
|
|
(1)
|
Identifiable intangible assets acquired in connection with our acquisition of Exelis in the fourth quarter of fiscal 2015 were recorded as Corporate assets because they benefited the entire Company as opposed to any individual segment. Exelis identifiable intangible asset balances of continuing operations recorded as Corporate assets were approximately
$1.1 billion
and
$1.2 billion
as of
June 30, 2017
and
July 1, 2016
, respectively.
|
(2)
|
Corporate assets primarily consisted of cash, income taxes receivable, deferred income taxes, deferred compensation plan investments, buildings and equipment and identifiable intangibles, and also included any assets and liabilities from discontinued operations. See
Note 3: Discontinued Operations and Divestitures
for additional information regarding discontinued operations.
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Capital Expenditures
|
|
|
|
|
|
||||||
Communication Systems
|
$
|
14
|
|
|
$
|
16
|
|
|
$
|
26
|
|
Electronic Systems
|
40
|
|
|
40
|
|
|
29
|
|
|||
Space and Intelligence Systems
|
34
|
|
|
38
|
|
|
52
|
|
|||
Corporate
|
27
|
|
|
41
|
|
|
7
|
|
|||
Discontinued operations
|
4
|
|
|
19
|
|
|
34
|
|
|||
|
$
|
119
|
|
|
$
|
154
|
|
|
$
|
148
|
|
Depreciation and Amortization
|
|
|
|
|
|
||||||
Communication Systems
|
$
|
64
|
|
|
$
|
63
|
|
|
$
|
65
|
|
Electronic Systems
|
29
|
|
|
56
|
|
|
36
|
|
|||
Space and Intelligence Systems
|
37
|
|
|
40
|
|
|
32
|
|
|||
Corporate
|
142
|
|
|
124
|
|
|
27
|
|
|||
Discontinued operations
|
39
|
|
|
78
|
|
|
84
|
|
|||
|
$
|
311
|
|
|
$
|
361
|
|
|
$
|
244
|
|
Geographical Information for Continuing Operations
|
|
|
|
|
|
||||||
U.S. operations:
|
|
|
|
|
|
||||||
Revenue
|
$
|
5,639
|
|
|
$
|
5,798
|
|
|
$
|
3,756
|
|
Long-lived assets
|
$
|
896
|
|
|
$
|
917
|
|
|
$
|
1,020
|
|
International operations:
|
|
|
|
|
|
||||||
Revenue
|
$
|
261
|
|
|
$
|
194
|
|
|
$
|
129
|
|
Long-lived assets
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
11
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Communication Systems
|
$
|
1,753
|
|
|
$
|
1,864
|
|
|
$
|
1,836
|
|
Electronic Systems
|
2,251
|
|
|
2,233
|
|
|
1,019
|
|
|||
Space and Intelligence Systems
|
1,902
|
|
|
1,899
|
|
|
1,007
|
|
|||
Corporate eliminations
|
(6
|
)
|
|
(4
|
)
|
|
23
|
|
|||
|
$
|
5,900
|
|
|
$
|
5,992
|
|
|
$
|
3,885
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(In millions)
|
||||||||||
Segment Operating Income:
(1)
|
|
|
|
|
|
|||||||
Communication Systems
(2)
|
$
|
524
|
|
|
$
|
522
|
|
|
$
|
553
|
|
|
Electronic Systems
|
464
|
|
|
430
|
|
|
163
|
|
||||
Space and Intelligence Systems
|
311
|
|
|
288
|
|
|
136
|
|
||||
Unallocated corporate expense
(3)
|
(223
|
)
|
|
(180
|
)
|
|
(210
|
)
|
||||
Corporate eliminations
|
(3
|
)
|
|
(5
|
)
|
|
(10
|
)
|
||||
Non-operating income (loss)
(4)
|
2
|
|
|
10
|
|
|
(108
|
)
|
||||
Net interest expense
|
(170
|
)
|
|
(181
|
)
|
|
(128
|
)
|
||||
|
|
$
|
905
|
|
|
$
|
884
|
|
|
$
|
396
|
|
|
|
|
|
|
|
|
(1)
|
Segment operating income includes stranded costs and Financial Accounting Standards (“FAS”) pension income previously reported as part of our former Critical Networks segment but now re-allocated to our remaining
three
segments.
|
(2)
|
Communication Systems operating income in fiscal
2016
included
$20 million
of charges primarily related to workforce reductions, facility consolidation and other items. We recorded
$14 million
of these charges in the “Cost of product sales and services” line item and the remaining
$6 million
of these charges in the “Engineering, selling and administrative expenses” line item in the accompanying Consolidated Statement of Income.
|
(3)
|
Unallocated corporate expense included: (i) the impact of a net liability reduction of
$101 million
in fiscal 2016 for certain post-employment benefit plans, (ii)
$58 million
and
$121 million
of Exelis acquisition-related and other charges in fiscal 2017 and fiscal 2016, respectively, and (iii)
$109 million
of expense in each of fiscal 2017 and fiscal 2016 for amortization of identifiable intangible assets acquired as a result of our acquisition of Exelis. Because the acquisition of Exelis benefited the entire Company as opposed to any individual segment, the amortization of identifiable intangible assets acquired in the Exelis acquisition was recorded as unallocated corporate expense.
|
(4)
|
Non-operating income (loss) in fiscal 2015 included loss on prepayment of long-term debt. Additional information regarding non-operating income (loss) is set forth in
Note 21: Non-Operating Income (Loss)
.
|
|
Quarter Ended
|
|
Total
Year
|
|||||||||||
|
9/30/2016
(1)
|
|
12/30/2016
(1)
|
|
3/31/2017
|
|
6/30/2017
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|||||
|
(In millions, except per share amounts)
|
|||||||||||||
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|||||
Revenue
|
1,420
|
|
|
1,449
|
|
|
1,489
|
|
|
1,542
|
|
|
5,900
|
|
Gross profit
|
517
|
|
|
524
|
|
|
525
|
|
|
523
|
|
|
2,089
|
|
Income from continuing operations before income taxes
|
203
|
|
|
235
|
|
|
233
|
|
|
234
|
|
|
905
|
|
Income from continuing operations
(2)
|
145
|
|
|
163
|
|
|
164
|
|
|
166
|
|
|
638
|
|
Discontinued operations, net of income taxes
|
15
|
|
|
14
|
|
|
(79
|
)
|
|
(35
|
)
|
|
(85
|
)
|
Net income
|
160
|
|
|
177
|
|
|
85
|
|
|
131
|
|
|
553
|
|
Per common share data:
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
|
|
|
|
|
|
|
|
|||||
Income from continuing operations
|
1.17
|
|
|
1.32
|
|
|
1.33
|
|
|
1.37
|
|
|
5.19
|
|
Net income
|
1.29
|
|
|
1.42
|
|
|
0.70
|
|
|
1.09
|
|
|
4.50
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|||||
Income from continuing operations
|
1.16
|
|
|
1.30
|
|
|
1.31
|
|
|
1.35
|
|
|
5.12
|
|
Net income
|
1.27
|
|
|
1.40
|
|
|
0.69
|
|
|
1.07
|
|
|
4.44
|
|
Cash dividends
|
0.53
|
|
|
0.53
|
|
|
0.53
|
|
|
0.53
|
|
|
2.12
|
|
Stock prices — High
|
94.09
|
|
|
107.54
|
|
|
113.00
|
|
|
114.32
|
|
|
|
|
Low
|
80.78
|
|
|
88.89
|
|
|
99.13
|
|
|
106.18
|
|
|
|
|
|
Quarter Ended
|
|
Total
Year
|
||||||||||||||||
|
|
10/2/2015
|
|
1/1/2016
(3)
|
|
4/1/2016
|
|
7/1/2016
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(In millions, except per share amounts)
|
||||||||||||||||||
Fiscal 2016
(1)
|
|
|
|
|
|
|
|
|
|
|||||||||||
Revenue
|
$
|
1,420
|
|
|
$
|
1,489
|
|
|
$
|
1,550
|
|
|
$
|
1,533
|
|
|
$
|
5,992
|
|
|
Gross profit
|
524
|
|
|
499
|
|
|
541
|
|
|
528
|
|
|
2,092
|
|
||||||
Income from continuing operations before income taxes
|
188
|
|
|
258
|
|
|
221
|
|
|
217
|
|
|
884
|
|
||||||
Income from continuing operations
(4)
|
129
|
|
|
181
|
|
|
159
|
|
|
142
|
|
|
611
|
|
||||||
Discontinued operations, net of income taxes
|
19
|
|
|
(333
|
)
|
|
9
|
|
|
18
|
|
|
(287
|
)
|
||||||
Net income
|
148
|
|
|
(152
|
)
|
|
168
|
|
|
160
|
|
|
324
|
|
||||||
Per common share data:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income from continuing operations
|
1.04
|
|
|
1.46
|
|
|
1.27
|
|
|
1.14
|
|
|
4.91
|
|
||||||
Net income
|
1.20
|
|
|
(1.23
|
)
|
|
1.35
|
|
|
1.29
|
|
|
2.61
|
|
||||||
Diluted
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income from continuing operations
|
1.03
|
|
|
1.45
|
|
|
1.26
|
|
|
1.13
|
|
|
4.87
|
|
||||||
Net income
|
1.18
|
|
|
(1.22
|
)
|
|
1.34
|
|
|
1.28
|
|
|
2.59
|
|
||||||
Cash dividends
|
0.50
|
|
|
0.50
|
|
|
0.50
|
|
|
0.50
|
|
|
2.00
|
|
||||||
Stock prices — High
|
84.78
|
|
|
89.78
|
|
|
89.35
|
|
|
84.75
|
|
|
|
|||||||
Low
|
70.10
|
|
|
73.72
|
|
|
70.97
|
|
|
73.32
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Fiscal 2016 and first and second quarters of fiscal 2017 vary from amounts previously reported in our periodic reports as a result of our former IT Services and CapRock businesses being classified as discontinued operations in the third quarter of fiscal 2017, which is reflected for all periods presented.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
ITEM 9B.
|
OTHER INFORMATION.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
Plan Category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)(2)
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)(2)
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
|
||||
Equity compensation plans approved by shareholders
(1)
|
5,650,626
|
|
|
$69.89
|
|
29,302,222
|
|
Equity compensation plans not approved by shareholders
|
—
|
|
n/a
|
|
—
|
|
|
Total
|
5,650,626
|
|
|
$69.89
|
|
29,302,222
|
|
(1)
Consists of the Harris Corporation 2005 Equity Incentive Plan (As Amended and Restated Effective August 27, 2010) (the “2005 Equity Incentive Plan”) and the Harris Corporation 2015 Equity Incentive Plan. No additional awards may be granted under the 2005 Equity Incentive Plan.
|
(2)
Under the 2005 Equity Incentive Plan and the Harris Corporation 2015 Equity Incentive Plan, in addition to options, we have granted share-based compensation awards in the form of performance shares, shares of restricted stock, performance share units, restricted stock units, shares of immediately vested common stock and other similar types of share-based awards. As of June 30, 2017, there were awards outstanding under those plans with respect to 894,699 shares, consisting of (i) awards of 154,215 shares of restricted stock, for which all 154,215 shares were issued and outstanding; and (ii) awards of 740,484 performance share units and restricted stock units, for which all 740,484 were payable in shares but for which no shares were yet issued and outstanding. The 5,650,626 shares to be issued upon exercise of outstanding options, warrants and rights as listed in column (a) consisted of shares to be issued in respect of the exercise of 4,910,142 outstanding options and in respect of awards of 740,484 performance share units and restricted stock units payable in shares. Because there is no exercise price associated with awards of shares of restricted stock, performance share units or restricted stock units, all of which are granted to employees at no cost, such awards are not included in the weighted-average exercise price calculation in column (b).
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES.
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
|
|
Page
|
(1) List of Financial Statements Filed as Part of this Report:
|
|
The following financial statements and reports of Harris Corporation and its consolidated subsidiaries are included in Item 8. of this Report at the page numbers referenced below:
|
|
Consolidated Statement of Income — Fiscal Years ended Ju
ne 30, 2017; July 1, 2016; July 3, 2015
|
|
Consolidated Statement of Comprehensive Income (Loss) — Fiscal Years ended Ju
ne 30, 2017; July 1, 2016; July 3, 2015
|
|
Consolidated Balance Sheet — Ju
ne 30, 2017; July 1, 2016
|
|
Consolidated Statement of Cash Flows — Fiscal Years ended Ju
ne 30, 2017; July 1, 2016; July 3, 2015
|
|
Consolidated Statement of Equity — Fiscal Years ended Ju
ne 30, 2017; July 1, 2016; July 3, 2015
|
|
(2) Financial Statement Schedules:
|
|
Schedule II — Valuation and Qualifying Accounts — Fiscal Years ended Ju
ne 30, 2017; July 1, 2016; July 3, 2015
|
*
|
Management contract or compensatory plan or arrangement.
|
ITEM 16.
|
FORM 10-K SUMMARY.
|
|
|
HARRIS CORPORATION
|
||
|
|
(Registrant)
|
||
Date: August 29, 2017
|
|
By:
|
|
/
S
/ W
ILLIAM
M. B
ROWN
|
|
|
|
|
William M. Brown
|
|
|
|
|
Chairman, President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
||
|
|
|
||||
/s/ W
ILLIAM
M. B
ROWN
|
|
Chairman, President and Chief Executive Officer (Principal Executive Officer)
|
|
August 29, 2017
|
||
William M. Brown
|
|
|
||||
|
|
|
||||
/s/ R
AHUL
G
HAI
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
August 29, 2017
|
||
Rahul Ghai
|
|
|
||||
|
|
|
||||
/s/ T
ODD
A. T
AYLOR
|
|
Vice President, Principal Accounting Officer (Principal Accounting Officer)
|
|
August 29, 2017
|
||
Todd A. Taylor
|
|
|
||||
|
|
|
||||
/s/ J
AMES
F. A
LBAUGH
*
|
|
Director
|
|
August 29, 2017
|
||
James F. Albaugh
|
|
|
||||
|
|
|
|
|
||
/s/ P
ETER
W. C
HIARELLI
*
|
|
Director
|
|
August 29, 2017
|
||
Peter W. Chiarelli
|
|
|
||||
|
|
|
||||
/s/ T
HOMAS
A. D
ATTILO
*
|
|
Director
|
|
August 29, 2017
|
||
Thomas A. Dattilo
|
|
|
||||
|
|
|
||||
/s/ R
OGER
B. F
RADIN
*
|
|
Director
|
|
August 29, 2017
|
||
Roger B. Fradin
|
|
|
||||
|
|
|
||||
/s/ T
ERRY
D. G
ROWCOCK
*
|
|
Director
|
|
August 29, 2017
|
||
Terry D. Growcock
|
|
|
|
|||
|
|
|
||||
/s/ L
EWIS
H
AY
III*
|
|
Director
|
|
August 29, 2017
|
||
Lewis Hay III
|
|
|
||||
|
|
|
||||
/s/ V
YOMESH
I. J
OSHI
*
|
|
Director
|
|
August 29, 2017
|
||
Vyomesh I. Joshi
|
|
|
||||
|
|
|
||||
/s/ L
ESLIE
F. K
ENNE
*
|
|
Director
|
|
August 29, 2017
|
||
Leslie F. Kenne
|
|
|
||||
|
|
|
||||
/s/ J
AMES
C. S
TOFFEL
*
|
|
Director
|
|
August 29, 2017
|
||
James C. Stoffel
|
|
|
||||
|
|
|
||||
/s/ G
REGORY
T. S
WIENTON
*
|
|
Director
|
|
August 29, 2017
|
||
Gregory T. Swienton
|
|
|
||||
|
|
|
||||
/s/ H
ANSEL
E. T
OOKES
II*
|
|
Director
|
|
August 29, 2017
|
||
Hansel E. Tookes II
|
|
|
||||
|
|
|
|
|||
*By:
|
|
/s/ S
COTT
T. M
IKUEN
|
|
|
|
|
|
|
Scott T. Mikuen
|
|
|
|
|
|
|
Attorney-in-Fact
|
|
|
|
|
|
|
pursuant to a power of attorney
|
|
|
|
|
Col. A
|
|
Col. B
|
|
Col. C
|
|
Col. D
|
|
Col. E
|
||||||||||||||
|
|
|
|
Additions
|
|
|
|
|
||||||||||||||
Description
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Charged to
Other Accounts
— Describe
|
|
Deductions
— Describe
|
|
Balance at
End of Period
|
||||||||||||
Year ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts Deducted From
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Respective Asset Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
$
|
7
|
|
(A)
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
551
|
|
(B)
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
3,329
|
|
(C)
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
3,247
|
|
(D)
|
|
|
|||||||||
Allowances for collection losses
|
|
$
|
9,949
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
7,134
|
|
|
|
$
|
2,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
$
|
1,865
|
|
(A)
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
103,371
|
|
(D)
|
|
|
|||||||||
|
|
|
|
|
|
$
|
(354
|
)
|
(E)
|
|
175
|
|
(F)
|
|
|
|||||||
Allowances for deferred tax assets
|
|
$
|
300,159
|
|
|
$
|
(11,626
|
)
|
|
$
|
(354
|
)
|
|
|
$
|
105,411
|
|
(D)
|
|
$
|
183,279
|
|
Year ended July 1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts Deducted From
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Respective Asset Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
$
|
960
|
|
(A)
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
5,188
|
|
(C)
|
|
|
|||||||||
Allowances for collection losses
|
|
$
|
12,169
|
|
|
$
|
3,928
|
|
|
$
|
—
|
|
|
|
$
|
6,148
|
|
|
|
$
|
9,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
$
|
2,092
|
|
(D)
|
|
$
|
4,648
|
|
(A)
|
|
|
||||||
|
|
|
|
|
|
389
|
|
(E)
|
|
946
|
|
(F)
|
|
|
||||||||
Allowances for deferred tax assets
|
|
$
|
71,866
|
|
|
$
|
231,406
|
|
|
$
|
2,481
|
|
|
|
$
|
5,594
|
|
|
|
$
|
300,159
|
|
Year ended July 3, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts Deducted From
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Respective Asset Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
$
|
621
|
|
(A)
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
2,249
|
|
(C)
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
181
|
|
(D)
|
|
|
|||||||||
Allowances for collection losses
|
|
$
|
7,252
|
|
|
$
|
2,154
|
|
|
$
|
5,814
|
|
(D)
|
|
$
|
3,051
|
|
|
|
$
|
12,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
$
|
10,029
|
|
(D)
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
7,009
|
|
(E)
|
|
|
|
|
|
|||||||||
Allowances for deferred tax assets
|
|
$
|
68,163
|
|
|
$
|
(12,036
|
)
|
|
$
|
17,038
|
|
|
|
$
|
1,299
|
|
(A)
|
|
$
|
71,866
|
|
ARTICLE 1 - DEFINITIONS
|
1
|
||
1.01
|
|
Accrued Benefit
|
1
|
1.02
|
|
Administrative Committee
|
1
|
1.03
|
|
Annual Dollar Limit
|
1
|
1.04
|
|
Annuity Starting Date
|
1
|
1.05
|
|
Appendix
|
1
|
1.06
|
|
Associated Company
|
1
|
1.07
|
|
Beneficiary
|
1
|
1.08
|
|
Benefit Service
|
1
|
1.09
|
|
Board of Directors
|
1
|
1.10
|
|
Code
|
1
|
1.11
|
|
Company
|
1
|
1.12
|
|
Compensation
|
1
|
1.13
|
|
Early Retirement Date
|
1
|
1.14
|
|
Effective Date of the Plan
|
1
|
1.15
|
|
Eligibility Service
|
1
|
1.16
|
|
Employee
|
1
|
1.17
|
|
Equivalent Actuarial Value
|
1
|
1.18
|
|
ERISA
|
1
|
1.19
|
|
Final Average Compensation
|
1
|
1.20
|
|
Former Pension Plan
|
1
|
1.21
|
|
Hours of Service
|
1
|
1.22
|
|
Investment Committee
|
1
|
1.23
|
|
ITT Corporation
|
1
|
1.24
|
|
IRS Interest Rate
|
1
|
1.25
|
|
IRS Mortality Table
|
1
|
1.26
|
|
Leased Employee
|
1
|
1.27
|
|
Member
|
1
|
1.28
|
|
Normal Retirement Date
|
1
|
1.29
|
|
Parental Leave
|
1
|
1.30
|
|
Participating Employee
|
1
|
1.31
|
|
Participating Unit
|
1
|
1.32
|
|
Plan
|
1
|
1.33
|
|
Plan Year
|
1
|
1.34
|
|
Postponed Retirement Date
|
1
|
1.35
|
|
Prior Salaried Plan
|
1
|
1.36
|
|
Registered Domestic Partner
|
1
|
1.37
|
|
Section 401(a)(17) Employee
|
1
|
1.38
|
|
Severance Date
|
1
|
1.39
|
|
Social Security Benefit
|
1
|
1.40
|
|
Social Security Retirement Age
|
1
|
1.41
|
|
Spousal Consent
|
1
|
1.42
|
|
Spouse
|
1
|
1.43
|
|
Stability Period
|
1
|
1.44
|
|
Statutory Compensation
|
1
|
1.45
|
|
Trustee
|
1
|
ARTICLE 2 - SERVICE
|
1
|
||
2.01
|
|
Eligibility Service
|
1
|
2.02
|
|
Benefit Service
|
1
|
2.03
|
|
Questions Relating to Service under the Plan
|
1
|
ARTICLE 3 - MEMBERSHIP
|
1
|
||
3.01
|
|
Persons Employed on December 31, 2013
|
1
|
3.02
|
|
Persons First Employed as Employees after December 31, 2011
|
1
|
3.03
|
|
Persons Employed as Leased Employees with the Company or an Associated Company
|
1
|
3.04
|
|
Persons Employed as other than Employees by the Company
|
1
|
3.05
|
|
Reemployment of Former Employees, Former Members and Retired Members
|
1
|
3.06
|
|
Termination of Membership
|
1
|
3.07
|
|
Questions Relating to Membership in the Plan
|
1
|
ARTICLE 4 - BENEFITS
|
1
|
||
4.01
|
|
Plan Benefit Formulas
|
1
|
4.02
|
|
Normal Retirement Allowance
|
1
|
4.03
|
|
Postponed Retirement Allowance
|
1
|
4.04
|
|
Standard Early Retirement Allowance
|
1
|
4.05
|
|
Special Early Retirement Allowance
|
1
|
4.06
|
|
Vested Benefit
|
1
|
4.07
|
|
Forms of Benefit Payment after Retirement
|
1
|
4.08
|
|
Survivor’s Benefit Applicable before Retirement
|
1
|
4.09
|
|
Maximum Benefits
|
1
|
4.10
|
|
No Duplication
|
1
|
4.11
|
|
Payment of Benefits
|
1
|
4.12
|
|
Reemployment of Former Member or Retired Member
|
1
|
4.13
|
|
Return of Contributions with Respect to Members who Participated in a Contributory Former Pension Plan
|
1
|
4.14
|
|
Payment of “Accumulated Benefits” under Former Pension Plans
|
1
|
4.15
|
|
Top-heavy Provisions
|
1
|
4.16
|
|
Payment of Medical Benefits for Certain Members who retire Under the Plan
|
1
|
4.17
|
|
Transfers from Other Qualified Plans
|
1
|
4.18
|
|
Direct Rollover of Certain Distributions
|
1
|
4.19
|
|
Delayed Commencement of Benefits
|
1
|
4.20
|
|
Limitations Based on Funded Status of the Plan
|
1
|
4.21
|
|
Limitations on Unpredictable Contingent Event Benefit
|
1
|
ARTICLE 5 - ADMINISTRATION OF PLAN
|
1
|
||
5.01
|
|
Plan Administrator
|
1
|
5.02
|
|
Appointment of Administrative Committee
|
1
|
5.03
|
|
Duties and Powers of Administrative Committee
|
1
|
5.04
|
|
Appointment of Investment Committee
|
1
|
5.05
|
|
Duties of Investment Committee
|
1
|
5.06
|
|
Named Fiduciary
|
1
|
5.07
|
|
Meetings
|
1
|
5.08
|
|
Claims Procedure
|
1
|
5.09
|
|
Compensation and Bonding
|
1
|
5.10
|
|
Electronic Media
|
1
|
ARTICLE 6 - CONTRIBUTIONS
|
1
|
||
ARTICLE 7 - MANAGEMENT OF FUNDS
|
1
|
||
ARTICLE 8 - CERTAIN RIGHTS AND LIMITATIONS
|
1
|
||
8.01
|
|
Termination of the Plan
|
1
|
8.02
|
|
Limitation Concerning Highly compensated Employees or Highly compensate Former Employees
|
1
|
8.03
|
|
Conditions of Employment Not Affected by Plan
|
1
|
8.04
|
|
Offsets
|
1
|
8.05
|
|
Denial of Benefits
|
1
|
8.06
|
|
Limitation on Benefits In the Event of a Liquidity Shortfall
|
1
|
8.07
|
|
Notice of Address and Missing Persons
|
1
|
8.08
|
|
Beneficiary’s Ability to Disclaim Interest in Plan
|
1
|
8.09
|
|
Construction; Venue
|
1
|
8.10
|
|
Limitations of Time for Submitting Claims and Filing Suits
|
1
|
8.11
|
|
Legal Fees
|
1
|
ARTICLE 9 - NONALIENATION OF BENEFITS
|
1
|
||
ARTICLE 10 - AMENDMENTS
|
1
|
||
APPENDIX A
|
A-1
|
||
APPENDIX B
|
B-1
|
||
APPENDIX C
|
C-1
|
||
APPENDIX D
|
D-1
|
||
APPENDIX E
|
E-1
|
||
APPENDIX F
|
F-1
|
||
APPENDIX G
|
G-1
|
(A)
|
two percent of the Member’s Final Average Compensation multiplied by the balance of that portion of his first 25 years of his TPP Benefit Service which are rendered on and after January 1, 1994;
|
(B)
|
plus one and one-half percent of the Member’s Final Average Compensation multiplied by the next 15 years of the balance of that portion of his TPP Benefit Service which are rendered on and after January 1, 1994; and
|
(C)
|
reduced by one and one-fourth percent of the Social Security Benefit multiplied by the balance of that portion of his years of TPP Benefit Service not in excess of 40 years which are rendered on and after January 1, 1994 (the “Social Security Offset”).
|
Age
|
Pension Equity Plan Percentage
|
under 30
|
3.0%
|
30-39
|
4.0%
|
40-49
|
5.0%
|
50 and over
|
6.0%
|
(A)
|
With respect to Plan Years (i) beginning prior to January 1, 2012, interest on a Member’s Basic PEP Lump Sum Value determined as of the end of the month in which the Member terminates from service from the Company and all Associated Companies for the period beginning with the month following the Member’s termination of employment from the Company and all Associated Companies until his reemployment with the Company or any Associated Company or the end of the month preceding the Annuity Starting Date of his PEP Pension Formula Benefit, whichever occurs first; and (ii) beginning on or after January 1, 2012, interest on a Member’s Basic PEP Lump Sum Value determined as of the end of the month for the period beginning with January 2012, until the end of the month preceding the Annuity Starting Date of his PEP Pension Formula Benefit, and
|
(B)
|
Interest on the accumulated total amount credited to the Member’s Supplemental PEP Lump Sum Value as of the end of the preceding month, if any, until the end of the month preceding the Member’s Annuity Starting Date applicable to such PEP Formula Pension.
|
Months Commencement Date
Precedes First Day of Month Coincident With or Next Following
Member’s Attainment of Age 62
|
TPP Formula Benefit Percentage Reduction Per Month
|
months 1 to 48
|
5/12 of 1%
|
months 49 to 60
|
4/12 of 1%
|
months 61 to 84
|
3/12 of 1%
|
(A)
|
the amount of the survivor benefit payable to the Spouse determined as of the retroactive Annuity Starting Date under the form elected by the Member or former Member is no less than the amount the Spouse would have received
|
(B)
|
the Member’s or former Member’s Spouse on his retroactive Annuity Starting Date is not his Spouse on the first day of the month in which payments commence and is not treated as his Spouse under a qualified domestic relations order;
|
(A)
|
the Member or former Member, prior to his retroactive Annuity Starting Date, has submitted a request to the Company, in a form approved by the Administrative Committee, to commence Plan payments as of such date, or
|
(B)
|
due to an administrative error as determined by the Administrative Committee on a basis uniformly applicable to all members similarly situated, the Member or former Member was not provided the written explanation as described in paragraph (c) as on a timely basis;
|
ANNUAL REDUCTION FOR SPOUSE’S COVERAGE
AFTER TERMINATION OF EMPLOYMENT
|
|
Age
|
Annual Reduction
|
Less than 40
|
1/10 of 1%
|
40 but prior to 50
|
2/10 of 1%
|
50 but prior to 55
|
3/10 of 1%
|
55 but prior to 60
|
5/10 of 1%
|
60 but less than 65
|
1%
|
Period of Retirement
|
Medical Expenses Incurred
During Following Period
|
On or before January 1, 1984
|
On or after December 31, 1984
|
After January 1, 1984 and
on or before August 1, 1986
|
On or after October 1, 1986
|
After August 1, 1986 and
on or before January 1, 1989
|
On or after January 1, 1989
|
After January 1, 1989 and
on or before January 1, 1992
|
On or after January 1, 1992.
|
(A)
|
a qualified defined contribution plan described in Section 401(a) of the Code;
|
(B)
|
effective on and after January 1, 2007, any qualified plan described in Section 401(a) of the Code; or
|
(C)
|
effective on and after January 1, 2007, an annuity plan described in Section 403(b) of the Code;
|
ARTICLE 6 -
|
CONTRIBUTIONS
|
ARTICLE 8 -
|
CERTAIN RIGHTS AND LIMITATIONS
|
1.
|
Alcatel Employment
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any person (a) who was employed by the Company on December 31, 1986, (b) who was then a Member of or was then in the process of satisfying the eligibility requirements for membership in this Plan, (c) who, immediately after said date, became employed by a company within the controlled group of Alcatel N.V. (“Alcatel”) as a result of the joint venture with Compagnie Générale d’Electricit (“CGE”), and (d) who then became covered by the retirement plan for salaried employees established pursuant to the joint venture by Alcatel for such persons, any employment with Alcatel rendered on or after January 1, 1987, shall not be recognized as Benefit Service under this Plan, but shall be recognized as Eligibility Service under this Plan in accordance with Section 2.01. Remuneration paid to such person by Alcatel during any such period of Eligibility Service shall be recognized as Compensation in accordance with Section 1.12; provided, however, that for purposes of determining Final Average Compensation in accordance with Section 1.18, total Compensation recognized in any Plan Year after 1986 will not exceed 105% of such person’s total Compensation recognized in the immediately preceding Plan Year. These provisions shall apply until the earlier of the date such person retires or terminates his Alcatel employment; the date such person’s Alcatel employer is no longer within the controlled group of Alcatel N.V.; or the date, as determined by the Board of Directors or the Administrative Committee, the aforementioned Alcatel retirement plan no longer operates in conjunction with this Plan.
|
2.
|
Rayonier Employment
- Subject to any limitations set forth in writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any person (a) who was a Member of this Plan or who was in the process of satisfying the eligibility requirements for membership in this Plan on February 28, 1994, and (b) who, as a result of the spinoff of ITT Rayonier Corporation, became a Member of the Retirement Plan for Salaried Employees of Rayonier Inc. (the “Rayonier Plan”) on March 1, 1994, or, if later, the date he first completed the eligibility requirements thereof, any employment with Rayonier Inc. rendered by such person on or after March 1, 1994, shall not be recognized as Benefit Service under this Plan, but shall be recognized as Eligibility Service under this Plan to the extent such employment is recognized for purposes of determining eligibility for benefits under the terms of the Rayonier Plan. Remuneration paid to such person by Rayonier, Inc. during any period of Eligibility Service shall be recognized as Compensation in accordance with Section 1.12 of this Plan; provided, however, that, for purposes of determining Final Average Compensation in accordance with Section 1.18 of this Plan, total Compensation recognized in any Plan Year after 1993 will not exceed 105% of such person’s total Compensation recognized in the immediately preceding Plan Year. These provisions shall apply until the earlier of the date such person retires or terminates his Rayonier, Inc. employment.
|
3.
|
PowerSystems Employment
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any Member who was employed by ITT PowerSystems Corporation on March 29, 1994, and who became employed by International PowerSystems Corporation (“IPS”) on March 30, 1994, any employment with IPS after March 29, 1994, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after March 30, 1994, and prior to March 30, 1999, or, if earlier, up to and including the date such employment with IPS is terminated shall be recognized as Eligibility Service under this Plan in accordance with Section 2.01.
|
4.
|
Employment Rendered by ITTA-ESI Employees formerly Employed by GM/MABU
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, the following shall apply to any person who, on April 1, 1994, became an Employee of ITT Automotive Electrical Systems, Inc. (“ITTA-ESI”) as a result of the acquisition by ITTA-ESI on such date of certain assets of the Motors and Actuators Business Unit (“MABU”) of General Motors Corporation’s Delco Chassis Division (“GM/MABU Acquisition”).
|
5.
|
ITT Small Business Finance Corporation (sometimes also referred to as “CILG”) Divestiture on March 31, 1995, to General Electric Capital Corporation
|
6.
|
ITT Commercial Finance Corporation Divestiture on April 30, 1995, to Deutsche Bank AG
|
7.
|
Island Finance Corporation Divestiture on April 30, 1995, to Norwest Financial Services, Inc.
|
8.
|
ITT Lyndon Life Insurance
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any Member who was employed by ITT Lyndon Life Insurance on October 20, 1995, and who became employed by Mercury Finance Company (“Mercury”) on October 21, 1995, any employment with Mercury on and after October 21, 1995, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after October 21, 1995, and prior to October 21, 2000, or, if earlier, up to and including the date such employment with Mercury
|
9.
|
ITT Lyndon Guaranty Bank
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any person who was employed by ITT Lyndon Guaranty Bank and who became employed by LGB Holdings, Inc. (“LGB”) on May 9, 1996, any employment with LGB and any of its affiliates rendered by such person on and after May 9, 1996, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after May 9, 1996, and prior to May 9, 2001, or, if earlier up to and including the date such employment with LGB is terminated shall be recognized as Eligibility Service under the Plan in accordance with Section 2.01. Notwithstanding the foregoing, such Member’s Final Average Compensation hereunder shall be based on his Compensation and Eligibility Service determined as of May 8, 1996.
|
10.
|
ITTA Seats
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any Member who was employed by ITTA - Body Systems Hancock excluding Jackson (ITTA Seats) on August 24, 1997, and who became employed by Lear Corporation (“Lear”) on August 25, 1997, any employment with Lear on and after August 25, 1997, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after August 25, 1997, and prior to August 25, 2002, or, if earlier, up to and including the date such employment with Lear is terminated shall be recognized as Eligibility Service under this Plan in accordance with Section 2.01. Notwithstanding the foregoing, such Member’s Final Average Compensation hereunder shall be based on his Compensation and Eligibility Service determined as of August 24, 1997.
|
11.
|
ITTA Precision Die Casting
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any Member who was employed by ITTA-Precision Die Casting on March 13, 1998, and who became employed by Lester Precision Die Casting, Inc. (“Lester”) on March 13, 1998, any employment with Lester after March 13, 1998, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after March 13, 1998, and prior to March 13, 2003, or, if earlier, up to and including the date such employment with Lester is terminated shall be recognized as Eligibility Service under this Plan in accordance with Section 2.01. Notwithstanding the foregoing, such Member’s Final Average Compensation hereunder shall be based on his Compensation and Eligibility Service determined as of March 13, 1998. Notwithstanding the foregoing, pursuant to the provisions of the purchase and sale agreement applicable to said divestiture, Eligibility Service accruals under this Section 11 shall cease as of December 31, 2000.
|
12.
|
ITT Pomona Electronics
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any Member who was employed by ITT Pomona Electronics on September 25, 1998, and who became employed by Danaher Corporation or one of its subsidiaries (“Danaher”) on September 25, 1998, any employment with Danaher after September 25, 1998, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after September 25, 1998, and prior to September 24, 2003, or, if earlier, up to and including the date such employment with Danaher is terminated shall be recognized as Eligibility Service under this Plan in accordance with Section 2.01. Notwithstanding the foregoing, such Member’s Final Average Compensation hereunder shall be based on his Compensation and Eligibility Service determined as of September 25, 1998.
|
13.
|
ITTA-Brakes and Chassis
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any person (i) who was employed by the Company on September 25, 1998, (ii) who was then a Member of this Plan or who was then in the process of satisfying the eligibility requirements for membership in this Plan, and (iii) who, as a result of the divestiture on September 25, 1998, of ITTA-Brakes and Chassis to Continental AG (“Continental”) became employed by Continental on September 26, 1998, any employment with Continental and any of its affiliates rendered by such person on and after September 26, 1998, shall not be recognized as Benefit Service under this Plan, but shall be recognized as Eligibility Service in accordance with the provisions of Section 2.01 of this Plan. Notwithstanding the foregoing, such Member’s Final Average Compensation hereunder shall be based on his Compensation and Eligibility Service determined as of September 25, 1998.
|
14.
|
ITTA-Electrical Systems
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any person (i) who was employed by the Company on September 28, 1998, (ii) who was then a Member of this Plan or who was then in the process of satisfying the eligibility requirements for membership in this Plan, and (iii) who, as a result of the divestiture on September 28, 1998, of ITTA-Electrical Systems to Valeo (“Valeo”) became employed by Valeo on September 29, 1998, any employment with Valeo and any of its affiliates rendered by such person on and after September 29, 1998, shall not be recognized as Benefit Service under this Plan, but shall be recognized as Eligibility Service in accordance with the provisions of Section 2.01 of this Plan. Notwithstanding the foregoing, such Member’s Final Average Compensation hereunder shall be based on his Compensation and Eligibility Service determined as of September 28, 1998.
|
15.
|
ITT GaAsTEK
- Subject to any limitations set forth in the purchase and sale agreement applicable to said divestiture or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any Member who was employed by ITT GaAsTEK on March 6, 2000, and who became employed by M/A-COM, Inc. or one of its affiliates (“M/A-COM”) on March 6, 2000, any employment with M/A-COM after March 6, 2000, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after March 6, 2000, and prior to March 6, 2005, or, if earlier, up to and including the date such employment with M/A-COM is terminated shall be recognized as Eligibility Service under this Plan in accordance with Section 2.01. Notwithstanding the foregoing, such Member’s Final Average Compensation hereunder shall be based on his Compensation and Eligibility Service determined as of March 6, 2000.
|
16.
|
HiSan, Inc.
- With respect to any person (i) who was employed by the Company on December 31, 2002, or such later date, as applicable, but no later than July 29, 2005, (ii) who was then a Member of this Plan or who was then in the process of satisfying the eligibility requirements for membership in the Plan, and (iii) who, as a result of the direct transfer of his employment from the Company to HiSan, Inc. became employed by HiSan, Inc. between January 1, 2003, and July 29, 2005, (a “Transferred HiSan Member”), his or her period of uninterrupted employment with HiSan, Inc. rendered immediately after such direct transfer of his or her employment to HiSan, Inc. as a salaried employee, shall be recognized as Benefit Service under this Plan in accordance with Section 2.02. The provisions of the foregoing sentence shall continue to apply until the earlier of (i) the date such person first retires or terminates his employment with HiSan, Inc., (ii) the date HiSan, Inc. ceases to be an Associated Company, or (iii) the date otherwise determined by the Board of Directors or the Pension Administration Committee. Any period of employment rendered with HiSan, Inc. shall be recognized as Eligibility Service in accordance with Section 2.01 until the date HiSan, Inc. ceases to be an Associated Company. Remuneration paid to an employee of HiSan, Inc. during any period of employment with HiSan,
|
17.
|
ITT Switches Business
- Subject to any limitations set forth in the purchase and sale agreement dated May 8, 2007, between ITT Corporation and DeltaTech Controls, Inc. or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any Member who was employed by the Company in the United States on July 27, 2007, and who became employed by DeltaTech Controls, Inc. or any affiliate thereof (“DeltaTech”) pursuant to the terms of said agreement on July 28, 2007, any employment with DeltaTech after July 27, 2007, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after July 27, 2007, and prior to July 27, 2012, or, if earlier, up to and including the date such employment with DeltaTech is terminated, shall be recognized as Eligibility Service under this Plan in accordance with Section 2.01. Notwithstanding the foregoing, such Member’s Final Average Compensation hereunder shall be based on his Compensation and Eligibility Service determined as of July 27, 2007.
|
18.
|
ITT Automotive, Inc.
- Subject to any limitations set forth in the Stock and Asset Purchase Agreement for ITT Automotive, Inc. (“Automatic”) dated December 4, 2005, between ITT Corporation and Cooper-Standard Automotive, Inc. (“CSA”)or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect an employee who (i) was either a Member of the Plan on February 6, 2006, or who was in the process of satisfying the eligibility requirements for membership in the Plan on that date (a “Transferred Member”), and (ii) was employed by Automotive on February 6, 2006, and remained employed by CSA on February 7, 2006, the period of employment with CSA rendered by such person on and after February 7, 2006, and prior to the earlier of such Member’s termination of employment from CSA or February 6, 2011, shall not be recognized as Benefit Service under this Plan, but shall be recognized as Eligibility Service in accordance with the provisions of Section 2.01 of this Plan. Any such Transferred Member who satisfies the Plan’s eligibility requirements for retirement either before or during the period for which such Eligibility Service is being granted, may not commence receipt of such Transferred Member’s benefit under the Plan until the earlier of his termination of employment with CSA or February 6, 2011.
|
19.
|
ITT Corporation
- Subject to any limitations set forth in the Benefits and Compensation Matters Agreement dated October 25, 2011, among ITT Corporation, Xylem Inc. and Exelis Inc. (the “BCMA”) or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any Member who was employed by the Company on October 30, 2011, and who remained employed by ITT Corporation or any of its subsidiaries or affiliates thereof (“ITT”) on October 31, 2011, any employment with ITT after October 30, 2011, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after October 30, 2011, and prior to October 31, 2016, or, if earlier, up to and including the earlier of (i) the date such employment with ITT is terminated, (ii) the Annuity Starting Date under the Plan with respect to the Member’s TPP Pension Formula Benefit, or (iii) the date of a change of control (as such term is defined in the BCMA) of ITT Corporation, shall be recognized as Eligibility Service under this Plan in accordance with Section 2.01. Notwithstanding the foregoing, such Member shall be treated for other purposes as if he incurred a termination of employment under the Plan as of October 30, 2011, and such Member’s Final Average Compensation hereunder shall be based on his Compensation determined as of October 30, 2012, and the rate of interest to be credited on such
|
20.
|
Xylem Inc.
- Subject to any limitations set forth in the Benefits and Compensation Matters Agreement dated October 25, 2011, among ITT Corporation, Xylem Inc. and Exelis Inc. (the “BCMA”) or in a separate writing by the Board of Directors or the Administrative Committee on a basis uniformly applicable to all persons similarly situated, with respect to any Member who was employed by the Company on October 30, 2011, and who became employed by Xylem Inc. or any of its subsidiaries or affiliates thereof (“Xylem”) on October 31, 2011, any employment with Xylem after October 30, 2011, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after October 30, 2011, and prior to October 31, 2016, or, if earlier, up to and including the earlier of (i) the date such employment with Xylem is terminated, (ii) the Annuity Starting Date under the Plan with respect to the Member’s TPP Pension Formula Benefit, or (iii) the date of a change of control (as such term is defined in the BCMA) of Xylem Inc., shall be recognized as Eligibility Service under this Plan in accordance with Section 2.01. Notwithstanding the foregoing, such Member’s Final Average Compensation hereunder shall be based on his Compensation determined as of October 30, 2012.
|
21.
|
Vectrus, Inc.
- As set forth in the Employee Matters Agreement by and between Exelis Inc. and Vectrus, Inc. dated as of September 25, 2014 (the “EMA”), with respect to any Member who was employed by the Company on September 26, 2014, and who became employed by Vectrus, Inc. or any of its subsidiaries or affiliates, including but not limited to Vectrus Systems Corporation (collectively, “Vectrus”), on September 27, 2014, any employment with Vectrus after September 26, 2014, shall not be recognized as Benefit Service under this Plan, but any such employment rendered on and after September 26, 2014, and through December 31, 2016, or, if earlier, up to and including the earlier of (i) the last day of the month preceding the date as of which payments from the Plan begin, (ii) the individual’s termination of employment with Vectrus and its Affiliates (as this term is defined in the EMA), (iii) the individual’s death, (iv) a Change in Control (as this term is defined in the EMA) or (v) December 31, 2016, shall be recognized as Eligibility Service.
|
Portion of Retirement Allowance or
Vested Benefit Determined
Under Former Goulds Plan III Formula
|
Portion of Retirement Allowance
or Vested Benefit Determined Under
Exelis Plan Formula
|
Life annuity with ten year certain
|
Life annuity if Annuity Starting Date prior to January 1, 2000, otherwise life annuity with ten year certain
|
Portion of Vested Benefit Determined
Under Former Goulds Plan III Formula
|
Portion of Retirement Vested Benefit Determined Under
Exelis Plan Formula
|
100% joint and survivor annuity with Spouse as Beneficiary
|
50% joint and survivor annuity with Spouse as Beneficiary
|
A.
|
Portion of Retirement Allowance
Determined Under Kaman
Former Pension Plan Formula
|
Portion of Retirement Allowance
Determined Under
Exelis Plan Formula
|
|
(i)Social Security Leveling Option
|
Life annuity
|
|
(ii)Life annuity with ten year certain option
|
Life annuity if Annuity Starting Date prior to January 1, 2000, otherwise life with ten year certain
|
B.
|
Portion of Vested Benefit
Determined Under
Kaman Former Pension Plan Formula
|
Portion of Vested Benefit
Determined Under
Exelis Plan Formula
|
|
(i)50% joint and survivor annuity with nonSpouse beneficiary
|
50% joint and survivor annuity with Spouse as beneficiary or Life Annuity
|
|
(ii)100% joint and survivor annuity with nonSpouse beneficiary
|
50% joint and survivor annuity with Spouse as beneficiary or Life Annuity
|
|
(iii)100% joint and survivor annuity with Spouse as beneficiary
|
50% joint and survivor annuity with Spouse as beneficiary
|
|
(iv)Life annuity with ten year certain
|
Life annuity if Annuity Starting Date is prior to January 1, 2000, otherwise life annuity with ten year certain
|
Portion of Retirement Allowance
Determined Under Former C&K Plan
|
Portion of Retirement Allowance
Determined Under Exelis Plan Formula
A Member may also elect, in accordance with the Plan provisions, to convert the portion of a Member’s Retirement Allowance determined under the PEP formula of the Plan into a lump sum subject to any restrictions set forth in the Plan.
|
(i)100% J&S with nonSpouse beneficiary
|
100% J&S with nonSpouse beneficiary
|
(ii)50% J&S with nonSpouse beneficiary
|
50% J&S with nonSpouse beneficiary
|
Portion of Vested Benefit
Determined Under Former C&K Plan
|
Portion of Vested Benefit
Determined Under Exelis Plan Formula
*
|
(i)100% J&S with nonSpouse beneficiary
|
Life Annuity
|
(ii)50% J&S with nonSpouse beneficiary
|
Life Annuity
|
(iii)100% J&S with Spouse beneficiary
|
50% J&S with Spouse as beneficiary
|
Portion of a Retirement Allowance or Vested Benefit
Determined Under
Former Kodak Plan Formula
|
Portion of Retirement Allowance or Vested Benefit
Determined Under
Exelis Plan Formula
|
(i)25% regular or deferred joint and survivor benefit
|
50% Contingent Annuity
|
(ii)50% regular or deferred joint and survivor benefit
|
50% Contingent Annuity (if the member is eligible, a 90/50 Spouse’s Annuity)
|
(iii)100% regular or deferred joint and survivor benefit
|
100% joint and survivor annuity or (if the Member is eligible, a 80/80 Spouse’s Annuity)
|
(iv)10 year Certain & Life Annuity
|
10 year Certain & Life Annuity
|
|
Fiscal Year Ended
|
||||||
|
June 30, 2017
|
|
July 1, 2016
|
||||
|
|
|
|
||||
|
(In millions, except ratios)
|
||||||
Earnings:
|
|
|
|
||||
Income from continuing operations
|
$
|
638
|
|
|
$
|
611
|
|
Plus: Income taxes
|
267
|
|
|
273
|
|
||
Fixed charges
|
179
|
|
|
188
|
|
||
Amortization of capitalized interest
|
—
|
|
|
1
|
|
||
|
$
|
1,084
|
|
|
$
|
1,073
|
|
Fixed Charges:
|
|
|
|
||||
Interest expense
|
$
|
172
|
|
|
$
|
183
|
|
Interest portion of rental expense
|
7
|
|
|
5
|
|
||
|
$
|
179
|
|
|
$
|
188
|
|
Ratio of Earnings to Fixed Charges
|
6.06
|
|
|
5.71
|
|
|
|
|
Name of Subsidiary
|
|
State or Other
Jurisdiction of Incorporation
|
Harris Atlas Systems LLC *
|
|
Abu Dhabi, UAE
|
Harris Asia Pacific Sdn. Bhd.
|
|
Malaysia
|
Harris Canada Systems, Inc.
|
|
Canada
|
Harris Cayman Ltd.
|
|
Cayman Island
|
Harris Communications (Australia) Pty. Ltd.
|
|
Australia
|
Harris Communications Bahrain Co. W.L.L.
|
|
Bahrain
|
Harris Communications MH Spain, S.L.
|
|
Spain
|
Harris Communications FZCO
|
|
Dubai, UAE
|
Harris Communications GmbH
|
|
Germany
|
Harris Communications Honduras S.A. de C.V.
|
|
Honduras
|
Harris Communications Limited
|
|
Hong Kong
|
Harris Communications Malaysia Sdn. Bhd.
|
|
Malaysia
|
Harris Communications Pakistan (Private) Limited.
|
|
Pakistan
|
Harris Comunicaçoes Participaçoes do Brasil Ltda.
|
|
Brazil
|
Harris Communications (Spain), S.L.
|
|
Spain
|
Harris Communications Systems India Private Limited
|
|
India
|
Harris Denmark ApS
|
|
Denmark
|
Harris Denmark Holding ApS
|
|
Denmark
|
Harris Holdco LLC
|
|
Delaware
|
Harris International Inc.
|
|
Afghanistan
|
Harris International, Inc.
|
|
Delaware
|
Harris International Chile Limitada
|
|
Chile
|
Harris International Holdings, LLC
|
|
Delaware
|
Harris International Saudi Communications
|
|
Saudi Arabia
|
Harris International Venezuela, C.A.
|
|
Venezuela
|
Harris Norge AS
|
|
Norway
|
Harris NV
|
|
Belgium
|
Harris Pension Management Limited
|
|
United Kingdom
|
Harris Salam *
|
|
Qatar
|
Harris Solid-State (Malaysia) Sdn. Bhd.
|
|
Malaysia
|
Harris Solutions NY, Inc.
|
|
New York
|
Harris Systems Limited
|
|
United Kingdom
|
Applied Kilovolts Group Holdings Limited
|
|
United Kingdom
|
Applied Kilovolts Limited
|
|
United Kingdom
|
CR MSA, LLC
|
|
Delaware
|
Defence Investments Limited
|
|
United Kingdom
|
Eagle Technology, LLC
|
|
Delaware
|
|
|
|
Name of Subsidiary
|
|
State or Other
Jurisdiction of Incorporation
|
EDO (UK) Ltd.
|
|
United Kingdom
|
EDO LLC
|
|
Delaware
|
EDO MBM Technology Ltd.
|
|
United Kingdom
|
EDO Western Corporation
|
|
Utah
|
Exelis Arctic Services
|
|
Delaware
|
Exelis Australia Holdings Pty Ltd.
|
|
Australia
|
Exelis Australia Pty Ltd.
|
|
Australia
|
Harris C4i Pty Ltd.
|
|
Australia
|
Harris Defence Ltd.
|
|
United Kingdom
|
Exelis Holdings Inc.
|
|
Delaware
|
Exelis Luxembourg Sarl.
|
|
Luxembourg
|
Harris Orthogon GmbH
|
|
Germany
|
Exelis Visual Information Solutions BV
|
|
Netherlands
|
Exelis Visual Information Solutions GmbH
|
|
Germany
|
Exelis VIS KK
|
|
Japan
|
Exelis Visual Information Solutions France SARL
|
|
France
|
Exelis Visual Information Solutions SRL
|
|
Italy
|
Exelis Visual Information Solutions UK Limited
|
|
United Kingdom
|
Exelis Visual Information Solutions, Inc. *
|
|
Colorado
|
Felec Services, Inc.
|
|
Delaware
|
HAL Technologies, LLC
|
|
Delaware
|
Hunan Carefx Information Technology, LLC
|
|
China
|
Manu Kai, LLC *
|
|
Hawaii
|
Maritime Communication Services, Inc.
|
|
Delaware
|
Melbourne Leasing, LLC
|
|
Florida
|
NexGen Communication, LLC
|
|
Virginia
|
Nextgen Equipage Fund, LLC
|
|
Delaware
|
Pine Valley Investments, LLC
|
|
Delaware
|
PT CapRock Communications Indonesia *
|
|
Indonesia
|
SARL Assured Communications
|
|
Algeria
|
S.C. Harris Assured Communications SRL
|
|
Romania
|
SpaceLink Systems, Inc.
|
|
Texas
|
SpaceLink Systems, LLC
|
|
Delaware
|
Sunshine General Services, LLC
|
|
Iraq
|
*
|
Subsidiary of Harris Corporation less than 100% directly or indirectly owned by Harris Corporation.
|
|
|
|
|
|
Form S-3 ASR
|
|
No. 333-213408
|
|
Harris Corporation Debt and Equity Securities
|
Form S-4
|
|
No. 333-202539
|
|
Harris Corporation Shares of Common Stock
|
Form S-8
|
|
No. 333-192735
|
|
Harris Corporation Retirement Plan
|
Form S-8
|
|
No. 333-130124
|
|
Harris Corporation 2005 Equity Incentive Plan
|
Form S-8
|
|
No. 333-207774
|
|
Harris Corporation 2015 Equity Incentive Plan
|
/s/ WILLIAM M. BROWN
|
|
/s/ TERRY D. GROWCOCK
|
William M. Brown
|
|
Terry D. Growcock
|
Chairman, President and Chief Executive Officer
|
|
Director
|
|
|
|
/s/ RAHUL GHAI
|
|
/s/ LEWIS HAY III
|
Rahul Ghai
|
|
Lewis Hay III
|
Senior Vice President and Chief Financial Officer
|
|
Director
|
|
|
|
/s/ TODD A. TAYLOR
|
|
/s/ VYOMESH I. JOSHI
|
Todd A. Taylor
|
|
Vyomesh I. Joshi
|
Vice President, Principal Accounting Officer
|
|
Director
|
|
|
|
/s/ JAMES F. ALBAUGH
|
|
/s/ LESLIE F. KENNE
|
James F. Albaugh
|
|
Leslie F. Kenne
|
Director
|
|
Director
|
|
|
|
/s/ PETER W. CHIARELLI
|
|
/s/ JAMES C. STOFFEL
|
Peter W. Chiarelli
|
|
James C. Stoffel
|
Director
|
|
Director
|
|
|
|
/s/ THOMAS A. DATTILO
|
|
/s/ GREGORY T. SWIENTON
|
Thomas A. Dattilo
|
|
Gregory T. Swienton
|
Director
|
|
Director
|
|
|
|
/s/ ROGER B. FRADIN
|
|
/s/ HANSEL E. TOOKES II
|
Roger B. Fradin
|
|
Hansel E. Tookes II
|
Director
|
|
Director
|
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K for the
fiscal year ended June 30, 2017
of Harris Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 29, 2017
|
|
|
|
/s/ William M. Brown
|
||
|
|
|
|
Name:
|
|
William M. Brown
|
|
|
|
|
Title:
|
|
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K for the
fiscal year ended June 30, 2017
of Harris Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 29, 2017
|
|
|
|
/s/ Rahul Ghai
|
||
|
|
|
|
Name:
|
|
Rahul Ghai
|
|
|
|
|
Title:
|
|
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Harris as of the dates and for the periods expressed in the Report.
|
Date: August 29, 2017
|
|
|
|
/s/ William M. Brown
|
||
|
|
|
|
Name:
|
|
William M. Brown
|
|
|
|
|
Title:
|
|
Chairman, President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Harris as of the dates and for the periods expressed in the Report.
|
Date: August 29, 2017
|
|
|
|
/s/ Rahul Ghai
|
||
|
|
|
|
Name:
|
|
Rahul Ghai
|
|
|
|
|
Title:
|
|
Senior Vice President and Chief Financial Officer
|