________________________________________________________________________________
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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, 1995
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
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(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 1997-2009 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 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 $13.4 billion at December 31, 1995.
There were 282,769,564 shares of Common Stock outstanding at December 31, 1995.
Documents Incorporated by Reference
-----------------------------------
Part I and II: Annual Report to Shareowners for the Year Ended December
31, 1995.
Part III: Proxy Statement for Annual Meeting of Shareowners to be held
April 22, 1996.
________________________________________________________________________________
________________________________________________________________________________
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, 1995 Report
- ---------------------------------- ------------------------------------------------------------ ------------
1. Business Note 23. Segment Financial Data ............................ 37
Note 24. Geographic Areas -- Financial Data ................ 38
Management's Discussion and Analysis ....................... 19
3. Legal Proceedings Note 19. Commitments and Contingencies ..................... 35
5. Market for the Regis- Note 25. Unaudited Quarterly Financial
trant's Common Equity Information ................................................ 38
and Related Stock- Selected Financial Data .................................... 39
holder Matters
6. Selected Financial Data Selected Financial Data .................................... 39
7. Management's Discussion and Management's Discussion and Analysis ....................... 19
Analysis of Financial
Condition and Results of
Operations
8. Financial Statements and Report of Independent Accountants .......................... 38
Supplementary Data Consolidated Statement of Income ........................... 26
Consolidated Statement of Retained Earnings ................ 26
Consolidated Balance Sheet ................................. 27
Consolidated Statement of Cash Flows ....................... 28
Notes to Financial Statements .............................. 29
Heading(s) in Proxy Statement for Page(s) in
Annual Meeting of Shareowners Proxy
to be held April 22, 1996 Statement
------------------------------------------------------------ ------------
10. Directors and Executive Election of Directors; Voting Securities ................... *
Officers of the Registrant
11. Executive Compensation Election of Directors -- Compensation of Directors;
Executive Compensation ..................................... *
12. Security Ownership of Certain Voting Securities .......................................... *
Beneficial Owners and
Management
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* To be included in a definitive Proxy Statement to be filed with the
Securities and Exchange Commission not later than 120 days after December 31,
1995.
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, as the context may
require.
TABLE OF CONTENTS
ITEM PAGE
---- ----
Part I. 1 Business........................................................................................ 4
2 Properties...................................................................................... 14
3 Legal Proceedings............................................................................... 15
4 Submission of Matters to a Vote of Security Holders............................................. 15
Executive Officers of the Registrant............................................................... 15
Part II. 5 Market for the Registrant's Common Equity and Related Stockholder Matters....................... 16
6 Selected Financial Data......................................................................... 17
7 Management's Discussion and Analysis of Financial Condition and Results of Operations........... 17
8 Financial Statements and Supplementary Data..................................................... 17
9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............ 17
Part III. 10 Directors and Executive Officers of the Registrant............................................. 17(a)
11 Executive Compensation......................................................................... 17(a)
12 Security Ownership of Certain Beneficial Owners and Management................................. 17(a)
13 Certain Relationships and Related Transactions................................................. 18
Part IV. 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K................................ 18
Signatures.................................................................................................... 19
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(a) These items are omitted since the Registrant will file with the Securities
and Exchange Commission a definitive Proxy Statement pursuant to Regulation
14A involving the election of directors not later than 120 days after
December 31, 1995. Certain other information relating to the Executive
Officers of the Registrant appears at pages 15 and 16 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
electronics, motor vehicles, chemicals, textiles, construction, plastics,
housing, telecommunications, utilities, packaging, agriculture, military and
commercial aviation, and in the space program. The following is a description of
the Company's three business segments and their principal products and
activities.
AEROSPACE
The Aerospace segment 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.
Aerospace's principal product lines are organized into four strategic
business units: AlliedSignal Engines (Engines), Aerospace Equipment Systems
(Equipment Systems), Government Electronic Systems (Electronic Systems) and
Commercial Avionics Systems (Avionics Systems).
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-piston engine aircraft,
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 (OE) sales and an extensive aftermarket
business, including spare parts, maintenance and repair, and retrofitting.
Worldwide customers include the U.S. and foreign governments, all of the major
airframe and engine manufacturers, including Boeing, McDonnell Douglas, Lockheed
Martin, Airbus Industrie (Airbus), British Aerospace, Cessna, Fairchild,
Dassault, Gulfstream, Bombardier, Rockwell International, 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; forward-looking windshear detection systems
and wing ice detection 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; flight data recorders; cockpit voice recorders; ground
proximity warning systems; electric power generating systems; fuel control
systems; aircraft wheels and brakes; brake control systems; 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 October 1994 the Company completed the purchase of the Lycoming Turbine
Engine Division of Textron Inc. (Lycoming Engine). The acquisition extended the
Company's turbine engine product
4
offerings into the 50- to 115-seat regional aircraft market and in helicopters
and other commercial and military applications. Lycoming Engine had 1994 sales
of $550 million.
In January 1996, the Company completed the acquisition of Northrop Grumman
Corporation's precision products business based in Norwood, Massachusetts. The
business, which has annual sales of approximately $39 million, manufactures
inertial and sensor products for military and space markets. In addition, the
Company sold its military landing gear business to Coltec Industries' Menasco
unit.
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. and
foreign governments, 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 canceled 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, United Technologies and B.F.
Goodrich.
Sales to the U.S. government, acting through its various departments and
agencies and through prime contractors, amounted to $1,806 million for 1995 and
$1,886 million for 1994, which amounts include sales to the Department of
Defense of $1,205 million in 1995 and $1,300 million in 1994. Approximately 54%
and 59% of sales to the U.S. government in 1995 and 1994, 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. Total backlog for products and services for
both government and commercial contracts was $4,523 million at December 31, 1995
and $4,730 million at December 31, 1994 of which U.S. and foreign government
orders were $1,871 million and $1,803 million for the respective years. The
Company anticipates that approximately $3,010 million of the total 1995 backlog
will be filled during 1996.
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 facility outside of the U.S. is in Canada.
In 1995, as in the prior year, world defense spending continued to decline.
However, most major U.S. and international airlines operated in an improving
economic environment. The modest turnaround that began in the second half of
1993, continued in 1994 and strengthened significantly in 1995. The regional
airlines experienced strong growth while the high-end corporate aviation market
showed moderate growth.
Aerospace received a number of significant contracts during 1995.
5
The Company's flight safety systems were chosen by several major airlines.
Singapore Airlines selected the Company's flight safety and data management
avionics for its 67 Boeing 747-400 and Airbus A340-300E aircraft in a contract
with a potential sales value of more than $20 million. Scandinavian Airlines and
Continental Airlines became the first two customers for the Company's
Electro-Thermal Ice Protection System on their MD-80 aircraft. Southwest
Airlines selected Avionics Systems to supply a complete package of avionics,
including forward-looking windshear detection systems, and Equipment Systems to
provide maintenance for wheels and brakes in contracts with a combined potential
sales value of $175 million.
Engine's new TFE731-40 turbofan engine was chosen by Dassault for its new
Falcon 50EX business jet. Engines was also selected to provide TPE331-14-GR/HR
turboprop engines for 69 Jetstream 41 aircraft ordered by Trans States Airlines
Inc. and SA Airlink of South Africa; the contract, including spares and service,
has a potential sales value of $220 million. Engines was chosen to supply
TFE731-5BR turbofan engines for the new Raytheon Hawker 800XP aircraft in a
contract with a potential sales value of $300 million. Engines and Avionics
Systems received a contract with a potential sales value of $240 million for the
LF-507 engines and avionics for the Avro RJ-85 aircraft chosen by Sabena
Airlines and Swissair. Equipment Systems was selected by GE Aircraft Engines to
supply the start system for the CF34-8C.
In military markets, Electronic Systems won several key awards. Northrop
Grumman selected Electronic Systems to be the sole supplier of the navigation
system for the U.S. Army's brilliant anti-armor submunition program; the
contract has a potential sales value of $200 million. McDonnell Douglas
Helicopter Systems selected the Company to provide multipurpose displays for its
AH-64D Longbow Apache advanced attack helicopter in a contract with a sales
potential in excess of $300 million. Equipment Systems will provide the turbine
cooling valve for Pratt & Whitney's F119 engine, currently under development to
power the twin-engine F-22 Advanced Tactical Fighter; the award has a potential
sales value of more than $12 million. Equipment Systems also was awarded a
contract having a potential sales value of $20 million by the U.S. Navy (USN) to
provide F-18 wheel and brake spare parts and contracts for various valve systems
on the Seawolf and New Attack submarines. Raytheon Aircraft selected Avionics
Systems to supply avionics for the new U.S. Air Force (USAF)/USN Joint Primary
Aircraft Training System aircraft. The USN/Marine Corps selected Avionics
Systems' new flat-panel, color liquid crystal displays to replace up to 700
mechanical horizontal situation indicators in its H46 helicopters.
In the general aviation market, the Company received several significant
contracts. Engine's new RE100 Auxiliary Power Unit (APU) was selected by Learjet
as the standard option for its new Lear 45 business jet. Equipment Systems
received a contract to supply the air conditioning system for Cessna's new
Citation Excel turbofan aircraft. Avionics Systems was selected by Cessna to be
the exclusive supplier of avionics for the rebirth of the single-piston-engine
aircraft.
A number of airlines selected Equipment Systems for their wheels and brakes
for new aircraft, including: Japan Air System for wheels and brakes for its new
fleet of Boeing 777 aircraft in a contract with potential sales valued at $54
million; Egyptair for wheels and carbon brakes for the airline's new Airbus
A340s and Boeing 777s; and Shandong Airlines for wheels and brakes for its new
Boeing 737 aircraft. The Company was also chosen by McDonnell Douglas to
assemble and deliver an integrated landing system, including wheels and brakes,
for its new MD-95 twin-jet aircraft.
In the helicopter market, McDonnell Douglas chose the Company's Bendix/King
and Global Wulfsberg avionics for its new Explorer helicopter in a contract with
a sales potential of $50 million. Light Helicopter Turbine Engine Company, a
partnership with the Allison Engine Company, signed a contract with Hindustan
Aeronautics Ltd. to provide CTS800 commercial turboshaft engines for a new
advanced light helicopter. Projections of 300 helicopters could result in more
than $150 million in engine sales.
AlliedSignal Technical Services Corp. (ATSC) received a contract with a
$200 million sales potential from the USAF to provide maintenance, engineering
services and modifications to the Air Force Satellite Control Network.
6
Equipment Systems received a contract from Bombardier Aerospace-North
America to provide the integrated electrical power system for the new
deHavilland Dash 8 Series 400 regional aircraft. McDonnell Douglas selected
Avionics Systems to supply liquid crystal displays as part of a field upgrade
program to retrofit the electro-mechanical flight instruments on the DC-8, DC-9,
DC-10 and MD-80 aircraft.
The Company was also awarded a number of significant contracts in 1994.
Aerospace was awarded several significant contracts related to Boeing's new
737-700 program totaling about $3 billion in potential sales over the life of
the program. The most significant of these awards included the Company's
designation as the sole supplier of APUs for this new family of aircraft; the
contract has a sales potential of $2 billion. Equipment Systems won contracts
for the environmental control and bleed air systems with a sales potential of
$370 million. GE's Aircraft Engines unit awarded contracts to Equipment Systems
for the main fuel control and the air turbine start system for its CFM56-7
engine on the new 737 program with a combined sales potential of $260 million.
Southwest Airlines awarded a contract with a sales potential of $225 million to
Equipment Systems for wheels and brakes on its new Boeing 737-700 fleet.
Equipment Systems was also awarded a contract for the engine nose cowl anti-ice
valve with a sales potential of $22 million.
The Company has received contracts for the MD-95. Equipment Systems will
supply the environmental control systems and Avionics Systems will provide the
communications and navigational systems on a supplier-furnished-equipment basis.
The combined sales potential of the two contracts is more than $500 million.
Aero Vodochody of Czechoslovakia selected International Turbine Engines
Corp., a joint venture between Engines and the Aero Industry Development Center
of the Republic of China (Taiwan), to supply F124-GA-100 engines for its L-159
light attack/advanced trainer aircraft. The sales potential of the contract is
$290 million. Aero Vodochody also chose a Rockwell-AlliedSignal team to supply
the avionics suite for its L-159 program; Electronic Systems is responsible for
supplying and integrating selected avionics subsystems. Lockheed Martin Aircraft
Services awarded a contract to Electronic Systems to upgrade the integrated
cockpit displays and mission avionics in A-4M SkyHawk tactical fighters sold by
the U.S. government to the Republic of Argentina's Air Force.
Engines received an order to supply the Garrett Turbine Compressor Power
180C engine for up to 750 ground carts for the USAF for the San Antonio Air
Logistics Center's Large Aircraft Start System. The contract has a sales
potential of $75 million.
Electronic Systems received a contract with a sales potential of $200
million to produce an inertial measurement unit for Northrop Grumman's Brilliant
Anti-Tank Weapon.
The USAF's Philips Laboratory awarded Equipment Systems a contract to
develop a turbopump. This contract has sales potential of about $5 million and
is considered strategically significant because it positions Equipment Systems
for entry into the turbopump market.
Two important APU maintenance service agreements (MSA) were awarded during
the year. Southwest Airlines, for its fleet of 737 aircraft, awarded a contract
with a sales potential of $100 million to the Company and Alaska Airlines
selected the Company to service its APUs with a sales potential of $7.6 million.
The Australian Civil Aviation Authority awarded a contract for $9 million
to Electronic Systems to provide a parallel approach radar monitor (PARM) for
Sydney's airport; it will be the third airport in the world and the first
outside the U.S. with a PARM.
The Company was also awarded new contracts in general aviation in 1994.
Avionics Systems successfully penetrated the safety avionics market by winning a
contract from Gulfstream to provide a safety avionics suite for the Gulfstream
GV aircraft. The award included a traffic alert and collision avoidance system
(TCAS II), ground proximity warning systems and maintenance data acquisition
units. Israeli Aircraft Industries selected the Company for three contracts with
a combined sales potential exceeding $30 million. The TFE731-40 engine, a
turbofan from the Company's generation of TFE731 engines, was selected as the
propulsion system for the Astra SPX aircraft and the Company's APUs and
environmental control systems were selected for the Galaxy business jet.
Dassault Aviation
7
selected Engines to supply the most powerful of its new family of turbofan
engines, the TFE731-60, for Dassault's new Falcon 900EX. Engines received a
contract for 69 TPE331-14 turboprop engines from Jetstream with a sales
potential of $220 million. Canadair selected Engines to supply APUs and air
turbine start systems for its fleet of Global Express aircraft with a combined
sales potential of $50 million.
NASA awarded ATSC the test, evaluation and maintenance contract for its
White Sands Test Facility in New Mexico. The initial three-year contract, plus a
two-year option, has a sales potential of $163 million. In an award that secured
a strong position for future potential space station work, Equipment Systems
received a contract from NASA's Lewis Research Center to develop the first space
flight demonstration of a solar dynamic electric power generation system with a
sales potential of $15 million. Aerospace was part of four industry teams that
will share in $98 million in technology reinvestment project grants from the
U.S. government's Advanced Research Projects Agency. Among the projects is a $42
million award for the development of a radar system to be used in an Autonomous
Landing Guidance System and a $43 million award to develop Fly-by-Light Advanced
Systems Hardware. ATSC is developing and installing the ground system for
Taiwan's new satellite program under a contract with a sales potential,
including options, of $32 million.
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 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, brake valves,
wheel end products, 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, anti-lock braking
systems (ABS), compressors, air dryers, 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,
China, France, Germany, India, Ireland, Italy, Japan, Malaysia, Mexico, Poland,
Portugal, South Korea, Spain, Turkey and the United Kingdom. Distribution and
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 OE sales accounted for approximately 74%
in both 1995 and 1994 of the net sales of the Automotive segment with
aftermarket sales accounting for the balance. In 1995 and 1994 Automotive
operations outside the U.S. accounted for $2,499 and $2,217 million, or 45% in
both years, of worldwide sales.
In 1995 and 1994 sales of automotive OE systems and components were made to
approximately 30 customers of which the Company's five largest automotive
manufacturing customers accounted for approximately 52% and 56%, respectively,
of such sales. Total worldwide sales (for OE and aftermarket use) for 1995 and
1994 to the Company's five largest automotive manufacturing customers amounted
to $2,138 and $2,063 million, including sales to Ford Motor Company (Ford), the
segment's largest customer, of $887 and $782 million for the respective years.
8
The segment's operations outside the U.S. are conducted through various
foreign companies in which it has interests ranging from minor 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, Delco, AM Brake, Raybestos,
Takata and Morton.
In 1994 the Company established two joint ventures in Europe, one with
Sogefi S.p.A. and the other with Gilardini, a subsidiary of Fiat, and Sequa. The
joint venture with Sogefi S.p.A., a European manufacturer and distributor of
automotive filters and other automotive products, has enabled both partners to
penetrate new markets through a joint distribution network and to reduce costs
through consolidation of both warehouses and distribution centers. The joint
venture with Gilardini and Sequa -- BAG, S.p.A. -- which began operations in the
third quarter of 1995, manufactures and supplies hybrid inflators for driver-
and passenger-side air bag modules that are assembled by the Company's new plant
in Italy. Hybrid inflators provide a cost-efficient method of inflating air
bags, using compressed argon gas and a proprietary environmentally-friendly
solid generant from the Atlantic Research Corporation, which is used to heat the
gas. These operations provide the Company with an entry into the European air
bag market. In January 1995 the Company and Jidosha Kiki Co. of Japan formed a
joint venture to supply brake boosters for vehicles built in Europe by Japanese
manufacturers. The venture is based in Pamplona, Spain.
In late December 1994 the Company acquired Ford's spark plug manufacturing
plant in Treforest, South Wales. The acquisition enhanced the Company's
relationship with Ford as its sole supplier of spark plugs in both North America
and Europe and provides a manufacturing base in Europe for growth in the
aftermarket spark plug business.
In April 1995 the Company acquired the Budd Company's Wheel and Brake
Division, whose products include: rotors, hubs, drums and related assemblies for
passenger cars and light trucks; steel disk wheels for heavy trucks; and
demountable rims and hub and drum assemblies for medium- and heavy-duty trucks.
The Wheel and Brake Division had 1994 sales of over $300 million.
In June 1995 the Company acquired Fiat Auto Poland S.A. (Fiat)'s braking
business in Poland, whose products include disc and drum brakes, master
cylinders and brake boosters; and became the exclusive supplier of braking
systems to Fiat in Poland. The manufacturing facility of the business is located
in Twargodora, Poland. Annual sales approximate $30 million.
In 1995 the Company purchased Transturk Holding's 68% interest in Transturk
Fren Donanim Industriesi AS, a leading Turkish manufacturer of braking systems.
The acquisition brings the Company's investment in the company to 80%. Annual
sales approximate $27 million.
Construction of a new turbocharger plant in Shanghai, China was completed
and production began in September 1995. This facility enables the Company to
serve the rapidly growing diesel engine market in China and provide
turbochargers to international markets as opportunities develop.
Automotive, as previously announced, has decided to exit the light-vehicle
ABS business and is conducting discussions concerning the future of its
light-vehicle braking business. Exiting the ABS business could hinder the
Company's ability to remain a first tier supplier of complete braking systems.
The Company expects that neither exiting the ABS business nor the absence of an
agreement regarding the light-vehicle braking business would have a material
impact on the Company's results of operations or financial position in 1996. The
ABS actions do not affect the heavy-truck ABS business, in which the Company's
joint venture with Knorr-Bremse has a significant market position.
In addition, a reduction in the Automotive workforce was announced and
substantially completed in the fourth quarter of 1995. The reduction eliminates
approximately 3,100 full-time-equivalent positions. The workforce reduction is
expected to be completed by the end of 1996.
9
ENGINEERED MATERIALS
The Engineered Materials segment is composed of four major divisions:
Polymers, Fluorine Products, Specialty Chemicals and Electronic Materials. The
Specialty Chemicals and Electronic Materials divisions were formed in February
1996 by realigning some of Engineered Materials' businesses in order to increase
the focus on the rapidly growing global markets these divisions serve.
Polymers. The Polymers division consists of the Fibers and Plastics
businesses which were combined in 1995 to enhance the units' vertical
integration and ensure optimization throughout the nylon system.
The Company's Fibers business 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', CrushResisterTM 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 1995 the Company announced plans to
increase capacity at its industrial polyester yarn facility in Longlaville,
France at a cost of approximately $45 million. In November 1995 the Company
acquired Bridgestone/Firestone's 50 million-pound industrial polyester fiber
plant in Hopewell, Virginia. With anticipated modernization, the Company
believes that the Hopewell plant will have annual sales of approximately $100
million. The Company believes that polyester yarn will become the primary
reinforcement for passenger car radial tires in the world in the late 1990s and
is exploring development opportunities in the Asia/Pacific region.
The textile fibers markets, where the Company sells Caprolan'r' nylon flat
yarns for warp knit and weaving applications, include intimate apparel, sports
outerwear, jackets and such recreational products as sleeping bags, back packs
and luggage. The industry is highly price competitive.
The Plastics business manufactures and markets engineering resins. 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.
In October 1995 the Company acquired the nylon plastics and industrial
fibers manufacturing facilities in Rudolstadt, Germany, from the German state of
Thuringia. The Company plans to invest about $100 million during the next three
years to expand and upgrade the facility.
Fluorine Products. The Fluorine Products business consists of Hydrofluoric
Acid (HF), Fluorocarbons, Nuclear Services, Sulfur Hexafluoride (SF6) and
Sterilant Gases.
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,
SF6 and uranium hexafluoride (UF6).
Genetron'r' fluorocarbons are sold mainly as refrigerants to OE 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. The Montreal Protocol (Protocol), which has been signed
by the United States, regulates worldwide chlorofluorocarbons (CFC) production
and consumption. With few exceptions, the Protocol required 100% elimination of
fully halogenated CFC production by industrialized countries as of December 31,
1995. The amended U.S. Clean Air Act also regulates CFCs and similarly required
that most U.S. production of CFCs be phased out by the end of 1995.
10
CFCs produced in the U.S. are also subject to the Ozone Depleting Chemical Tax
of the Revenue Reconciliation Act of 1989. In accordance with applicable law,
the Company's Genetron'r' and Genesolv'r' products include CFCs.
The Company is continuing its efforts to develop environmentally-friendly
fluorocarbon products as it replaces the current CFC product line. An existing
commercial plant in El Segundo, California was converted in 1991 to manufacture
hydrochlorofluorocarbon (HCFC)-141b, a key substitute for CFC-11, a blowing
agent in urethane foams, and as a replacement for CFC-113 in critical solvent
applications. By 1994 the Company more than tripled the plant's capacity to 60
million pounds per year. The Company has commercialized key CFC substitute
products in various applications, including automotive air conditioning and
residential, commercial and industrial refrigeration. In this connection, the
Company began manufacturing environmentally-friendly alternatives to CFCs at a
new $70 million multi-product commercial facility in Geismar, Louisiana targeted
primarily at the substitute products HCFC-123, HCFC-124, hydrofluorocarbon
(HFC)-125 and HFC-134a. The Company is continuing its research and development
efforts in view of the changing regulatory environment in which it operates. The
Company cannot predict the impact of possible future regulatory issues.
The Company acquired the CFC business of Akzo NV, with facilities in the
Netherlands, in April 1994. This acquisition has provided the Company with
access to new markets for its fluorocarbon products.
The Company's Nuclear Services business 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. A Company
subsidiary is in 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 Company also produces sterilant gases which primarily consist of blends
of ethylene oxide and fluorocarbons that are sold to hospitals, medical device
manufacturers and contract sterilizers. The Company holds the patents for
selected sterilant gas blends using environmentally-friendly fluorocarbons.
Specialty Chemicals. Businesses included are Riedel-de Haen, Performance
Chemicals, A-C'r' Performance Additives, the UOP joint venture, Carbon
Materials, the Environmental Catalysts joint venture and Specialty Films.
In October 1995 the Company purchased Hoechst AG's 95.8% interest in
Riedel-de Haen AG, a specialty chemicals manufacturer located in Seelze,
Germany. Riedel-de Haen manufactures products for the pharmaceutical and
electronics industries, as well as coatings, photo dyes and specialty pigments
markets. Annual sales approximate $250 million.
The Performance Chemicals business is a leading supplier of specialty oxime
chemicals for use in the agricultural, coatings, photographic, pharmaceutical,
adhesives and sealants, and mining industries. The Company has some cost
benefits from its captive source of hydroxylamine sulfate.
A-C'r' Performance Additives are low-molecular weight polyethylene polymer
additives which primarily serve the textiles, plastics, adhesives and polishes
specialty markets worldwide.
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 Carbon Materials 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.
11
The Environmental Catalysts business is a major worldwide supplier of
catalysts used in catalytic converters for automobiles. In November 1994 the
Company and General Motors Corporation (GM) formed a joint venture to produce
coated automotive catalytic converter substrates. The Company contributed its
environmental catalysts business and GM contributed coating-related technology
and a long-term supply contract to the joint venture.
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. The Company plans to begin manufacturing
SpectraVueTM, a line of thin plastic films that significantly improves the image
quality of Liquid Crystal Displays, during 1996. The Company will manufacture
SpectraVueTM components from a new $25 million facility in Elizabeth, New
Jersey.
Electronic Materials. Businesses included are Laminate Systems, Advanced
Microelectronic Materials and Amorphous Metals.
Laminate Systems 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 55% of sales are to the international
market, primarily in southeast Asia and throughout Europe. The industry is
highly price competitive. The Company, in partnership with Mitsui Mining and
Smelting Company, is backward integrated in electro deposited copper foil. This
unit also manufactures electrical grade glass yarns in partnership with Nittobo
Corporation of Japan.
The Advanced Microelectronics Materials business designs, develops and
manufactures materials for semiconductor companies worldwide. The Company is a
leader in technology that smoothes integrated circuits under the trademark
ACCUGLASS'r'.
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. Amorphous metals are also
a key component in theft deterrent systems used by retail companies.
In December 1995 the Company exited its high-density polyethylene (HDPE)
business. Paxon Polymer Company, L.P., a partnership of the Company and Exxon
Chemical Company, transferred the HDPE business to Exxon.
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 virtually all of its HF and
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 23 (Segment Financial Data) of Notes to Financial Statements in the
Company's 1995 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 1995 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.
12
The Company's principal foreign manufacturing operations are in Australia,
Brazil, Canada, France, Germany, Ireland, Italy, Japan, Mexico, Poland,
Portugal, South Korea, Spain, Singapore, Taiwan, the Netherlands and the United
Kingdom. 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 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.
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, 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 14,000 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 $353, $318 and $313 million in
1995, 1994 and 1993, respectively. Customer-sponsored (principally the U.S.
government) research and development activities amounted to an additional $536,
$486 and $514 million in 1995, 1994 and 1993, respectively.
The Company has approximately 48 research 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 court interpretations of these laws, there is a possibility that a
responsible party might have to bear
13
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 $44 million in 1995. The Company estimates that during each of
the years 1996 and 1997 such capital expenditures will be in the $40 to $45
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 21 of the
Company's 1995 Annual Report to shareowners, incorporated herein by reference,
for further information regarding environmental matters.
EMPLOYEES
The Company had an aggregate of 88,500 salaried and hourly employees at
December 31, 1995. Of the approximately 33,000 unionized employees, 19,000 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 Steelworkers of America, the Oil, Chemical and Atomic
Workers International Union, the International Brotherhood of Teamsters and many
other 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 39% of
the Company's U.S. and Canadian unionized employees are covered by labor
contracts scheduled to expire in 1996. Major labor negotiations will include
locations in all of the segments.
ITEM 2. PROPERTIES
The Company has 372 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)
Tempe, AZ
Tucson, AZ (partially leased)
Torrance, CA (partially leased)
Stratford, CT (owned by the U.S. Government and managed by the Company)
Fort Lauderdale, FL
South Bend, IN
Lawrence, KS
Olathe, KS
Columbia, MD
Towson, MD
Teterboro, NJ
Rocky Mount, NC
Rexdale, Ont., Canada (partially leased)
Raunheim, Germany
AUTOMOTIVE
Greenville, AL
Torrance, CA
St. Joseph, MI
Fostoria, OH
Greenville, OH
Sumter, SC
Jackson, TN
Maryville, TN
Campinas, Brazil
Angers, France
Conde, France
Moulins, France
Thaon-Les-Vosges, France
Crema, Italy
Glinde, Germany
Skelmersdale, United Kingdom
ENGINEERED MATERIALS
Metropolis, IL
Baton Rouge, LA
Geismar, LA
Moncure, NC
Philadelphia, PA
Pottsville, PA
Columbia, SC
Chesterfield, VA
Hopewell, VA
Longlaville, France
Seelze, Germany
14
ITEM 3. LEGAL PROCEEDINGS
The first and second paragraphs of Note 19 (Commitments and Contingencies)
of Notes to Financial Statements at page 35 of the Company's 1995 Annual Report
to shareowners are incorporated herein by reference.
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), 60 Chairman of the Board since January 1992. Chief Executive Officer of the
Company since July 1991. Vice Chairman and Executive Officer of the
1991 General Electric Company (diversified industrial corporation) from 1984 to
June 1991.
John W. Barter, 49 Executive Vice President and President, AlliedSignal Automotive since
October 1994. Senior Vice President and Chief Financial Officer from July
1985 1988 to September 1994.
Daniel P. Burnham, 49 Executive Vice President and President, AlliedSignal Aerospace since January
1992. Executive Vice President and President-Elect, AlliedSignal Aerospace
1991 Company from July 1991 to December 1991. President, AiResearch Group from
March 1990 to June 1991.
Frederic M. Poses, 53 Executive Vice President and President, AlliedSignal Engineered Materials
since April 1988.
1988
Isaac R. Barpal, 56 Senior Vice President and Chief Technology Officer since August 1993. Vice
President -- Science & Technology of Westinghouse Electric Corporation
1993 (electric equipment manufacturer) from June 1987 to July 1993.
Peter M. Kreindler, 50 Senior Vice President, General Counsel and Secretary since December 1994.
Senior Vice President and General Counsel from March 1992 to November
1992 1994. Senior Vice President and General Counsel-Elect from January 1992 to
February 1992. Partner, Arnold & Porter (law firm) from January 1990 to
December 1991.
Donald J. Redlinger, 51 Senior Vice President -- Human Resources and Communications since February
1995. Senior Vice President -- Human Resources from January 1991 to
1991 January 1995.
Paul R. Schindler, 54 Senior Vice President -- International since August 1993. Chairman of
Imperial Chemical Industries Asia/Pacific (chemical manufacturer) from
1993 April 1991 to July 1993. Chairman of Imperial Chemical Industries China
from July 1989 to March 1991.
James E. Sierk, 57 Senior Vice President -- Quality and Productivity since January 1991.
1991
- ------------
(a) Also a director.
(table continued on next page)
15
(table continued from previous page)
NAME, AGE,
DATE FIRST
ELECTED AN OFFICER BUSINESS EXPERIENCE
- ------------------------------- ----------------------------------------------------------------------------
Richard F. Wallman, 44 Senior Vice President and Chief Financial Officer since March 1995. Vice
President and Controller of International Business Machines Corp. (IBM)
1995 (manufacturer of information-handling systems) from April 1994 to February
1995. General Assistant Controller of IBM from October 1993 to March 1994.
Assistant Controller -- Sales & Marketing of Chrysler Corporation
(automobile manufacturer) from April 1989 to September 1993.
Kenneth W. Cole, 48 Vice President -- Government Relations since January 1989.
1989
G. Peter D'Aloia, 51 Vice President and Controller since February 1994. Vice President and
Treasurer from August 1988 to January 1994.
1985
Catherine M. de Lacy, 38 Vice President, Health, Safety and Environmental since July 1995. Vice
President -- Health, Safety and Environmental of Occidental Petroleum
1995 Corporation (oil and gas explorer, developer, producer and marketer) from
April 1993 to June 1995. Director -- Environmental Affairs & Technical
Support of Occidental Petroleum Corporation from May 1990 to March 1993.
Nancy A. Garvey, 46 Vice President and Treasurer since February 1994. Staff Vice
President -- Investor Relations from November 1989 to January 1994.
1994
Larry E. Kittelberger, 47 Vice President and Chief Information Officer since August 1995 (Executive
Officer since February 1996). Corporate Chairman -- Information Officer
1996 Leadership Committee of Tenneco Inc. (diversified industrial concern) from
June 1989 to July 1995.
Frederick H. McClintock, 59 Vice President -- Materials Management since February 1996. Vice
President -- Materials Management AlliedSignal Aerospace from March 1992
1996 to January 1996. Owner and operator of Global Supply Institute (consulting
business) from June 1990 to February 1992.
Richard P. Schroeder, 44 Vice President -- Manufacturing since June 1994. Vice President of Quality,
Operations and Supply Management at Asea Brown Boveri Inc. (international
1994 electrical engineering company) -- Industrial Group and North American
operations from August 1991 to May 1994. Vice President and General
Manager Customer Service, Corporate Quality, and Government Compliance of
Codex (communications for both voice and data communications systems), a
unit of Motorola, Inc., from November 1986 to July 1991.
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 25 (Unaudited Quarterly Financial Information) of Notes to
Financial Statements at page 38 of the Company's 1995 Annual Report to
shareowners, and such information is incorporated herein by reference.
16
The number of record holders of the Registrant's common stock is contained
in the statement 'Selected Financial Data' at page 39 of the Company's 1995
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 39 of the Company's
1995 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 19 through 25 of the
Company's 1995 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 LLP dated February 1, 1996 appearing on pages 26
through 38 of the Company's 1995 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 1995
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, will be contained in a definitive Proxy Statement involving the election
of directors which the Registrant will file with the Securities and Exchange
Commission pursuant to Regulation 14A not later than 120 days after December 31,
1995, and such information is incorporated herein by reference. Certain other
information relating to Executive Officers of the Registrant appears at pages 15
and 16 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.
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.
17
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not Applicable
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PAGE IN
ANNUAL REPORT TO
SHAREOWNERS
----------------
(a)(1.) Index to Consolidated Financial Statements:
Incorporated by reference to the 1995 Annual Report to shareowners:
Report of Independent Accountants.................................................... 38
Consolidated Statement of Income for the years ended December 31, 1995, 1994 and
1993................................................................................ 26
Consolidated Statement of Retained Earnings for the years ended December 31, 1995,
1994 and 1993....................................................................... 26
Consolidated Balance Sheet at December 31, 1995 and 1994............................. 27
Consolidated Statement of Cash Flows for the years ended December 31, 1995, 1994 and
1993................................................................................ 28
Notes to Financial Statements........................................................ 29
(a)(2.) Consolidated Financial Statement Schedules
The two financial statement schedules applicable to the Company have been
omitted because of the absence of the conditions under which they are required.
(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
- ----------- -----------------------------------------------------------------------------------------
13 Pages 19 through 39 (except for the data included under the captions 'Financial
Statistics' on page 39) of the Company's 1995 Annual Report to shareowners
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
24 Powers of Attorney
27 Financial Data Schedule
The exhibits identified 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,
1995.
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.
February 27, 1996 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 Russell E. Palmer
Chairman of the Board and Chief Executive Director
Officer and Director
* *
- ------------------------------------------------------ ------------------------------------------------------
Hans W. Becherer Ivan G. Seidenberg
Director Director
* *
- ------------------------------------------------------ ------------------------------------------------------
Eugene E. Covert Andrew C. Sigler
Director Director
* *
- ------------------------------------------------------ ------------------------------------------------------
Ann M. Fudge John R. Stafford
Director Director
* *
- ------------------------------------------------------ ------------------------------------------------------
Paul X. Kelley Thomas P. Stafford
Director Director
* *
- ------------------------------------------------------ ------------------------------------------------------
Robert P. Luciano Robert C. Winters
Director Director
*
- ------------------------------------------------------
Robert B. Palmer
Director
/s/ RICHARD F. WALLMAN /s/ G. PETER D'ALOIA
- ------------------------------------------------------ ------------------------------------------------------
Richard F. Wallman G. Peter D'Aloia
Senior Vice President and Vice President and Controller
Chief Financial Officer (Chief Accounting Officer)
*By: /s/ RICHARD F. WALLMAN
- ------------------------------------------------------
(Richard F. Wallman
Attorney-in-fact)
February 27, 1996
19
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as 'r'
The trademark symbol shall be expressed as 'tm'
The subscript numerics in chemistry notation shall be expressed as baseline
numerics, e.g., sulfur hexafluoride would be expressed SF6.
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 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 (incorporated by reference to Exhibit 10.2 to the Company's Form
10-K for the year ended December 31, 1993)
10.3* Retirement Plan for Non-Employee Directors of AlliedSignal 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* Stock Plan for Non-Employee Directors of AlliedSignal Inc., as amended
(incorporated by reference to Exhibit C to the Company's Proxy Statement,
dated March 10, 1994, filed pursuant to Rule 14a-6 of the Securities
Exchange Act of 1934)
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* AlliedSignal Inc. Incentive Compensation Plan for Executive Employees, as
amended (incorporated by reference to Exhibit B to the Company's Proxy
Statement, dated March 10, 1994, 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
March 31, 1995)
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* AlliedSignal Inc. Severance Plan for Senior Executives, as amended
(incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for
the quarter ended March 31, 1994)
10.10* Salary Deferral Plan for Selected Employees of AlliedSignal Inc. and its
Affiliates, as amended (incorporated by reference to Exhibit 10.2 to the
Company's Form 10-Q for the quarter ended March 31, 1995)
EXHIBIT NO. DESCRIPTION
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10.11* 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 10, 1994, filed pursuant to Rule 14a-6 of the Securities
Exchange Act of 1934)
10.12* Amended and restated Agreement dated May 6, 1994 between the Company and
Lawrence A. Bossidy (incorporated by reference to Exhibit 10.3 to the
Company's Form 10-Q for the quarter ended June 30, 1994)
10.13 Five-Year Credit Agreement dated as of June 30, 1995 by and between
AlliedSignal Inc., a Delaware corporation, the banks, financial
institutions and other institutional lenders listed on the signature pages
thereof (the 'Lenders'), Citibank, N.A., as agent, and ABN Amro Bank N.V.
and Morgan Guaranty Trust Company of New York, as co-agents, for the
Lenders (incorporated by reference to Exhibit 10.1 to the Company's Form
10-Q for the quarter ended June 30, 1995)
10.14 364-Day Credit Agreement dated as of June 30, 1995 by and between
AlliedSignal Inc., a Delaware corporation, the banks, financial
institutions and other institutional lenders listed on the signature pages
thereof (the 'Lenders'), Citibank, N.A., as agent, and ABN Amro Bank N.V.
and Morgan Guaranty Trust Company of New York, as co-agents, for the
Lenders (incorporated by reference to Exhibit 10.2 to the Company's Form
10-Q for the quarter ended June 30, 1995)
11 Omitted (Inapplicable)
12 Omitted (Inapplicable)
13 Pages 19 through 39 (except for the data included under the captions
'Financial Statistics' on page 39) of the Company's 1995 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 Financial Data Schedule (filed herewith)
28 Omitted (Inapplicable)
99 Omitted (Inapplicable)
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The Exhibits identified above with an asterisk(*) are management contracts
or compensatory plans or arrangements.