SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 1-8974
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AlliedSignal Inc.
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(Exact name of registrant as specified in its charter)
Delaware 22-2640650
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Columbia Road
P.O. Box 4000
Morristown, New Jersey 07962-2497
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(Address of principal executive offices) (Zip Code)
(201)455-2000
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding at
Class of Common Stock March 31, 1995
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$1 par value 284,298,441 shares
AlliedSignal Inc.
Index
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Page No.
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Part I. - Financial Information
Item 1. Condensed Financial Statements:
Consolidated Balance Sheet -
March 31, 1995 and December 31, 1994 3
Consolidated Statement of Income -
Three Months Ended March 31, 1995 and 1994 4
Consolidated Statement of Cash Flows-
Three Months Ended March 31, 1995 and 1994 5
Notes to Financial Statements 6
Report on Review by Independent
Accountants 7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 8
Part II.- Other Information
Item 4. Submission of Matters to a Vote of
Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
- 2 -
AlliedSignal Inc.
Consolidated Balance Sheet
(Unaudited)
March 31, December 31,
1995 1994
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(Dollars in millions)
ASSETS
Current Assets:
Cash and cash equivalents $ 512 $ 508
Accounts and notes receivable - net
(Note 2) 1,861 1,697
Inventories - net (Note 3) 1,877 1,743
Other current assets 653 637
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Total current assets 4,903 4,585
Investments and long-term receivables 504 475
Property, plant and equipment 9,010 8,792
Accumulated depreciation and
amortization (4,718) (4,532)
Cost in excess of net assets of
acquired companies - net 1,347 1,349
Other assets 671 652
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Total assets $11,717 $11,321
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LIABILITIES
Current Liabilities:
Accounts payable $ 1,291 $ 1,296
Short-term borrowings 227 133
Current maturities of long-term debt 184 130
Accrued liabilities 1,953 1,832
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Total current liabilities 3,655 3,391
Long-term debt 1,317 1,424
Deferred income taxes 428 406
Postretirement benefit obligations
other than pensions 1,827 1,790
Other liabilities 1,287 1,328
SHAREOWNERS' EQUITY
Capital - common stock issued 358 358
- additional paid-in capital 2,464 2,458
Common stock held in treasury, at cost (1,488) (1,505)
Cumulative translation adjustment 70 18
Unrealized holding gain on equity securities 37 40
Retained earnings 1,762 1,613
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Total shareowners' equity 3,203 2,982
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Total liabilities and shareowners' equity $11,717 $11,321
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Notes to Financial Statements are an integral part of this
statement.
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AlliedSignal Inc.
Consolidated Statement of Income
(Unaudited)
Three Months Ended
March 31
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1995 1994
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(Dollars in millions
except per share amounts)
Net sales $3,419 $2,986
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Cost of goods sold 2,747 2,402
Selling, general and
administrative expenses 358 314
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Total costs and expenses 3,105 2,716
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Income from operations 314 270
Equity in income of affiliated companies 49 30
Other income (expense) (19) (13)
Interest and other financial charges (41) (37)
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Income before taxes on income 303 250
Taxes on income 105 81
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Net income $ 198 $ 169
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Earnings per share of common
stock (Note 4) $ .70 $ .60
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Cash dividends per share of
common stock $ .195 $ .145
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Notes to Financial Statements are an integral part of this
statement.
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AlliedSignal Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31
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1995 1994
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(Dollars in millions)
Cash flows from operating activities:
Net income $ 198 $ 169
Adjustments to reconcile net income to net
cash flows from operating activities:
Streamlining and restructuring -- (44)
Depreciation and amortization (includes goodwill) 152 135
Undistributed earnings of equity affiliates (22) (7)
Deferred taxes 40 35
(Increase) in accounts and notes receivable (152) (105)
Decrease (increase)in inventories (124) 1
(Increase) in other current assets (16) (1)
(Decrease) in accounts payable (27) (11)
Increase (decrease) in accrued liabilities 101 (50)
Other (50) (56)
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Net cash flow provided by operating activities 100 66
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Cash flows from investing activities:
Expenditures for property, plant and equipment (145) (111)
Proceeds from disposals of property, plant and
equipment 20 7
Decrease in other investments -- --
(Increase) in other investments -- (5)
Decrease in marketable securities -- 16
Cash paid for acquisitions - net 31 (22)
Proceeds from sales of businesses -- 27
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Net cash flow (used for) investing activities (94) (88)
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Cash flows from financing activities:
Net increase in commercial paper 89 1
Net increase in short-term borrowings 3 57
Proceeds from issuance of common stock 20 24
Proceeds from issuance of long-term debt -- 1
Payments of long-term debt (59) (79)
Repurchases of common stock (1) (15)
Cash dividends on common stock (54) (41)
Redemption of common stock purchase rights -- (7)
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Net cash flow (used for) financing activities (2) (59)
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Net increase (decrease) in cash and cash equivalents 4 (81)
Cash and cash equivalents at beginning of year 508 892
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Cash and cash equivalents at end of period $ 512 $ 811
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Notes to Financial Statements are an integral part of this
statement.
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AlliedSignal Inc.
Notes to Financial Statements
(Unaudited)
(Dollars in millions)
Note 1. In the opinion of management, the accompanying unaudited
consolidated financial statements reflect all adjustments,
consisting only of normal adjustments, necessary to present fairly
the financial position of AlliedSignal Inc. and its consolidated
subsidiaries at March 31, 1995 and the results of operations and the
changes in cash flows for the three months ended March 31, 1995 and
1994. The results of operations for the three-month period ended
March 31, 1995 should not necessarily be taken as indicative of the
results of operations that may be expected for the entire year 1995.
The financial information as of March 31, 1995 should be read in
conjunction with the financial statements contained in the Company's
Form 10-K Annual Report for 1994.
Note 2. Accounts and notes receivable consist of the following:
March 31, December 31,
1995 1994
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Trade $1,699 $1,526
Other 198 204
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1,897 1,730
Less-Allowance for doubtful
accounts and refunds (36) (33)
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$1,861 $1,697
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Note 3. Inventories are valued at the lower of cost or market using
the last-in, first-out (LIFO) method for certain qualifying domestic
inventories and the first-in, first-out (FIFO) or the average cost
method for other inventories.
Inventories consist of the following:
March 31, December 31,
1995 1994 (a)
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Raw materials $ 550 $ 488
Work in process 824 761
Finished products 743 711
Supplies and containers 69 70
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2,186 2,030
Less - Progress payments (184) (160)
Reduction to LIFO
cost basis (125) (127)
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$1,877 $1,743
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(a) Reclassified for comparative purposes.
Note 4. Based on the weighted average number of shares outstanding
during each period, as follows: 1995, 283,765,137 shares, and 1994,
284,456,136 shares. No dilution results from outstanding common
stock equivalents.
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Report on Review by Independent Accountants
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To the Board of Directors
of AlliedSignal Inc.
We have reviewed the accompanying consolidated balance sheet of
AlliedSignal Inc. and its subsidiaries as of March 31, 1995, and the
consolidated statements of income and of cash flows for the three-
month periods ended March 31, 1995 and 1994. This financial
information is the responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the financial information referred to above
for it to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December
31, 1994, and the related consolidated statements of income, of
retained earnings, and of cash flows for the year then ended (not
presented herein); and in our report dated February 1, 1995 we expressed
an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
balance sheet information as of December 31, 1994, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which
it has been derived.
Price Waterhouse LLP
4 Headquarters Plaza North
Morristown, NJ 07962
April 21, 1995
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Results of Operations
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First Quarter 1995 Compared with First Quarter 1994
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Net sales in the first quarter of 1995 totaled $3.4 billion, an
increase of $433 million, or 15%, compared with the first quarter of
last year. Of this increase, $237 million was due to higher sales
volumes by the automotive and engineered materials segments, $137
million reflects the consolidation of recent acquisitions and the
impact of dispositions and $61 million was due to favorable foreign
exchange fluctuations in the automotive segment. Automotive's sales
increased $250 million, or 22%, engineered materials was $133
million, or 18%, higher and aerospace had a $50 million, or 5%,
gain.
Automotive benefited from growing sales of turbochargers in the
U.S., Europe and Asia, expanded sales of braking systems worldwide,
continued strength in North American medium and heavy truck brakes,
strong worldwide sales of safety restraints and higher sales of
aftermarket products, primarily in Europe. Sales volumes were
higher for most engineered materials business units, including
fibers, performance materials, engineering plastics, laminate
systems, environmental catalysts and carbon materials. Aerospace's
sales increased reflecting the acquisition of the Lycoming turbine
engine business in October 1994. Recent events and new government
requirements have also resulted in heightened demand for commercial
avionics' aircraft safety equipment, such as collision avoidance,
wind shear detection and ground proximity warning systems.
Aerospace equipment systems also had higher sales. Year-to-year
quarterly sales comparisons were adversely affected by a one-time
contract settlement in 1994 and, in 1995, by delays in government
electronics systems' shipments.
Selling, general and administrative expenses increased $44
million, or 14%, reflecting in part the impact of acquisitions over
the past year.
Income from operations of $314 million increased by $44
million, or 16%, compared with last year's first quarter.
Automotive's operating income improved by 25%, engineered materials'
by 24% and aerospace's by 6%. Operating expense for corporate was
unfavorable by $10 million. The Company's operating margin for the first
quarter of 1995 was 9.2% compared with 9.0% for the same period last
year. See the discussion of net income below for information by
segment.
Productivity (the constant dollar basis relationship of sales
to costs) of the Company's businesses improved by 5.4% compared with
last year's first quarter.
Equity in income of affiliated companies of $49 million
increased by $19 million, or 63%, compared with last year mainly
because of improved joint venture earnings for Paxon high-density
polyethylene, UOP process technology and Atlantic Research
hybrid inflator technology.
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Other income (expense) of $(19) million was unfavorable by $6
million compared with last year's first quarter mainly due to lower
interest income and higher minority interest reflecting the truck
brake business joint venturing with Knorr-Bremse in the United
States.
Interest and other financial charges of $41 million increased
by $4 million, or 11%, from 1994's first quarter reflecting a lower
amount capitalized.
The effective tax rate in the first quarter of 1995 was 34.6%
compared with 32.4% in 1994. The 2.2 percentage point increase over
the 1994 rate is primarily due to growth in both domestic and
foreign earnings that are subject to the statutory rate.
Aerospace's net income rose to $56 million from $52 million, an
increase of 8%, reflecting increased earnings for engines, aerospace
equipment systems and commercial avionics systems.
Automotive's net income rose to $62 million from $46 million a
year ago, a 35% increase, reflecting increased sales of automotive
systems and components on higher car and light truck production in
Europe and North America and increased utilization of turbo diesel
engines in Western European passenger cars and North American light
trucks. Net income was significantly higher for braking systems-
Europe, safety restraint systems, turbocharging systems and truck
brake systems. Worldwide aftermarket income was up, primarily
driven by Europe. The Company continues to reap the benefits of
strong AlliedSignal content in popular minivans and sport utility
vehicles as well as certain new car models.
Engineered materials' net income increased to $94 million from
$78 million, a 21% increase. Net income was higher for fibers,
performance materials, engineering plastics, laminate systems,
environmental catalysts and carbon materials. Income improved in
the quarter due to volume and price increases, partially offset by
higher raw materials costs. There was a substantial increase in
net income from the Paxon joint venture with Exxon and the UOP joint
venture with Union Carbide.
Net income in the 1995 first quarter of $198 million, or
$0.70 a share, was higher than last year's net income of $169
million, or $0.60 a share, for the reasons discussed above.
Financial Condition
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March 31, 1995 Compared with December 31, 1994
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On March 31, 1995 the Company had $512 million in cash and cash
equivalents, compared with $508 million at year-end 1994. The
current ratio at March 31, 1995 was 1.3X, compared with 1.4X at year-
end 1994.
On March 31, 1995 the Company's long-term debt amounted to
$1,317 million, $107 million lower than at year-end 1994. Total
debt of $1,728 million on March 31, 1995 was $41 million higher than
at year-end. The Company's total debt as a percent of capital
decreased from 34.1% at year-end to 33.1% at March 31, 1995.
- 9 -
During the first three months of 1995, the Company spent $145
million for capital expenditures, compared with $111 million in the
corresponding period in 1994. Spending for the 1995 three month
period was as follows: aerospace-$29 million; automotive-$51
million; engineered materials-$57 million, and corporate-$8 million.
In April 1995 the Company completed the purchase of The Budd
Company's Wheel & Brake Division for approximately $160 million.
The division manufactures rotors, hubs, drums and related assemblies
for passenger cars and light trucks; steel disc wheels for heavy
trucks; demountable rims; and hub and drum assemblies for medium-
and heavy-duty vehicles and had 1994 sales of about $250 million.
Review by Independent Accountants
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The "Independent Accountants' Report" included herein is not a
"report" or "part of a Registration Statement" prepared or certified
by an independent accountant within the meanings of Section 7 and 11
of the Securities Act of 1933, and the accountants' Section 11
liability does not extend to such report.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareowners of the Company held
on April 24, 1995, the following matters set forth in the Company's
Proxy Statement dated March 10, 1995, which was filed with the
Securities and Exchange Commission pursuant to Regulation 14A under
the Securities Exchange Act of 1934, were voted upon with the
results indicated below.
(1) The nominees listed below were elected directors for
a three-year term ending in 1998 with the respective votes set forth
opposite their names:
FOR WITHHELD
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Russell E. Palmer 238,244,499 4,925,686
Ivan G. Seidenberg 238,397,642 4,772,543
Andrew C. Sigler 238,088,857 5,081,328
Thomas P. Stafford 238,127,316 5,042,869
(2) A proposal seeking approval of the appointment of
Price Waterhouse LLP as independent accountants for 1995 was
approved, with 238,139,205 votes cast FOR, 2,501,701 votes cast
AGAINST and 2,529,279 abstentions;
(3) A shareowner proposal recommending that steps be
taken to eliminate the election of directors by classes was not
approved, with 91,858,803 votes cast FOR, 124,882,768 votes cast
AGAINST, 5,464,053 abstentions and 20,964,561 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with this
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Form 10-Q:
10.1 Supplemental Non-Qualified Savings
Plan for Highly Compensated Employees of
AlliedSignal Inc. and its Subsidiaries, as
amended
10.2 Salary Deferral Plan for Selected
Employees of AlliedSignal Inc. and its
Affiliates, as amended
15 Independent Accountants' Acknowledgment Letter
as to the incorporation of their report relating
to unaudited interim financial statements
27 Financial Data schedule
(b) Reports on Form 8-K. No reports on Form 8-K were
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filed by the Company during the quarter ended March 31, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AlliedSignal Inc.
Date: May 8, 1995 By: /s/ G. Peter D'Aloia
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G. Peter D'Aloia
Vice President and Controller
(on behalf of the Registrant
and as the Registrant's
Principal Accounting Officer)
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EXHIBIT INDEX
Exhibit Description
Number
2 Omitted (Inapplicable)
4 Omitted (Inapplicable)
10.1 Supplemental Non-Qualified
Savings Plan for Highly
Compensated Employees of
AlliedSignal Inc. and its
Subsidiaries, as amended
10.2 Salary Deferral Plan for
Selected Employees of
AlliedSignal Inc. and its
Affiliates, as amended
11 Omitted (Inapplicable)
15 Independent Accountants'
Acknowledgment Letter as to
the incorporation of their
report relating to unaudited
interim financial statements
18 Omitted (Inapplicable)
19 Omitted (Inapplicable)
22 Omitted (Inapplicable)
23 Omitted (Inapplicable)
24 Omitted (Inapplicable)
27 Financial Data Schedule
99 Omitted (Inapplicable)
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