________________________________________________________________________________
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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
ALLIEDSIGNAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2640650
- - - - - ---------------------------------------- ---------------------------------------------
(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
- - - - - ---------------------------------------- ---------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201)455-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
- - - - - ---------------------------------------- ---------------------------------------------
Common Stock, par value $1 per share* New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Money Multiplier Notes due 1996-2000 New York Stock Exchange
9 7/8% Debentures due June 1, 2002 New York Stock Exchange
9.20% Debentures due February 15, 2003 New York Stock Exchange
Zero Coupon Serial Bonds due 1995-2009 New York Stock Exchange
9 1/2% Debentures due June 1, 2016 New York Stock Exchange
- - - - - ------------
* The common stock is also listed for trading on the Amsterdam, Basle,
Frankfurt, Geneva, London, Paris, Tokyo and Zurich stock exchanges.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant was approximately $11.2 billion at December 31, 1993.
There were 283,833,506 shares of Common Stock outstanding at December 31, 1993.
Such amount reflects the impact of the 2-for-1 stock split for shareowners
of record on February 22, 1994.
Documents Incorporated by Reference
Part I and II: Annual Report to Shareowners for the Year Ended December
31, 1993.
Part III: Proxy Statement for Annual Meeting of Shareowners to be held
April 25, 1994.
________________________________________________________________________________
________________________________________________________________________________
ALLIEDSIGNAL INC.
CROSS REFERENCE SHEET
Page(s) in
Form 10-K Heading(s) in Annual Report to Shareowners for Annual
Item No. Year Ended December 31, 1993 Report
- - - - - ---------------------------------- ------------------------------------------------------------ ------------
1. Business Note 25. Segment Financial Data ............................ 38
Note 24. Geographic Areas -- Financial Data ................ 38
Management's Discussion and Analysis ....................... 20
3. Legal Proceedings Note 19. Commitments and Contingencies ..................... 35
5. Market for the Regis- Note 26. Unaudited Quarterly Financial
trant's Common Equity Information ................................................ 39
and Related Stock- Selected Financial Data .................................... 40
holder Matters
6. Selected Financial Data Selected Financial Data .................................... 40
7. Management's Discussion and Management's Discussion and Analysis ....................... 20
Analysis of Financial
Condition and Results of
Operations
8. Financial Statements and Report of Independent Accountants .......................... 39
Supplementary Data Consolidated Statement of Income ........................... 27
Consolidated Statement of Retained Earnings ................ 27
Consolidated Balance Sheet ................................. 28
Consolidated Statement of Cash Flows ....................... 29
Notes to Financial Statements .............................. 30
Heading(s) in Proxy Statement for Page(s) in
Annual Meeting of Shareowners Proxy
to be held April 25, 1994 Statement
------------------------------------------------------------ ------------
10. Directors and Executive Election of Directors; Voting Securities ................... 2,10
Officers of the Registrant
11. Executive Compensation Election of Directors -- Compensation of Directors;
Executive Compensation ..................................... 9,12
12. Security Ownership of Certain Voting Securities .......................................... 10
Beneficial Owners and
Management
2
NOTE: AlliedSignal Inc. is sometimes referred to in this Report as the
Registrant and as the Company, and AlliedSignal Inc. and its consolidated
subsidiaries are sometimes referred to as the Company.
TABLE OF CONTENTS
ITEM PAGE
--------------------------------------------------------------------------------------------------- ----
Part I. 1 Business........................................................................................ 4
2 Properties...................................................................................... 13
3 Legal Proceedings............................................................................... 14
4 Submission of Matters to a Vote of Security Holders............................................. 14
Executive Officers of the Registrant............................................................... 14
Part II. 5 Market for the Registrant's Common Equity and Related Stockholder Matters....................... 16
6 Selected Financial Data......................................................................... 16
7 Management's Discussion and Analysis of Financial Condition and Results of Operations........... 16
8 Financial Statements and Supplementary Data..................................................... 16
9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............ 16
Part III. 10 Directors and Executive Officers of the Registrant.............................................. 16(a)
11 Executive Compensation.......................................................................... 16(a)
12 Security Ownership of Certain Beneficial Owners and Management.................................. 17(a)
13 Certain Relationships and Related Transactions.................................................. 17
Part IV. 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K................................. 17
Signatures.................................................................................................... 19
- - - - - ------------
(a) These items are omitted since the Registrant filed with the Securities
and Exchange Commission a definitive Proxy Statement pursuant to Regulation
14A involving the election of directors. Certain other information
relating to the Executive Officers of the Registrant appears at pages 14
and 15 of this Report.
3
PART I.
ITEM 1. BUSINESS
AlliedSignal Inc. with its consolidated subsidiaries (sometimes referred to
in this Report as the Company) was organized in the State of Delaware in 1985.
The Company is the successor to Allied Corporation, which was organized in the
State of New York in 1920.
The Company's operations are conducted under three business segments:
aerospace, automotive and engineered materials.
The Company's products are used by many major industries, including
textiles, construction, plastics, electronics, motor vehicles, chemicals,
housing, telecommunications, utilities, packaging, military and commercial
aviation and aerospace, and in the space program, and agriculture. The following
is a description of the Company's three business segments and their principal
products and activities.
AEROSPACE
The Aerospace segment is composed of AlliedSignal Aerospace. It is among
the world's largest manufacturers and suppliers of advanced technology products
and services for the military, commercial and general aviation, and space
markets.
The Company serves key military and commercial segments of the aviation,
defense and space markets with a broad array of systems, subsystems, components
and services. It designs, develops, manufactures, markets and services hundreds
of products found on all types of aircraft from single-engine executive aircraft
and wide-bodied 'jumbos', flown by the world's commercial carriers, to trainers,
transports, bombers, fighters and helicopters used by the U.S. and other
countries for national defense. The Company's global business consists primarily
of original-equipment sales and an extensive aftermarket business, including
spare parts, maintenance and repair, and retrofitting. Worldwide customers
include all of the major airframe and engine manufacturers, including Boeing,
McDonnell Douglas, Lockheed, Airbus Industrie (Airbus), British Aerospace,
Fokker, Cessna, Fairchild, Dassault, Rockwell, Pratt & Whitney, General Electric
(GE) and Rolls Royce as well as the world's leading airlines.
Principal products, manufactured for military aircraft, civil air transport
and general aviation markets, include primary propulsion, consisting of
turboprop, turbofan, turbojet and turboshaft engines, and auxiliary power gas
turbine engines; environmental control systems, consisting of air conditioning,
cabin pressure and temperature controls; airborne weather avoidance and
collision avoidance radar systems; aircraft communications -- both voice and
data; microwave landing systems; automatic flight control systems; pneumatic
control systems; engine and flight instruments; motion sensing and air data
systems; navigation and identification equipment, including identification of
friend-or-foe systems; cockpit data recorders; ground proximity warning
equipment; electric power generating systems; fuel control systems; aircraft
wheels and brakes; test systems; electromechanical and hydraulic systems and
components; heat transfer equipment and engine oil cooling systems. Other
products include electronic cooling systems and infrared radiation suppressors.
The Company also manufactures products for missiles, spacecraft defense
command, control communication and intelligence programs and oceanic
applications, primarily for defense markets. Products include cryptographic
equipment, radar proximity fuzes, space-pointing devices for deep space probes
and control systems for spacecraft, gyroscopes for tactical missiles and
military aircraft, antisubmarine warfare systems as well as field engineering
management and technical support services to the National Aeronautics and Space
Administration (NASA) and the U.S. Department of Energy (DOE).
In addition, the Company operates a large network of aircraft service and
overhaul installations. These operations include airport-based facilities in
California, Texas, Illinois, Georgia and New York, plus repair and overhaul
facilities in Alabama and Arizona in the U.S. as well as Singapore, the United
Kingdom (U.K.) and Germany overseas.
4
In 1993 the Company completed the purchase of Sundstrand's Data Control
business which had 1992 sales of $194 million. The operation, now called
AlliedSignal Avionics, strengthens the Company's core avionics business by
broadening its commercial and avionics product lines and by providing important
systems integration opportunities. The integration of data management with
communications and derivative systems is one of the fastest growing segments of
the avionics market. The Company also acquired the aircraft wheel and brake
overhaul operations of Air Treads, Inc. which had 1992 sales of approximately
$22 million. In March 1994 the Company announced that it was negotiating with
Moog Inc. the sale of a small business which manufactures mechanical and
hydraulic actuation products.
The Company is affected by the level of expenditures for defense and space
programs and the level of production of commercial and general aviation
aircraft. The Company's aerospace products are sold directly to the U. S.
government, aircraft manufacturers and commercial airlines, and to dealers and
distributors of general aviation products.
Moderate growth in the Company's commercial business for aerospace products
is expected, over the long term, to mitigate a reduction in U.S. defense
spending. Moreover, aerospace sales are not dependent on any one key defense
program or commercial customer. However, contract awards by aircraft
manufacturers, some of which are discussed below, can be cancelled or reduced if
aircraft orders are cut back. The products and services are sold in competition
with those of a large number of other companies, some of which have substantial
financial resources and significant technological capabilities. Among those
companies that compete with several of the segment's product areas are GE,
Honeywell, Rockwell International, Sundstrand and United Technologies.
Sales to the U.S. government, acting through its various departments and
agencies and through prime contractors, amounted to $1,911 million for 1993 and
$2,061 million for 1992, which amounts include sales to the Department of
Defense of $1,391 million in 1993 and $1,570 million in 1992. Approximately 61%
and 64% of sales to the U.S. government in 1993 and 1992, respectively, were
made under fixed-price contracts in which the Company agrees to perform the
contract for a fixed price and retains for itself any benefits of cost savings
or must bear the burden of cost overruns.
Government contracts are generally terminable by the government at will.
Upon termination, the contractor is normally entitled to reimbursement for
allowable costs and to an allowance for profit. However, if the contract is
terminated because of the contractor's default, the contractor may not recover
all of its costs and may be liable for any excess costs incurred by the
government in procuring undelivered items from another source.
The Company, as are other government contractors, is subject to government
investigations of business practices and compliance with government procurement
regulations. Although such regulations provide that a contractor may be
suspended or debarred from government contracts under certain circumstances, and
the outcome of pending government investigations cannot be predicted with
certainty, management is not presently aware of any such investigation which it
expects will have a material adverse effect on the Company.
Orders for certain products sold to general and commercial aviation
customers mainly consist of relatively short-term and frequently renewed
commitments. Government procurement agencies generally issue contracts covering
relatively long periods of time. The total backlog of unfilled orders for
products and services for both government and commercial contracts was $4,773
million at December 31, 1993 and $4,859 million at December 31, 1992 of which
funded U.S. and foreign government orders were $1,283 million and $1,557 million
for the respective years. The Company anticipates that approximately $2,335
million of the total 1993 backlog will be filled during 1994.
The Aerospace segment's international operations consist primarily of
exporting U.S. manufactured products, performance of services, operating
aircraft repair and overhaul facilities and licensing activities. The principal
manufacturing facilities outside of the U.S. are in Canada and Germany.
In 1993, as in the prior year, U.S. defense budgets and those of most other
nations continued to decline. Furthermore, most major U.S. and international
airlines operated in a difficult economic environment with only modest
turnarounds beginning in the second half of 1993. While the regional airlines
showed some financial strength, growth in the high end corporate aviation market
remained
5
flat. As a result, 1993 was a challenging year. Nonetheless, Aerospace
had strong success in booking new programs, being awarded approximately 65% of
the programs bid.
Chalk Airlines purchased AlliedSignal Engine's (AE) TPE331-14 turboprop to
re-engine their fleet of Albatross amphibian aircraft. The sales potential of
the engine retrofit program is $24 million. The U.S. Army funded a $73 million
contract add-on under which LHTEC, the joint venture company of the Allison Gas
Turbine Division of General Motors and AE, will continue development of a growth
version of its T-800 turboshaft engine which has been selected for use on the
RAH-66 Comanche helicopter.
The Company received new military avionics contracts in 1993. Guidance &
Control Systems (GCS), teamed with Chrysler Technology, was awarded a major
contract from the U.S. Air Force (USAF) for the update of autopilots and
displays for the C-130 and C-141 aircraft. The program has a potential to the
Company of $500 million in sales over the life of the program. Air Transport
Avionics was awarded a $15 million contract from Lockheed to supply Traffic
Alert and Collision Avoidance Systems (TCAS II) for the C-130 aircraft. GCS
received an order from McDonnell Douglas Helicopter Company to update the
display processor for the AH-64 Longbow Apache helicopter, a program with a
sales potential to the Company of over $300 million. Communications Systems (CS)
received a significant contract from the USAF Special Operations Command for the
Multi-mission Advanced Tactical Terminal (MATT), a program with $170 million in
sales potential. CS also led one of four winning teams for the Advanced Research
Projects Agency's Small Low-cost Interceptor Device (SLID) program which is
expected to develop military land vehicle protection through the use of smart
small projectiles. SLID has a sales potential of $110 million. CS was also
awarded several contracts for its APX-100 Identification Friend-or-Foe
transponder with the U.S. Navy, Air National Guard, U.K. Ministry of Defence and
Teledyne Ryan. Combined, the sales potential to the Company is over $150
million.
Other key military aircraft equipment awards included the F-18E/F (the
Navy's first-line fighter) wheels and brakes by Aircraft Landing Systems (ALS)
and the F-22 Integrated Environmental Control System by Aerospace Systems &
Equipment (ASE), together worth more than $340 million in sales potential. The
latter was particularly notable because it began as a component procurement, but
ASE's strong focus on systems integration turned it into a contract for the
complete Environmental Control System.
AlliedSignal Technical Services (ATSC) was successful in booking a number
of important technical services programs. These programs included the NASA White
Sands program, worth $225 million in sales, the U.S. Marine Corps' Maritime
Prepositioning Ship (MPS) program, worth $125 million in sales, and a number of
smaller NASA programs worth over $130 million in sales.
In the commercial and general aviation aircraft market, ALS was awarded the
position of one of two wheel and brake suppliers for Boeing on its new 737-X
transport, a program with $1.3 billion in sales potential to the Company. On the
new Gulfstream G-5 aircraft, AE was awarded a contract to supply the Auxiliary
Power Unit (APU); ASE, the Environmental Control System, and Controls &
Accessories was awarded the contract for the Cabin Pressure Control System.
Together the awards have a sales potential of $130 million. Also, Fluid Systems
received the Engine Starting System contract for the BMW/Rolls Royce BR-710
engine, the selected engine for both the Gulfstream G-5 and the Canadair Global
Express aircraft. Furthermore, ASE received the Environmental Control System
contract for the new Learjet Model 45 general aviation aircraft. Significant
1993 awards from commercial airlines included the following: the ALS business
won the wheels and brakes on the Continental Airline fleet with $170 million
sales potential; AE won an APU long-term maintenance service agreement from a
major airline worth $135 million in potential sales; ALS also was awarded
significant wheels and brake awards from JAL, Air France and Egyptair with a
combined sales potential of $140 million.
In the spacecraft market, Lockheed Missile & Space Company awarded GCS the
ring laser gyro and momentum wheel contracts for their Iridium program and a
ring laser gyro contract for their FSAT-A (Frugal Satellite) program. The
combined sales potential of these is $50 million.
The Company was also awarded a number of contracts in 1992, including the
following:
Learjet, a unit of Bombardier, Inc., awarded a key contract to AE to supply
its new series TFE 731-20 turbofan engine for the new Model 45 Learjet. The
contract has a potential for $1 billion in sales
6
over the life of the program. Also, in the general aviation area, Cessna, a
unit of Textron Inc., selected, for its Citation X, APUs, Air Turbine Start
Systems and Cabin Pressure Control Systems made by the
Company's Auxiliary Power, Fluid Systems and Controls & Accessories businesses.
The ALS business received an important launch order from British Airways for
wheels and brakes on its Boeing 777 aircraft and the Air Transport Avionics
business received significant orders for its TCAS II from British Airways, Air
France and Thai Airways. In addition, the Air Transport Avionics business signed
a joint venture agreement with the Scientific Research Institute for Aircraft
Equipment of Russia for the joint design, development and manufacture of
avionics for aircraft to be built in Russia. The new partnership combines the
Institute's software and systems integration expertise with the design,
production, marketing and customer support capabilities of the Company.
In the military market, the Company received several awards on the new
F-18E/F fighter program. McDonnell Douglas awarded the main and nose landing
gear to a team of the Company's ALS business and the Dowty Group and it selected
ASE to provide servovalves for actuation systems. LHTEC received a $240 million
development contract for a growth version of its T-800 engine that was selected
for use in the RAH-66 Comanche helicopter program. On the new F-22 Advanced
Tactical Fighter (ATF) being developed by the team of Lockheed, Boeing and Pratt
& Whitney, the Company has been awarded several contracts. The ATF Integrated
Maintenance System (AIMS) was awarded to the GCS business, a contract with
nearly $100 million of sales potential over the life of the program. Boeing
awarded a contract for the F-22 Auxiliary Power Generation System (APGS) to a
team of AE, ASE, Controls & Accessories and Fluid Systems businesses. The U.S.
Navy's NAVSEA organization made two major awards to the Ocean Systems business,
the TB-23 and the TB-16/BQW follow-on submarine towed arrays. Together the
awards total $24 million and offer $130 million sales potential over the life of
the programs.
Some technologically significant research and development awards were
received by the Company offering future contribution to its product base. The
DOE's Oak Ridge National Laboratories awarded a contract to the Company for
advanced heat engine ceramic technology. The Naval Air Warfare Center awarded a
program for research on advanced high pressure ratio high tip speed centrifugal
compressor technology to the Propulsion Engines business. The USAF's Wright
Laboratories awarded a contract for development of an Integrated Power Unit
(electric APU) to the Auxiliary Power Systems business and it awarded a contract
for development of an electrically actuated braking system to a team of the ALS
and Fluid Systems businesses. The trend of customers towards the use of more
electric systems and components in aircraft makes these awards important.
The Company expects that these programs will require only minimal fixed
capital spending.
AUTOMOTIVE
The Automotive segment designs, engineers and manufactures systems and
components for the worldwide vehicle manufacturers and aftermarket customers.
The segment's principal business areas are braking systems, engine components,
safety restraint systems and the aftermarket. Within each area, the segment
offers a wide range of products for passenger cars and light, medium and
heavy trucks.
For manufacturers of passenger cars and light trucks, the Company provides
disc and drum brakes, power brake boosters and master cylinders, anti-lock
braking systems (ABS), friction materials, spark plugs, turbochargers and
occupant protection systems (seat belts, air bags and related components).
The Company's primary product offerings for the manufacturers of medium and
heavy trucks and off-road vehicles primarily include air and hydraulic brake
actuation components, air and hydraulic drum and disc brakes, ABS, slack
adjusters, air dryers, fan clutches, friction materials, turbochargers and
charge-air intercoolers.
The aftermarket business includes replacement parts for most of the above
items as well as air, oil and fuel filters, wire and cable products, and brake
sealants and fluids.
Automotive operations are located in the U.S., Australia, Brazil, Canada,
France, Germany, India, Ireland, Italy, Japan, Malaysia, Mexico, Portugal, South
Korea, Spain and the U.K. Distribution and
7
marketing are conducted in these and numerous other countries as well.
Internationally, products are marketed under the Bendix, Fram, Autolite,
Garrett and Jurid trademarks.
Worldwide passenger car and truck original-equipment sales accounted for
approximately 70% in 1993 and 68% in 1992 of the net sales of the Automotive
segment with aftermarket sales accounting for the balance. In 1993 and 1992
Automotive operations outside the U.S. accounted for $2,002 and $2,391 million,
or 44% and 53%, respectively, of worldwide sales.
In 1993 and 1992 sales of automotive original-equipment systems and
components were made to approximately 30 customers of which five automotive
manufacturers accounted for approximately 60% and 58%, respectively, of such
sales. Total worldwide sales (for original-equipment and aftermarket use) for
1993 and 1992 to the five automotive manufacturers amounted to $1,886 and $1,754
million, including sales to Ford Motor Company, the segment's largest customer,
of $715 and $640 million for the respective years.
The Company has established joint venture relationships with Gilardini, a
European seat belt supplier, which is expected to provide growth opportunities
in both seat belts and air bag inflators.
The Company has formed a joint venture, International Auto Parts, Ltd.,
with other international companies to provide for the supply and distribution of
components and accessories for the import vehicle market in Russia.
Additionally, the Company has purchased Filtram, the exclusive manufacturer and
distributor of its Fram'r' filter products in Mexico. The Company intends to use
Filtram's broad distribution network in Mexico to provide growth for other
Company aftermarket products, including brakes, friction materials and spark
plugs.
The Automotive segment's truck brake operations have been restructured
under venture agreements with Knorr-Bremse AG of Munich, Germany. Two ventures
have been formed. The Company manages and owns 65% of the North American
operation and owns 35% of the European business. Annual sales of the two
ventures are expected to be about $650 million. The objective of forming an
alliance with Knorr-Bremse is to provide a higher level of support and enhance
the Company's ability to supply air brake controls and related products to the
truck industry.
During 1992 and 1993 the Automotive segment has been refocusing its efforts
and making investments to become a more competitive total brake system supplier.
The Company continues to apply advanced engineering and manufacturing
technologies from around the world to improve the design and quality of its ABS
product. New ABS product introductions and major awards on a number of car
models are expected to continue to provide the Company with the synergies to be
a worldwide total brake system supplier.
The Company initiated facilities rationalization plans in 1991 and 1992
which will significantly reduce the number of worldwide automotive locations
through 1995. By the end of 1993, 20 operating plants had been closed.
Rationalization and consolidations of sales offices, distribution centers, and
research and development facilities will continue throughout 1994.
The segment's operations outside the U.S. are conducted through various
foreign companies in which it has interests ranging from minor interests to
complete control. International operations also include the exporting of U.S.
manufactured products and licensing activities.
The Automotive segment's products are sold in highly competitive markets to
customers who demand performance, quality and competitive prices. Virtually all
automotive components are sold in competition with other independent suppliers
or with the captive component divisions of the vehicle manufacturers. While the
Company's competitive position varies among its products, the Company believes
it is a significant factor in each of its major product markets. The major
independent competitors in one or more major business areas include: ITT Teves,
Lucas Girling, Rockwell-WABCO, Dana, Autoliv, Cooper Industries, Schwitzer,
Midland, Bosch, Kelsey Hayes, KKK, TRW, Purolator, Takata and Morton.
ENGINEERED MATERIALS
The Engineered Materials segment is composed of five major divisions: the
Fibers Group, Chemicals and Catalysts, Performance Materials, Plastics and
AlliedSignal Laminate Systems Inc.
8
Fibers Group. The Company is a leading producer of type 6 nylon and the
third largest producer of nylon in the U.S. The Company is also the largest
domestic producer of caprolactam, the primary intermediate for type 6 nylon,
from which it produces fine and heavy denier nylon yarns and molding compounds
and film. These yarns are sold under the trademarks Anso'r', Anso X'r',
Anso IV'r', Anso V'r', Worry-Free'r', CrushResister'tm' and Caprolan'r'. In
addition, the Company produces heavy denier polyester yarns. The Company
primarily sells yarns to the carpet, textile, motor vehicle and industrial
markets.
In the carpet yarn markets, both continuous filament and staple nylon yarns
are sold to yarn processors and mills for the manufacture of carpeting. Nylon
filament and staple are the dominant fiber yarns used in carpet production. The
four largest producers, including the Company, have over 90% of domestic
capacity. The Company has achieved recognition as a leader in product
development and has developed a strong customer base. Brand identity, service to
customers and quality are important competitive factors in the market and there
is considerable price competition. In the motor vehicle and industrial markets,
the Company's primary products are nylon and polyester yarns for use in tire
cord, seat belts, hoses, tarpaulins and outdoor furniture. In 1993 the Company
completed construction of a $200 million industrial polyester yarn facility with
42 million pounds capacity in Longlaville, France and started customer shipments
in the fourth quarter of 1993. The Company believes that polyester yarn will
become the primary reinforcement for passenger car radial tires in the world
in the 1990s and is exploring development opportunities in the Far East.
The principal markets for textile fibers, where the Company sells
Caprolan'r' nylon flat yarns for warp knit and weaving applications, are
intimate apparel, sports outerwear, jackets and such recreational products as
sleeping bags, back packs and luggage. The industry is highly price competitive.
In October 1993 the Company announced that it is discussing a joint venture
with BASF, and that it had also completed the acquisition of AKZO's carpet fiber
business in Europe. The Company and BASF are discussing the combination of their
domestic carpet and textile nylon fiber businesses. The Company and BASF would
each own 50% of the venture. The companies believe that the combination would
result in significant operational efficiencies. The combination is subject to a
number of conditions. The AKZO carpet fiber business, which had 1993 revenues of
$70 million, produces continuous filament yarn and is located in Emmen, The
Netherlands. The acquisition will strengthen the Company's position as a
supplier of products to the European market. Previously, the Company only
exported fibers to the European market.
Chemicals and Catalysts. The division manufactures and markets fluorine
products, environmental catalysts and oximes.
The major fluorine products are hydrofluoric acid (HF), fluorocarbons,
uranium hexafluoride (UF6) and sulfur hexafluoride (SF6). The Company is the
world's largest producer of HF and an industry leader in the production and sale
of products derived from HF, including fluorocarbons, UF6 and SF6.
Genetron'r' fluorocarbons are sold mainly as refrigerants to
original-equipment and replacement manufacturers of air conditioning and
refrigeration equipment and as foam blowing agents to rigid foam producers.
Genesolv'r' fluorocarbons are sold as solvents in precision cleaning
applications such as electronics, optics and aerospace applications.
Approximately 60% of the Company's Genetron'r' and Genesolv'r' products are
chlorofluorocarbons (CFCs). The Montreal Protocol (Protocol), which is supported
by 87 countries, regulates worldwide CFC production and consumption. The
Protocol requires 100% elimination of fully halogenated CFC production by
industrialized countries by December 31, 1995. The amended U.S. Clean Air Act
also regulates CFCs and similarly requires that most U.S. production of CFCs be
phased out by the end of 1995. CFCs are also subject to the Ozone Depleting
Chemical Tax of the Revenue Reconciliation Act of 1989. Because of the
availability of non-fluorine-based substitute technologies, the Company has
decided to de-emphasize the solvents market and to focus its activities on the
foam and refrigerant markets.
The Company is pursuing development of environmentally-safer fluorocarbons
to replace the current CFC product line. An existing commercial plant was
converted in 1991 to manufacture hydrochlorofluorocarbon (HCFC)-141b, a key
substitute for CFC-11, a blowing agent in urethane
9
foams, and as a replacement for CFC-113 in critical solvent applications.
Commercial quantities of HCFC-141b were produced in 1992. In 1993 the Company
more than doubled the plant's capacity, from 20 to 50 million pounds per
year. The Company also continued its commercialization effort directed at
key CFC substitute products in various applications, including automotive air
conditioning and residential, commercial and industrial refrigeration. In early
1993 the Company began construction of a $100 million multi-product commercial
facility targeted primarily at the substitute products HCFC-123, HCFC-124,
HFC-125 and HFC-134a. The first phase of the facility, estimated to cost
about $70 million, is expected to begin operations in the second quarter of
1994. These new products are expected to service key applications as production
of current CFCs are phased out. While management cannot predict the ultimate
outcome of these research and development efforts and continuing regulatory
issues, it does not currently expect that the Protocol or the U.S. Clean Air Act
will have a material adverse effect on the Company. However, the Company can not
predict the impact of possible future regulatory issues.
The Company also expanded its fluorocarbon business in 1993 through the
acquisition of Praxair Inc.'s U.S. sterilant gas business. Praxair's sterilant
gases primarily consist of blends of ethylene oxide and CFCs and are sold to
hospitals, medical device makers and contract sterilizers. As CFCs are phased
out of the marketplace, blends of the environmentally-safer HCFC-124 are
expected to become the product of choice.
The Company processes uranium ore concentrates into UF6 which is an
essential intermediate in the production of fuel elements for nuclear power
reactors for domestic and foreign customers. In November 1992 a Company
subsidiary entered into a partnership with a General Atomics' affiliate to
market UF6 conversion services supplied by the Company's Metropolis, Illinois
manufacturing facility. The partnership, ConverDyn, competes for the open world
market with four foreign processors that are either government owned or
controlled. The Company is one of two domestic producers of SF6, a gas primarily
used by utilities because of its electrical insulatory properties in circuit
breakers, switches, transmission lines and electronic minisubstations.
The Environmental Catalysts business is a major worldwide supplier of
catalysts used in catalytic converters for automobiles. The Company has expanded
its catalyst manufacturing facility in Florange, France to service the growing
European market which requires stringent automotive emission standards effective
in 1993. The Company is currently supplying the European market through its
newly expanded facility. The Company also completed construction of a $4.5
million manufacturing facility in San Luis Potosi, Mexico and shipments began in
the third quarter of 1993. The Company and General Motors have agreed in
principle to become partners in the Environmental Catalysts business by
combining their relevant assets to conduct the business. The venture is expected
to be operational before the end of 1994.
The Oximes business is the leading supplier of specialty oxime chemicals
for use in the agricultural, coatings, photograph, pharmaceutical, adhesives and
sealants, and mining industries. The Company has certain cost benefits from its
captive source of hydroxylamine sulfate. In early 1993 the Company acquired the
specialty chemicals business of Koch Chemicals which is expected to accelerate
the growth of this business.
Performance Materials. Major businesses include A-C'r' performance
additives, the Paxon high-density polyethylene (HDPE) and the UOP joint
ventures, and tar products.
A-C'r' performance additives are low-molecular weight polyethylene polymer
additives which primarily serve the textiles, plastics, adhesives and polishes
specialty markets worldwide.
The Paxon joint venture is equally owned with Exxon Corporation. The joint
venture manufactures HDPE resins used in the production of plastics for
household and industrial products. The Company's interest in the Paxon joint
venture is accounted for by the equity method.
UOP is an equally owned joint venture with Union Carbide Corporation which
designs and licenses processes, and produces and markets catalysts for the
petroleum refining, gas processing, petrochemical and food industries. The
Company's interest in the UOP joint venture is accounted for by the equity
method.
10
The Tar Products business produces binder pitch for electrodes for the
aluminum and carbon industries, creosote oils as preservatives for the wood
products and carbon black markets, refined naphthalene as a chemical
intermediate, and driveway sealer tar and roofing pitch for the construction
industry. All of the tar products are distilled from coal tar, a by-product of
the steel industry's coking operations.
Plastics. The Plastics business manufactures and markets engineering resins
and specialty films. The Company is a leading producer of nylon 6 engineering
resins (Capron'r') for the automotive, electrical and electronic component, food
packaging, lawn care and power tool markets. Major products in the Specialty
Films business include cast nylon (Capran'r'), biaxially oriented nylon film
(Biax'r') and fluoropolymer film (Aclar'r'). Specialty film markets include
food, pharmaceutical, and other packaging and industrial applications.
AlliedSignal Laminate Systems Inc. The business unit manufactures circuit
board laminates for the electronic and electrical industries. The Company's
product line includes copper clad and unclad laminates used in computer,
telecommunication, instrumentation and military applications. Approximately 40%
of sales are to the international market, primarily in southeast Asia and
throughout Europe. The Company, in partnership with Mitsui Mining and Smelting
Company, is backward integrated in electro deposited copper foil. The Company
completed construction of a new laminates plant in Thailand in the first
quarter of 1994.
The Company manufactures amorphous metals (METGLAS'r' Alloys) that offer
significant efficiency gains in electrical distribution transformers over
conventional electrical steel, which is currently used.
The principal raw materials used in the Engineered Materials segment are
generally readily available and include cumene, natural gas, sulfur,
terephthalic acid, ethylene and ethylene glycol, fluorspar, HF, carbon
tetrachloride, chloroform, nylon resins, fiberglass, copper foil, platinum,
rhodium and coal tar pitch. The Company is producing all of its HF and virtually
all of its nylon resin requirements. Important competitors are: Du Pont, GE,
Monsanto, Hoechst/Celanese, BASF Fibers, Koppers, U.S.I., Phillips, Soltex,
Atochem and Nan Ya.
SEGMENT FINANCIAL DATA
Note 25 (Segment Financial Data) of Notes to Financial Statements in the
Company's 1993 Annual Report to shareowners is incorporated herein by reference.
DOMESTIC AND FOREIGN FINANCIAL DATA
Note 24 (Geographic Areas -- Financial Data) of Notes to Financial
Statements in the Company's 1993 Annual Report to shareowners is incorporated
herein by reference.
FOREIGN ACTIVITIES
The Company's foreign businesses are subject to the usual risks attendant
upon investments in foreign countries, including nationalization, expropriation,
limitations on repatriation of funds, restrictive action by local governments
and changes in foreign currency exchange rates.
The Company's principal foreign manufacturing operations are in Australia,
Brazil, Canada, France, Germany, Ireland, Italy, Japan, Mexico, Portugal, South
Korea, Spain, Singapore, Taiwan and the U.K. The Company maintains sales and
business offices in these and various other countries, including Austria,
Belgium, China, Denmark, Finland, Hong Kong, India, New Zealand, Norway, Sweden,
The Netherlands and Turkey as well as warehousing, distribution and aircraft
repair and overhaul facilities to support foreign operations and export sales.
Further information about foreign activities is discussed in the segment
narratives.
11
RAW MATERIALS
Among the principal raw materials used by the Company, in addition to those
previously discussed for the Engineered Materials segment, are electronic,
optical and mechanical component parts and assemblies, electronic and
electromechanical devices, metallic products, magnetic and induction
devices, castings, forgings, steel and bar stock, copper, aluminum, platinum and
titanium. The Company believes that sources of supply for raw materials and
components are generally adequate.
PATENTS AND TRADEMARKS
The Company owns approximately 15,500 patents or pending patent
applications and is licensed under other patents covering certain of its
products and processes. It believes that, in the aggregate, the rights under
such patents and licenses are generally important to its operations, but does
not consider that any patent or license or group of them related to a specific
process or product is of material importance in relation to the Company's total
business.
The Company also has registered trademarks for a number of its products.
Some of the more significant trademarks include: AiResearch, Anso, Autolite,
Bendix, Bendix/King, Capron, Fram, Garrett, Genetron, Jurid, King and Norplex
Oak.
RESEARCH AND DEVELOPMENT
The Company's research activities are directed toward the discovery and
development of new products and processes, improvements in existing products and
processes, and the development of new uses of existing products.
Research and development expense totaled $313 million in 1993, $320 million
in 1992 and $381 million in 1991. Customer-sponsored (principally the U.S.
government) research and development activities amounted to an additional $514,
$501 and $463 million in 1993, 1992 and 1991.
The Company's Research and Technology organization has research facilities
at Morris Township, New Jersey and Des Plaines, Illinois consisting of research
and development laboratories where special emphasis is placed upon applied
research and upon development of new products and processes. In addition, there
are approximately 49 other research laboratories and facilities which provide
direct support to the operating segments.
ENVIRONMENT
The Company is subject to various federal, state and local requirements
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment. It is the Company's policy to comply with
these requirements and the Company believes that, as a general matter, its
policies, practices and procedures are properly designed to prevent unreasonable
risk of environmental damage, and of resulting financial liability, in
connection with its business. Some risk of environmental damage is, however,
inherent in particular operations and products of the Company, as it is with
other companies engaged in similar businesses. (See the description of the
Engineered Materials segment, above, for information regarding regulation of
CFCs.)
The Company is and has been engaged in the handling, manufacture, use or
disposal of many substances which are classified as hazardous or toxic by one or
more regulatory agencies. The Company believes that, as a general matter, its
handling, manufacture, use and disposal of such substances are in accord with
environmental laws and regulations. It is possible, however, that future
knowledge or other developments, such as improved capability to detect
substances in the environment, increasingly strict environmental laws and
standards and enforcement policies thereunder, could bring into question the
Company's handling, manufacture, use or disposal of such substances.
Among other environmental requirements, the Company is subject to the
federal Superfund law, and similar state laws, under which the Company has been
designated as a potentially responsible party which may be liable for cleanup
costs associated with various hazardous waste sites, some of which are on the
U.S. Environmental Protection Agency's Superfund priority list. Although, under
some
12
court interpretations of these laws, there is a possibility that a
responsible party might have to bear more than its proportional share of the
cleanup costs if it is unable to obtain appropriate contribution from other
responsible parties, the Company has not had to bear significantly more than its
proportional share in multi-party situations taken as a whole.
Capital expenditures for environmental control facilities at existing
operations were $39 million in 1993. The Company estimates that during each of
the years 1994 and 1995 such capital expenditures will be in the $45 to $50
million range. In addition to capital expenditures, the Company has incurred and
will continue to incur operating costs in connection with such facilities.
Reference is made to Management's Discussion and Analysis at page 23 of the
Company's 1993 Annual Report to shareowners, incorporated herein by reference,
for further information regarding environmental matters.
EMPLOYEES
The Company had an aggregate of 86,400 salaried and hourly employees at
December 31, 1993. Of the approximately 31,000 unionized employees, 15,000 are
employed in the Company's U.S. and Canadian plants and other facilities.
Unionized employees are represented by local unions that are either independent
or affiliated with the United Auto Workers, the International Association of
Machinists, the United Steel Workers of America, the Oil, Chemical and Atomic
Workers International Union, the International Brotherhood of Teamsters and many
other national and international unions. Relations between the Company and its
employees and their various representatives have been generally satisfactory,
although the Company has experienced work stoppages from time to time.
Approximately 22% of the Company's U.S. and Canadian unionized employees are
covered by labor contracts scheduled to expire in 1994. Major labor negotiations
in 1994 will include locations in all of the segments.
ITEM 2. PROPERTIES
The Company has almost 400 locations consisting of plants, research
laboratories, sales offices and other facilities. The plants are generally
located to serve large marketing areas and to provide accessibility to raw
materials and labor pools. The properties are generally maintained in good
operating condition. Utilization of these plants may vary with government
spending and other business conditions; however, no major operating facility is
significantly idle. The facilities, together with planned expansions, are
expected to meet the Company's needs for the foreseeable future. The Company
owns or leases warehouses, railroad cars, barges, automobiles, trucks, airplanes
and materials handling and data processing equipment. It also leases space for
administrative and sales staffs. The Company's headquarters and administrative
complex are located at Morris Township, New Jersey.
The principal plants, which are owned in fee unless otherwise indicated,
are as follows:
AEROSPACE
Phoenix, AZ (4 plants, 3 fully leased, 1 partially leased)
Prescott, AZ
Tempe, AZ
Tucson, AZ (partially leased)
Sylmar, CA
Torrance, CA (partially leased)
Fort Lauderdale, FL
South Bend, IN
Olathe, KS
Columbia, MD
Towson, MD
Kansas City, MO (owned by the U.S. Government and managed by the Company)
Eatontown, NJ
Teterboro, NJ
Rocky Mount, NC
South Montrose, PA
Redmond, WA (partially leased)
Rexdale, Ont., Canada (partially leased)
Montreal, Que., Canada
Raunheim, Germany
AUTOMOTIVE
Greenville, AL
Torrance, CA
St. Joseph, MI
Fostoria, OH
Greenville, OH
Sumter, SC
Jackson, TN
Maryville, TN
Clearfield, UT
Campinas, Brazil
Bristol, England
Beauvais, France
Conde, France
Moulins, France
Thaon-Les-Vosges, France
Trelaze, France
Crema, Italy
Glinde, Germany
13
ENGINEERED MATERIALS
Metropolis, IL
Baton Rouge, LA
Geismar, LA
Moncure, NC
Catoosa, OK
Philadelphia, PA
Pottsville, PA
Columbia, SC
Chesterfield, VA
Hopewell, VA
ITEM 3. LEGAL PROCEEDINGS
The first paragraph of Note 19 (Commitments and Contingencies) of Notes to
Financial Statements at page 35 of the Company's 1993 Annual Report to
shareowners is incorporated herein by reference. While the ultimate results of
investigations, lawsuits and claims involving the Company cannot be determined,
management does not expect that these matters will have a material adverse
effect on the consolidated financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Registrant, listed as follows, are elected
annually in April. There are no family relationships among them.
NAME, AGE,
DATE FIRST
ELECTED AN OFFICER BUSINESS EXPERIENCE
- - - - - ------------------------------- ----------------------------------------------------------------------------
Lawrence A. Bossidy (a), 59 Chairman of the Board since January 1992. Chief Executive Officer of the
1991 Company since July 1991. Vice Chairman and Executive Officer of the
General Electric Company (diversified industrial corporation) from 1984 to
June 1991.
Daniel P. Burnham, 47 Executive Vice President and President, AlliedSignal Aerospace since January
1991 1992. Executive Vice President and President-Elect, AlliedSignal Aerospace
Company from July 1991 to December 1991. President, AiResearch Group from
March 1990 to June 1991. President, Fibers Division from April 1988 to
February 1990.
Frederic M. Poses, 51 Executive Vice President and President, AlliedSignal Engineered Materials
1988 since April 1988.
Ralph E. Reins, 53 Executive Vice President and President, AlliedSignal Automotive since
1991 November 1991. President of United Technologies Corporation (diversified
high-technology manufacturer) Automotive Group from October 1990 to
October 1991. Chairman, President and Chief Executive Officer of Mack
Truck, Inc. (automotive heavy vehicle manufacturer) from June 1989 to
September 1990. Senior Vice President and President and Chief Executive
Officer of ITT (diversified enterprise) Automotive from January 1987 to
May 1989.
Isaac R. Barpal, 54 Senior Vice President and Chief Technology Officer since August 1993. Vice
1993 President -- Science & Technology of Westinghouse Electric Corporation
(electric equipment manufacturer) from June 1987 to July 1993.
John W. Barter, 47 Senior Vice President and Chief Financial Officer since July 1988.
1985
- - - - - ------------
(a) Also a director.
(table continued on next page)
14
(table continued from previous page)
NAME, AGE,
DATE FIRST
ELECTED AN OFFICER BUSINESS EXPERIENCE
- - - - - ------------------------------- ----------------------------------------------------------------------------
Peter M. Kreindler, 48 Senior Vice President and General Counsel since March 1992. Senior Vice
1992 President and General Counsel-Elect from January 1992 to February 1992.
Partner, Arnold & Porter (law firm) from January 1990 to December 1991.
Principal and Associate General Counsel, Coopers & Lybrand (accounting and
consulting firm) from September 1988 to December 1989.
David G. Powell, 60 Senior Vice President -- Public Affairs since September 1985.
1985
Donald J. Redlinger, 49 Senior Vice President -- Human Resources since January 1991. Staff Vice
1991 President -- Human Resources from March 1990 to December 1990. Staff Vice
President -- Organization Planning and Compensation from June 1988 to
February 1990.
Paul R. Schindler, 52 Senior Vice President -- International since August 1993. Chairman of
1993 Imperial Chemical Industries Asia/Pacific (chemical manufacturer) from
April 1991 to July 1993. Chairman of Imperial Chemical Industries China
from July 1989 to March 1991. Chairman of Imperial Industries France from
January 1986 to June 1989.
James E. Sierk, 55 Senior Vice President -- Quality and Productivity since January 1991. Vice
1991 President -- Quality Office, Development and Manufacturing of Xerox
Corporation (business products and systems and financial services) from
February 1990 to December 1990. Vice President -- National Quality Award
Office, Xerox from December 1989 to January 1990. Vice President -- Latin
American and Canadian Operations, Xerox from February 1986 to November
1989.
Hans B. Amell, 42 Vice President -- Marketing since August 1993. Vice President --
1993 International Strategy of The Dun & Bradstreet Corporation (business
information, publishing, marketing and television) April 1991 to July
1993. Vice President -- Corporate Marketing Programs of Unisys Corporation
(business information systems, data processing and aerospace products
manufacturer) from September 1987 to March 1991.
Edward W. Callahan, 63 Vice President -- Health, Safety and Environmental Sciences since September
1985 1985.
Kenneth W. Cole, 47 Vice President -- Government Relations since January 1989.
1989
G. Peter D'Aloia, 49 Vice President and Controller since February 1994. Vice President and
1985 Treasurer from August 1988 to January 1994.
Nancy A. Garvey, 44 Vice President and Treasurer since February 1994. Staff Vice
1994 President -- Investor Relations November 1989 to January 1994. Manager of
Investment Manager Relations of General Motors Corporation (automotive
manufacturer) December 1987 to October 1989.
Andrew B. Samet, 52 Vice President, Secretary and Associate General Counsel since May 1988.
1988
15
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market and dividend information for the Registrant's common stock is
contained in Note 26 (Unaudited Quarterly Financial Information) of Notes to
Financial Statements at page 39 of the Company's 1993 Annual Report to
shareowners, and such information is incorporated herein by reference.
The number of record holders of the Registrant's common stock is contained
in the statement 'Selected Financial Data' at page 40 of the Company's 1993
Annual Report to shareowners, and such information is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information included under the captions 'For the Year' and 'At
Year-End' in the statement 'Selected Financial Data' at page 40 of the Company's
1993 Annual Report to shareowners is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
'Management's Discussion and Analysis' on pages 20 through 26 of the
Company's 1993 Annual Report to shareowners is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements, together with the report
thereon of Price Waterhouse dated February 3, 1994 except for Note 1 (Subsequent
Events), which is as of February 7, 1994 appearing on pages 27 through 39 of
the Company's 1993 Annual Report to shareowners, are incorporated herein by
reference. With the exception of the aforementioned information and the
information incorporated by reference in Items 1, 3, 5, 6 and 7, the 1993 Annual
Report to shareowners is not to be deemed filed as part of this Form 10-K Annual
Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to directors of the Registrant, as well as information
relating to compliance with Section 16(a) of the Securities Exchange Act of
1934, is contained in a definitive Proxy Statement involving the election of
directors which the Registrant filed with the Securities and Exchange Commission
pursuant to Regulation 14A, and such information is incorporated herein by
reference. Certain other information relating to Executive Officers of the
Registrant appears at pages 14 and 15 of this Form 10-K Annual Report.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is contained in the Proxy
Statement referred to above in 'Item 10. Directors and Executive Officers of the
Registrant,' and such information is incorporated herein by reference.
16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to security ownership of certain beneficial owners and
management is contained in the Proxy Statement referred to above in 'Item 10.
Directors and Executive Officers of the Registrant,' and such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not Applicable
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
REFERENCE
---------------------------------
FORM 10-K ANNUAL REPORT TO
ANNUAL REPORT SHAREOWNERS
PAGE PAGE
------------- ----------------
(a)(1.) Index to Consolidated Financial Statements:
Incorporated by reference to the 1993 Annual Report to shareowners:
Report of Independent Accountants.................................. -- 39
Consolidated Statement of Income for the years ended December 31,
1993, 1992 and 1991.............................................. -- 27
Consolidated Statement of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991................................. -- 27
Consolidated Balance Sheet at December 31, 1993 and 1992........... -- 28
Consolidated Statement of Cash Flows for the years ended December
31, 1993, 1992 and 1991.......................................... -- 29
Notes to Financial Statements...................................... -- 30
(a)(2.) Index to Consolidated Financial Statement Schedules:
Report of Independent Accountants on Financial Statement
Schedules......................................................... 20 --
V -- Property, Plant and Equipment for the years ended December 31,
1993, 1992 and 1991............................................. 21 --
VI -- Accumulated Depreciation and Amortization of Property, Plant and
Equipment for the years ended December 31, 1993, 1992 and
1991............................................................ 22 --
IX -- Short-term Borrowings for the years ended December 31, 1993,
1992 and 1991................................................... 23 --
X -- Supplementary Income Statement Information for the
years ended December 31, 1993, 1992 and 1991.................... 24 --
The financial statement schedules should be read in conjunction with the
financial statements incorporated by reference in Item 8 of this Form 10-K
Annual Report. Schedules other than those listed above have been omitted because
of the absence of the conditions under which they are required or because the
information required is shown in the consolidated financial statements or the
notes thereto.
17
(a)(3.) Exhibits
See the Exhibit Index to this Form 10-K Annual Report. The following
exhibits listed on the Exhibit Index are filed with this Form 10-K Annual
Report:
EXHIBIT NO. DESCRIPTION
- - - - - ----------- -----------------------------------------------------------------------------------------
10.2* Deferred Compensation Plan for Non-Employee Directors of AlliedSignal Inc., as amended
10.14* Agreement dated December 21, 1993 between the Company and Alan Belzer
13 Pages 20 through 40 (except for the data included under the captions 'Financial
Statistics' on page 40) of the Company's 1993 Annual Report to shareowners
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
24 Powers of Attorney
The exhibits identified above and in the Exhibit Index with an asterisk(*)
are management contracts or compensatory plans or arrangements.
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended December 31,
1993.
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
AlliedSignal Inc.
March 15, 1994 By /s/ G. PETER D'ALOIA
----------------------------
G. Peter D'Aloia
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this
annual report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
NAME NAME
---- ----
* *
- - - - - ---------------------------------- -------------------------------------
Lawrence A. Bossidy Robert P. Luciano
Chairman of the Board and Chief Director
Executive Officer and Director
* *
- - - - - ---------------------------------- -------------------------------------
Hans W. Becherer Russell E. Palmer
Director Director
*
- - - - - ---------------------------------- -------------------------------------
Jewel Plummer Cobb Andrew C. Sigler
Director Director
* *
- - - - - ---------------------------------- -------------------------------------
Eugene E. Covert John R. Stafford
Director Director
* *
- - - - - ---------------------------------- -------------------------------------
Ann M. Fudge Thomas P. Stafford
Director Director
* *
- - - - - ---------------------------------- -------------------------------------
William R. Haselton Delbert C. Staley
Director Director
* *
- - - - - ---------------------------------- -------------------------------------
Paul X. Kelley Robert C. Winters
Director Director
*
- - - - - ----------------------------------
Robert D. Kilpatrick
Director
/s/ JOHN W. BARTER /s/ G. PETER D'ALOIA
- - - - - ---------------------------------- -------------------------------------
John W. Barter G. Peter D'Aloia
Senior Vice President Vice President and Controller
and Chief Financial Officer (Chief Accounting Officer)
*By: /s/ JOHN W. BARTER
----------------------------
(John W. Barter,
Attorney-in-fact)
March 15, 1994
19
REPORT OF INDEPENDENT ACCOUNTANTS
ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of AlliedSignal Inc.
Our audits of the consolidated financial statements referred to in our report
dated February 3, 1994 appearing on page 39 of the 1993 Annual Report to
Shareowners of AlliedSignal Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Consolidated Financial Statement Schedules listed
in Item 14(a) of this Form 10-K. In our opinion, these Consolidated Financial
Statement Schedules present fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.
/s/ PRICE WATERHOUSE
4 Headquarters Plaza North
Morristown, New Jersey 07962-1965
February 3, 1994
20
(DOLLARS IN MILLIONS)
ALLIEDSIGNAL INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
BALANCE AT ADDITIONS SALES AND ADOPTION OF
CLASSIFICATION BEGINNING OF YEAR AT COST RETIREMENTS ADJUSTMENTS(1) FASB #109(2)
- - - - - ------------------------------------- ----------------- --------- ----------- -------------- ------------
YEAR ENDED DECEMBER 31, 1993
----------------------------
Land and land improvements........... $ 301 $ 10 $ 4 $ (3) $ --
Machinery and equipment.............. 4,982 441 71 (59) --
Buildings............................ 1,173 54 7 12 --
Office furniture and equipment....... 594 73 7 (38) --
Transportation equipment............. 146 18 17 (3) --
Construction in progress............. 433 122 (6) (33) --
-------------------------------------------------------------------------------
Total........................... $ 7,629 $ 718 $ 100 $ (124) $ --
-------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992
----------------------------
Land and land improvements........... $ 311 $ 5 $ 15 $ (1) $ --
Machinery and equipment.............. 4,431 470 51 8 91
Buildings............................ 1,048 96 19 (9) 47
Office furniture and equipment....... 531 71 6 (6) 3
Transportation equipment............. 139 18 10 (1) --
Construction in progress............. 402 31 2 (13) --
-------------------------------------------------------------------------------
Total........................... $ 6,862 $ 691 $ 103 $ (22) $141
-------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1991
----------------------------
Land and land improvements........... $ 312 $ 4 $ 1 $ (4) $ --
Machinery and equipment.............. 4,183 426 23 (189) --
Buildings............................ 974 92 3 (17) --
Office furniture and equipment....... 476 63 3 (5) --
Transportation equipment............. 138 12 10 (1) --
Construction in progress............. 352 71 -- (25) --
-------------------------------------------------------------------------------
Total........................... $ 6,435 $ 668 $ 40 $ (241) $ --
-------------------------------------------------------------------------------
INITIALLY DECONSOLIDATED BALANCE AT
CLASSIFICATION CONSOLIDATED BUSINESSES(3) END OF YEAR
- - - - - ------------------------------------- ------------ ------------------- -----------
YEAR ENDED DECEMBER 31, 1993
----------------------------
Land and land improvements........... $ 18 $ (1) $ 321
Machinery and equipment.............. 61 (58) 5,296
Buildings............................ 14 (5) 1,241
Office furniture and equipment....... 15 (3) 634
Transportation equipment............. 2 (1) 145
Construction in progress............. 3 -- 531
---------------------------------------------
Total........................... $113 $(68) $ 8,168
---------------------------------------------
YEAR ENDED DECEMBER 31, 1992
----------------------------
Land and land improvements........... $ 1 $ -- $ 301
Machinery and equipment.............. 33 -- 4,982
Buildings............................ 10 -- 1,173
Office furniture and equipment....... 1 -- 594
Transportation equipment............. -- -- 146
Construction in progress............. 15 -- 433
---------------------------------------------
Total........................... $ 60 $ -- $ 7,629
---------------------------------------------
YEAR ENDED DECEMBER 31, 1991
----------------------------
Land and land improvements........... $ -- $ -- $ 311
Machinery and equipment.............. 34 -- 4,431
Buildings............................ 2 -- 1,048
Office furniture and equipment....... -- -- 531
Transportation equipment............. -- -- 139
Construction in progress............. 4 -- 402
---------------------------------------------
Total........................... $ 40 $ -- $ 6,862
---------------------------------------------
- - - - - ------------
Notes: (1) Effect of translating foreign currency balance sheets to U.S. dollars
and in 1991 the effect of write-downs relating to the streamlining
and restructuring program.
(2) Effect of adopting FASB #109 -- Accounting for Income Taxes,
effective January 1, 1992.
(3) In 1993 represents the deconsolidation of the European air-brake
control business.
21
(DOLLARS IN MILLIONS)
ALLIEDSIGNAL INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING COSTS AND SALES AND
CLASSIFICATION OF YEAR EXPENSES(1) RETIREMENTS ADJUSTMENTS(2)
- - - - - -------------------------------------------------------------- ---------- ----------- ----------- --------------
YEAR ENDED DECEMBER 31, 1993
----------------------------
Depreciation and amortization:
Land improvements........................................ $ 66 $ 3 $ 1 $ 1
Machinery and equipment.................................. 2,739 369 41 (35)
Buildings................................................ 446 53 6 5
Office furniture and equipment........................... 393 71 5 (34)
Transportation equipment................................. 88 18 15 (1)
----------------------------------------------------------
Total.................................................... $3,732 $514 $68 $(64)
----------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992
----------------------------
Depreciation and amortization:
Land improvements........................................ $ 63 $ 4 $ 1 $--
Machinery and equipment.................................. 2,354 364 29 17
Buildings................................................ 390 49 11 3
Office furniture and equipment........................... 337 61 5 (2)
Transportation equipment................................. 80 18 8 (1)
----------------------------------------------------------
Total.................................................... $3,224 $496 $54 $17
----------------------------------------------------------
YEAR ENDED DECEMBER 31, 1991
----------------------------
Depreciation and amortization:
Land improvements........................................ $ 59 $ 4 $ 1 $ 1
Machinery and equipment.................................. 2,092 344 14 (68)
Buildings................................................ 350 42 2 --
Office furniture and equipment........................... 281 61 3 (2)
Transportation equipment................................. 69 19 7 (1)
----------------------------------------------------------
Total.................................................... $2,851 $470 $27 $(70)
----------------------------------------------------------
BALANCE
ADOPTION OF DECONSOLIDATED AT END
CLASSIFICATION FASB #109(3) BUSINESSES(4) OF YEAR
- - - - - -------------------------------------------------------------- ------------ ------------------- -------
YEAR ENDED DECEMBER 31, 1993
----------------------------
Depreciation and amortization:
Land improvements........................................ $-- $ -- $ 69
Machinery and equipment.................................. -- (37) 2,995
Buildings................................................ -- (1) 497
Office furniture and equipment........................... -- (2) 423
Transportation equipment................................. -- -- 90
---------------------------------------------
Total.................................................... $-- $(40) $4,074
---------------------------------------------
YEAR ENDED DECEMBER 31, 1992
----------------------------
Depreciation and amortization:
Land improvements........................................ $-- $-- $ 66
Machinery and equipment.................................. 33 -- 2,739
Buildings................................................ 15 -- 446
Office furniture and equipment........................... 2 -- 393
Transportation equipment................................. (1) -- 88
---------------------------------------------
Total.................................................... $49 $-- $3,732
---------------------------------------------
YEAR ENDED DECEMBER 31, 1991
----------------------------
Depreciation and amortization:
Land improvements........................................ $-- $-- $ 63
Machinery and equipment.................................. -- -- 2,354
Buildings................................................ -- -- 390
Office furniture and equipment........................... -- -- 337
Transportation equipment................................. -- -- 80
---------------------------------------------
Total.................................................... $-- $-- $3,224
---------------------------------------------
- - - - - ------------
Notes: (1) Estimated service lives used for computing depreciation range from 3
to 40 years.
(2) Effect of translating foreign currency balance sheets to U.S.
dollars and in 1991 the effect of write-downs relating to the
streamlining and restructuring program.
(3) Effect of adopting FASB #109 -- Accounting for Income Taxes,
effective January 1, 1992.
(4) In 1993 represents the deconsolidation of the European air-brake
control business.
22
(DOLLARS IN MILLIONS)
ALLIEDSIGNAL INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
WEIGHTED AVERAGE
INTEREST RATE MAXIMUM OUTSTANDING
BALANCE AT ON YEAR END AT A MONTH END AVERAGE OUTSTANDING
YEARS ENDED DECEMBER 31 END OF YEAR BALANCE(1)(2) DURING YEAR(1) DURING YEAR(1)
- - - - - --------------------------------- ----------- ------------------- ------------------- -------------------
1993............................. $ 220 9.12% $ 598 $ 320
1992............................. $ 154 8.92% $ 829 $ 490
1991............................. $ 736 10.91% $ 957 $ 807
WEIGHTED AVERAGE
INTEREST RATE
YEARS ENDED DECEMBER 31 DURING YEAR(1)(2)
- - - - - --------------------------------- -----------------
1993............................. 11.17%
1992............................. 9.88%
1991............................. 9.88%
- - - - - ------------
Notes: (1) Includes amounts for weighted average interest rate, maximum
outstanding, average outstanding and the weighted average interest
rate during the year for commercial paper of: 3.35%, $322 million,
$212 million and 3.18% for 1993; 7.74%, $507 million, $274 million
and 4.39% for 1992, and 5.1%, $446 million, $291 million and 7.2% for
1991. The outstanding commercial paper balance at December 31, 1993,
1992 and 1991, was $164 million, $4 million and $263 million,
respectively.
(2) Includes rates for borrowings of foreign subsidiaries. In 1993 and
1992 such foreign borrowings represented a greater proportion of
total borrowings than in the prior period.
23
(DOLLARS IN MILLIONS)
ALLIEDSIGNAL INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
CHARGED TO COSTS AND EXPENSES
-----------------------------------
YEARS ENDED DECEMBER 31 1993 1992 1991
- - - - - ---------------------------------------------------------- ---- ---- ----
Maintenance and repairs................................... $ 356 $ 363 $ 369
Depreciation and amortization of intangible assets,
preoperating costs and similar deferrals................ * * *
Taxes, other than income taxes:
Payroll.............................................. 338 333 325
Property............................................. 55 63 57
Other................................................ 17 21 20
--- --- ---
410 417 402
Royalties................................................. * * *
Advertising costs......................................... * * *
- - - - - ------------
* Less than 1 percent of total sales and revenues.
24
STATEMENT OF DIFFERENCES
The registered trademark shall be expressed as 'r'
Subscript numerics in chemistry notation shall be expressed as baseline
numerics, e.g., sulfur hexaflouride would be expressed as SF6.
APPENDIX
Graphic and Image information: See narratives substituted for 6 charts on pages
21, 22 and 24 of the paper format of Exhibit 13.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- - - - - ----------- --------------------------------------------------------------------------------------------
3(i) Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit
99.1 to the Company's Form 10-Q for the quarter ended March 31, 1993)
3(ii) By-laws of the Company, as amended (incorporated by reference to Exhibit 99.2 to the
Company's Form 10-Q for the quarter ended March 31, 1993)
4.1 Rights Agreement, dated as of May 30, 1986, between the Company and The Bank of New York
(incorporated by reference to Exhibit 4 to the Company's Form 8-K dated June 5, 1986)
4.2 Amendment, dated as of December 16, 1988, to the Rights Agreement, dated as of May 30, 1986,
between the Company and The Bank of New York (incorporated by reference to Exhibit 4 to the
Company's Form 8-K dated December 16, 1988)
The Company is a party to several long-term debt instruments under which,
in each case, the total amount of securities authorized does not exceed 10% of
the total assets of the Company and its subsidiaries on a consolidated basis.
Pursuant to paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, the Company
agrees to furnish a copy of such instruments to the Securities and Exchange
Commission upon request.
9 Omitted (Inapplicable)
10.1 Master Support Agreement, dated as of February 26, 1986 as amended and restated as of January
27, 1987, as further amended as of July 1, 1987 and as again amended and restated as of
December 7, 1988, by and among the Company, Wheelabrator Technologies Inc., certain
subsidiaries of Wheelabrator Technologies Inc., The Henley Group, Inc. and Henley Newco
Inc. (incorporated by reference to Exhibit 10.1 to the Company's Form 10-K for the year
ended December 31, 1988)
10.2* Deferred Compensation Plan for Non-Employee Directors of AlliedSignal Inc., as amended (filed
herewith)
10.3* Retirement Plan for Non-Employee Directors of Allied-Signal Inc., as amended (incorporated by
reference to Exhibit 19.2 to the Company's Form 10-Q for the quarter ended June 30, 1990)
10.4* Restricted Stock Plan for Non-Employee Directors of Allied-Signal Inc., effective September
27, 1985 (incorporated by reference to Exhibit 10.4 to the Company's Form 10-K for the year
ended December 31, 1985)
10.5* 1985 Stock Plan for Employees of Allied-Signal Inc. and its Subsidiaries, as amended
(incorporated by reference to Exhibit 19.3 to the Company's Form 10-Q for the quarter ended
September 30, 1991)
10.6* Allied-Signal Inc. Incentive Compensation Plan for Executive Employees (incorporated by
reference to Exhibit A to the Company's Proxy Statement, dated March 10, 1992, filed
pursuant to Rule 14a-6 of the Securities Exchange Act of 1934)
10.7* Supplemental Non-Qualified Savings Plan for Highly Compensated Employees of AlliedSignal Inc.
and its Subsidiaries, as amended (incorporated by reference to Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended June 30, 1993)
10.8* 1982 Stock Option Plan for Executive Employees of Allied Corporation and its Subsidiaries, as
amended (incorporated by reference to Exhibit 19.4 to the Company's Form 10-Q for the
quarter ended September 30, 1991)
10.9* Allied-Signal Inc. Severance Plan for Senior Executives, as amended (incorporated by reference
to Exhibit 19.1 to the Company's Form 10-Q for the quarter ended September 30, 1991)
EXHIBIT NO. DESCRIPTION
- - - - - ----------- -----------------------------------------------------------------------------------------
10.10* 1993 Stock Plan for Employees of AlliedSignal Inc. and its Affiliates (incorporated by
reference to Exhibit A to the Company's Proxy Statement, dated March 9, 1993, filed
pursuant to Rule 14a-6 of the Securities Exchange Act of 1934)
10.11* Agreement between the Company and Lawrence A. Bossidy, as amended (incorporated by reference
to Exhibit 10.11 to the Company's Form 10-K for the year ended December 31, 1991)
10.12* Amendment Agreement between the Company and Lawrence A. Bossidy (incorporated by reference to
Exhibit 19 to the Company's Form 10-Q for the quarter ended June 30, 1992)
10.13* Agreement dated May 6, 1988 between the Company and Alan Belzer (incorporated by reference to
Exhibit 19 to the Company's Form 10-Q for the quarter ended June 30, 1988)
10.14* Agreement dated December 21, 1993 between the Company and Alan Belzer (filed herewith)
10.15* Description of Agreement between the Company and Ralph E. Reins (incorporated by reference to
Exhibit 10.13 to the Company's Form 10-K for the year ended December 31, 1992)
10.16 Revolving Credit Agreement, dated as of July 7, 1993, among the Company, certain banks,
Citibank, N.A., as Administrative Agent for the banks, and ABN AMRO Bank N.V. and Morgan
Guaranty Trust Company of New York, as Co-Agents (incorporated by reference to Exhibit 10.2
to the Company's Form 10-Q for the quarter ended June 30, 1993)
10.17 364-Day Credit Agreement, dated as of July 7, 1993, among the Company, certain banks,
Citibank, N.A., as Administrative Agent for the banks, and ABN AMRO Bank N.V. and Morgan
Guaranty Trust Company of New York, as Co-Agents (incorporated by reference to Exhibit 10.3
to the Company's Form 10-Q for the quarter ended June 30, 1993)
11 Omitted (Inapplicable)
12 Omitted (Inapplicable)
13 Pages 20 through 40 (except for the data included under the captions 'Financial Statistics'
on page 40) of the Company's 1993 Annual Report to shareowners (filed herewith)
16 Omitted (Inapplicable)
18 Omitted (Inapplicable)
21 Subsidiaries of the Registrant (filed herewith)
22 Omitted (Inapplicable)
23 Consent of Independent Accountants (filed herewith)
24 Powers of Attorney (filed herewith)
27 Omitted (Inapplicable)
28 Omitted (Inapplicable)
99 Omitted (Inapplicable)
- - - - - ------------
The Exhibits identified above with an asterisk(*) are management contracts
or compensatory plans or arrangements.