________________________________________________________________________________
________________________________________________________________________________
UNITED STATES
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, 1998
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 (973)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 Exchange
Money Multiplier Notes due 1999-2000 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 1999-2009 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 London stock exchange.
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 [x]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant was approximately $21.7 billion at January 31, 1999.
There were 557,130,797 shares of Common Stock outstanding at January 31, 1999.
Documents Incorporated by Reference
Part I and II: Annual Report to Shareowners for the Year Ended December
31, 1998.
Part III: Proxy Statement for Annual Meeting of Shareowners to be held
April 26, 1999.
________________________________________________________________________________
________________________________________________________________________________
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, 1998 Report
- - ------------------------------- ----------------------------------------------------------- ------------
1. Business Note 23. Segment Financial Data ........................... 41
Note 24. Geographic Areas -- Financial Data................ 42
Management's Discussion and Analysis....................... 19
3. Legal Proceedings Note 20. Commitments and Contingencies..................... 39
5. Market for the Regis- Note 25. Unaudited Quarterly Financial
trant's Common Equity Information.............................................. 42
and Related Stock- Selected Financial Data.................................... 18
holder Matters
6. Selected Financial Data Selected Financial Data.................................... 18
7. Management's Management's Discussion and Analysis....................... 19
Discussion and Analysis
of Financial Condition
and Results of
Operations
7A. Quantitative and Management's Discussion and Analysis....................... 19
Qualitative Disclosure
About Market Risk
8. Financial Statements and Report of Independent Accountants.......................... 27
Supplementary Data Consolidated Statement of Income........................... 28
Consolidated Balance Sheet................................. 29
Consolidated Statement of Cash Flows....................... 30
Consolidated Statement of Shareowners' Equity.............. 31
Notes to Financial Statements.............................. 32
Heading(s) in Proxy Statement for Page(s) in
Annual Meeting of Shareowners Proxy
to be held April 26, 1999 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 Voting Securities.......................................... *
Certain Beneficial Owners
and Management
- - ------------
* 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,
1998.
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............................................................................... 14
4 Submission of Matters to a Vote of Security Holders............................................. 14
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......................................................................... 16
7 Management's Discussion and Analysis of Financial Condition and Results of Operations........... 17
7A Quantitative and Qualitative Disclosure About Market Risk....................................... 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................................. 18(a)
13 Certain Relationships and Related Transactions................................................. 18
Part IV. 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K................................ 18
Signatures.................................................................................................... 19
- - ------------
(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, 1998. 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 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.
MAJOR BUSINESSES
AlliedSignal Inc. is an advanced technology and manufacturing company
serving customers worldwide with aerospace and automotive products, chemicals,
fibers, plastics and advanced materials. The Company's operations are conducted
by eleven strategic business units, which have been aggregated under five
reportable segments: Aerospace Systems, Specialty Chemicals & Electronic
Solutions, Turbine Technologies, Performance Polymers and Transportation
Products.
Following is a description of the Company's strategic business units:
STRATEGIC
BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS
- - -------------------- --------------------------- ----------------------- -------------------------- ------------------
AEROSPACE SYSTEMS
Aerospace Environmental control Air conditioning Commercial, regional Barber Colman
Equipment systems systems and general Hamilton Standard
Systems Bleed air control aviation aircraft Liebherr
systems Military aircraft Parker Hannifin
Cabin pressure systems Spacecraft Sundstrand
Environmental and TAT
thermal control for
spacecraft
Smoke detection
systems
Repair, overhaul and
spare parts
------------------------------------------------------------------------------------------------------
Engine systems and Electronic and Commercial air transport, Chandler-Evans
accessories hydromechanical regional and general Hamilton Standard
fuel controls aviation Lockheed Martin
Engine start systems Military aircraft Lucas
Pressure transducers Parker
Repair, overhaul and
spare parts
------------------------------------------------------------------------------------------------------
Power management and Electric, hydraulic and Commercial, military, Auxilec
generation systems pneumatic power regional and general B.F. Goodrich
generation systems aviation aircraft Hella
Exterior and Ground vehicles Lucas
interior lighting Parker Bertea
systems Smiths
Power distribution and Sundstrand
power management Teleflex
systems
Pumps, starters,
converters, controls,
electrical actuation
for flight surfaces
Repair, overhaul and
spare parts
------------------------------------------------------------------------------------------------------
Aircraft landing systems Wheels and brakes Commercial and Aircraft Braking
Friction products military aircraft Systems
Brake control systems Dunlop
Wheel and brake B.F. Goodrich
overhaul services Messier-Bugatti
Aircraft landing Messier-Dowty
systems integration
- - ---------------------------------------------------------------------------------------------------------------------------
4
STRATEGIC
BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS
- - -------------------- --------------------------- ------------------------- -------------------------- ------------------
Electronic & Avionics systems Flight safety systems: Commercial, business Century
Avionics Systems Enhanced Ground and general aviation Garmin
Proximity Warning aircraft B.F. Goodrich
Systems (EGPWS) Government aviation Honeywell
Traffic Alert and Litton
Collision Avoidance Lockheed Martin
Systems (TCAS) Narco
Windshear detection Rockwell/Collins
systems and weather Sextant
radar Smiths
Flight data and cockpit S-tec
voice recorders Trimble/Terra
Communication and Universal
navigation systems:
Flight management
systems
Data management and
aircraft performance
monitoring systems
Air-to-ground
telephones
Global positioning
systems
Automatic flight
control systems
Navigation systems
Identification systems
Integrated systems
Vehicle management
systems
Cockpit display systems
------------------------------------------------------------------------------------------------------
Automatic test systems Computer-controlled U.S. Government and GDE Systems
automatic test systems international logistics Honeywell
Functional testers and centers Litton
ancillaries Military aviation Lockheed Martin
Portable test and Northrop Grumman
diagnostic systems
Advanced battery
analyzer/charger
------------------------------------------------------------------------------------------------------
Inertial sensor Inertial sensor systems Military and Astronautics-
for guidance, commercial vehicles Kearfott
stabilization, Commercial spacecraft Ball
navigation and launch vehicles BEI
and control Energy utility boring GEC
Gyroscopes, Transportation Honeywell
accelerometers, Missiles Litton
inertial measurement Munitions Rockwell/Collins
units and thermal
switches
------------------------------------------------------------------------------------------------------
Radar systems Aircraft precision Global and U.S. airspace Hughes
landing agencies Motorola
Ground surveillance Military aviation Raytheon
Target detection devices Military missiles Rockwell
Thomson-CSF
- - ---------------------------------------------------------------------------------------------------------------------------
Aerospace Management and technical Maintenance/operation of U.S. and foreign Computer Sciences
Marketing, services space systems and government space and Dyncorp
Sales & Service(1) facilities communications services Lockheed Martin
Systems engineering, Commercial space ground Raytheon
integration and segment systems and SAIC
information technology services
services
------------------------------------------------------------------------------------------------------
Aircraft hardware Consumable hardware, Commercial and military Wesco Aircraft
distribution including fasteners, aviation and space Tristar Aerospace
bearings, bolts and programs M&M Aerospace
o-rings Aviall
Adhesives, sealants, W.S. Wilson
lubricants, cleaners Jamaica Bearings
and paints
Value-added services,
repair and overhaul
kitting and
point-of-use
replenishment
- - ---------------------------------------------------------------------------------------------------------------------------
(1) Aerospace-related businesses have organized their marketing, sales, service,
technical support, repair and overhaul and distribution capabilities into
this business unit.
5
STRATEGIC
BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS
- - -------------------- --------------------------- ------------------------- -------------------------- ------------------
SPECIALTY CHEMICALS & ELECTRONIC SOLUTIONS
Specialty Chemicals Fluorocarbons Genetron'r' refrigerants, Refrigeration Atochem
aerosol and Air conditioning DuPont
insulation foam blowing Polyurethane foam ICI
agents Precision cleaning
Genesolv'r' solvents Optical
Oxyfume sterilant gases Metalworking
Hospitals
Medical equipment
manufacturers
------------------------------------------------------------------------------------------------------
Hydrofluoric acid (HF) Anhydrous and aqueous Fluorocarbons Ashland
hydrofluoric acid Steel Atochem
Oil refining DuPont
Chemical intermediates Hashimoto
Merck
Norfluor
Quimaco Fluor
------------------------------------------------------------------------------------------------------
Fluorine specialties Sulfur hexafluoride (SF6) Electric utilities Air Products
Iodine pentafluoride Magnesium Asahi Glass
(IF5) Gear manufacturers Atochem
Antimony pentafluoride Ausimont
(SbF5) Kanto Denko Kogyo
Solvay Fluor
------------------------------------------------------------------------------------------------------
Nuclear services UF6 conversion services Nuclear fuel British Nuclear
Electric utilities Fuels
Cameco (Canada)
Cogema (France)
Tennex (Russia)
------------------------------------------------------------------------------------------------------
Pharmaceutical and Active pharmaceutical Agrichemicals Cambrex
agricultural chemicals ingredients Pharmaceuticals DSM
Oxime-based fine Lonza
chemicals Zeneca
Fluoroaromatics
Bromoaromatics
------------------------------------------------------------------------------------------------------
High purity chemicals Ultra high purity HF Semiconductors LaPorte
Solvents Merck
Inorganic acids Olin
High purity solvents
------------------------------------------------------------------------------------------------------
Industrial specialties Hydrofluoric acid (HF) Diverse by product type Varies by product
Imaging HF derivatives line
Luminescence and Fluoroaromatics
plastic additives Photodyes
Chemical processing Phosphors
Materials and Catalysts
surface treatment Oxime silanes
Sealants
------------------------------------------------------------------------------------------------------
Specialty waxes Polyethylene waxes Coatings BASF
Petroleum waxes and Inks Clariant
blends Candles Eastman
Tire/Rubber Exxon
Personal care IGI
Packaging Leuna
Schumann-Sasol
------------------------------------------------------------------------------------------------------
Specialty additives Polyethylene waxes PVC Eastman
Petroleum waxes and Plastics Geon
blends Henkel
PVC lubricant systems
Plastic additives
------------------------------------------------------------------------------------------------------
UOP (joint venture) Processes Petroleum, ABB Lummus
Catalysts petrochemical, gas Criterion
Molecular sieves processing and IFP (France)
Adsorbents chemical industries Mobil
Design of process Procatalyse
plants and equipment (France)
Customer catalyst Stone & Webster
manufacturing Zeochem
- - ---------------------------------------------------------------------------------------------------------------------------
6
STRATEGIC
BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS
- - -------------------- --------------------------- ------------------------- -------------------------- ------------------
Electronic Materials Multilayer circuitry Laminates Military ADI/Isola
materials Prepregs Telecommunications Nanya
Copper foil Automotive Nelco
Computers Polyclad
Consumer electronics
------------------------------------------------------------------------------------------------------
Copper-clad rigid Laminates Military ADI/Isola
laminates for circuitry Telecommunications General Electric
Automotive Nanya
Computers Nelco
Consumer electronics Polyclad
------------------------------------------------------------------------------------------------------
Advanced Spin-on dielectrics Semiconductors Dow Corning
microelectronic for semiconductor Microelectronics Applied Materials
materials manufacturing Tokyo-Ohka
------------------------------------------------------------------------------------------------------
Equipment for semiconductor Electron beam Semiconductor and Fusion Systems
and curing equipment thin film head Asyst
related electronics Mini clean room manufacturing
manufacturing environments Seimconductor and
related electronics
manufacturing
------------------------------------------------------------------------------------------------------
Engineering design services Printed circuit board Semiconductor N/A
MultiChip fabricators manufacturing
------------------------------------------------------------------------------------------------------
Amorphous metals Amorphous metal ribbons Electrical distribution Allegheny-Ludlum
and components transformers Steel
High frequency electronics Armco Steel
Metal joining Kawasaki Steel
Theft deterrent systems Nippon Steel
- - ---------------------------------------------------------------------------------------------------------------------------
TURBINE TECHNOLOGIES
Engines Turbine propulsion TFE731 turbofan Business, regional Pratt & Whitney
engines TPE331 turboprop and military trainer Canada
TFE1042 turbofan aircraft Rolls-Royce/
F124 turbofan Commercial and military Allison Engine
LF502 turbofan helicopters Company
LF507 turbofan Military vehicles Turbomeca
CFE738 turbofan Commercial and military
T53, T55 turboshaft marine craft
LT101 turboshaft
T800 turboshaft
TF40 turboshaft
AGT1500 turboshaft
Repair, overhaul and
spare parts
------------------------------------------------------------------------------------------------------
Auxiliary power units Airborne auxiliary Commercial and Pratt & Whitney
(APUs) power units military aircraft Canada
Jet fuel starters Ground power Sundstrand Power
Secondary power Systems
systems
Ground power units
Repair, overhaul and
spare parts
------------------------------------------------------------------------------------------------------
Industrial power ASE 8 turboshaft Ground based Solar
ASE 40/50 utilities, industrial Rolls-Royce/
turboshaft or mechanical Allison Engine
ASE 120 turboshaft drives Company
European Gas
Turbines
- - ---------------------------------------------------------------------------------------------------------------------------
7
STRATEGIC
BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS
- - -------------------- --------------------------- ------------------------- -------------------------- ------------------
Turbocharging Charge-air systems Turbochargers Passenger car, truck Aisin Seiki
Systems Thermal systems Charge-air coolers and off-highway Behr/McCord
Aluminum radiators original equipment GE/Elliott
Aluminum cooling manufacturers (OEMs) General Motors
modules Engine manufacturers Hitachi
Superchargers Aftermarket distributors Holset
Remanufactured components and dealers IHI
KKK
Mitsubishi/MHI
Modine
Schwitzer
Valeo
Williams
International
------------------------------------------------------------------------------------------------------
Power generation Turbogenerators Users of electricity Capstone Turbine
Electric Utilities
- - ---------------------------------------------------------------------------------------------------------------------------
PERFORMANCE POLYMERS
Polymers Carpet fibers Nylon filament and Commercial, residential BASF
staple yarns and specialty carpet DuPont
Bulk continuous markets Solutia
filament Rhodia
Nylon polymer
------------------------------------------------------------------------------------------------------
Performance fibers Industrial nylon and Passenger car and truck Akra
polyester yarns tires Akzo
Extended-chain Passenger car and light BASF
polyethylene composites truck seatbelts and DSM
Fine denier nylon yarns airbags DuPont
Broad woven fabrics Hoechst/Celanese
Ropes and mechanical Hyosung
rubber goods Kolon
Luggage Nylstar
Sports gear Rhodia
Bullet resistant vests,
helmets and heavy armor
Cut-resistant industrial
gloves
Sailcloth
------------------------------------------------------------------------------------------------------
Engineering plastics Thermoplastic nylon Food and pharmaceutical BASF
Thermoplastic alloys and packaging Bayer
blends Housings (e.g., electric DuPont
Post-consumer recycled hand tools, chain saws) Hoechst/Celanese
PET resins Automotive components Monsanto
Recycled nylon resins Office furniture
Electrical and electronics
------------------------------------------------------------------------------------------------------
Specialty films Cast nylon Food DuPont of Canada
Biaxially oriented nylon Pharmaceuticals Kolon
film Packaging and industrial Rexam Custom
Fluoropolymer film applications Toyobo
------------------------------------------------------------------------------------------------------
Chemical intermediates Caprolactam Nylon for fibers, BASF
Ammonium sulfate engineered resins and DSM
Hydroxylamine film DuPont
Cyclohexanol Fertilizer ingredients Enichem
Cyclohexanone Specialty chemicals Solutia
Adipic acid Vitamins Rhodia
Ube
- - ---------------------------------------------------------------------------------------------------------------------------
8
STRATEGIC
BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS
- - -------------------- --------------------------- ------------------------- -------------------------- ------------------
TRANSPORTATION PRODUCTS
Consumer Products Aftermarket Oil, air, fuel, Automotive and heavy AC Delco/Delphi/GM
Group filters, electronic transmission and vehicle aftermarket ArmorAll/STP/Clorox
components and car care coolant filters channels and original Autoglym
products PCV valves equipment service Baldwin
Spark plugs (OES) Bosch
Wire and cable Mass merchandisers Champion Labs
Antifreeze/coolant Champion/Cooper Ind.
Ice-fighter products Cummings Diesel
Windshield washer fluids Donaldson
Waxes, washes and Gold Eagle
specialty cleaners Gonher
Havoline/Texaco
Labinal
Mac Quair
Mann & Hummel
NGK
Peak
Pennzoil/Quaker State
Purolator/Arvin Ind
Pyroil/Valvoline
Turtle Wax
Various Prival Label
Wix/Dana
Zerex/Valvoline
- - ---------------------------------------------------------------------------------------------------------------------------
Friction Materials Friction materials Disc brake pads Automotive and heavy Akebono
Aftermarket brake hard Drum brake linings vehicle OEMs, OES, brake BBA Group
parts Brake blocks manufacturers and Dana
Disc and drum brake aftermarket channels Delphi
components Mass merchandisers Federal-Mogul
Brake hydraulic Installers ITT/Galfer
components Railway and commercial/ JBI
Brake fluid military aircraft OEMs Nisshinbo
Aircraft brake linings and brake manufacturers Pagid
Railway linings Sumitomo
- - ---------------------------------------------------------------------------------------------------------------------------
Truck Brake Air brake systems Anti-lock brake systems On-highway medium and Eaton
Systems (ABS) heavy truck, Midland-Haldex
(joint venture) Air disc brakes bus and trailer OEMs Meritor
Air compressors Off-highway equipment WABCO
Air valves OEMs
Air dryers Aftermarket distributors
Actuators and dealers/OES
Truck electronics
Competitive
remanufactured
products
- - ---------------------------------------------------------------------------------------------------------------------------
RECENT DEVELOPMENTS
Activity in Aerospace Systems included the acquisition, in January 1998, of
substantially all the assets of Banner Aerospace, distributors of FAA-certified
aircraft hardware, for common stock valued at approximately $350 million. The
acquired operations have annual sales of about $250 million, principally to
commercial air transport and general aviation customers. In June 1998, the
Company acquired a controlling interest in the Normalair-Garrett Ltd
environmental controls joint venture. The acquired operations have annual sales
of approximately $240 million. Several smaller acquisitions were also completed.
In the first quarter of 1998, the Company sold its underwater detection systems
business to L-3 Communications Corporation for approximately $70 million in cash
and, in September 1998, the Company sold its communications systems business to
Raytheon Company for approximately $60 million in cash. The divested businesses
had annual sales of about $190 million. Aerospace Systems also strengthened its
leadership in flight safety products by winning several major contracts for its
new FAA-approved Enhanced Ground Proximity Warning System which gives pilots
advance warning time of a collision with terrain.
In June 1998, the Company acquired Pharmaceutical Fine Chemicals S.A. (PFC)
of Lugano, Switzerland, for approximately $390 million, including assumed
liabilities, as part of the Specialty Chemicals & Electronic Solutions segment.
PFC manufactures and distributes active and intermediate
9
pharmaceutical chemicals and had sales of about $110 million in 1997. Several
other smaller acquisitions were also completed during the year. In April 1998,
the European laminates business of Electronic Materials was sold.
Turbine Technologies began development of the AS900, its first new turbofan
engine platform in more than 20 years, for the rapidly growing general and
regional aviation market. It is scheduled for FAA certification in the first
quarter of 2001. Turbocharging Systems is entering the small-scale power
generation business to serve a growing demand for low cost, highly reliable and
efficient independent power units. International distribution alliances for the
power systems were formed in 1998. Initial product shipments are scheduled for
mid-1999.
Performance Polymers formed a joint venture with DSM Chemicals North
America to construct and operate an $80 million recycling facility to convert
nylon carpet into caprolactam, the raw material used in carpeting and automobile
parts. Performance Polymers exited its European carpet fibers business and a
portion of the North American textile business in 1998. Performance Polymers
also sold its phenol facility to Sun Company, Inc. in 1998, and as part of the
sale the Company retained a phenol supply arrangement for its nylon business.
In Transportation Products, Truck Brake Systems and its partner,
Knorr-Bremse AG, established a joint venture company with Robert Bosch GmbH
(Bosch) combining their European commercial heavy-duty brake systems businesses.
Bosch contributed its commercial vehicle brake product division to the European
joint venture, in exchange for a 20% interest in the joint venture. The Company
will also have a 20% ownership interest in the European joint venture.
Knorr-Bremse, AlliedSignal's joint venture partner since 1993, will have the
remaining 60% interest.
In June 1998, the Company sold its interest in its automotive catalyst
business to a unit of General Motors Corporation for approximately $50 million
in cash. This business had annual sales of about $250 million.
In 1998, the Company was unsuccessful in its $10 billion unsolicited offer
for AMP Incorporated (AMP), a manufacturer of electrical connection devices. In
connection with this transaction, the Company acquired approximately a 9%
interest in AMP for $890 million. The fair market value of the investment at
December 31, 1998 was $1,041 million.
In January 1999, the Company announced that it will commence realignment of
its aerospace businesses in the first quarter to strengthen their market and
customer focus, simplify the business structure and reduce costs.
U.S. GOVERNMENT SALES
Sales to the U.S. Government (primarily aerospace-related), acting through
its various departments and agencies and through prime contractors, amounted to
$1,891 million for 1998 and $1,851 million for 1997, which includes sales to the
U.S. Department of Defense (DoD) of $1,366 million in 1998 and $1,338 million in
1997. Approximately 58% and 59% of sales to the U.S. Government in 1998 and
1997, respectively, were made under fixed-price contracts in which the Company
agrees to perform a contract for a fixed price, retaining any benefits of cost
savings and absorbing any cost overruns. The Company is affected by U.S.
Government budget restraints for defense and space programs. After years of
decline, U.S. defense spending increased slightly in 1998 and is expected to
increase over the next several years.
In addition to normal business risks, companies engaged in supplying
military and other equipment to the U.S. Government are subject to unusual
risks, including dependence on Congressional appropriations and administrative
allotment of funds, changes in governmental procurement legislation and
regulations and other policies that may reflect military and political
developments, significant changes in contract scheduling, complexity of designs
and the rapidity with which they become obsolete, necessity for constant design
improvements, intense competition for U.S. Government business necessitating
increases in time and investment for design and development, difficulty of
forecasting costs and schedules when bidding on developmental and highly
sophisticated technical work and other factors characteristic of the industry.
Changes are customary over the life of U.S. Government contracts, particularly
development contracts, and generally result in adjustments of contract prices.
10
The Company, like 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 currently aware of any such investigations
that it expects, individually or in the aggregate, will have a material adverse
effect on the Company. In addition, the Company has a proactive business
compliance program designed to ensure compliance and sound business practices.
BACKLOG
Orders for certain aerospace-related 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 (principally
for aerospace-related products and services) for both government and commercial
contracts was $5,012 million at December 31, 1998 and $5,087 million at
December 31, 1997 of which U.S. and foreign government orders were $1,511
million and $1,908 million for the respective years. The Company anticipates
that approximately $3,553 million of the total 1998 backlog will be filled
during 1999.
Backlog information may not be an accurate indicator of future sales.
Government contracts and, in general, subcontracts thereunder are terminable, in
whole or in part, for default or for convenience by the government or the higher
level contractor if deemed in their best interest. Upon termination for
convenience, 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.
In addition to the right of the government to terminate, government
contracts are conditioned upon the continuing availability of Congressional
appropriations. Congress usually appropriates funds on a fiscal-year basis even
though contract performance may extend over many years. Consequently, at the
outset of a program, the prime contract is usually partially funded and
additional funds are normally only appropriated to the contract by Congress in
future years. Fixed-price subcontracts are normally fully funded, but are
subject to convenience termination if the prime contract is not funded.
SEGMENT FINANCIAL DATA
Note 23 (Segment Financial Data) of Notes to Financial Statements in the
Company's 1998 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 1998 Annual Report to shareowners is incorporated
herein by reference.
COMPETITION
The Company encounters substantial competition, in each of its product
areas, from businesses producing the same or similar products and businesses
producing different products designed for the same uses. Such competition is
expected to continue in all geographic markets. Depending on the particular
market involved, the Company's businesses compete on a variety of factors, such
as price, quality, delivery, customer service, performance, product innovation
and product recognition. Other competitive factors for certain products include
breadth of product line, research and development efforts and technical and
managerial capability. While the Company's competitive position varies among its
products, the Company believes it is a significant factor in each of its major
product classes.
Certain products and services of the Company are sold in competition with
those of a large number of other companies, some of which have substantial
financial resources and significant technological capabilities. Other products
compete with independent suppliers or with the captive
11
component divisions of the vehicle manufacturers. Still other businesses
are aligned around markets, customers and common technologies. Brand identity,
service to customers and quality are important competitive factors in the
market and there is considerable price competition.
INTERNATIONAL OPERATIONS
The Company is engaged in manufacturing, sales and/or research and
development mainly in the U.S., Europe, Canada, Asia and Latin America. U.S.
exports and foreign manufactured products are significant to the Company's
operations. U.S. exports comprised 17% of total Company net sales in both 1998
and 1997. Foreign manufactured products and services, mainly in Europe, were 21%
and 22% of total Company net sales in 1998 and 1997, respectively.
The Company's international operations, including U.S. exports, are
potentially subject to a number of unique risks and limitations, including:
fluctuations in currency value; exchange control regulations; wage and price
controls; employment regulations; foreign investment laws; import and trade
restrictions, including embargoes; and governmental instability.
Approximately 25% of total sales of aerospace-related products and services
were exports of U.S. manufactured products and systems, performance of services
such as aircraft repair and overhaul, and licensing activities. Exports were
principally made to Europe, Asia and Canada. The principal manufacturing
facilities outside of the U.S. are in Europe and Canada. Foreign manufactured
products comprised 11% of total sales of aerospace-related products and
services.
Exports of U.S. manufactured automotive products comprised 5% of total
sales of automotive products. The principal manufacturing facilities outside the
U.S. are in Europe, with less significant operations in Asia, Latin America and
Canada. Foreign manufactured products accounted for 47% of total sales of
automotive products.
Approximately 13% of total sales of chemicals, fibers, plastics and
advanced materials were exports of U.S. manufactured products. Exports were
principally made to Asia, Europe, Latin America and Canada. The principal
manufacturing facilities outside the U.S. are in Europe, with less significant
operations in Asia and Canada. Foreign manufactured products comprised 19% of
total sales of chemicals, fibers, plastics and advanced materials.
RAW MATERIALS
The principal raw materials used to produce the Company's products include:
aerospace products -- carbon fiber; electronic, optical and mechanical component
parts and assemblies; electronic and electromechanical devices and metallic
products; automotive products -- castings, forgings, steel and bar stock,
copper, aluminum, platinum and titanium and chemicals, fibers, plastics and
advanced materials -- cumene, natural gas, sulfur, terephthalic acid, ethylene
and ethylene glycol, fluorspar, HF, carbon tetrachloride, chloroform, nylon
resins, fiberglass, copper foil, platinum, rhodium, polyester chips, lubricating
oil by-products and butylrubber. The Company is producing virtually all of its
HF and nylon resin requirements. The principal raw materials used in the
Company's operations are generally readily available. Major requirements for key
raw materials and fuels are typically purchased pursuant to multi-year
contracts. The Company is not dependent on any one supplier for a material
amount of its raw material or fuel requirements. However, the Company is highly
dependent on its suppliers and subcontractors in order to meet commitments to
its customers. In addition, many major components and product equipment items
are procured or subcontracted on a sole-source basis with a number of domestic
and foreign companies. The Company maintains a qualification and performance
surveillance process to control risk associated with such reliance on third
parties. The Company believes that sources of supply for raw materials and
components are generally adequate, although, temporary shortages may occur from
time to time.
PATENTS AND TRADEMARKS
The Company owns approximately 9,000 patents or 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
12
that any patent or patent license agreement 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, Holts, Prestone and Redex.
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 $394, $349 and $345 million in
1998, 1997 and 1996, respectively. Customer-sponsored (principally the U.S.
Government) research and development activities amounted to an additional $418,
$527 and $536 million in 1998, 1997 and 1996, respectively.
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 certain operations and products of the Company, as it is with other
companies engaged in similar businesses.
The Company is and has been engaged in the handling, manufacture, use or
disposal of many substances 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 or 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 that 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 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 $52 million in 1998. The Company estimates that during each of
the years 1999 and 2000 such capital expenditures will be in the $60 to $65
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 22 of the
Company's 1998 Annual Report to shareowners, incorporated herein by reference,
for further information regarding environmental matters.
EMPLOYEES
The Company had an aggregate of 70,400 employees at December 31, 1998.
Approximately 49,900 were located in the United States, and, of these employees,
about 23% were unionized employees represented by various local or national
unions.
13
ITEM 2. PROPERTIES
The Company has approximately 340 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 is located at Morris Township, New Jersey.
The principal plants, which are owned in fee unless otherwise indicated,
are as follows:
AEROSPACE SYSTEMS
Anniston, AL Olathe, KS (leased) Mississauga, Ontario
Tempe, AZ Columbia, MD Canada
Torrance, CA (partially Teterboro, NJ Yeovil, Somerset
leased) Rocky Mount, NC United Kingdom
Tucson, AZ Urbana, OH
South Bend, IN Redmond, WA
SPECIALTY CHEMICALS & ELECTRONIC SOLUTIONS
Baton Rouge, LA Orange, TX Seelze, Germany
Geismar, LA
TURBINE TECHNOLOGIES
Phoenix, AZ (4 plants, Torrance, CA Singapore
1 owned, 3 partially Thaon-Les-Vosges, France Skelmersdale,
leased) Raunheim, Germany United Kingdom
PERFORMANCE POLYMERS
Moncure, NC Chesterfield, VA Longlaville, France
Pottsville, PA Churchill, VA Rudolstadt, Germany
Columbia, SC Hopewell, VA
Sparta, TN
TRANSPORTATION PRODUCTS
Huntington, IN Greenville, OH Glinde, Germany
Fostoria, OH
ITEM 3. LEGAL PROCEEDINGS
The first four paragraphs of Note 20 (Commitments and Contingencies) of
Notes to Financial Statements at page 39 of the Company's 1998 Annual Report to
shareowners are incorporated herein by reference.
The Indiana Department of Environmental Management issued a Notice of
Violation (NOV) to the Company on August 18, 1997 alleging, principally, that
the Company had failed to obtain certain air emissions permits required for the
construction and operation of various equipment at its South Bend, Indiana
plant. The Company could be subject to monetary sanctions which may exceed
$100,000. Management does not believe that any such monetary sanctions, if
imposed, will have a material adverse effect on the consolidated results of
operations or financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
14
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), 63 Chairman of the Board since January 1992. Chief Executive Officer of the
1991 Company since July 1991.
Frederic M. Poses (a), 56 President and Chief Operating Officer since June 1998. Vice Chairman from
1988 October 1997 to May 1998. Executive Vice President and President,
AlliedSignal Engineered Materials from April 1988 to September 1997.
Larry E. Kittelberger, 50 Senior Vice President and Chief Information Officer since February 1999.
1996 Vice President and Chief Information Officer from August 1995
to January 1999. Corporate Chairman -- Information Officer
Leadership Committee of Tenneco Inc. (diversified industrial concern)
from June 1989 to July 1995.
Peter M. Kreindler, 53 Senior Vice President, General Counsel and Secretary since December 1994.
1992 Senior Vice President and General Counsel from March 1992 to November
1994.
Donald J. Redlinger, 54 Senior Vice President -- Human Resources and Communications since February
1991 1995. Senior Vice President -- Human Resources from January 1991 to
January 1995.
Richard F. Wallman, 47 Senior Vice President and Chief Financial Officer since March 1995. Vice
1995 President and Controller of International Business Machines Corp. (IBM)
from April 1994 to February 1995. General Assistant Controller of IBM from
October 1993 to March 1994.
William J. Amelio, 41 President -- Turbocharging Systems since April 1997. Vice President,
1998 Re-Engineering and Information Systems of IBM Personal Computer Company from
1996 to 1997. Vice President, Operations, IBM Personal Computer
Company from 1994 to 1995.
David E. Berges, 49 President -- Consumer Products Group since January 1998. President,
1998 Bendix/Jurid unit of Friction Materials from November 1997 to December 1997.
Vice President and General Manager, Engine Systems and Accessories unit of
Aerospace Equipment Systems from July 1994 to October 1997.
Mark H. Breedlove, 42 President -- Friction Materials since October 1998. President,
1998 Bendix/Jurid unit of Friction Materials from February 1998 to September
1998. President, Asia Operations, Automotive from June 1996 to January
1998. President, Braking Systems -- Asia, from July 1995 to May 1996. Vice
President, Product Management, Braking Systems -- Americas from August
1994 to June 1995. Vice President, Finance, Braking Systems North America
from June 1993 to July 1994.
Gary A. Cappeline, 49 President -- Specialty Chemicals since December 1998. Group Vice President,
1998 Pigments and Additives, Engelhard Corporation (chemical manufacturer) from
January 1997 to November 1998; Group Vice President, Specialty Chemicals of
Ashland Chemical from January 1993 to December 1996.
- - ------------
(a) Also a director.
(list continued on next page)
15
(list continued from previous page)
NAME, AGE,
DATE FIRST
ELECTED AN OFFICER BUSINESS EXPERIENCE
- - ------------------------------- ----------------------------------------------------------------------------
Karen K. Clegg, 50 President -- Federal Manufacturing & Technologies (FM&T) since May 1995.
1998 Vice President of FM&T from February 1995 to April 1995. Vice President,
Field Services and New Markets, AlliedSignal Technical Services
Corporation from January 1994 to January 1995.
Robert D. Johnson, 51 President -- Aerospace Marketing, Sales and Service since January 1999.
1998 President -- Electronic & Avionics Systems from October 1997 to December
1998. Vice President and General Manager, Aerospace Services from 1994 to
1997. Group Vice President, Manufacturing and Services of AAR
Corp. from 1993 to 1994.
Steven R. Loranger, 47 President -- Engines since July 1997. President -- Truck Brake Systems from
1998 February 1995 to June 1997. Vice President, Air Transport unit of Engines
from May 1993 to January 1995.
Jeffrey I. Sinclair, 49 President -- Truck Brake Systems since October 1997. Vice President, Global
1998 Sales and Marketing, Friction Materials from September 1996 to September
1997. Principal of A.T. Kearney (management consulting company) from
September 1995 to August 1996. President of St. James Group (marketing
consulting company) from March 1991 to August 1995.
David N. Weidman, 43 President -- Polymers since March 1998. President -- Fluorine Products unit
1998 of Specialty Chemicals from May 1995 to February 1998. Vice President and
General Manager, Performance Additives unit of Specialty Chemicals from May
1994 to April 1995. Vice President and General Manager of American Cyanamid's
Fibers business from 1990 to 1994.
Geoffrey Wild, 42 President -- Electronic Materials since February 1997. President of
1998 Electronic Materials of Johnson Matthey plc from August 1992 to January 1997.
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 42 of the Company's 1998 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 18 of the Company's 1998
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 18 of the Company's
1998 Annual Report to shareowners is incorporated herein by reference.
16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
'Management's Discussion and Analysis' on pages 19 through 27 of the
Company's 1998 Annual Report to shareowners is incorporated herein by reference.
This Report contains, or incorporates by reference, certain statements that
may be deemed 'forward-looking statements' within the meaning of Section 21E of
the Securities Exchange Act of 1934. All statements, other than statements of
historical fact, that address activities, events or developments that the
Company or management intends, expects, projects, believes or anticipates will
or may occur in the future are forward-looking statements. Such statements are
based upon certain assumptions and assessments made by management of the Company
in light of its experience and its perception of historical trends, current
conditions, expected future developments and other factors it believes to be
appropriate. The forward-looking statements included in this Report are also
subject to a number of material risks and uncertainties, including but not
limited to economic, competitive, governmental and technological factors
affecting the Company's operations, markets, products, services and prices. Such
forward-looking statements are not guarantees of future performance and actual
results, developments and business decisions may differ from those envisaged by
such forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Information relating to market risk is included under the caption
'Financial Instruments' in 'Management's Discussion and Analysis' on pages 22
and 23 of the Company's 1998 Annual Report to shareowners, and such information
is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements, together with the report
thereon of PricewaterhouseCoopers LLP dated February 1, 1999 appearing on pages
27 through 42 of the Company's 1998 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, 7
and 7A, the 1998 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,
1998, 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.
17
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
PAGE IN
ANNUAL REPORT TO
SHAREOWNERS
----------------
(a)(1.) Index to Consolidated Financial Statements:
Incorporated by reference to the 1998 Annual Report to shareowners:
Report of Independent Accountants.................................................... 27
Consolidated Statement of Income for the years ended December 31, 1998, 1997 and
1996................................................................................ 28
Consolidated Balance Sheet at December 31, 1998 and 1997............................. 29
Consolidated Statement of Cash Flows for the years ended December 31, 1998, 1997 and
1996................................................................................ 30
Consolidated Statement of Shareowners' Equity for the years ended December 31, 1998,
1997 and 1996....................................................................... 31
Notes to Financial Statements........................................................ 32
(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 18 through 42 (except for the data included under the captions 'Financial
Statistics' on page 18) of the Company's 1998 Annual Report to shareowners
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
24 Powers of Attorney
27 Financial Data Schedule
(b) Reports on Form 8-K
During the three months ended December 31, 1998, a report on Form 8-K was
filed on October 21, 1998 disclosing certain earnings data, updated Year 2000
information and certain new credit facilities.
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 4, 1999 By: /s/ RICHARD J. DIEMER, JR.
---------------------------------
Richard J. Diemer, Jr.
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
* *
- - ------------------------------------------------------ ------------------------------------------------------
Frederic M. Poses Ivan G. Seidenberg
Director Director
* *
- - ------------------------------------------------------ ------------------------------------------------------
Hans W. Becherer Andrew C. Sigler
Director Director
*
- - ------------------------------------------------------ ------------------------------------------------------
Marshall N. Carter John R. Stafford
Director Director
(Joined Board of Directors March 1, 1999)
* *
- - ------------------------------------------------------ ------------------------------------------------------
Ann M. Fudge Thomas P. Stafford
Director Director
* *
- - ------------------------------------------------------ ------------------------------------------------------
Paul X. Kelley Robert C. Winters
Director Director
* *
- - ------------------------------------------------------ ------------------------------------------------------
Robert P. Luciano Henry T. Yang
Director Director
* /s/ RICHARD J. DIEMER, JR.
- - ------------------------------------------------------ ------------------------------------------------------
Robert B. Palmer Richard J. Diemer, Jr.
Director Vice President and Controller
(Principal Accounting Officer)
/s/ RICHARD F. WALLMAN
- - ------------------------------------------------------
Richard F. Wallman
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
*By: /s/ RICHARD F. WALLMAN
-------------------------------------------------
(Richard F. Wallman
Attorney-in-fact)
March 4, 1999
19
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- - ----------- ---------------------------------------------------------------------------------------------
2 Omitted (Inapplicable)
3(i) Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit
3(i) to the Company's Form 10-Q for the quarter ended March 31, 1997)
3(ii) By-laws of the Company, as amended (incorporated by reference to Exhibit 3(ii) to the
Company's Form 10-Q for the quarter ended March 31, 1996)
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 February 26, 1986, as amended and restated January 27, 1987,
as further amended July 1, 1987 and as again amended and restated 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, 1996)
10.3* 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)
10.4* 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)
10.5* 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)
10.6* 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)
10.7* 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)
10.8* 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)
10.9* 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)
EXHIBIT NO. DESCRIPTION
- - ----------- ---------------------------------------------------------------------------------------------
10.10* Amended and restated Agreement, dated May 6, 1994, as amended May 12, 1997 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 and to Exhibit 10.15 to the Company's Form
10-Q for the quarter ended June 30, 1997)
10.11 Five-Year Credit Agreement dated as of June 30, 1995 as amended 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 Forms 10-Q for the
quarters ended June 30, 1995 and June 30, 1996 and to Exhibit 10.13 to the Company's Form
10-Q for the quarter ended June 30, 1997)
10.12 364 Day Backstop Credit Agreement dated as of October 9, 1998 by and among AlliedSignal Inc.,
Bank of America NT&SA, Citibank, N.A., as Agent, Banque Nationale de Paris, Barclays Bank
PLC, Citibank, N.A., Deutsche Bank AG and Morgan Guaranty Trust Company of New York, as
Lenders, and Citibank, N.A., as Agent (incorporated by reference to Exhibit 99.1 to the
Company's Form 8-K filed October 21, 1998)
10.13* AlliedSignal Inc. Supplemental Pension Plan, as amended (incorporated by reference to Exhibit
10.13 to the Company's Form 10-K for the year ended December 31, 1997)
11 Omitted (Inapplicable)
12 Omitted (Inapplicable)
13 Pages 18 through 42 (except for the data included under the captions 'Financial Statistics'
on page 18) of the Company's 1998 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)
- - ------------
The Exhibits identified above with an asterisk(*) are management contracts
or compensatory plans or arrangements.
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as.................. 'r'