U.S. Securities and
Exchange Commission
Washington, DC 20549
General Signal Corporation
1994 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, 1994 or
--- Transition Report Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Commission File No. 1-996
General Signal Corporation
Box 10010
High Ridge Park, Stamford, Connecticut 06904
Telephone Number (203) 329-4100
IRS Employer Identification No. 16-0445660
State of Incorporation: New York
Securities registered pursuant to Section 12(b) of
the Act:
Name of each exchange
Title of each class on which registered
Common Stock New York Stock Exchange
par value $1.00
(Par value reduced Pacific Stock Exchange
from $6.67 effective
April 21, 1969)
5.75% Convertible New York Stock Exchange
Subordinated
Debentures due
June 1, 2002
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 voting stock held by
non-affiliates as of March 2, 1995 was
approximately $1.7 billion. As of March 2, 1995,
there were 47.3 million shares of General Signal
Corporation common stock outstanding.
Documents incorporated by reference Part
Annual Report to Shareholders for the
Fiscal Year Ended December 31, 1994 I, II, IV
Proxy Statement for 1995 Annual Meeting III
Note: Some of the information required
in this Form 10-K report (10-K) was
presented in the General Signal
Corporation 1994 Annual Report to
Shareholders (Shareholders' Report) and
is incorporated herein by reference. A
complete copy of the Shareholders'
Report is bound on the outside of this
10-K to facilitate reference. Except for
those sections specifically referred to
as being incorporated herein by
reference, the Shareholders' Report
shall not be deemed to be "filed" as
part of this 10-K. The registrant is
also referred to as "the company."
Table of Contents
Item Page
1. Business ...................................1
2. Properties .................................4
3. Legal Proceedings ..........................4
4. Submission of Matters to a
Vote of Security Holders ...................4
5. Market for the Registrant's Common
Stock and Related Shareholder Matters ......4
6. Selected Financial Data ....................4
7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations ..................4
8. Financial Statements and
Supplementary Data .........................5
9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure ...................5
10. Directors and Executive Officers ...........5
11. Executive Compensation .....................5
12. Security Ownership of Certain
Beneficial Owners and Management ...........5
13. Certain Relationships and
Related Transactions .......................5
14. Exhibits, Financial Statements,
Schedules and Reports on Form 8-K ..........5
<PAGE>1
Part I
Item 1. Business
General Developments General Signal Corporation, incorporated in New York in
1904, produces industrial valves and mixers; pumps; other equipment for
industrial automation, electrical energy management, telecommunications
transmission, and transportation; and test and measurement equipment. The
company serves these markets through three product sectors: Process Controls,
Electrical Controls and Industrial Technology.
In November 1994, the company adopted a plan to sell Leeds & Northrup,
formerly a part of the Process Controls business sector, and
Dynapower/Stratopower, formerly a part of the Industrial Technology business
sector. The company expects to sell these businesses during 1995.
During the last five years, the company invested approximately $307
million in cash and common stock (2.6 million shares) to acquire 24
businesses and/or product lines. The notes to the financial statements on
page 29 of the Shareholders' Report provide additional information for
acquisitions during the last three years and are incorporated herein by
reference.
Financial Information about Business Segments Selected business segment
information for the last five fiscal years is summarized on page 31 of the
Shareholders' Report and is incorporated herein by reference. There were no
classes of similar products or services that exceeded 10 percent of
consolidated sales.
A summary of information by geographic area for the last five fiscal
years is included on page 32 of the Shareholders' Report and is incorporated
herein by reference.
Narrative Description of Business
Major Markets and Products and Method of Distribution A narrative
description of the registrant's business is included on pages 4 through 13 of
the Shareholders' Report and is incorporated herein by reference.
The company's products are sold by its own sales organization and
through distributors and manufacturers' representatives.
Materials and Supplies The company manufactures many of the components
used in its products, but it also purchases a variety of basic materials and
component parts. Although some basic materials and components have been and
may be in short supply from time to time, the company believes that generally
it will be able to obtain adequate supplies of major items or reasonable
substitutes.
Patents The company holds many patents and has continued to secure other
patents that cover many of its products. While patents are important in the
aggregate to the company's competitive position, the loss of any single
patent, patent application or patent license agreement, or group thereof,
would not materially affect the conduct of its business as a whole. The
company is both a licensor and licensee of patents.
Working Capital A discussion of working capital is included on pages 16
and 17 of the Shareholders' Report and is incorporated herein by reference.
Backlog The amount of unfilled orders was approximately $307.2 million
as of December 31, 1994 and $300.4 million as of December 31, 1993 (excluding
unfilled orders of businesses sold or discontinued). All unfilled orders are
expected to be filled within the next succeeding year.
Competition Although the businesses of the company are highly
competitive, the competitive position cannot be determined accurately in the
aggregate or by segment since none of its competitors offers all of the same
product lines or serves all of the same markets, nor are reliable comparative
figures available for its competitors. In most product groups, competition
comes from numerous concerns, both large and small. The principal methods of
competition are price, service, product performance and technical innovation.
These methods vary with the type of product sold. The company believes that
it can compete effectively on the basis of each of these factors as they
apply to the various products offered.
Research and Development Research and development information for the
last three years is included on page 33 of the Shareholders' Report and is
incorporated herein by reference.
Environmental Matters The company is involved in various stages of
investigation and remediation relative to environmental protection matters,
arising from its own initiative, from indemnification of purchasers of
divested operations, or from legal or administrative proceedings, some of
which involve waste disposal sites. The company has a comprehensive
environmental compliance program which includes environmental audits
conducted by internal and outside independent environmental professionals and
regular communications with the company's operating units regarding
environmental compliance requirements and anticipated regulations.
Pursuant to the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the company has been
notified that it has been named as a potentially responsible party ("PRP") at
34 CERCLA sites which are listed on the National Priorities List ("NPL")
maintained by the U.S. Environmental Protection Agency ("EPA"). The law
governing CERCLA sites provides that PRPs may be jointly and
<PAGE>2
severally liable for the total costs of investigation and remediation.
Based on information available to the company, at five of these sites (Byron
Barrell in Byron, NY; Iron Horse Park in Billerica, MA; M.T. Richards in
Crossville, IL; Doepke-Holliday in Holliday, KS; and North Penn Water
Authority in Montgomery Co., PA), the company believes that its aggregate
probable remaining liability will not exceed $2.5 million. At six sites
(Aquatech in Greer, SC; Berks Associates in Douglasville, PA; Commercial Oil
Services in Oregon, OH; West KL in Kalamazoo, MI; Spectron in Elkton, MD; and
Stringfellow in Riverside, CA) the company is of the opinion, based on
information currently available, that it contributed less than 1% of the
total volume, weight or other allocation criteria at each site and the
company believes its aggregate probable remaining liability for these sites
will not exceed $350,000. At 15 of the remaining 22 CERCLA NPL sites, the
company has resolved its liability by entering into de minimis settlements or
buy-out agreements with either the EPA or PRP groups and paying its
proportionate share of costs of site investigation and remediation (at an
aggregate cost to the company of less than $500,000). The company believes,
based on information currently available, that it has no liability at seven
such sites since the company's investigation has not revealed either a record
of its having transported or arranged for disposal of hazardous substances to
such sites or verifiable evidence of its responsibility for the release or
threatened release of hazardous substances at these sites, but the company
believes that it could incur future costs (including legal expenses) related
to the foregoing which would not exceed approximately $100,000 in the
aggregate. Finally, the company recently received a contractual
indemnification claim with respect to a CERCLA NPL site (Cork Street,
Kalamazoo Co., MI). No information regarding the company's involvement at
such site is currently available.
The company has also received requests for information from the EPA at
seven NPL sites for which the company believes, based on its investigation of
such matters, that its potential aggregate remaining liability will not
exceed $100,000.
The company recently received a notification of potential liability from
the EPA under the Toxic Substances Control Act of 1976 with respect to a
multi-party site, which is not a CERCLA site, based on the company's alleged
generation of toxic substances present at the site. The company's liability,
based on currently available information, is estimated to be approximately
$100,000. At six sites which are not CERCLA NPL sites, the company has been
cited by EPA with respect to removal actions. The company has entered into
settlements and paid its proportionate share of costs at five of these sites,
and the company believes that its probable remaining liability at the sixth
site is less than $50,000.
The company has received notices of potential liability from various
state environmental authorities pursuant to state environmental laws
regarding ten multi-party sites based on the company's alleged generation of
hazardous materials present at those sites. The company's liability has been
resolved and satisfied at two sites and, based on the company's
investigation, the company believes that its aggregate probable remaining
liability at the eight other sites will not exceed $2.5 million. Although the
company has received requests for information from state environmental
authorities at two additional sites, the company's investigation has revealed
no record of its having disposed of hazardous substances at, or arranged for
transportation of hazardous substances to, such sites.
The company is engaged in site investigation and/or remediation at the
following sites presently or formerly owned by the company:
New York Air Brake Landfill/Kelsey Creek Site In February 1990, the
company entered into a consent order with the New York State Department of
Environmental Conservation ("NYSDEC") to conduct an investigation and
remediation at the company's discontinued New York Air Brake facility in
Watertown, New York. On March 30, 1994, NYSDEC issued a Record of Decision
("ROD") requiring site remediation at a cost of $8.1 million. The remedial
action will consist of consolidation of contamination in the existing
industrial landfill, capping the landfill and collecting contaminated
groundwater downgradient of the landfill. The ROD also proposed the removal
of certain sediments in Kelsey Creek and a tributary creek at an additional
cost estimated by the company at approximately $1.75 million; the company has
submitted a risk assessment for review by the NYSDEC recommending no action
since the company's risk assessment of the creeks showed no adverse impacts
from sediments. At the request of NYSDEC, the company is conducting a survey
of soft sediments which will be the basis for future discussions regarding
Kelsey Creek and its tributaries. The company has filed litigation against
the City of Watertown to challenge an increase in sewer discharge fees for
leachate at the landfill and believes that it will ultimately prevail in such
litigation.
Hevi-Duty Facility In August 1990, the EPA placed this manufacturing
facility of the company, located in Goldsboro, North Carolina, on the NPL;
subsequently, the company challenged the listing and the EPA delisted the
facility in June 1993. Following the delisting, the company investigated
site contamination at this facility and prepared a remedial plan. The company
has informed the State of North Carolina that it seeks participation in a
voluntary clean-up program and has negotiated the terms of an Administrative
Order on Consent with the North Carolina Department of Environmental Health
and Natural Resources. The company currently believes that the probable
aggregate remaining liability for clean-up of this site will be approximately
$3 million.
<PAGE>3
General Railway Signal Facility In 1990, the company's pre-divestiture
investigation of this facility, located in Rochester, New York, identified
certain areas which may have been contaminated with hazardous substances.
Remediation is being conducted at the site. The company currently believes
that the probable aggregate remaining liability for remediation of this site
will be approximately $1 million.
Fairbanks Morse Facility On December 2, 1994, the company acquired
Fairbanks Morse, Inc. Based on the pre-acquisition environmental assessment
and site testing performed at the Fairbanks Morse facility located in Kansas
City, Kansas, the company will spend an estimated $525,000 for various
environmental matters, including investigation of site soil and groundwater
contamination and remediation of oil-contaminated soil. It is possible that
an additional $2 million to $5 million could be required for remediation of
contaminated groundwater if the Kansas Department of Environment and Health,
based on the site investigation, decides that existing groundwater
contamination at the facility is not attributable to the neighboring
contaminated property. The company is accounting for the foregoing, and for
any liability of Fairbanks Morse at the Doepke-Holliday and Stringfellow
sites discussed above, under purchase accounting.
The company has reported site contamination to environmental authorities
with respect to seven sites which the company formerly owned or operated. The
company is undertaking site investigations and remediations at six of those
sites and site investigations at one site. The company believes that the
probable aggregate remaining liability for investigation and remediation will
not exceed approximately $1.4 million. At one present manufacturing facility
and one former manufacturing facility, the company is performing voluntary
site investigation and remediation at a remaining cost not estimated to
exceed approximately $225,000, based on information currently available.
It is the company's policy not to offset expected insurance recoveries
against expected obligations when determining the amount of environmental
accruals.
The potential costs related to the matters described above and the
possible impact on future operations are uncertain due in part to the
complexity of government laws and regulations and their interpretations, the
varying costs and effectiveness of clean-up technologies, the uncertain level
of insurance or other types of recovery, and the questionable level of the
company's responsibility. In management's opinion, after considering reserves
established for such purposes, remedial actions for compliance with the
present laws and regulations governing the protection of the environment are
not expected to have a material adverse impact on the company's results of
operations or financial position.
Employees At December 31, 1994, the company had approximately 12,200
employees, excluding employees of businesses held for sale. Approximately
2,900 employees are represented by 36 different collective bargaining units.
The company has generally experienced satisfactory labor relations at its
various locations.
Executive Officers of the Registrant Name, Position, Age at December 31
and Other Information Age
Edmund M. Carpenter ........................................................53
Chairman and Chief Executive Officer since May 1, 1988. Previously, Director,
President and Chief Operating Officer of ITT Corporation since 1985. Prior to
joining ITT Corporation in 1981, President of Kelsey-Hayes Company, a
subsidiary of Fruehauf Corporation.
Michael D. Lockhart ........................................................45
President and Chief Operating Officer since October 3, 1994. Previously, Vice
President and General Manager of General Electric's Commercial Engines and
Services division, along with several other key executive positions at GE.
Prior to joining GE, served as vice president and director, The Boston
Consulting Group.
Terence D. Martin ..........................................................51
Executive Vice President and Chief Financial Officer since February 2, 1995.
Previously, Chief Financial Officer of American Cyanamid Company since 1991
and Treasurer since 1988.
Joel S. Friedman ...........................................................57
Senior Vice President Operations since March 1, 1987. Previously, Group
Executive and President of Lightnin, a unit of General Signal, since 1984 and
President of O-Z/Gedney, a unit of General Signal, since 1975.
George Falconer ............................................................62
Vice President Human Resources since October 23, 1986. Previously, Director
of Human Resources since 1981, Director of Industrial Relations since 1977,
and Corporate Director of Personnel Relations since 1976. Associated with
Metal Forge, a unit of General Signal, since 1970, most recently as Vice
President Employee Relations.
Nino J. Fernandez ..........................................................53
Vice President Investor Relations since May 1, 1987. Previously, Director of
Communications since 1974. Name, Position, Age at December 31 and Other
Information Age
<PAGE>4
Executive Officers of the Registrant
Name, Position, Age at December 31 and Other Information Age
Philip A. Goodrich .........................................................38
Vice President Corporate Development since December 12, 1991.
Previously, Director of Corporate Development since May, 1989 and Assistant
Treasurer since May, 1987. Prior to joining the company, associated with
Joseph E. Seagram & Sons, Inc. since 1981, most recently as Assistant
Treasurer.
Darryl A. Littleton ........................................................45
Vice President Manufacturing since February 5, 1992. Previously, Senior
Partner and Director of Ingersoll Engineers, Inc. since 1984.
Terry J. Mortimer 49
Vice President and Controller since May 25, 1990. Previously Director Finance
and Chief Accountant for Apple Computer since June, 1988. Previously with
Becton Dickinson and Company from January, 1981 to June, 1988, most recently
as Medical Sector Controller.
Edgar J. Smith, Jr. ........................................................60
Vice President, General Counsel, and Secretary since April 19, 1984, and Vice
President and General Counsel since January 1, 1980. Previously, Assistant
General Counsel since 1967.
Thomas E. Taylor ...........................................................48
Vice President Taxes since September 1, 1993. Previously with Elf Aquitaine,
Inc. as Vice President Taxes since 1985.
Julian B. Twombly ..........................................................48
Vice President and Treasurer since December 17, 1991. Prior to joining the
company, associated with United Dominion Industries, Ltd. since 1974, most
recently as Senior Vice President and Treasurer.
The executive officers are elected annually by the Board of Directors.
There are no family relationships between any of the directors or executive
officers of the company.
Item 2. Properties
The Process Controls sector's operations consist of 27 manufacturing
facilities in 12 states and 8 foreign countries, containing approximately 2.9
million square feet, of which 94 percent is owned and 6 percent is leased.
The Electrical Controls sector's operations consist of 30 manufacturing
facilities in 14 states and 4 foreign countries, containing approximately 2.7
million square feet, of which approximately 69 percent is owned and 31
percent is leased.
The Industrial Technology sector's operations consist of 11
manufacturing facilities in 8 states, containing approximately 0.9 million
square feet, of which approximately 79 percent is owned and 21 percent is
leased.
In addition to manufacturing plants, the company as lessee occupies
executive offices in Stamford, Connecticut, and various sales and service
locations throughout the world. All of these properties, as well as the
related machinery and equipment, are considered to be well maintained,
suitable and adequate for their intended purposes. Assets subject to lien are
not significant.
As a result of recent business divestitures and restructuring
activities, the company holds 1.4 million square feet of idle facilities and
facilities related to discontinued operations for sale or sublease.
Item 3. Legal Proceedings
The company and certain of its subsidiaries are defendants in legal
proceedings incidental to its business. Although the ultimate disposition of
these proceedings is not presently determinable, management does not expect
the outcome to have a material adverse impact on the company's financial
position.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Part II
Item 5. Market for Registrant's Common Stock and Related Shareholder
Matters
The company's common stock is listed on the New York and Pacific stock
exchanges under the symbol "GSX". Information as to quarterly prices for the
last two years, and dividends paid is included on pages 21 and 32 of the
Shareholders' Report and is incorporated herein by reference. There were
approximately 10,330 holders of record of the company's common stock on March
2, 1995.
Item 6. Selected Financial Data
Selected financial data of the company for the last five fiscal years
are incorporated herein by reference to page 34 of the Shareholders' Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" appears on pages 14 through 17 of the Shareholders' Report and
is incorporated herein by reference.
<PAGE>5
Item 8. Financial Statements and Supplementary Data
The financial statements and related notes are incorporated herein by
reference to pages 19 through 33 of the Shareholders' Report. Quarterly
financial information is incorporated herein by reference to page 32 of the
Shareholders' Report. The Report of Independent Auditors, dated January 27,
1995, is incorporated herein by reference to page 18 of the Shareholders'
Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
Item 10. Directors and Executive Officers
This information is incorporated herein by reference to pages 5 through
7 of the Proxy Statement for the 1995 annual meeting of shareholders. Also
see page 3 of this 10-K as to information related to executive officers.
Item 11. Executive Compensation
This information is incorporated by reference to pages 11 through 18 of
the Proxy Statement for the 1995 annual meeting of shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is incorporated by reference to pages 2 through 4 of
the Proxy Statement for the 1995 annual meeting of shareholders.
Item 13. Certain Relationships and Related Transactions
Not applicable.
Part IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K
(a) (1) Financial Statements and Other Financial Data.
The financial statements of the company and consolidated subsidiaries
are incorporated herein by reference to pages 19 through 33 of the
Shareholders' Report. The Independent Auditors' Report of Ernst & Young, LLP,
dated January 27, 1995, is incorporated herein by reference to page 18 of the
Shareholders' Report.
Page
(2) Schedule II Valuation and Qualifying Accounts ......................9
All other schedules are omitted as the required information is not
applicable or the information is presented in the financial statements or
related notes.
(3) Exhibits
3.1 Restated Certificate of Incorporation of General Signal
Corporation, as amended through April 21, 1994.
3.2 By-laws of General Signal Corporation, as amended through March
16, 1995.
4.1 Copies of the instruments with respect to the company's long-term
debt are available to the Securities and Exchange Commission upon
request.
4.2 Copies of the Credit Agreements among General Signal Corporation
and Various Commercial Banking Institutions, as amended through
January 12, 1995, as described in the Notes to Financial
Statements incorporated herein by reference in (a)(1) above, are
available to the Securities and Exchanges Commission upon
request.
10.1 Description of General Signal Corporation Incentive Compensation
Plan is incorporated herein by reference to Exhibit 10.1 of the
registrant's 1991 Form 10-K filed March_25, 1992.
10.2 Retirement Plan for Directors of General Signal Corporation is
incorporated herein by reference to Exhibit 10.7 of the
registrant's 1988 Form 10-K filed March 17, 1989.
10.3 General Signal Corporation Change in Control Severance Pay Plan,
as amended, is incorporated herein by reference to Exhibit 10.8
of the registrant's 1989 Form 10-K filed March 16, 1990.
10.4 General Signal Corporation Deferred Compensation Plan, dated
October 14, 1993, is incorporated herein by reference to Exhibit
10.4 of the registrant's 1993 Form 10-K filed March 21, 1994.
10.5 General Signal Corporation Benefit Equalization Plan as amended
and restated October 14, 1993, is incorporated herein by
reference to Exhibit 10.5 of the registrant's 1993 Form 10-K
filed March 21, 1994.
<PAGE>6
10.6 General Signal Corporation 1992 Stock Incentive Plan as amended
and restated July 7, 1993, is incorporated herein by reference to
Exhibit 10.6 of the registrant's 1993 Form 10-K filed March 21,
1994.
10.7 General Signal Corporation 1989 Stock Option and Incentive Plan
as amended July 7, 1993, is incorporated herein by reference to
Exhibit 10.7 of the registrant's 1993 Form 10-K filed March 21,
1994.
10.8 General Signal Corporation 1985 Stock Option Plan as amended and
restated July 7, 1993, is incorporated herein by reference to
Exhibit 10.8 of the registrant's 1993 Form 10-K filed March 21,
1994.
10.9 General Signal Corporation 1981 Stock Option Plan as amended and
restated July 7, 1993, is incorporated herein by reference to
Exhibit 10.9 of the registrant's 1993 Form 10-K filed March 21,
1994.
10.10 Consulting Agreement with Nathan R. Owen is incorporated herein
by reference to Exhibit 10.10 of the registrant's 1986 Form 10-K
filed March 30, 1987.
10.11 Employment agreement between Edmund M. Carpenter and the
registrant dated April 15, 1988 is incorporated herein by
reference to Exhibit 10.12 of the registrant's 1988 Form 10-K
filed March 17, 1989.
10.12 Employment agreement between Michael D. Lockhart and the
registrant dated October 3, 1994.
10.13 Employment agreement between Terence D. Martin and the
registrant dated February 2, 1995.
10.14 Severance agreement between Peter A. Laing and the registrant
dated January 9, 1995.
10.15 Severance agreement between Stephen W. Nagy and the registrant
dated January 13, 1995.
11.0 Computation of Earnings per Share. See page 9 of this report.
12.0 Calculation of Ratios of Earnings to Fixed Charges. See page 10
of this report.
13.0 1994 Annual Report to Shareholders. Except for those portions
specifically incorporated herein by reference, the company's 1994
Annual Report to Shareholders is furnished for the information of
the Commission and is not deemed to be "filed." Pages 14 through
34, including the Independent Auditors' Report on page 18, are
specifically incorporated herein by reference.
21.0 Subsidiaries. See pages 10 through 12 of this report.
23.0 Consent of Ernst & Young, LLP. See inside back cover of this
report.
(b) Reports on Form 8-K.
No reports were filed on Form 8-K.
<PAGE>7
Signatures
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
General Signal Corporation
/s/ Edmund M. Carpenter
(Edmund M. Carpenter, Chairman) March 17, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Edmund M. Carpenter
(Edmund M. Carpenter) March 17, 1995
Chairman and Director (Principal Executive Officer)
/s/ Michael D. Lockhart
(Michael D. Lockhart) March 17, 1995
President and Chief Operating Officer and Director
/s/ Terence D. Martin
(Terence D. Martin) March 17, 1995
Executive Vice President and Chief Financial Officer
/s/ Terry J. Mortimer
(Terry J. Mortimer) March 17, 1995
Vice President and Controller (Chief Accounting Officer)
/s/ Ralph E. Bailey
(Ralph E. Bailey) March 17, 1995
Director
/s/ Van C. Campbell
(Van C. Campbell) March 17, 1995
Director
/s/ Ronald E. Ferguson
(Ronald E. Ferguson) March 17, 1995
Director
/s/ John P. Horgan
(John P. Horgan) March 17, 1995
Director
/s/ C. Robert Kidder
(C. Robert Kidder) March 17, 1995
Director
/s/ Richard J. Kogan
(Richard J. Kogan) March 17, 1995
Director
/s/ Nathan R. Owen
(Nathan R. Owen) March 17, 1995
Director
/s/ Roland W. Schmitt
(Roland W. Schmitt) March 17, 1995
Director
/s/ John R. Selby
(John R. Selby) March 17, 1995
Director
<PAGE>8
Schedule II Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Additions
General Signal Corporation and charged
Consolidated Subsidiaries Balance at (credited) Balance at
Years Ended December 31, 1994, 1993 beginning to cost and end of
and 1992 (In millions) of period expense Deductions period
<S> <C> <C> <C> <C>
1994
Reserves deducted from assets:
Allowance for doubtful accounts $10.5 $4.5 $(4.9)(1) $10.1
----- ---- ----- -- -----
Assets held for sale $14.4 $8.6 $(14.4)(3) $8.6
----- ---- ------ -- ----
Dispositions and special items:
Consolidation of operations and other $- $19.3 $(3.4)(4) $15.9
Transaction and consolidation of Revco 8.8 (1.5) (6.7)(4) 0.6
Semiconductor 13.3 (0.6) 5.4(4),(5) 18.1
Restructuring 13.0 (3.5) (7.0)(4) 2.5
---- ---- ---- -- ---
$35.1 $13.7 $(11.7) $37.1
===== ===== ====== =====
1993
Reserves deducted from assets:
Allowance for doubtful accounts $8.9 $4.6 $(3.0)(1) $10.5
---- ---- ----- -- -----
Assets held for sale $18.6 $- $(4.2)(3) $14.4
----- - ----- -- -----
Dispositions and special items:
Transaction and consolidation of Revco $- $13.2 $(4.4)(4) $8.8
Semiconductor 57.3 (53.2) 9.2(4),(6) 13.3
Restructuring - 30.5 (17.5)(4) 13.0
---- ----- -- ----
$57.3 $(9.5) $(12.7) $35.1
===== ===== ====== =====
1992
Reserves deducted from assets:
Allowance for doubtful accounts $11.1 $5.5 $(7.7)(1),(2) $8.9
----- ---- ----- -- -- ----
Assets held for sale $- $18.6 $- $18.6
- ----- - -----
Semiconductor $- $67.0 $(9.7)(4) $57.3
- ----- ----- -- -----
<FN>
(1) Write-off of bad debts, net of recoveries. Includes reclassifications in
1994 of discontinued operations to assets held for sale.
(2) Includes transfer of semiconductor equipment operations allowance for
doubtful accounts to assets held for sale at October 1, 1992.
(3) Charges to reserve related to businesses divested during 1993 and 1994.
(4) Charges to reserve for related costs incurred during the year.
(5) Includes reclassification of $8.4 credit balance of GS Japan's cumulative
translation adjustment as of December 31, 1994.
(6) Includes $47.6 of excess proceeds on disposal of businesses divested during
1993.
</FN>
</TABLE>
Computation of Earnings Per Share Exhibit (11.0)
<TABLE>
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries
(In millions, except per-share data) Year Ended
December 31, 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
I. Earnings (loss) per share of common
stock (used for financial reporting):
Continuing operations $104.1 $98.1 $6.3
Earnings (loss) from discontinued operations 2.4 (31.5) 6.1
Loss on disposal of discontinued operations (25.8) - -
Extraordinary charges - (6.6) (0.3)
Cumulative effect of accounting changes - (25.3) (92.4)
----- ----- ------
Net Earnings (loss) $80.7 $34.7 $(80.3)
===== ===== ======
Average number of common shares outstanding(a) 47.3 45.2 41.8
==== ==== ====
Earnings (loss) per average share of common stock:
Continuing operations $2.20 $2.17 $0.15
Earnings (loss) from discontinued operations 0.05 (0.70) 0.15
Loss on disposal of discontinued operations (0.54) - -
Extraordinary charges - (0.14) (0.01)
Cumulative effect of accounting changes - (0.56) (2.21)
----- ----- ------
$1.71 $0.77 $(1.92)
===== ===== ======
II. Primary earnings per share(b)
(including common stock equivalents):
Average number of common shares outstanding 47.3 45.2 41.8
Dilutive effect of outstanding options
(as determined by application of the treasury
stock method) 0.3 0.3 0.3
--- --- ---
Total shares used in calculation of primary
earnings per share 47.6 45.5 42.1
==== ==== ====
Primary earnings (loss) per share:
Continuing operations $2.19 $2.16 $0.15
Earnings (loss) from discontinued operations 0.05 (0.69) 0.15
Loss on disposal of discontinued operations (0.54) - -
Extraordinary charges - (0.15) (0.01)
Cumulative effect of accounting changes - (0.56) (2.20)
----- ----- ------
$1.70 $0.76 $(1.91)
===== ===== ======
III. Fully diluted earnings per share(b):
Average number of shares used in calculation of
primary earnings per share above 47.6 45.5 42.1
Additional dilutive effect of outstanding options
(as determined by application of the treasury
stock method) - - -
----- ----- ------
Total shares used in calculation of fully diluted
earnings per share 47.6 45.5 42.1
----- ----- ------
Fully diluted earnings (loss) per share:
Continuing operations $2.19 $2.16 $0.15
Earnings (loss) from discontinued operations 0.05 (0.69) 0.15
Loss on disposal of discontinued operations (0.54) - -
Extraordinary charges - (0.15) (0.01)
Cumulative effect of accounting changes - (0.56) (2.20)
----- ----- ------
$1.70 $0.76 $(1.91)
===== ===== ======
<FN>
(a) Excludes common stock equivalents in accordance with provisions of APB
Opinion No. 15 because such equivalent shares result in dilution of less
than 3%.
(b) This calculation is presented in accordance with Regulation S-K although
the effect of the options deemed to be common stock equivalents is
antidilutive in 1992.
</FN>
</TABLE>
Calculation of Ratios of Earnings to Fixed Charges Exhibit (12.0)
General Signal Corporation
<TABLE>
<CAPTION>
(Dollars in millions) Year Ended December 31, 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Earnings:
Earnings (loss) from continuing operations
before income taxes and extraordinary items $160.3 $139.1 $9.5 $97.4 $15.5
Add: fixed charges 20.2 22.6 35.3 39.3 46.4
---- ---- ---- ---- ----
$180.5 $161.7 $44.8 $136.7 $61.9
====== ====== ===== ====== =====
Fixed charges:
Interest expense $14.4 $18.0 $28.6 $31.8 $37.2
One-third of rent expense 5.8 4.6 6.7 7.5 9.2
--- --- --- --- ---
$20.2 $22.6 $35.3 $39.3 $46.4
===== ===== ===== ===== =====
Ratio 8.94 7.15 1.27 3.48 1.33
==== ==== ==== ==== ====
</TABLE>
Subsidiaries of Registrant
1. Consolidated Subsidiaries Exhibit (21.0)
Percent Organized Under
Owned the Laws of
Subsidiaries of General Signal Corporation:
Aurora/Hydromatic Pumps Inc. 100 Delaware
Borri Elettronica Industriale S.r.l. 100 Italy
DeZurik of Australia Proprietary Ltd. 100 Australia
DeZurik Vertriebes GmbH 100 Austria
Fairbanks Morse Pump Corporation 100 Kansas
GCA International Corporation 100 New Jersey
GS Building Systems Corporation 100 Connecticut
Subsidiary of GS Building Systems Corporation:
Dual-Lite Manufacturing, Inc. 100 Delaware
General Signal FSC Inc. 100 Virgin Islands
General Signal Holdings Company 100 Delaware
Subsidiaries of General Signal Holdings Company:
General Signal Technology Corporation 100 Delaware
Subsidiaries of General Signal Technology Corporation:
General Farebox Service of Atlanta, Inc. 100 Delaware
General Signal Japan Corporation 100 Japan
General Signal International Corporation 100 Delaware
General Signal Limited 100 Ontario
General Signal SEG Asia, Ltd. 100 Hong Kong
General Signal SEG SARL 100 France
General Signal UK Limited 100 England
Subsidiaries of General Signal UK Limited:
DeZurik International Ltd. 100 England
GCA Limited 100 England
G.S. Iona Ltd. 100 England
General Signal SEG, Ltd. 100 England
Leeds & Northrup Limited 100 England
Lightnin Europe Limited 100 England
Lightnin Mixers Limited 100 England
Subsidiaries of Lightnin Mixers Ltd.:
Deutsche Lightnin Jesse Mischtechnik
Verwaltungsgesellschaft GmbH (Remaining 90 Germany
10% owned by General Signal Corporation)
Turbo Maschinenbau GmbH 100 Germany
Turbo Lightnin Mischtechnik GmbH & Co. KG 100 Germany
Percent Organized Under
Owned the Laws of
Sola (UK) Limited 100 England
Tau-Tron (UK) Limited 100 England
Telenex Europe Limited 100 England
Leeds & Northrup Company 100 Delaware
Subsidiaries of Leeds & Northrup Company:
Leeds & Northrup Australia Pty., Ltd. 100 Australia
Subsidiary of Leeds & Northrup Australia Pty., Ltd.:
Leeds & Northrup (New Zealand) Ltd. 100 New Zealand
Leeds & Northrup GmbH 100 Germany
Leeds & Northrup Mexicana, S.A. 100 Mexico
Leeds & Northrup S.A. 100 Spain
LDN, Ltd. 100 Delaware
Subsidiaries of LDN, Ltd.:
Leeds & Northrup (France) SARL 100 France
L.D.N. Netherlands, B.V. 100 Netherlands
L&N Singapore, Pte., Ltd. 100 Singapore
Leeds & Northrup Italy, S.p.A. 53 Italy
(47% owned by Leeds & Northrup Company)
Lightnin China Mixers Co. Ltd. 100 China
Lightnin Mixers Pty. Ltd. 60 Australia
(Remaining 40% owned by General Signal Ltd.)
Lightnin Pte. Ltd. 100 Singapore
Metal Forge Company, Inc. 100 Delaware
Shenyang Stock Electric Power Equipment Company, Limited100 China
Sola Australia, Limited 100 Australia
Sola Electric AG 100 Switzerland
Subsidiary of Sola Electric AG:
Borri Stromversorgunanlagen GmbH 100 Germany
Stock Japan, Ltd. 100 Japan
Telenex Corporation 100 New Jersey
2. Other Subsidiaries
The following minor foreign subsidiaries and the investment in
50-percent-or-less owned companies, which are not material individually or in
the aggregate in relation to the financial statements, are carried at cost
plus equity in undistributed earnings since acquisition.
Subsidiaries of General Signal Corporation:
DeZurik - India 40 India
DeZurik Japan Co., Ltd. 48 Japan
DeZurik Mexico, S.A. de C.V. 49 Mexico
General Signal Acquisition Corporation 100 Delaware
General Signal Corporation 100 Delaware
GSR Merger Sub Inc. 100 Delaware
HMS Ventures Ltd. 14 California
High Ridge Company, Limited 100 Bermuda
Industrias Sola Basic, S.A. 49 Mexico
Koyo Lindberg Ltd. 50 Japan
New Signal, Inc. 100 Delaware
Solamex, S.A. de C.V. 48 Mexico
Subsidiaries of Solamex, S.A. de C.V.:
Industrial GESCA S.A. de C.V. 99 Mexico
Inmobiliaria S-Tres, S.A. de C.V. 99 Mexico
Inmobiliaria S-Dos, S.A. de C.V. 99 Mexico
Inmobiliaria Solamex, S.A. de C.V. 99 Mexico
Productora Y Maquiladora Queretana S.A. de C.V. 99 Mexico
Terasaki Nelson Ltd. 50 Japan
Consent of Ernst & Young LLP Exhibit (23.0)
The Board of Directors and Shareholders
General Signal Corporation
We consent to the incorporation by reference in this Annual Report (Form
10-K) of General Signal Corporation of our report dated January 27, 1995,
included in the 1994 Annual Report to Shareholders of General Signal
Corporation.
Our audits also included the financial statement schedule of General
Signal Corporation and consolidated subsidiaries listed in Item 14(a). This
schedule is the responsibility of the company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
the financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly
in all material respects, the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements (Form S-3 No. 33-33929) pertaining to the universal shelf
registration dated May, 1994, (Form S-8 No. 33-46613) pertaining to the
General Signal Corporation Savings and Stock Ownership Plan, (Form S-8 No.
33-47495) pertaining to General Signal Corporation's stock incentive plans,
(Form S-4 No. 33-50081) pertaining to the merger agreement with Revco
Scientific, Inc. and related prospectuses of our report dated January 27,
1995, with respect to the financial statements incorporated herein by
reference, and our report included in the preceding paragraph with respect to
the financial statement schedule included in this Annual Report (Form 10-K)
of General Signal Corporation.
/s/ Ernst & Young LLP
Stamford, Connecticut
March 17, 1995
GENERAL SIGNAL CORPORATION
__________
BY-LAWS
__________
As Amended Through March 16, 1995
ARTICLE I
SHAREHOLDERS' MEETING
SECTION 1. Annual Meeting: The Annual Meeting of the shareholders of
this Corporation for the election of directors and the transaction of such
other business as may properly come before such meeting shall be held each
year on such date and at such time and place, whether within or without the
State of New York, as shall be determined by the Board of Directors.
SECTION 2. Special Meeting: A Special Meeting of the shareholders may
be held at any time upon the call of the Board of Directors or the Chairman
of the Board and shall be called by the Secretary at the written request of
shareholders owning at least two-thirds of the outstanding shares of stock
entitled to vote, which request shall specify the matters to be presented to
such meeting.
SECTION 3. Notice of Annual or Special Meeting: Written notice of the
holding of each Annual or Special Meeting of the shareholders shall be given
by the Secretary. Such notice shall state the place, date and hour of the
meeting, and the purpose or purposes for which the meeting is called, and
shall be signed by the Secretary, and shall indicate that it is being issued
by or at the direction of the person or persons calling the meeting. A copy
of such notice shall be mailed, postage prepaid, not less than ten nor more
than fifty days before the date of the meeting, to each shareholder of record
as of such record date, not less than ten nor more than fifty days before the
date of the meeting, as may be fixed by the Board of Directors for
determining the shareholders entitled to notice of, or to vote at, the
meeting. Such notice shall be directed to the shareholder at his address as
it appears on the record of shareholders, or, if he shall have filed with the
Secretary a written request that notices to him be mailed to some other
address, then directed to him at such other address.
If, at any meeting, action is proposed to be taken which would, if
taken, entitle certain shareholders to receive payment for their shares, the
notice of such meeting shall include a statement of that purpose and to that
effect.
At any meeting of shareholders or any such adjourned meeting, only such
business shall be conducted as shall have been properly brought before such
meeting or any such adjourned meeting. To be properly brought before any
meeting of shareholders or any such adjourned meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b) otherwise properly brought
before such meeting or any such adjourned meeting by or at the direction of
the Board of Directors, or (c) otherwise properly brought before such meeting
or any such adjourned meeting by a shareholder. For business to be properly
brought before any meeting of shareholders or any such adjourned meeting by a
shareholder, the shareholder must have given timely notice thereof in writing
to the Secretary. To be timely, a shareholder's notice must be delivered to
or mailed and received at the principal executive offices of the Corporation
not less than forty-five days nor more than sixty days prior to such meeting;
provided, however, that in the event less than fifty-five days prior public
disclosure of the date of such meeting is made to the shareholders or in the
event the only public disclosure of the date of the meeting is written notice
in accordance with this Article 1, Section 3, notice by such shareholder to
be timely must be so received not later than the close of business on the
tenth day following the day on which such notice of the date of such meeting
was mailed or such public disclosure was made. A shareholder's notice to the
Secretary shall set forth as to each matter the shareholder proposes to bring
before such meeting (a) a brief description of the business desired to be
brought before such meeting and the reasons for conducting such business at
such meeting, (b) the name and address, as they appear on the Corporation's
books, of the shareholder proposing such business, (c) the class and number
of shares of the securities of the Corporation which are beneficially owned
by such shareholder, and (d) any material interest of such shareholder in
such business.
No business shall be conducted at any meeting of shareholders or any
such adjourned meeting except in accordance with the procedures set forth in
this Article 1, Section 3. In the event that a shareholder seeks to bring
one or more matters before a meeting of shareholders or any such adjourned
meeting, the Board of Directors shall establish a committee consisting of
non-management directors for the purpose of reviewing compliance with this
Article 1, Section 3; provided, however, that if the business to be brought
before such meeting or any such adjourned meeting by a shareholder relates to
the removal, replacement or election of one or more directors, the Secretary
shall appoint two or more inspectors, neither of whom shall be an affiliate
of the Corporation, to act in lieu of such committee to review compliance
with this Article 1, Section 3. If the committee or the inspectors (as the
case may be) shall determine that a shareholder has not complied with this
Article 1, Section 3, the committee or the inspectors (as the case may be)
shall direct the chairman of such meeting to declare to such meeting or any
such adjourned meeting that such business was not properly brought before
such meeting or any such adjourned meeting in accordance with the provisions
of this Article 1, Section 3; and the chairman shall so declare to such
meeting or any such adjourned meeting and any such business not properly
brought before such meeting or any such adjourned meeting shall not be
transacted.
Only individuals who are nominated in accordance with the procedures set
forth in this Article 1, Section 3, shall be eligible for election as
directors. Nominations of individuals for election to the Board of Directors
may be made at a meeting of shareholders or any such adjourned meeting by or
at the direction of the board of Directors or by any shareholder of the
Corporation entitled to vote for the election of directors at such meeting or
any such adjourned meeting who complies with the notice procedures set forth
in this Article 1, Section 3.
Such nominations, other than those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing to the
Secretary. To be timely, a shareholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than forty-five days nor more than sixty days prior to such meeting;
provided, however, that in the event less than fifty-five days prior public
disclosure of the date of such meeting is made to the shareholders or in the
event the only public disclosure of the date of the meeting is written notice
in accordance with this Article 1, Section 3, notice by such shareholder to
be timely must be so received not later than the close of business on the
tenth day following the day on which such notice of the date of such meeting
was mailed or such public disclosure was made. Such shareholder's notice
shall set forth (a) as to each individual whom such shareholder proposes to
nominate for election or re-election as director, (i) the name, age, business
address and residence address of such individual, (ii) the principal
occupation or employment of such individual, (iii) the class and number of
shares, or the amount of any securities of the Corporation which are
beneficially owned by such individual and (iv) any other information relating
to such individual that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case,
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (including without limitation such individual's written consent to
being named in the proxy statement as a nominee and to serving as a director
if elected); and (b) as to the shareholder giving the notice, (i) the name
and address, as they appear on the Corporation's books, of such shareholder
and (ii) the class and number of shares of the securities of the Corporation
which are beneficially owned by such shareholder. At the request of the
Board of Directors, any individual nominated by the Board of Directors for
election as a director shall furnish to the Secretary that information
required to be set forth in a shareholder's notice of nomination which
pertains to the nominee. No individual shall be eligible for election as a
director of the Corporation unless nominated in accordance with the
procedures set forth in this Article 1, Section 3. In the event that a
shareholder seeks to nominate one or more directors, the Secretary shall
appoint two inspectors, neither of whom shall be an affiliate of the
Corporation, to determine whether such shareholder has complied with this
Article 1, Section 3. If the inspectors shall determine that such
shareholder has not complied with this Article 1, Section 3, the inspector
shall direct the chairman of such meeting or any such adjourned meeting to
declare to such meeting or any such adjourned meeting that a nomination was
not made in accordance with the prescribed procedures, and the chairman shall
so declare to such meeting or any such adjourned meeting and the defective
nomination shall be disregarded.
SECTION 4. Presiding Officer: At all meetings of shareholders the
Chairman of the Board shall preside, or in his absence, the Chairman of the
Executive Committee, the President or any Vice President may preside.
SECTION 5. Inspectors: Prior to each meeting of the shareholders, the
Board of Directors may appoint two Inspectors of Election and two or more
Alternate Inspectors, to serve at such meeting and any adjournment thereof.
If any Inspector refuses to serve, or shall not be present at the meeting of
the shareholders, the Alternate Inspectors shall act in the order of their
appointment.
SECTION 6. Voting and Method of: Except as otherwise provided in the
Certificate of Incorporation, at all meetings of the shareholders, each
shareholder entitled to vote shall be entitled to one vote for every share
standing in his name on the record of shareholders, and all questions to be
decided by the shareholders, except the question of election of directors and
such other questions the manner of deciding which is specifically regulated
by statute, shall be decided by a majority of the votes cast at the meeting
in person or by proxy by the holders of shares entitled to vote thereon. All
voting shall be viva-voce, except that any qualified voter may require a vote
by ballot on any question to be decided. In case of a vote by ballot, each
ballot shall state the name of the shareholder voting and the number, class
and series (if any) of shares owned by him, and in addition, if such ballot
be cast by a proxy, the name of the proxy shall be stated.
SECTION 7. Quorum: Except as may be otherwise provided by law or by the
Certificate of Incorporation, at all meetings of the shareholders, the
holders of a majority of the shares entitled to vote thereat shall constitute
a quorum for the transaction of any business.
SECTION 8. Fiscal Year: The fiscal year of the Corporation shall close
on the 31st day of December in each year. The officers of the Corporation
shall prepare and cause to be submitted to the shareholders at the Annual
Meeting a detailed statement showing the financial condition of the
Corporation.
ARTICLE II
DIRECTORS
SECTION 1. Election of Directors: The directors shall be classified
with respect to their terms of office by dividing them into three classes.
All classes shall be as nearly equal in number as possible, and no class
shall include less than three directors. Subject to such limitations, the
size of each class may be fixed by action of the shareholders or of the Board
of Directors.
At each Annual Meeting of Shareholders, directors to replace those whose
terms expire at such Annual Meeting shall be elected to hold office until the
expiration of the term of whatever class they are assigned to, provided that
no director may be assigned to a class the term of which will expire later
than the Annual Meeting next succeeding the director's attaining age 72.
Each director shall hold office until the expiration of the term for
which he is elected, and until his successor has been elected and qualified,
provided, however, that a director may be removed from office as a director,
but only for cause, by action of the shareholders or of the Board of
Directors.
SECTION 2. Number of Directors: The number of the directors of the
Corporation shall be not less than 9 nor more than 15 as shall be determined
from time to time by the Board of Directors.
SECTION 3. Newly Created Directorships and Vacancies: Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board for any reason may be filled by the vote of
a majority of the directors then in office, although less than a quorum may
exist. A director elected to fill a newly created directorship or a vacancy
shall be elected to hold office until the next Annual Meeting of the
shareholders, and (if he is to have a successor) until his successor has been
elected and qualified.
SECTION 4. Regular Meetings: Regular Meetings of the Board of Directors
shall be held at such times and places as may be fixed by the Board of
Directors provided that the Organization Meeting of the newly elected Board
of Directors shall be held on the same day as the Annual Meeting of the
shareholders, at which time the Executive Committee and other Committees of
the Board and Officers shall be elected or appointed. Unless otherwise
required by appropriate resolution of the Board of Directors, or by law,
notice of any such meetings need not be given.
SECTION 5. Special Meetings: Special Meetings of the Board of Directors
shall be called by the Secretary upon the order of the Chairman of the Board,
the President, or the Chairman of the Executive Committee, or upon the
written request of five (5) directors.
SECTION 6. Presiding Officer: At all meetings of the Board of
Directors, the Chairman of the Board of Directors shall preside, or in his
absence, the Chairman of the Executive Committee, the President or any Vice
President who is a member thereof may preside.
SECTION 7. Quorum: A majority of the directors then in office or half
of such number when the number of directors then in office is even, but not
less than one-third of the entire Board, shall constitute a quorum for the
transaction of business at all meetings of the Board.
SECTION 8. Notice: The Secretary shall mail to each director notice of
any Special Meeting, or of any Regular Meeting, if required, at least two
days before the meeting, or shall telegraph or telephone such notice not
later than the day before such meeting. Each director shall file with the
Secretary a designation of the address to which such notice to him shall be
sent, and any such notice to him thereafter shall be addressed in accordance
with his latest designation.
SECTION 9. Designation of Executive and Other Committees: The Board of
Directors shall by resolution adopted by a majority of the entire Board,
designate an Executive Committee of not less than three of its members of
whom the Chairman of the Board, the Chairman of the Executive Committee, and
the President shall be ex officio members, and said Executive Committee shall
have authority to exercise and shall exercise in the interim between the
Regular and Special meetings of the Board of Directors all of the rights,
powers and duties of the Board of Directors, except such as cannot be
lawfully delegated.
The Board of Directors may by resolution adopted by a majority of the
entire Board, designate one or more directors as alternate members of the
Executive Committee, who may replace any absent member or members of the
Executive Committee, at any meeting thereof, when required to constitute a
quorum.
Meetings of the Executive Committee may be called by the Secretary upon
order by the Chairman of the Executive Committee or in his absence by the
Chairman of the Board, the President, or upon written request of two (2)
members of the Executive Committee.
At all meetings of the Executive Committee, the Chairman of the
Executive Committee shall preside, or in his absence the Chairman of the
Board or the President may preside.
At all meetings of the Executive Committee, a majority of the full
membership of the Executive Committee, including vacancies not filled or
eliminated, shall constitute a quorum for the transaction of business.
The Board of Directors may by resolution adopted by a majority of the
entire Board, designate other Committees, each consisting of three or more
directors, and delegate to them such powers and duties of the Board as may be
lawfully delegated and determined to be appropriate by the Board.
The Executive Committee and each other Committee designated pursuant to
this Section, and each member or alternate member thereof, shall serve until
the next Annual Meeting of the shareholders and at the pleasure of the Board
of Directors. Vacancies in the Executive Committee or any other Committee,
occurring for any reason, may by resolution adopted by a majority of the
entire Board at any meeting of the Board of Directors, be filled or may be
eliminated by reducing the number constituting the membership of such
Committee, provided, however, that the membership of any Committee shall not
be reduced to less than three.
Notice of the time and place of any meeting of the Executive Committee
shall be given in the manner provided in Section 8 of this Article for the
giving of notice of meetings of the Board of Directors. Meetings of any
other Committee designated pursuant to this Section 9 shall be held in such
manner, and at such times and places, and upon such notice, if any, as shall
be provided in the resolution of the Board creating such Committee.
SECTION 10. Compensation: Each director who is not a full-time employee
of the Corporation or of any consolidated subsidiary shall be paid such
compensation for serving as a director as the Board of Directors may, from
time to time, determine.
Section 11. Action by Unanimous Written Consent: Any action required to
be or permitted to be taken by the Board of Directors or any Committee
thereof may be taken without a meeting if all members of the Board of
Directors or the Committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and written consents thereto by the
members of the Board of Directors or Committee shall be filed with the
minutes of the proceedings of the Board of Directors or Committee.
Section 12. Participation in Meetings by Means of Conference Telephone:
Any one or more members of the Board of Directors or any Committee thereof
may participate in a meeting of the Board of Directors or Committee by means
of a conference telephone or similar communication equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at such
meeting.
ARTICLE III
OFFICERS
SECTION 1. Executive Officers: The Officers of the Corporation shall
consist of a Chairman of the Board of Directors, a President, a Vice
President-Finance, one or more other Vice Presidents, one or more of whom may
also be designated Executive Vice President or Senior Vice President, a
Secretary, a Treasurer and a Controller, all of whom shall be elected
annually by the Board at a meeting following the Annual Meeting of the
shareholders. The Board may also elect one or more Assistant Treasurers and
one or more Assistant Secretaries and such subordinate officers and agents of
the Corporation as it may from time to time determine. The same person may
hold two or more offices, except that the Chairman of the Board and President
shall not hold the office of Secretary.
SECTION 2. Duties of Chairman of the Board: The Chairman of the Board
shall be a director and shall be chief executive officer of the Corporation
and, subject to the direction of the Board, shall exercise general
supervision over the business and affairs of the Corporation and shall
perform such other duties as may be assigned to him from time to time by the
Board. If the office of the President is not independently established, he
shall perform all duties of that office. He shall preside at all meetings of
the Board of Directors and shall also preside at all meetings of the
shareholders of the Corporation.
SECTION 3. Duties of President: The President shall be a director and
shall be the chief operating officer of the Corporation and, subject to the
direction of the Board of Directors and the Chairman of the Board, shall
direct and supervise the business operations of the Corporation and shall
perform such other duties as from time to time the Board of Directors may
prescribe or the Chairman of the Board may assign to him. The office of the
President will normally be vested in the Chairman of the Board, provided,
however, that in the discretion of the Board of Directors, the position of
President may be established independent of, but reporting to, the Chairman
of the Board.
SECTION 4. Duties of Vice President-Finance, and other Vice Presidents:
The Vice President-Finance shall serve as principal financial officer of the
Corporation and shall perform such other duties as shall from time to time be
prescribed by the Board of Directors or assigned to him by the Chairman of
the Board or by the President. Each other Vice President shall perform such
duties as from time to time may be prescribed by the Board of Directors or
assigned to him by the Chairman of the Board or the Officer to whom he
reports.
SECTION 5. Duties of Treasurer and Controller: The Treasurer shall have
the care and custody of all the funds and securities of the Corporation and,
in general, shall perform all the duties incident to the office of Treasurer
including the appointment of depository and disbursement banks. The
Controller shall have charge of the books of account of the Corporation and,
in general, perform all the duties incident to the office of Controller. The
Treasurer and the Controller shall also discharge such other duties as from
time to time the Board of Directors may prescribe or the Chairman of the
Board, the President, or the Vice President-Finance may assign.
SECTION 6. Duties of Secretary: The Secretary shall keep the minutes of
the meetings of the Board of Directors, of the Executive Committee and other
Committees of the Board and of the shareholders, and shall attend to the
giving and service of all notices for meetings of the Board of Directors, of
the Executive Committee and other Committees of the Board and of the
shareholders and otherwise whenever required, except to the extent, that such
duties shall have been specifically delegated to another officer by the Board
of Directors or by the Chairman of the Board. He shall have the custody of
such books and papers as the Board of Directors, the Chairman of the Board,
or the President may provide. He shall also discharge such other duties as
from time to time the Board of Directors may prescribe or the Chairman of the
Board, or the President may assign to him.
SECTION 7. Assistant Officers: The Board of Directors may elect one or
more Assistant Secretaries or one or more Assistant Treasurers. Each
Assistant Secretary, if any, and each Assistant Treasurer, if any, shall have
such authority and perform such duties as from time to time the Board of
Directors may prescribe or the Chairman of the Board or the President may
assign.
SECTION 8. Subordinate Officers: The Board of Directors may elect such
subordinate officers as it may deem desirable. Each such officer shall have
such authority and perform such duties as the Board of Directors may
prescribe. The Board of Directors may, from time to time, authorize any
officer to appoint and remove subordinate officers and prescribe the powers
and duties thereof.
SECTION 9. Surety Bonds of Officers: The Board of Directors may require
from any officer of the Corporation a bond in such amount as it may determine
for the faithful discharge of the duties of any such officer; such bond to be
approved by the Board and to be obtained at the expense of the Corporation.
SECTION 10. Compensation of Officers: The Chairman of the Board, with
the advice of the President of the Corporation, shall have power to fix the
compensation of all officers of the Corporation, except the Chairman of the
Board, the President and the officers reporting directly to either of them.
The Board of Directors shall have power to fix the compensation of the
Chairman of the Board, the President and of the officers reporting directly
to either of them. The Board of Directors may authorize any officer, upon
whom the power of appointing subordinate officers may have been conferred, to
fix the compensation of such subordinate officers. Notwithstanding the
foregoing, the Board of Directors may delegate to a Committee of the Board
the responsibility of determining the incentive compensation and stock awards
of the Chairman of the Board, the President and the officers reporting
directly to either of them.
SECTION 11. Vacancy: Any vacancy of an office occurring may be filled
at any Regular or Special Meeting of the Board of Directors.
SECTION 12. Removal of Officers: Any officer of the Corporation may be
removed, with or without cause, by the vote of the Board of Directors at any
meeting thereof.
SECTION 13. Checks and Obligations: All notes and all checks, drafts,
or other orders for the payment of money, and all endorsements thereof,
executed on behalf of the Corporation shall be signed by any person or
persons designated for the purpose either by the Board or by an officer or
officers of the Corporation pursuant to authority delegated by the Board of
Directors.
SECTION 14. Execution of Contracts, Assignments, Deeds and other
Documents: All contracts, agreements, assignments, transfers, guaranties,
deeds, stock powers or other instruments of the Corporation may be executed
and delivered by the Chairman of the Board, the President, or any Vice
President or by such other officer or officers, or agent or agents, of the
Corporation as shall be thereunto authorized from time to time either by the
Board or by power of attorney executed by the Chairman of the Board, the
President, any Senior Vice President, or by any person pursuant to authority
granted by the Board; and the Secretary or any Assistant Secretary, the
Treasurer or any Assistant Treasurer may affix the seal of the Corporation
thereto and attest same.
SECTION 15. Execution of Proxies: The Chairman of the Board, the
President, or any Vice President or any other person designated by the Board
of Directors, may authorize from time to time the execution and issuance of
proxies to vote upon shares of stock of other corporations owned by the
corporation, or authorize the execution of a consent to action taken or to be
taken by such other corporation. All such proxies or consents may be signed
in the name of the Corporation by any of the persons above- mentioned in this
Section 15 or by any other person or persons designated for the purpose
either by the Board of Directors or by power of attorney executed by any
person pursuant to authority granted by the Board.
SECTION 16. Facsimile Signatures: Any signature which is authorized by
Section 13, 14 or 15 of this Article may be facsimile, if so determined by
the Board of Directors, or by an officer or officers of the Corporation
pursuant to authority delegated by the Board of Directors.
ARTICLE IV
CREATION OF DIVISIONS
SECTION 1. Creation of Divisions: The Board of Directors may from time
to time create divisions and may set apart to such divisions such aspects or
portions of the business, affairs and properties of the Corporation as the
Board may from time to time determine. Each division of the Corporation
shall be organized and regulated as hereinafter provided in this Article IV.
As used in the succeeding Sections of this Article, the term "Company" shall
refer to any division of the Corporation.
SECTION 2. Executive Officers of Company: The Chairman of the Board of
the Corporation may appoint, with the advice of the President of the
Corporation, as Executive Officers of the Company, a President, one or more
Vice Presidents, appropriate Financial Officers and a Secretary and in his
discretion, one or more Assistant Secretaries and Assistant Financial
Officers and such subordinate officers as may from time to time be deemed
desirable. Such officers shall be appointed as soon as practicable following
the creation of the Company and thereafter shall hold office at the
discretion of the Chairman of the Board of the Corporation. The same person
may hold two or more offices of the Company, except the offices of President
and Secretary of the Company, and any person holding an office of the Company
may also be elected by the Board as an officer of the Corporation. Vacancies
occurring in any office may be filled at any time by the Chairman of the
Board of the Corporation, with the advice of the President of the
Corporation. The Executive Officers and all other persons who shall serve
the Company in the capacities set forth in this Article are hereby appointed
agents of the Corporation with the powers and duties herein set forth.
However, the authority of said agents shall be limited to matters related to
the properties, business and affairs of the Company, and shall not extend to
any other portion of the properties, business and affairs of the Corporation
nor are such Executive Officers or other persons to be considered officers of
the Corporation.
SECTION 3. Authority of the Executive Officers of the Company: The
President of the Company shall be the Chief Executive Officer of the Company.
He shall exercise general supervision over the business, affairs and
properties of the Company and shall be directly responsible to, and shall
perform such other duties as may be assigned to him from time to time by, the
Chairman of the Board or the assigned Officer or other employee of the
Corporation to whom the President of the Company reports. All Executive
Officers other than the President of the Company, and any subordinate
officers, shall be directly responsible to the President of the Company and
any Officer or other employee of the Corporation as the Chairman of the Board
or the assigned Officer or other employee of the Corporation to whom the
President of the Company reports shall direct.
SECTION 4. Use of Divisional Names: In executing any document on behalf
of any division of the Corporation, the name of such division shall be
followed by the words "a division of General Signal Corporation." In any
instance in which a division of the Corporation shall use the name of the
division followed by the words, "a unit of General Signal," such words shall
have the same meaning as "a division of General Signal Corporation."
ARTICLE V
INDEMNIFICATION
SECTION 1. Indemnification: Except to the extent expressly prohibited
by the New York Business Corporation Law, the Corporation shall indemnify
each person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, and whether by or in the right of the
Corporation or otherwise, by reason of the fact that such person or such
person's testator or intestate is or was a director or officer of the
Corporation, or serves or served at the request of the Corporation any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise in any capacity while he or she was such a director or
officer (hereinafter referred to as "Indemnified Person"), against judgments,
fines, penalties, amounts paid in settlement and reasonable expenses,
including attorneys' fees, incurred in connection with such action or
proceeding, or any appeal therein, provided that no such indemnification
shall be made if a judgment or other final adjudication adverse to such
Indemnified Person establishes that either (a) his or her acts were committed
in bad faith, or were the result of active and deliberate dishonesty, and
were material to the cause of action so adjudicated, or (b) that he or she
personally gained in fact a financial profit or other advantage to which he
or she was not legally entitled.
The Corporation shall advance or promptly reimburse upon request any
Indemnified Person for all expenses, including attorneys' fees, reasonably
incurred in defending any action or proceeding in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of such
Indemnified Person to repay such amount if such Indemnified Person is
ultimately found not be entitled to indemnification or, where indemnification
is granted, to the extent the expenses so advanced or reimbursed exceed the
amount to which such Indemnified Person is entitled.
Nothing herein shall limit or affect any right of any Indemnified Person
otherwise than hereunder to indemnification or expenses, including attorneys'
fees, under any statute, rule, regulation, certificate of incorporation,
by-law, insurance policy, contract or otherwise.
Anything in these by-laws to the contrary notwithstanding, no
elimination of this by- law, and no amendment of this by-law adversely
affecting the right of any Indemnified Person to indemnification or
advancement of expenses hereunder shall be effective until the 60th day
following notice to such Indemnified Person of such action, and no
elimination of or amendment to this by-law shall thereafter deprive any
Indemnified Person of his or her rights hereunder arising out of alleged or
actual occurrences, acts or failures to act prior to such 60th day.
The Corporation shall not, except by elimination or amendment of this
by-law in a manner consistent with the preceding paragraph, take any
corporate action or enter into any agreement which prohibits, or otherwise
limits the rights of any Indemnified Person to, indemnification in accordance
with the provisions of this by-law. The indemnification of any Indemnified
Person provided by this by-law shall be deemed to be a contract between the
Corporation and each Indemnified Person and shall continue after such
Indemnified Person has ceased to be a director or officer of the Corporation
and shall inure to the benefit of such Indemnified Person's heirs, executors,
administrators and legal representatives. If the Corporation fails timely to
make any payment pursuant to the indemnification and advancement or
reimbursement of expenses provisions of this Article V and an Indemnified
Person commences an action or proceeding to recover such payment, the
Corporation in addition shall advance or reimburse such Indemnified Person
for the legal fees and other expenses of such action or proceeding.
The Corporation is authorized to enter into agreements with any of its
directors or officers extending rights to indemnification and advancement of
expenses to such Indemnified Person to the fullest extent permitted by
applicable law, but the failure to enter into any such agreement shall not
affect or limit the rights of such Indemnified Person pursuant to this
by-law, it being expressly recognized hereby that all directors or officers
of the Corporation, by serving as such after the adoption hereof, are acting
in reliance hereon and that the Corporation is estopped to contend otherwise.
Persons who are not directors or officers of the Corporation shall be
similarly indemnified and entitled to advancement or reimbursement of
expenses to the extent authorized at any time by the Board of Directors.
In case any provision in this by-law shall be determined at any time to
be unenforceable in any respect, the other provisions shall not in any way be
affected or impaired thereby, and the affected provision shall be given the
fullest possible enforcement in the circumstances, it being the intention of
the Corporation to afford indemnification and advancement of expenses to its
directors or officers, acting in such capacities or in the other capacities
mentioned herein, to the fullest extent permitted by law whether arising from
alleged or actual occurrences, acts or failures to act occurring before or
after the adoption of this Article V.
For purposes of this by-law, the Corporation shall be deemed to have
requested an Indemnified Person to serve an employee benefit plan where the
performance by such Indemnified Person of his or her duties to the
Corporation also imposes duties on, or otherwise involves services by, such
Indemnified Person to the plan or participants or beneficiaries of the plan,
and excise taxes assessed on an Indemnified Person with respect to an
employee benefit plan pursuant to applicable law shall be considered
indemnifiable fines. For purposes of this by-law, the term "Corporation"
shall include any legal successor to the Corporation, including any
corporation which acquires all or substantially all of the assets of the
Corporation in one or more transactions.
ARTICLE VI
CAPITAL STOCK
SECTION 1. Certificates of Capital Stock: All certificates of stock of
the Corpora- tion, both preferred and common, shall be separately numbered
and the facsimile signature of the Chairman of the Board, or the President,
or a Vice President and the facsimile counter-signature of the Treasurer, or
an Assistant Treasurer, or the Secretary or an Assistant Secretary and the
facsimile seal of the Corporation shall appear thereon, all in manner as
authorized under the laws of the State of New York and approved by the New
York Stock Exchange.
SECTION 2. Transfer Agent and Registrar: All certificates of stock of
the Corporation shall be issued only through a Transfer Agent of the
Corporation's stock, consisting of a Bank or Trust Company, duly appointed by
the Board of Directors to act as Transfer Agent and bear the
counter-signature of the Registrar of the Corporation's stock duly appointed
by the Board of Directors to act as Registrar. Endorsement to the foregoing
effect shall be made upon all certificates issued.
SECTION 3. Transfer of Shares: Shares of stock shall be transferable
only on the books of the Corporation by the holder thereof in person or
pursuant to a power of attorney duly executed and filed with the Transfer
Agent, upon the surrender of the certificate representing the shares to be
transferred, properly endorsed. All certificates surrendered for transfer
shall be cancelled by the Transfer Agent.
SECTION 4. Lost, Destroyed or Stolen Certificates: No certificate for
shares of stock of the Corporation shall be issued in place of any
certificate alleged to have been lost, destroyed or stolen except on
production of such evidence of such loss, destruction or theft and on
delivery to the Corporation, if the Board of Directors shall so require, of a
bond of indemnity upon such terms and secured by such surety as the Board of
Directors may in its discretion determine to be satisfactory.
SECTION 5. Seal of Corporation: The seal of the Corporation shall be
circular in form and bear the words "GENERAL SIGNAL CORPORATION" next inside
the line of its circumference and the words "Incorporated June 13th, 1904" in
the center within the line of an inner circle.
ARTICLE VII
AMENDMENTS
SECTION 1. Amendments: Except as otherwise provided by the Certificate
of Incorpora- tion, any provision or provisions of these By-Laws, including
any amendment thereof, regardless of the manner in which any such provision
or amendment may have been adopted, may be deleted or amended in any respect
at any Annual Meeting of the shareholders, or at any Special Meeting called
for that purpose, by a majority of the votes cast at such meeting in person
or by proxy by the holders of shares entitled to vote thereon, or with the
exception of this Section 1 of Article VII, by a majority of the Board of
Directors then in office at any meeting thereof.
ARTICLE VIII
WAIVER OF NOTICE
SECTION 1. Waiver of Notice: Any notice required by these By-Laws may
be waived in writing, either before or after the action requiring such notice
is taken.
CERTIFICATE OF INCORPORATION *
1. Name. The name of the corporation shall be General Signal Corporation.
2. Purposes.
A. To manufacture, process, construct, develop, assemble, and
produce in any way, to sell, lease, supply, and distribute in any way, to
purchase, lease, mine, extract, and acquire in any way, to own, operate,
experiment with, deal in, service, finance, and use in any way equipment,
apparatus, appliances, devices, structures, materials, processes, information,
tangible and intangible property, services and systems of every kind, nature
and description:
(1) for any application or purpose, including but not limited to,
electrical and electronic, hydraulic and pneumatic devices and machinery and
controls, or in any way connected with or deriving from any such application
or purpose, and,
(2) for any other application or purpose, whatsoever, including but
not limited to industrial, utility, consumer, defense, governmental,
scientific, educational, cultural, financial, recreational, agricultural,
transportation, construction, mining, and communication applications or
purposes.
B. To acquire by purchase, subscription or otherwise, all or part of
any interest in the property assets, business, or good will of any
corporation, association, firm or individual, and to dispose of, or otherwise
deal with, such property, assets, business or good will.
C. To engage in any activity which may promote the interests of the
Corporation, or enhance the value of its property, to the fullest extent
permitted by law, and in furtherance of the foregoing purposes to exercise all
powers now or hereafter granted or permitted by law, including the powers
specified in the New York Business Corporation Law.
3. Capital. The total number of shares that may be issued by the
Corporation is 160,000,000 of which 10,000,000 shares, of the par value of
$1.00 per share, shall be preferred ("Preferred Stock") and 150,000,000 shares
of the par value of $1.00 per share shall be common ("Common Stock").
The designations, preferences, privileges and voting powers or
restrictions or qualifications of the shares of each class shall be as
follows:
A. Preferred Stock. The Preferred Stock may be issued from time to
time in one or more series, with such distinctive serial designations as shall
be stated and expressed in the resolution or resolutions providing for the
issue of such stock adopted from time to time by the Board of Directors, and
in such resolution or resolutions providing for the initial issue of the
shares of each particular series, the Board of Directors is expressly
authorized to fix the annual rate or rates of dividends for the particular
series, to determine whether or not said dividends shall be cumulative, and,
if so, from what date; the dividend payment dates for the particular series
and the date, if any, from which dividends on all shares of such series issued
prior to the record date for the first dividend payment date shall be
cumulative; the redemption price or prices for the particular series; the
distributive amount or amounts per share on liquidation for the particular
series; the voting rights, if any; and the right, if any, of holders of the
stock of the particular series to convert the same into stock of any other
series or class or other securities of the Corporation or of any other
corporation, with any provisions for the subsequent adjustment of such
conversion rights. All shares of Preferred Stock of any one series shall be
identical with each other in all respects except as to the dates, if any, from
which dividends thereon shall be cumulative.
As restated April 21, 1994
B. Common Stock. Subject to any
limitations prescribed in accordance with Article 3A above, and not otherwise,
the holders of the Common Stock shall be entitled to:
(i) such dividends (payable in cash, stock or otherwise) as may be
declared by the Board of Directors and paid on the Common Stock from time to
time out of any funds legally available therefor;
(ii) one vote for each share held at all meetings of the
stockholders of the Corporation; and
(iii) in the event of any liquidation, dissolution or winding-up of
the affairs of the Corporation, share in the remaining assets and funds of the
Corporation according to their respective shares.
C. Preemptive Rights. No holder of shares of Preferred Stock or
Common Stock of the Corporation shall as such holder have any preemptive right
to purchase shares of any class of stock of the Corporation or shares or other
securities convertible into or exchangeable for or carrying rights or options
to purchase shares of any class of stock of the Corporation, whether such
class of stock, shares or other securities are now or hereafter authorized,
which at any time may be proposed to be issued by the Corporation or subjected
to rights or options to purchase granted by the Corporation.
4. Office. The office of the Corporation in the State of New York
is to be located in the County of Monroe, State of New York.
5. Designation of Secretary of State as Agent. The Secretary of
State of the State of New York is designated as the agent of the Corporation
upon whom process against it may be served, and the post office address to
which the Secretary of State shall mail a copy of any such process served upon
him is: c/o CT Corporation System, 1633 Broadway, New York, New York 10019.
6. Registered Agent. The Corporation designates CT Corporation
System, a foreign corporation authorized to do business in this State, having
an office at 1633 Broadway, New York, New York, 10019, its registered agent in
this State upon whom process against this Corporation may be served.
7. Director Liability. No person who is or was a director of the
Corporation shall have personal liability to the Corporation or its
shareholders for damages for any breach of duty in such capacity, provided
that the foregoing shall not eliminate or limit the liability of any director
if a judgment or other final adjudication adverse to him establishes that his
acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled or that his
acts violated Section 719 of the Business Corporation Law of New York. No
amendment to or repeal of this Article 7 shall apply to or have any effect on
the liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or
repeal. If the Business Corporation Law of New York is amended hereafter to
expand or limit the liability of a director, then the liability of a director
of the Corporation shall be expanded to the extent required or limited to the
extent permitted by the Business Corporation Law of New York, as so amended.
8. Stockholder Vote Required. Any of the following actions may be
taken by the stockholders of the Corporation only by the affirmative vote of
the holders of two-thirds of all outstanding shares entitled to vote thereon:
(a) adoption, amendment or repeal of any By-Law, or any provision of this
Certificate of Incorporation, relating to (i) the number, classification and
terms of office of directors, (ii) the quorum of directors required for the
transaction of business, (iii) the filling of newly created directorships and
vacancies occurring in the Board of Directors, (iv) the removal of directors,
or (v) the power of the Board of Directors to adopt, amend or repeal By-Laws
of the Corporation or the vote of the Board of Directors required for any such
adoption, amendment or repeal; (b) the removal of directors; or (c) any
amendment or repeal of this Article 8. Nothing contained in this Article 8
shall in any way limit the power of the Board of Directors to adopt, amend or
repeal By-Laws of the Corporation.
9. Duration. Its duration is to be perpetual.
September 23, 1994
Mr. Michael D. Lockhart
8280 Kugler Mill Road
Cincinnati, OHIO 45243
Dear Mike:
On the basis of our discussions and your interviews with members of
our Board of Directors, I am pleased to extend this written
confirmation of our verbal offer to become President and Chief
Operating Office of General Signal Corporation, reporting to me as
Chairman and Chief Executive Officer. You and I will agree on the
effective date of your appointment.
The following confirms the terms and conditions of our offer:
1. Your starting base salary will be at an annual rate of
$600,000 paid biweekly.
2. General Signal will pay you $300,000 in March, 1995, to
compensate you for the anticipated payment you would have
received from General Electric for 1994 performance (less any
amount paid by General Electric).
In subsequent years, you will be eligible for a Target Award
of 60% of base salary (and a cap of 175% of target) with
actual awards depending on corporate performance and as
administered by the Personnel and Compensation Committee of
the Board of Directors; a minimum guarantee of $300,000 will
be in place for 1995 performance, payable in March of 1996.
3. On January 2, 1995 you will receive an award of 125,000 shares
of restricted common stock under our 1992 Stock Incentive
Plan, subject to certain conditions concerning performance
measurement, and a vesting schedule as follows:
9/1/95 - 26,000 shares
9/1/96 - 18,000 shares
9/1/99 - 13,000 shares
3/25/14 - 68,000 shares
125,000 shares
From the date of grant, you will receive dividends during the
vesting period, paid quarterly.
Please refer to Section 9 of this letter for modification to
the normal provision for forfeiture of unvested stock upon
termination of employment.
4. You will also be recommended for an award of 180,000 shares of
non-qualified stock options under the 1992 Stock Incentive
Plan. This award is subject to the usual terms and conditions
of awards under the Plan, including an initial period of one
year of employment, and shares may be exercised in 20%
cumulative installments, assuming continue employment (again,
subject to Section 9 of this letter). The option price will
be set at 100% of fair market value on the date of grant,
which is anticipated to be the next regularly scheduled Board
meeting. In addition, you will be eligible to receive further
awards under the Plan in future years as administered by our
Personnel and Compensation Committee. In that respect, we
will treat you fairly, commensurate with the then-existing
General Signal plan.
5. For purposes of your retirement benefits, the Company will
recognize 1.5 years of credited service for each year of your
employment with the Company. These special additional
benefits must necessarily be provided outside the Corporate
Retirement Plan of General Signal and will be paid from the
general funds of the Company. Your pension from General
Electric will be an offset to the special benefit.
6. We will put in place an unfunded deferred compensation amount
of $711,900 on January 2, 1995, designed to yield $2,100,000
at age 62 (year 2011) calculated at a 7% rate. After year
seven, 10% of the principal will vest each year. A full
payment of the principal and interest will be available at age
62 which will be taxable with no gross up.
You have agreed to use the net after-tax proceeds from your
General Electric deferred compensation plan distribution to
buy General Signal shares which you will hold for a minimum of
five years.
7. I will recommend you for membership on the Board of Directors
promptly following your acceptance of employment.
8. Your medical and life insurance coverage with General Signal
will commence after 90 days of employment. You should
continue your current coverage with General Electric under
COBRA, and we will reimburse you for the expense involved.
Beginning in 1995 you will be entitled to four weeks of annual
vacation.
9. In the unlikely event that your employment is involuntarily
terminated by the Company during the first three years of your
employment, other than for cause, we will provide you with
termination benefits for the period remaining between the date
of your termination and three years from the original date of
your employment. Termination benefits will be your monthly
salary, an assumed $300,000 annual bonus (prorate monthly),
continued vesting of Company service for purposes of pension
credited service and for outstanding awards under any then
existing option or restricted stock grants, and continuing
life and medical insurance benefits. Naturally, these
termination benefits will not be duplicative of any other plan
or program. After you have achieved three years of
employment, you will be covered under the normal General
Signal Severance Plan.
10. In response to your request, I have attached a copy of our
Change in Control Severance Play Plan and Transfer and Moving
Allowance policies. With respect to the relocation policy, we
have indicated the Transfer Allowance we will provide under
that section on page 2 of the policy will be a $100,000
allowance which will not be grossed up. I am also enclosing
a copy of our normal form of stock option agreement and
restricted stock agreement, as well as copy of an indemnity
contract which you will be given.
11. Mike, you should know that General Signal, in common with most
other companies, does not offer or ask for employment
commitments for a set period of time. In addition, this offer
is conditioned upon satisfactorily completing a physical
examination (which includes drug testing) and fulfilling the
requirements of the Immigration Reform and Control Act of
1986.
Assuming the foregoing is acceptable to you, please sign and return
a copy of this letter to me no later than Friday, September 30,
1994.
Sincerely,
ACCEPTED:
__________________________
Michael D. Lockhart
__________________________
Date:
January 26, 1995
Mr. Terence D. Martin
146 Central Park West #12G
New York, NY 10023
Dear Terry:
On the basis of our discussions and your interviews with members of our
Board of Directors, I am pleased to extend this written confirmation of our
verbal offer to become Executive Vice President and Chief Financial Officer
of General Signal Corporation reporting to me as Chairman and Chief Executive
Officer. Your appointment will be effective February 2, 1995.
The following confirms the terms and conditions of our offer:
1. Your starting base salary will be at an annual rate of $410,000.
2. You will be a participant in General Signal's Incentive Compensation
Plan. As such, you will be eligible for a Target Award of 60% of base salary
(and a cap of 200% of target) with actual awards depending on corporate
performance and as administered by the Personnel and Compensation Committee
of the Board of Directors; a minimum guarantee of $246,000 will be in place
for 1995 performance, payable in March of 1996.
3. You will be recommended for an award of 10,000 shares of restricted
common stock under our 1992 Stock Incentive Plan with a vesting schedule as
follows:
2/1/98 - 3,333 shares
2/1/99 - 3,333 shares
2/1/00 - 3,334 shares
10,000 shares
From the date of grant, you will receive dividends paid quarterly and
have voting rights for the shares during the vesting period.
<PAGE>
4. You will also be recommended for an award of 30,000 shares of
non-qualified stock options under the 1992 Stock Incentive Plan. This award
is subject to the usual terms and conditions of awards under the Plan,
including an initial period of one year of employment, and shares may be
exercised in 25% cumulative installments assuming continued employment. The
option price will be set at 100% of fair market value on the date of grant
which is anticipated to be the Board meeting of February 2, 1995. In
addition, you will be eligible to receive further awards under the Plan in
future years as administered by our Personnel and Compensation Committee. In
that respect, we will treat you fairly commensurate with the then-existing
General Signal Plan.
5. For purposes of your retirement benefit, the Company will recognize
2 years of credited service for each year of your employment with the
Company. These special additional benefits must necessarily be provided
outside the Corporate Retirement Plan of General Signal and will be paid from
the general funds of the Company. In addition, the credited service applied
for pension purposes will be used to determine your eligibility for employee
paid post-retirement medical benefits under our "Rule of 75" which requires
the sum of age and service to equal at least 75 in order to participate.
6. Your medical and life insurance (twice base salary - company paid)
coverage with General Signal will commence after 90 days of employment. You
should continue medical coverage with your current employer under COBRA, and
we will reimburse you for the expense involved.
7. Under General Signal Corporation's Change in Control Severance Pay
Plan as an Executive Officer you would be entitled to three years
compensation and continuation of other employee benefit plans applicable to
active salaried employees.
8. Terry, you should know that General Signal, in common with most
other companies, does not offer or ask for employment commitments for a set
period of time. In addition, this offer is conditioned upon satisfactorily
completing a physical examination (which includes drug testing) and
fulfilling the requirements of the Immigration Reform and Control Act of
1986.
<PAGE>
Assuming the foregoing is acceptable to you, please sign and return a copy of
this letter to me no later than Tuesday, January 31, 1995.
Sincerely,
EMC:cm
Enclosure
Accepted by:
Terence D. Martin Date
January 31, 1995
Mr. Peter A. Laing
977 Sunset Road
Stamford, CT 06903
Dear Peter,
This will confirm the terms of the severance agreement which has
been reached as a result of our discussions.
1. Effective January 9, 1995 you will relinquish your role as
Senior Vice President - Operations of General Signal.
2. You will continue on as an employee of General Signal through
March 31, 1997 with the period until February 1, 1995 being
used as a transition time during which discussions can be held
at a mutually convenient time and place to assure a smooth
transfer of responsibilities. As an employee of General
Signal, you will be compensated at an annual rate of $310,000
until February 1, 1995. From February 1, 1995 through
December 31, 1996 you will be compensated at an annual rate of
$202,174 and for the period January 1, 1997 through March 31,
1997 you will again be compensated at an annual rate of
$310,000. As part of this compensation arrangement you agree
to provide consulting services during the period February 1,
1995 to April 1, 1997 if requested and authorized by the CEO.
Such consulting services will be reasonably related to your
previous functional responsibilities and will only be
requested in situations where the Corporation would benefit
from the special knowledge you have gained from your previous
work experience. Moreover such services will be reasonable
in both time and duration and will be scheduled at a time
convenient to you. In addition, for the period April 1, 1997
through December 31, 1997 you will be compensated $50,000 by
the Corporation as a non-employee independent contractor for
consulting services. You will not be required to perform
consulting services in excess of 100 hours during this period.
Any consulting services required beyond the 100 hours will be
compensated for at the rate of $500.00 per hour. You will be
reimbursed for business expenses associated with any
employment or consulting assignment.
3. You will be eligible for full consideration for 1994 incentive
compensation, payable in March 1995, based on corporate
performance. You will not be eligible for any incentive
compensation based on 1995 performance.
4. You have indicated that you will elect early retirement under
the General Signal Retirement Plan (supplemented by the
Benefits Equalization Plan to the extent necessary) effective
April 1, 1997. It is understood that, provided you meet the
life expectancy requirement, you will be able to receive your
pension benefits in a lump sum distribution. The amount will
be reduced by no more than 3% per year for the 8 1/2 years
that your retirement date will predate normal retirement of
age 65.
5. As an employee, you will continue to be covered under the
terms of the Corporate Office benefit programs. After
retirement, you and your dependents will be covered by the
applicable post retirement benefits provided retirees of
General Signal.
6. Your automobile (1994 Mercedes 420) will become your property
effective March 1, 1995. You will have an income tax
liability for the value of the car.
7. You will keep confidential all confidential and trade secret
information concerning General Signal, its business, and its
prospects which has become known to you.
8. All salary payments provided hereunder will cease in the event
of your death, your voluntary termination of your employment
or the termination of your employment status by General Signal
for cause. It is understood that your acceptance of full time
employment with another employer shall not constitute
voluntary termination of your employment with General Signal.
9. The Company will provide the services of a certified financial
planner at a cost not to exceed $3,000.
10. You may retain the laptop computer and cellular phone in your
possession. I will let you know if this will generate any tax
liability.
<PAGE>
Please countersign and return to me the enclosed copy of this
letter indicating your acceptance of the understanding it sets
forth.
Sincerely,
GF:cm
Enclosure
______________________________
Peter A. Laing Date
Schedule I
February 1, 1995
Mr. Stephen W. Nagy
8 Joshua Slocum Dock
Stamford, CT 06902
Dear Steve,
This will confirm the terms of the severance agreement which has
been reached as a result of our discussions.
1. Effective January 13, 1995 you will relinquish your role as
Senior Vice President - Finance & Chief Financial Officer of
General Signal.
2. You will continue on as an employee of General Signal
through July 31, 1996. As an employee of General Signal,
you will be compensated at an annual rate of $310,000.
In addition, if you are unemployed as of August 1, 1996 you
will be eligible for up to an additional six months salary
as long as you remain unemployed. Employment is defined to
include consulting and self-employment.
3. You will be eligible for 1994 incentive compensation,
payable in March 1995, based on corporate performance and
according to formula. You will not be eligible for any
incentive compensation beyond that payable in March, 1995.
4. You have indicated that you will elect early retirement
under the General Signal Retirement Plan (supplemented by
the Benefits Equalization Plan to the extent necessary)
effective August 1, 1996 or the first day of the month
following your no longer being an employee which ever is
later.
5. As an employee, you will continue to be covered under the
terms of the corporate office benefit programs. After
retirement, you and your dependents will be covered by the
applicable post retirement benefits provided retirees of
General Signal.
6. Your automobile (1993 Infiniti) will become your property
effective March 1, 1995. You will have an income tax
liability for the value of the car.
7. You will keep confidential all confidential and trade secret
information concerning General Signal, its business, and its
prospects which has become known to you.
8. All salary payments provided hereunder will cease in the
event of your death.
9. Outplacement or reasonable offsite office arrangements
during your payroll continuation will be provided if you
desire such services.
10. As part of this agreement you will be required to sign a
Release of All Claims and Demands.
Please countersign and return to me the enclosed copy of this
letter indicating your acceptance of the understanding it sets
forth.
Sincerely,
GF:cm
Enclosure
___________________________
Stephen W. Nagy Date
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GENERAL SIGNAL
1994 ANNUAL REPORT
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Year Ended December 31, (Dollars in millions, except per-share data) 1994 1993
---- ----
<S> <C> <C>
Net sales $1,527.7 $1,354.2
Earnings from continuing operations(1) $104.1 $86.4
Earnings per share from continuing operations(1) $2.20 $1.91
Return on average shareholders' equity
from continuing operations(1) 19.4% 16.9%
Cash dividends paid per common share $.90 $.90
</TABLE>
[GRAPHICS OMITTED]
Table of Contents
1 Chairman's Letter
3 Bolt-On Acquisition Strategy
4 General Signal At a Glance
6 Process Controls Highlights
9 Electrical Controls Highlights
12 Industrial Technology
Highlights
14 Management's Discussion
and Analysis
18 Report of Management
and Auditors
19 Statement of Earnings
20 Balance Sheet
21 Statement of Shareholders'
Equity
22 Statement of Cash Flows
23 Notes to the Financial
Statements
34 Eleven-Year Financial
Summary
36 Directors and Officers
37 Shareholder Information
<PAGE>1
To Our Shareholders
General Signal marked its 90th birthday in 1994. It was, however, more
than just an historic milestone. The past year was one of our most momentous,
and for many of the management team, the busiest year ever.
Most of the Class 1 financial goals we set a number of years ago were
either met or exceeded an achievement of which we are proud.
We increased the annual dividend payout rate from 90 to 96 cents per share
the first increase in years and we set an even higher payout target of 40
to 45 percent of trailing earnings. With confidence in our future growth
and financial condition, we expect more consistent increases are ahead.
We welcomed Michael Lockhart to the new position of president and chief
operating officer. Mike's extensive experience and terrific business sense
will be important assets in achieving General Signal's goals for growth.
And in a second great appointment, we recently welcomed aboard Terry Martin
as our new executive vice president and chief financial officer. Terry's
broad background and capabilities will do much to advance our financial and
cash management programs necessary tools to meet our growth targets. You
should expect better results, sooner, with Mike and Terry as key parts of
our team.
Four new "bolt-on" acquisitions completed during the year strengthened the
competitive positions of our pump and electrical fittings businesses, and
gave them access to important new markets and distribution channels. At the
same time, we increased the critical mass of core Electrical and Process
Controls businesses through the consolidation of several units. And we also
announced the planned divestiture of the Leeds & Northrup and
Dynapower/Stratopower units and took a charge, primarily for taxes, for
moving them to discontinued operations. Both are good businesses, but we
were not well positioned to make them market leaders.
Our failed bid for Reliance Electric, while disappointing, gave us insight,
experience and $55 million in termination fees, which were used to enhance
future earnings. In the failed merger process, we learned how to improve
several existing businesses and some new tricks for acquiring companies.
But, most of all, we demonstrated that we will "not chase a deal" to the
detriment of our current and future shareholders.
Improvements Reflect Success
of Repositioning Effort
Sales on a continuing business basis for 1994 advanced 13 percent to
$1.53 billion from $1.35 billion last year. Operating earnings on a
continuing basis gained 21 percent to $169.7 million. Earnings on the same
basis were $104.1 million, up 20.5 percent from last year, and earnings per
share rose to $2.20, a new record for the company.
Focus Unchanged for Balance of Decade
We will continue to fine-tune our financial
goals for the company while setting new growth strategies as we enter the
decade's second half.
[GRAPHICS OMITTED]
<PAGE>2
While we will continue to strengthen the focus on top-line growth through both
internal development and bolt-on acquisitions, we will not relinquish our
commitment to achieving the financial return targets that have been a
cornerstone of our repositioning effort.
We are pleased with our accomplishments during the decade's first half.
General Signal's repositioning over the past six years has yielded the
following:
We have exited the businesses of defense, railroad equipment, and
semiconductor. When Leeds & Northrup is sold, we will also have exited the
instrumentation, measurement and systems businesses.
The number of business units has been reduced to 11 from 44 units.
This has been accomplished through 24 bolt- on acquisitions, 20 unit
divestitures, and 15 unit consolidations.
The average business unit size has increased to $145 million from $37
million.
Sales per employee have risen to $133,000 from $95,000.
The number of manufacturing facilities has been reduced from 117 to 68
facilities.
SG&A as a percent of sales has improved from 24 percent to 18.1 percent at
year-end 1994.
Working capital as a percent of sales has improved from 29.7 percent to
13.5 percent.
On a continuing basis, the return on equity has risen to 19.4 percent from
less than 10 percent.
Taken together, these measurements place us in Class 1 territory a position we
will maintain.
Bolt-On Acquisitions Strengthen
Competitive Position
The addition of Fairbanks Morse expanded our pump product line and
market reach, making General Signal a leading provider of pump equipment to
the U.S. municipal market. The acquisitions of Benjamin Signals, Neer
Manufacturing, and the assets of Berger Industries' steel fittings business
rounded out our signaling and fittings product lines, enhancing these units'
positions as leading suppliers to the electrical industry.
Our bolt-on acquisition effort, as outlined following this letter, has
successfully generated growth and has allowed us to direct investment to core
businesses with the best long-term growth potential. In short, growth through
bolt-on acquisitions is now a core competency for General Signal. We will
continue to prospect for additions to the company that enhance our global
competitive position and shareholder returns.
Although our bid for Reliance Electric was ultimately unsuccessful, the
exercise helped focus our strategic interests even further. Also, the
break-up fee has given us an opportunity to accelerate operating
improvements, an effort that will have a direct impact on our long-term
growth.
Our consolidations of Kinney Vacuum with General Signal Pump Group,
O-Z/Gedney with Sola to form GS Electrical Power Systems Group, and the
consolidation of Telenex with Tau-tron to form GS Telecom Group, continue to
increase the critical mass of our ongoing businesses.
1994 was a new high-water mark for General Signal in many respects. It
also established a base for continuing performance improvements. Our core
competencies disciplined growth, asset management, productivity improvement
and acquisition integration will serve us well as we work to generate
superior and consistent returns for our shareholders. The hard work and
commitment of our employees and support of our shareholders is deeply
appreciated.
On a more personal note, I would like to acknowledge the many
outstanding contributions to the development and success of General Signal
made by Nathan R. Owen, who will not be standing for re-election to General
Signal's board of directors. His support and advice were important to me and
to the company. Mr. Owen served as chairman of the board and chief executive
officer from 1962 to 1984 and as chairman of the executive committee of the
board since 1980. General Signal will always be grateful for his guiding
wisdom. For his extraordinary service, the Board will appoint Mr. Owen a
Director Emeritus.
Edmund M. Carpenter
Chairman and Chief Executive Officer
<PAGE>3
Bolt-On Acquisition Strategy
One of General Signal's strongest core competencies, making and
integrating "bolt-on" acquisitions, has enabled the company to grow
faster than its fundamental markets. General Signal has completed 24
bolt-on acquisitions during the past six years.
A bolt-on acquisition is a direct extension of an existing business
designed to enhance its strategic position and to create shareholder value.
Bolt-on acquisitions are typically:
Product extensions that are closely aligned with an existing business, its
distribution network, and its customers;
Customer diversifications, in which the acquisition adds similar products
that have a different customer base or distribution system; and/or
Geographic expansions that extend the company's presence in foreign,
domestic, or regional markets.
Because bolt-ons reinforce businesses already well understood by General
Signal management, these acquisitions provide a far more favorable return on
the company's investment at much lower risk than "stand-alone" or unrelated
acquisitions. General Signal identifies companies that offer a good strategic
fit with its core businesses and then develops a detailed plan for
integrating these companies with existing operations. The goal of integration
is to realize the benefits of scale, improved distribution, and other
synergies that will enhance the acquired company's ability to compete and
grow.
All bolt-on acquisitions involve some level of integration to achieve
cost efficiencies from general and administrative functions, manufacturing
operations, and marketing and sales activities. Integrating bolt-on
acquisitions quickly and successfully helps to ensure that General Signal
realizes the returns and competitive advantages which are the goals of the
acquisition effort.
Bolt-on acquisitions have added almost $400 million in revenue to
General Signal's continuing operations since 1988 and have significantly
improved the units' competitive positions and critical mass.
Bolt-On Acquisitions 1988 to 1994
<TABLE>
<CAPTION>
Acquisition - Acquiring Unit Products Acquisition Date
- ----------------------------- ------------ -----------------
<S> <C> <C>
Turbo-Mueller - Lightnin Mixing equipment November, 1988
Jesse (Turbo-Mueller) - Lightnin Mixing equipment January, 1989
Hydromatic Pumps - General Signal Pump Group Submersible pumps, grinder pumps, and January, 1989
sewage ejector pumps
Mirtone - GS Building Systems Corporation Intercom and fire alarm systems March, 1989
ARC Teleproducts - GS Telecom Group Data communications end-user test and
control equipment July, 1989
Dual-Lite - GS Building Systems Corporation Exit signs January, 1990
MPH - Revco/Lindberg Fuel-fired and electric furnaces May, 1990
Borri - GS Electrical Power Systems Group Uninterruptible power systems July, 1990
RTT - GS Telecom Group Monitor/analyzer for telephone company January, 1992
networks
ABB-UPS - GS Electrical Power Systems Group Uninterruptible power systems January, 1992
Associated Lighting - GS Electrical Power Systems Group Hazardous lighting March, 1992
FAST - GS Building Systems Corporation Fire alarm control systems May, 1992
Valex - Lightnin Magnetic drive mixers July, 1992
GMV - Lightnin Fixed and portable-mount mixers July, 1992
Unival - DeZurik Ported gate valves August, 1992
Ryken Tube Manufacturing - Metal Forge Tubular auto parts October, 1992
Northwest Alabama Industries - GS Electrical Power Electric tubing/fittings for light November, 1992
Systems Group commercial applications
Revco Scientific - Revco/Lindberg Ultra low-temperature freezers, October, 1993
refrigerators, and CO2 incubators
for life sciences research
Layne & Bowler - General Signal Pump Group Vertical pumps for water supply, November, 1993
treatment, and irrigation
Jannette Drives - Leeds & Northrup Large drive units for electric utilities November, 1993
Benjamin Signals - GS Building Systems Corporation Audible and visual signals for industrial
and hazardous locations March, 1994
Assets of Berger Industries' steel fittings Steel fittings for nonresidential March, 1994
division - GS Electrical Power Systems Group construction
Neer Manufacturing - GS Electrical Power Systems Group Zinc die-cast fittings April, 1994
Fairbanks Morse - General Signal Pump Group Pumps for wastewater treatment,
irrigation, home water December, 1994
systems, fire protection, and general
industrial use
</TABLE>
<PAGE>4 and 5
General Signal At a Glance
[GRAPHICS OMITTED]
PRINCIPAL BUSINESSES
Process Controls
General Signal Pump Group
North Aurora, Illinois
PRODUCTS
Centrifugal, submersible, regenerative turbine, and vertical
turbine pumps; mechanical vacuum pumps and pump packages
MARKETS SERVED
Municipal and residential water and wastewater treatment,
commercial heating, ventilation and air conditioning;
agriculture; food processing and packaging; chemical and
pharmaceutical processing; electrical manufacturing and
service; specialty metals processing; and heat treating and
other manufacturing industries
MAJOR COMPETITORS
ITT (Bell & Gossett, Flygt, Allis-Chalmers), Syncroflow,
Weil, Taco, F.E. Meyer, Peerless, Stokes, Leybold, Edwards,
Busch, Nash
ECONOMIC VARIABLES
Residential and nonresidential construction; industrial
capital spending
PRINCIPAL BUSINESSES
Lightnin
Rochester, New York
PRODUCTS
Industrial fluid mixers, agitators, and coal feeder
equipment
MARKETS SERVED
Process industries, including chemical, petroleum, minerals
processing; food and beverage, and pharmaceutical
manufacturing; industrial and municipal water treatment and
supply; electric utilities
MAJOR COMPETITORS
Chemineer, Philadelphia Mixers, EMI
ECONOMIC VARIABLES
Electric utility spending and industrial capital spending
PRINCIPAL BUSINESSES
DeZurik
Sartell, Minnesota
PRODUCTS
Industrial valves that isolate and throttle gases, liquids,
slurries and dry solids; consistency transmitters
MARKETS SERVED
Process industries, including chemical, petroleum, and
minerals processing; pulp and paper manufacturing; air
conditioning, industrial and municipal water and waste-
water treatment; electric utilities
MAJOR COMPETITORS
Keystone, Pratt, Fisher, Neles-Jamesbury
ECONOMIC VARIABLES
Industrial capital spending and government funding for water
treatment and sewage treatment
PRINCIPAL BUSINESSES
Revco/Lindberg
Asheville, North Carolina
PRODUCTS
Ultra-low temperature laboratory freezers, specialty
refrigerators, and CO2 incubators; industrial and laboratory
ovens and furnaces
MARKETS SERVED
Life science and industrial laboratory research; primary and
fabricated metals processing; electronic equipment
processing
MAJOR COMPETITORS
Forma Scientific (Life Sciences Int'l, PLC), Sanyo,
Barnstead/Thermolyne (Sybron Int'l Corp.), Despatch, Grieve,
Gruenberg Oven Co., Surface Combustion
ECONOMIC VARIABLES
Government and industrial funding of research, fabricated
metals, automotive, consumer electronics and industrial
capital spending
ELECTRICAL CONTROLS
PRINCIPAL BUSINESSES
GS Electrical Power
Systems Group
Farmington, Connecticut
PRODUCTS
Uninterruptible power systems, DC power supplies, power
conditioners/regulators, low-voltage general purpose
transformers, and transformer
remanufacturing/decommissioning services; electrical conduit
and cable fittings, enclosures and controls, industrial
lighting, heat-trace systems, and firestop products
MARKETS SERVED
Computer and electronic equipment manufacturers and users,
electric utilities; factory automation; nonresidential and
nonbuilding construction; large processing industrials
MAJOR COMPETITORS
Emerson, Exide, American Power Conversion, Square D, ITT,
Zytec, AT&T, GE, ABB, Thomas & Betts, Harvey Hubbell, Crouse
Hinds, Appleton, Raychem, Thermon, Dow, 3M
ECONOMIC VARIABLES
Nonresidential construction; industrial and retail capital
spending
PRINCIPAL BUSINESSES
GS Building Systems Corporation
Farmington, Connecticut
PRODUCTS
Fire detection systems, low-voltage systems service,
emergency lighting, exit signs, signaling devices, and
flexible wiring systems
MARKETS SERVED
Commercial, industrial, and institutional construction
MAJOR COMPETITORS
Simplex, Cerberus, Pittway, Federal Signal, Lithonia, Kaufel
Group
ECONOMIC VARIABLES
Construction and life safety building codes
PRINCIPAL BUSINESSES
GS Electric
Carlisle, Pennsylvania
PRODUCTS
Universal, blower, and permanent magnet fractional
horsepower electric motors
MARKETS SERVED
Consumer appliance manufacturing and commercial applications
MAJOR COMPETITORS
Ametek (Lamb Electric), Northland, United Technologies,
Mamco
ECONOMIC VARIABLES
Consumer spending
PRINCIPAL BUSINESSES
Dielectric Communications
Raymond, Maine
PRODUCTS
Radio frequency transmission and pressurization equipment
and systems
MARKETS SERVED
Broadcasting, telecommunications, government
MAJOR COMPETITORS
Andrew, Harris, Pure Gas
ECONOMIC VARIABLES
Spending by TV and FM/AM radio stations, Bell Operating
Companies and independents
INDUSTRIAL TECHNOLOGY
PRINCIPAL BUSINESSES
Metal Forge
Dublin, Ohio
PRODUCTS
Cold-forged solid and tubular metal components and
assemblies for automobiles and bicycles
MARKETS SERVED
Automotive and bicycle manufacturers and tier-one suppliers
to these manufacturers
MAJOR COMPETITORS
Divisions of automotive OEMs; TRW Inc. (Thompson Products
Division), Japanese-owned transplanted suppliers;
off-shore bicycle forging suppliers, Walker, Arvin
ECONOMIC VARIABLES
Domestic auto, car, and bicycle production
PRINCIPAL BUSINESSES
GFI Genfare
Elk Grove Village, Illinois
PRODUCTS
Electronic fareboxes, turnstiles, and vending equipment
MARKETS SERVED
Mass transit systems and federal government agencies
MAJOR COMPETITORS
Cubic, CGA, Autelca
ECONOMIC VARIABLES
Funding for mass transit
PRINCIPAL BUSINESSES
GS Telecom Group
Mount Laurel, New Jersey
PRODUCTS
Performance monitoring and test equipment for
telecommunications networks; data communications network
management systems, and diagnostic equipment
MARKETS SERVED
Telecommunications service providers and network operators
worldwide; data centers at industrial corporations, banking
and financial service organizations, and other data communi-
cations network operators and users
MAJOR COMPETITORS
Hewlett-Packard, Dynatech TTC, Hekimian, Anritsu, Wiltron,
NSC, Data Switch, Tekelec, ADC
ECONOMIC VARIABLES
Capital spending in the banking and financial services
sector; interexchange long-haul carriers and telecom
authorities overseas; capital spending on computer systems
and spending by Bell Operating Companies and independents
<PAGE>6
PROCESS CONTROLS
[GRAPHICS OMITTED]
<PAGE>7
General Signal's Process Controls sector delivered strong earnings
growth in 1994, reflecting the sector's enhanced competitive position in the
United States and abroad, "bolt-on" acquisitions particularly in the pump
business and a continued effort to improve productivity and reduce operating
costs.
The recent consolidation of Kinney Vacuum with General Signal Pump Group
and the planned divestiture of Leeds & Northrup reflect General Signal's
continued focus on building critical mass and enhancing the competitive
position of its core businesses. Leeds & Northrup has undergone a successful
repositioning effort, introducing an array of new products while
significantly reducing costs. However, changes within the instrumentation
and measurement section of the process controls industry led General Signal
to conclude that Leeds & Northrup would be better suited to an owner who
already has significant critical mass in this area or whose strategic focus
is to build such a presence.
With the recent bolt-on acquisition of Fairbanks Morse Pump Corporation,
General Signal Pump Group (formerly Aurora Pump) became a leading supplier to
the domestic municipal market. Fairbanks' strength in wastewater treatment,
fire protection, and industrial and home water systems gives General Signal
the industry's most comprehensive line of pumps and expands its distribution
network.
The 1993 addition of Layne & Bowler to General Signal Pump Group
increased the company's share of the domestic municipal market and aided the
unit's expansion into international markets.
New business included the sale of the unit's first vertical turbine
pumps to a New Jersey municipality. The unit also received contracts for
dry-pit, non-clog pumps to pump wastewater in treatment plants in Southern
California and Pennsylvania. General Signal Pump Group plans to introduce the
industry's first energy-efficient dry-pit, non-clog pump to the municipal
market in 1995.
The unit significantly increased its share of the fire protection market
in 1994 as a result of higher regional market sales for diesel engine- driven
products, a new distributor promotional pricing program, and increased
packaged sales of Layne & Bowler vertical pumps and Aurora horizontal pumps.
Shorter lead times also helped boost orders for the unit.
Capitalizing on new guidelines set by the National Fire Protection
Association, the unit introduced its first vertical in-line fire pump to the
domestic market. The product expands the unit's commercial market reach to
include small buildings. International pump sales also improved as a result
of a concentrated effort to market the company's line of pumps designed to be
powered by 50 Hertz motors.
General Signal Pump Group plans to take advantage of robust growth in the
overseas commercial market by introducing a new line of multi-stage diagonal
split-case pumps in 1995. These pumps provide high-pressure pumping for boiler
feed and high-rise building water supply projects.
Domestic and international vacuum pump sales increased as well in 1994,
aided by the 1993 introduction of the unit's liquid ring vacuum pump, and
strong sales to domestic and foreign manufacturers in the food packaging
markets. The unit also became a supplier of rotary piston pumps to one of the
world leaders in vacuum packaging equipment during 1994.
General Signal Pump Group's line of mid-sized liquid ring vacuum pumps
contributed to strong revenue growth in the chemical market. The product line
should continue to offer steady sales gains both in the U.S. and abroad as
the unit introduces the line to its foreign distribution network. Overall,
international pump sales increased significantly in 1994 and are expected to
continue to grow strongly in 1995.
Lightnin continued to lead the world mixer market, providing
cost-effective and technologically advanced solutions to the chemical,
mineral, pulp and paper, and municipal water and wastewater markets.
Demand for mixers used in chemical applications, particularly in the
production of terephthalic acid, continued to be strong, as Lightnin offers
the industry's most efficient large mixers for this application.
Lightnin successfully pursued new applications for its bottom-entry
seal-less mixer line, winning its largest single contract from a major
soft-drink manufacturer. Used in conjunction with top-entry mixers, these
bottom-entry units allow mixing to continue at low liquid levels, resulting
in higher yields for the manufacturer.
The unit also expanded its presence in Asia, where infrastructure spending
increased demand
[GRAPHICS OMITTED]
<PAGE>8
for low-cost, efficient water and wastewater treatment mixers. A new
light assembly and shipping facility in Shanghai, China will allow Lightnin
to respond more quickly to its Chinese customers. This facility will also
provide an export platform to other Asian markets. In addition, Lightnin
plans to introduce a new parallel shaft gear drive in 1995. The new product
responds to growing demand for large, inexpensive mixers for water treatment
and minerals processing applications in Asia and other developing regions,
where the drive's compact design makes it less expensive to produce.
Lightnin's Stock Equipment division received a large order for coal
feeders to supply 3600 megawatts of power to China as a result of its recent
joint venture with Shenyang Power Equipment Company. As this order indicates,
China is adding as much power every year as the United States will add
throughout the 1990s. Stock expects order levels to continue at a high rate
over the next several years.
Sales for DeZurik's valve business declined slightly as a result of
continued weakness in the paper industry. However, this decline was nearly
offset by increased sales in the municipal and wastewater treatment markets.
Sales for valves larger than 36 inches in diameter increased, a trend that is
expected to continue as large municipalities expand and retrofit their waste
treatment plants.
The unit also broadened its range of products for the pulp and paper
market to position itself for the market's anticipated recovery. The fourth
quarter was the strongest for the pulp and paper industry in several years.
DeZurik's orders were up in this period, indicating that this recovery has
begun.
A new sales office in Austria broadened DeZurik's European operations to
central Europe and helped secure a multi-million dollar contract for a Middle
Eastern desalinization project.
Further, to ensure long-term growth and profitability, the unit is
focusing its product development efforts on new seating and materials
technology, actuators, and consistency transmitters. These efforts, in
conjunction with cost reduction programs now underway, are expected to
provide significant growth in sales and profits in 1995.
Revco/Lindberg delivered strong earnings in 1994 as the unit
consolidated its manufacturing and administrative operations, focused on
growth opportunities in the laboratory and industrial markets, and channeled
products to the unit's expanded distribution network. These efforts, combined
with an aggressive cost-reduction program, resulted in a significant increase
in earnings.
The unit maintained its position as a leading supplier of ultra-low
temperature freezers and specialty refrigerators. A new line of
chlorofluorocarbon-free laboratory refrigerators, redesigned in anticipation
of 1996 government regulations banning chlorofluorocarbons, was well
received. An expanded line of laboratory ovens introduced under the Lindberg_
and Blue M_ names is also expected to contribute to sales growth in the
coming years.
A major restructuring of Revco/Lindberg's industrial business resulted
in a substantial increase in profits during 1994. Growing demand for
industrial furnaces allowed the unit to capture large contracts from Pratt
and Whitney for heat-treating furnaces for the production of jet engine
components, and from Siemens for a walking beam furnace for a nuclear
application.
Revco/Lindberg also introduced a leading-edge vertical elevator conveyor
oven that features a much smaller footprint, which will enable manufacturers
to improve productivity by making the most efficient use of factory space. A
sustaining effort to reduce costs and focus on areas of growth should
continue to enhance the unit's earnings in the year ahead.
Sales for the Process Controls sector's late-cycle businesses will
benefit as the economy improves. Margins should also continue to improve as
units leverage their competitive positions and realize the benefits of
bolt-on acquisitions and new product introductions.
[GRAPHICS OMITTED]
<PAGE>9
ELECTRICAL CONTROLS
[GRAPHICS OMITTED]
<PAGE>10
General Signal's Electrical Controls sector achieved robust increases in
sales and earnings, reflecting stronger operating trends within the fire
safety and control, power transformer, and power protection markets.
"Bolt-on" acquisitions for the sector's conduit fittings and signaling
businesses broadened their product offerings and strengthened distributor
relationships, positioning the units for continued growth in the year ahead.
GS Building Systems Corporation's life safety and signaling business
increased sales for the unit's fire detection systems. Volume was strong in
the institutional market with the unit winning new contracts for fire
detection systems at the Los Alamos, New Mexico nuclear research facility and
the Y-12 Nuclear Facility in Oak Ridge, Tennessee.
Integration of the Benjamin Signals product line, acquired this year, enabled
the unit to consolidate further its strong market share position with the
electrical wholesaler, an effort that will continue as the unit targets
competition in specific market categories more directly.
New products also helped expand the unit's competitive position. The
unit introduced a revolutionary new line of microprocessor-based smoke
detectors designed to distinguish between smoldering and flaming fires,
virtually eliminating false alarms. This leading-edge technology in fire
detection and prevention systems is expected to make a significant
contribution to unit sales in 1995.
The unit extended its popular line of LED exit signs to offer a new
low-watt green exit sign and a version featuring larger lettering. Both
products expand the unit's reach to new markets by combining energy
efficiency with designs that comply with safety codes in certain regional and
building environments.
GS Building Systems Corporation was chosen to supply a fully
differentiated line of large building fire detection systems for Honeywell
Inc. worldwide. The agreement expands the company's international presence
and exposure beyond the construction market to include the building
automation and security sectors.
The consolidation of O-Z/Gedney's electrical fittings business with Sola
Electric formed GS Electrical Power Systems Group. This larger unit is
capable of providing a more comprehensive array of products to the electrical
industry. The combination enhances the critical mass of the new unit, and
positions it for future growth.
GS Electrical Power Systems Group successfully delivered operating
earnings generated by the earlier consolidation of Hevi-Duty's general
purpose and control transformer business, gaining leverage and targeting
opportunities for growth through its electrical distribution channel.
Hevi-Duty's remanufacturing and decommissioning transformer business
expanded sales by adding new utility customers in the Midwest and South.
Productivity improvements contributed to the significant earnings rise over
prior years.
The unit's power protection and small transformer products contributed
substantially to unit profits as these businesses shifted their focus from
lower-margin commodity products to higher value products with unique features
to solve power quality problems. A continued emphasis on opportunities in the
industrial maintenance and repair and automation market should help the unit
maintain the favorable growth established in 1994.
A strategic partnership with Hewlett-Packard to supply computers with
uninterruptible power protection builds on GS Electrical Power Systems
Group's ability to provide both built-in uninterruptible power supply and DC
battery back-up technology to the computer market. This core competency will
be used to forge partnerships with other global computer manufacturers.
In an effort further to support its uninterruptible power supply
offerings, the unit also introduced a new line of differentiated products
suitable for global distribution. The first off-line and on-line products,
which were introduced abroad in 1994, were well received. A third interactive
line product is scheduled for introduction in 1995.
An aggressive international sales effort netted the unit a contract for
three 400 KVA, three-phase uninterruptible power systems to protect the
communications network for Moscow's government buildings from power outages.
[GRAPHICS OMITTED]
<PAGE>11
The unit will also provide a custom-designed power system to protect the
control circuits of a new geothermal power plant in Italy.
Sales for power transformers continued to recover. GS Electrical Power
Systems Group forged an innovative partnership with a number of
investor-owned utilities, including American Electric Power, that will
streamline their procurement costs and shorten cycle times, and offer
competitive benefits to both businesses.
The bolt-on acquisitions of Neer, a manufacturer of zinc die-cast
fittings, and Berger Industries' steel fittings division gave the unit the
broadest conduit and cable fittings business in the electrical industry.
These acquisitions extend the unit's opportunities to include the residential
and light commercial construction sectors.
New product introductions within the newly consolidated firestop,
industrial lighting, and enclosure and control product segments helped the
unit boost sales for these products and increase its penetration of the
commercial and industrial markets. Sales for heat-trace systems continued to
grow strongly, as the unit increased production yields to selected original
equipment segments in Canada and Europe.
GS Electric's electric motor business achieved record sales and earnings
as a result of strong orders in all of its markets, especially floor care and
fitness. In response to rising material costs and customer resistance to
price increases, the unit focused its efforts on improving operating
efficiency, cost reduction, and honing its technical capabilities. GS
Electric's position as the leading supplier of low-cost, custom-designed
motors to original equipment manufacturers in the floor care, lawn and
garden, and exercise markets will enable the unit to participate in market
growth from rising consumer demand for these products.
GS Electric boosted its sales to the floor care market, developing new
motors for applications in upright vacuums, extractors, wet/dry vacuums, and
hand held units sold by both existing and new customers.
Continued demand for fitness products and increased volume in floor care
from product line extensions should help maintain the positive trend in
earnings that GS Electric enjoyed in 1994.
Dielectric Communications successfully entered four new international
markets, supplying radio frequency broadcast equipment for new communications
projects in Kuwait, Saudi Arabia, India, and Nigeria.
Domestically, Dielectric's sales also improved, as the unit's expertise
in broadcast transmission systems resulted in a contract to supply custom
antennas, transmission line, and waveguide equipment for a three-TV station
project in Madison, Wisconsin.
The unit introduced a new water-sealed compressor for its mid-range and
large capacity dehydrators, which telephone companies use to pressurize
underground cables. The new product is quieter, easier to repair in the
field, and includes a complete line of retrofit kits that allow customers to
use the compressor in competing water-sealed dehydrators. This new compressor
is expected to increase sales of Dielectric's larger capacity dehydrators and
off-the-shelf compressors in 1995.
While this sector's substantial tie to the nonresidential and
nonbuilding construction market will most likely continue to challenge sales
growth, 1995 earnings should reflect the sector's strong market positions and
improved operating efficiency.
[GRAPHICS OMITTED]
<PAGE>12
INDUSTRIAL TECHNOLOGY
[GRAPHICS OMITTED]
<PAGE>13
The Industrial Technology sector produced record sales and earnings in
1994, aided by strong performance from the sector's automobile equipment,
fare collection, and vending equipment businesses.
Continued strong growth in the automotive industry contributed to
healthy sales gains for Metal Forge. The unit extended its best-selling
product line, the suspension arm assembly, providing a rear suspension wire
arm for the 1995 model Chrysler Cirrus and Dodge Stratus mid-size cars. The
assembly is expected to improve annual sales over the next several years.
A new bicycle crank and sprocket combination, developed for a domestic
juvenile "sidewalk bike" also boosted sales and extended the unit's expertise
in bicycle parts to the children's market.
Sales for replacement auto parts were brisk, as recall campaigns for
catalytic converters increased. Sales initiatives in 1995 will develop new
markets for these replacement products. Demand for original equipment parts
in the automotive market is expected to be strong again in 1995.
The consolidation of Tau-tron's telecommunications monitoring and test
equipment business, and Telenex, which continued to be the leading provider
of switching systems for wide-area networks in 1994, formed GS Telecom Group.
This larger unit promises to be highly competitive in the telecommunications
marketplace.
GS Telecom Group penetrated the local-area network and channel system
markets in 1994. The unit established a strong following for its new 2700
LAN/WAN switching system, winning the largest order in its ten-year history
from Bell South Telecommunications, Inc. The 2700 system will manage 13,000
ports at six sites within the Bell South network.
Unique in the industry, the 2700 allows network managers to connect
computers within a local or wide-area network from one central switching
system, eliminating the need to rewire networks when employees change
workstations.
GS Telecom's newest product, the ESCON converter, was developed jointly
with IBM as an enhancement to the unit's 2300 Channel Switching System. The
converter gives data centers a cost-effective way to connect peripheral
equipment, such as disk drives, magnetic tape drives, and printers via fiber
optic cabling to host mainframe systems.
In addition, the unit introduced the 8800 Series ATM Analyzer, becoming
the first supplier in the industry to offer an upgrade to existing equipment
used to test integrated voice, data, and video communications.
GS Telecom Group continued to build niche markets for its key product
lines. The unit's flagship test and monitoring product sector, Network
Channel Office Equipment (NCOE), showed continued strength, driven by the
market's demand for more test and monitoring services in critical
applications.
The unit continued to expand its customer base for the Integrated
Monitor and Test System (IMATS) and 9001 performance monitor and test product
line, as several analog switched-access system accounts upgraded to IMATS and
began to integrate their digital and analog test and monitoring systems. In
addition, GS Telecom Group introduced a new signaling tester to support the
installation of telephone switching equipment in Eastern Europe, Asia, and
Latin America, where massive telecommunications network upgrades are
underway.
Sales and earnings for GFI Genfare set records in 1994, aided by new
contracts, product extensions, and entry into new markets. The success of its
Ticket Reader/Issuer Machine, first introduced in 1992 as an attachment to
bus fareboxes, has given GFI Genfare a leadership position in the transit
market that should continue to fuel rapid sales growth in 1995 and 1996. New
contracts for more than $30 million in electronic registering fare boxes and
fare collection products for transit systems were received in 1994.
The unit substantially completed manufacturing of its first postage
stamp dispensing machines in 1994, shipping more than 4,000 units to the U.S.
Postal Service. The new machine dispenses stamp booklets and single coil
stamps, accepts U.S. currency, coins and credit/debit cards, makes change,
records the transaction electronically, and issues a receipt. GFI Genfare has
developed a range of additional options for the equipment, which should
result in additional orders as the Postal Service broadens installation of
new machines.
The Industrial Technology sector should continue to see good earnings
and margins in the year ahead as its businesses benefit from leading market
positions, the introduction of new products in 1994, and continued market
growth.
[GRAPHICS OMITTED]
<PAGE>14
Management's Discussion and Analysis
MD&A of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the
company's consolidated financial statements and notes thereto. All amounts
are in millions except per-share data.
Results of Operations
During 1994, the company reported earnings from continuing operations of
$104.1 (or $2.20 per share), compared with $98.1 (or $2.17 per share) during
1993. Results for 1994 and 1993 included the unusual charges and credits
discussed below. In addition, all previously reported periods have been
restated to exclude discontinued operations (see details on page 30). The
year-to-year comparisons exclude these unusual items. To assist the reader,
where applicable, we have bracketed the unusual items in the discussion.
The table below compares selected operating results on an as reported basis to
the results excluding the effect of the unusual items. A brief explanation of
the unusual items follows the table.
<TABLE>
<CAPTION>
1994 1993
1994 1994 Analytical 1993 1993 Analytical
Year Ended December 31, Reported Analytical(1) Percent Reported Analytical(1) Percent
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $1,527.7 $1,527.7 $1,354.2 $1,354.2
Gross margin 418.2 445.9 29.2% 395.2 399.6 29.5%
Selling, general and
administrative expenses 292.3 276.2 18.1% 259.3 259.3 19.1%
Operating earnings 172.1 169.7 11.1% 155.7 140.3 10.4%
Earnings from continuing
operations $104.1 $104.1 6.8% $98.1 $86.4 6.4%
Earnings per share of
common stock from
continuing operations $2.20 $2.20 $2.17 $1.91
<FN>
(1) Excludes the effect of items discussed below.
</FN>
</TABLE>
Reliance Merger Break-Up Fee: During the fourth quarter of 1994, the
company's planned merger with Reliance Electric was not successfully
concluded, and, as a result, the company received a break-up fee of $50.0.
The company also incurred $3.8 of net expenses related to the merger.
Consolidation of Operations, Asset Valuations and Other Charges: During
the fourth quarter of 1994, the company recorded $46.2 of charges related
principally to consolidation of certain operations ($11.8), asset valuations
($24.1) and environmental and other issues ($10.3). Management anticipates
lower costs in the future primarily from improved productivity and operating
unit consolidations. It is expected that approximately $14.0 to $15.0 of
these charges will result in cash expenditures in 1995 and 1996. During 1993,
the company charged $4.4 to cost of sales to reflect permanent declines in
the value of assets.
SEO: During 1993, the company substantially completed the divestiture of
Semiconductor Equipment Operations with higher than expected proceeds from
the sale of these units and lower than expected severance costs. As a result,
$53.2 of excess reserves were returned to operating income. At December 31,
1994, the SEO reserves remaining were $18.1 which the company anticipates
will be expended in 1995.
Restructuring: In 1993, the company provided $15.0 for restructuring,
including factory consolidation and rearrangement ($13.1), product
restructuring and realignment ($0.9), and reorganization of lines of
distribution and administration ($1.0), all related to the continuing
operations of the company. Substantially all such activities were completed
during 1994.
[GRAPHICS OMITTED]
<PAGE>15
Previously Divested Businesses: The company recognized in 1993 an
additional $5.2 charge related to previously divested businesses.
Adoption of New Accounting Standards: The company adopted SFAS 112,
"Employers' Accounting for Postemployment Benefits," effective January 1,
1993. The impact of adopting this standard (shown as the cumulative effect of
accounting changes in the statement of earnings) was a non-cash, after-tax
charge of $25.3 in 1993.
Extraordinary Charge: During 1993, the company extinguished certain
high-rate debt resulting in an extraordinary charge of $6.6.
Revco Transaction: During 1993, the company recorded a charge of $13.2
for transaction costs and consolidation of its Lindberg unit with Revco.
Substantially all such activities were completed during 1994.
1994 Compared with 1993 (Analytical) Revenues: Sales rose 12.8 percent
from 1993 to $1,527.7. Domestic sales increased 14.2 percent, reflecting the
strength of the domestic economy. Exports increased 13.2 percent, and foreign
shipments increased 3.4 percent.
Sales in the Process Controls sector were $606.4, up 11.1 percent from
1993. The sector saw increased sales in its vacuum pump lines and its
non-ferrous and heat-treat products. In addition, almost one-third of the
increase was from the late 1993 acquisition of Layne & Bowler, a municipal
water pump manufacturer.
Sales in the Electrical Controls sector rose 13.1 percent to $618.6 in
1994, primarily from higher shipments of life safety products, conduit
fittings and other electrical products, and electrical motors. 1994
acquisitions contributed $20.0 of the growth in sales of conduit fittings and
other electrical products.
Industrial Technology sector sales grew 15.8 percent to $302.7.
Accounting for this growth were greater shipments of OEM automotive
components and bus and rail fare equipment. A significant portion of the
increased sales in 1994 resulted from the shipment of U.S. Postal Service
stamp vending machines.
Costs and Expenses: In 1994, gross margins were flat at 29 percent of
sales [excluding unit consolidation, asset valuation and other charges in
1994 of $27.7 and asset valuation charges in 1993 of $4.4].
The ratio of selling, general and administrative expenses to sales
improved to 18.1 percent from 19.1 percent a year ago [excluding unit
consolidation, asset valuation and other charges in 1994 of $16.1].
Contributing to the lower rate of SG&A expenses to sales were the successful
cost reduction efforts undertaken by the company in 1993 and prior years.
SG&A expenses included pension credits of $9.7 in 1994 and $8.6 in 1993.
These credits resulted from the overfunded pension plan and favorable
long-term investment results. Market conditions during 1994 were not
favorable and the company anticipates lower pension credits in 1995. Spending
on research and development was 3 to 4 percent of sales in both years.
Net interest expense of $11.8 decreased from 1993 because of the
extinguishment of higher rate debt in 1993 and generally lower average debt
levels in 1994.
The effective income tax rate was 35 percent in 1994 compared with 29.5
percent in 1993. 1993 income taxes included benefits from adjustments of
prior year tax reserves and an increase in the company's deferred tax assets
arising from 1993 tax legislation.
Earnings improved to $104.1 or $2.20 per share for the year, a 20.5
percent improvement over 1993 comparable results of $86.4 or $1.91 per share.
[1994 analytical amounts exclude charges for consolidations of operations,
asset valuations and environmental matters of $46.2, the Reliance break-up
fee of $50.0, and net expenses of $3.8 incurred in connection with the
planned merger. 1993 analytical amounts exclude restructuring charges of
$15.0, asset valuation charges of $4.4, previously divested business charges
of $5.2, Revco transaction and consolidation charges of $13.2, and a net gain
of $53.2 million from divestiture of SEO businesses.]
[GRAPHICS OMITTED]
<PAGE>16
1993 Compared with 1992 (Analytical)
Revenues: Net sales were flat at approximately $1.35 billion for both
years [excluding sales of $135.0 in 1992 from SEO]. A 3.8 percent increase in
domestic sales was offset by international and export sales declines.
International and export sales were hurt by a generally stronger U.S. dollar
and weakened economies in Europe and in Asia, especially Japan.
Sales in the Process Controls sector were $545.8, flat compared with
1992 primarily from softer international demand. Sales included $2.7 from the
company's acquisition of Layne & Bowler late in 1993.
In the Electrical Controls sector, sales were $547.1, down 3.6 percent
from 1992 sales of $567.5. Only partially offsetting this decline were strong
domestic and international shipments of fire safety control products. A
significant portion of the decline was attributable to the sale of Sola's
Canadian lighting ballast business ($12.0), declines in orders for electric
motors used in floor care products, lower international demand for
uninterruptible power systems, and lower sales of hazardous location
equipment and medium power transformers.
Sales in the Industrial Technology sector of $261.3 were up 15.3 percent
from $226.7 in 1992 [excluding $135.0 of sales from SEO], reflecting
increased demand for truck products and the impact of the acquisition of
Ryken Tube Manufacturing made in 1992. Transit equipment sales also improved
in 1993 as several large municipal transit authorities accepted large
shipments of turnstiles, TRiMTM fare collection equipment, and token and
ticket vending machines. The continued success of the matrix switch product
line and other telecommunications products also helped sales.
Costs and Expenses: Gross margins [excluding $16.5 of gross margin from
SEO in 1992 and $4.4 of asset valuation charges in 1993] were flat as a
percentage of sales reflecting the continued pricing pressures experienced by
the company and the offsetting cost control measures that were taken earlier
this year, including the impact of the restructuring activities and a change
in postretirement benefits that reduced annual expense from $11.9 in 1992 to
$2.1 in 1993. In addition, the company realized $2.5 of LIFO reserve
liquidations in 1993 and $1.1 in 1992 as a result of aggressive inventory
management and product cost reduction programs.
The ratio of selling, general and administrative expenses to sales
improved to 19.1 percent over year ago levels primarily from continued cost
control efforts [excluding SEO expense of $23.5 in 1992]. Included in 1993
selling, general and administrative expenses was $1.7 for the incremental
cost of SFAS 112, principally related to severance benefits. The company
recognized pension credits in operating earnings of $8.6 and $14.0 in 1993
and 1992, respectively. Spending on research and development remained
consistent at approximately 4 percent of sales for both years [excluding SEO
spending of $22.7 in 1992].
Net interest expense of $16.6 decreased in 1993 from 1992 interest of
$24.8 because of the extinguishment of higher rate debt as a result of the
equity offering, proceeds from the sale of SEO, and lower interest rates.
The effective income tax rate for 1993 was 29.5 percent compared with
33.7 percent for 1992.
Liquidity and Capital Resources
Net cash provided by operating activities was $111.6 in 1994 compared
with $43.0 in 1993. Included in 1994 cash from operations was the Reliance
break-up fee of $50.0 less net expenses of $3.8 incurred in connection with
the planned merger. Cash expenditures related to SEO divestitures,
restructuring and severance were $14.0, $13.0 and $8.0, respectively, in 1994
and $38.0, $22.0 and $8.0, respectively, in 1993.
Capital expenditures were $74.8 in 1994 compared with $55.1 in 1993.
1994 capital expenditures included upgrades of the North Aurora, Illinois,
LaGrange, Georgia and Rochester, New York manufacturing facilities,
development of the Signature SeriesTM smoke detector production facilities,
the completion of a new production facility at Revco/Lindberg in Asheville,
North Carolina, and a new administrative and technical center in Connecticut
for GS Building Systems Corporation. The company anticipates that capital
expenditures will be lower in 1995 than in 1994 principally as a result of
the discontinued operations.
[GRAPHICS OMITTED]
<PAGE>17
Proceeds from the SEO dispositions were $26.2 in 1994 compared with
$97.6 in 1993. The company expects to receive proceeds of $145.0 to $175.0
during 1995 from the disposal of the operations discontinued in 1994, with
income taxes estimated to be $20.0 to $30.0. The company invested $83.3 in
cash for 1994 acquisitions compared with $20.0 in 1993. The company has
consistently grown through acquisitions of businesses and product lines,
investing approximately $246.0 in cash and common stock during the three
years ended December 31, 1994. Four acquisitions were completed in 1994,
three during 1993, and nine in 1992.
Net cash provided from financing activities was $19.1 in 1994 including
net borrowings of $70.9 and dividend payments of $42.6. In 1993, cash of
$79.3 was used for financing activities primarily as a result of the payments
of debt and dividends ($227.7) offset by the sale of common stock ($139.1).
Long-term debt-to-capitalization increased to 32.9 percent at December
31, 1994 from 26.7 percent at December 31, 1993, principally as a result of
the company's bolt-on acquisitions during 1994.
At the end of 1993, the company had $702.0 of unused lines of credit.
During 1994, the company terminated $300.0 of uncommitted and unutilized
domestic lines of credit and $19.0 of foreign credit facilities, leaving
unused lines of credit of $382.9 (principally committed revolving credit
agreements) at December 31, 1994. In January 1995, the company amended its
committed revolving credit agreement extending the maturity date to January
2000. Additionally, the company pre- registered $300.0 with the Securities
and Exchange Commission under a universal shelf filing dated May 16, 1994,
providing the flexibility to issue a broad variety of securities. At December
31, 1994, the company had the full amount available under the universal shelf
registration. The company expects that cash provided from operations and
unused credit lines will be sufficient to provide for the company's financing
needs for the next year. Additional financing may be undertaken as required.
At December 31, 1994, the company's balance sheet reflected deferred tax
assets of $63.3, which was net of deferred tax liabilities of $121.7 and a
valuation allowance of $43.2. The carrying amount of the net deferred tax
asset was based on management's assessment of the realizability of the net
operating loss carryforwards and deductible items through future taxable
earnings or alternative tax planning strategies.
The company entered into forward foreign exchange contracts to mitigate
the risks of doing business in foreign currencies. Almost one-half of these
contracts related to the company's discontinued operations. The company
hedges currency exposures of firm commitments and specific assets and
liabilities denominated in non-functional currencies to protect against the
possibility of diminished cash flow and adverse impact on earnings. The
company's currency exposures vary, but are primarily concentrated in
currencies such as the British pound, Canadian dollar, Australian dollar,
Swiss franc and Hong Kong dollar. From time-to-time, international cash flow
exposures are not hedged if the cost of hedging is considered to outweigh the
potential benefit. Translation exposures are not hedged as they do not
represent a cash flow exposure to the company.
Environmental Matters
The company is involved in various stages of investigation and
remediation relative to environmental protection matters. A more detailed
discussion of environmental matters has been made on page 26 of the notes to
the financial statements.
Other Matters
As a producer of capital goods and equipment, the results of the
company's businesses can vary with the relative strength of the economy.
Demand for products in the Process Controls sector follows the demand for
capital goods orders. The Electrical Controls sector depends upon several
markets, principally the nonresidential construction and computer equipment
industries. The Industrial Technology sector depends on several markets,
primarily automotive, mass transportation, and telecommunications equipment.
Mass transportation depends upon continued federal and local government
spending, and telecommunications is dependent upon continued research and
development and the continued success of new products. While no one
marketplace or industry has a major impact on the company's operations or
results, the inherent pace of technological changes presents certain risks
that the company monitors carefully. Success within all of the company's
businesses is dependent upon the timely introduction and acceptance of new
products.
[GRAPHICS OMITTED]
<PAGE>18
Management's Responsibility for Financial Statements
Management is responsible for the preparation of the company's
consolidated financial statements and related information appearing in this
annual report. Management considers that the consolidated financial
statements fairly reflect the form and substance of transactions and that the
financial statements reasonably present the company's financial position and
results of operations in conformity with generally accepted accounting
principles. Management also has included in the company's financial
statements amounts that are based on estimates and judgments which it views
as reasonable under the circumstances.
The independent accountants audit the company's consolidated financial
statements in accordance with generally accepted auditing standards and
provide an objective, independent review of the fairness of reported
operating results and financial position.
The Board of Directors of the company has an Audit Committee composed of
four non-management Directors. The Committee meets at least three times
annually with financial management, the internal auditors and the independent
auditors to review accounting, control, auditing and financial reporting
matters.
Edmund M. Carpenter
Chairman and Chief Executive Officer
Terence D. Martin
Executive Vice President and
Chief Financial Officer
Report of Independent Auditors
The Board of Directors and Shareholders
General Signal Corporation
We have audited the accompanying balance sheet of General Signal
Corporation and consolidated subsidiaries as of December 31, 1994 and 1993,
and the related statements of earnings, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of General Signal
Corporation and consolidated subsidiaries at December 31, 1994 and 1993, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
In 1993, the company changed its method of accounting for postemployment
benefits. In 1992, the company changed its method of accounting for income
taxes and for postretirement benefits other than pensions. These changes are
discussed in the notes to the financial statements.
ERNST & YOUNG LLP
Stamford, Connecticut
January 27, 1995
<PAGE>19
Statement of Earnings
<TABLE>
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries
Year Ended December 31, (In millions, except per-share data) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net sales $1,527.7 $1,354.2 $1,477.8
-------- -------- --------
Cost of sales 1,109.5 959.0 1,070.2
Selling, general and administrative expenses 292.3 259.3 287.7
Transaction and consolidation charge - 13.2 -
Disposition of businesses and special items (46.2) (33.0) 85.6
----- ----- ----
Total operating costs and expenses 1,355.6 1,198.5 1,443.5
------- ------- -------
Operating earnings 172.1 155.7 34.3
Interest expense, net (11.8) (16.6) (24.8)
----- ----- -----
Earnings from continuing operations before income taxes 160.3 139.1 9.5
Income taxes 56.2 41.0 3.2
---- ---- ---
Earnings from continuing operations 104.1 98.1 6.3
Earnings (loss) from discontinued operations,
net of income taxes:
Operations 2.4 (31.5) 6.1
Disposal (25.8) - -
-----
Earnings before extraordinary charges and cumulative
effect of accounting changes 80.7 66.6 12.4
Extraordinary charges - (6.6) (0.3)
Cumulative effect of accounting changes - (25.3) (92.4)
Net earnings (loss) $80.7 $34.7 $(80.3)
===== ===== ======
Earnings (loss) per share of common stock:
Continuing operations $2.20 $2.17 $0.15
Discontinued operations 0.05 (0.70) 0.15
Disposal of discontinued operations (0.54) - -
Extraordinary charges - (0.14) (0.01)
Cumulative effect of accounting changes - (0.56) (2.21)
----- -----
Net earnings (loss) $1.71 $0.77 $(1.92)
===== ===== ======
Average common shares outstanding 47.3 45.2 41.8
==== ==== ====
</TABLE>
See accompanying notes to financial statements.
<PAGE>20
Balance Sheet
<TABLE>
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries
December 31, (In millions) 1994 1993
---- ----
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $0.3 $1.3
Accounts receivable 258.3 255.5
Inventories 213.3 196.3
Prepaid expenses and other current assets 44.5 55.5
Assets held for sale at estimated realizable value 153.6 25.7
Deferred income taxes 47.2 60.3
---- ----
Total current assets 717.2 594.6
Property, plant and equipment 280.5 263.4
Intangibles 194.3 184.2
Other assets 134.5 134.3
Deferred income taxes 16.1 48.4
---- ----
Total assets $1,342.6 $1,224.9
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings and current maturities
of long-term debt $2.2 $9.3
Accounts payable 152.9 131.3
Accrued expenses 183.1 177.8
Income taxes 18.9 7.4
---- ---
Total current liabilities 357.1 325.8
----- -----
Long-term debt, less current maturities 269.1 191.4
Accrued postretirement and postemployment obligations 161.2 173.7
Other liabilities 7.3 8.8
--- ---
Total long-term liabilities 437.6 373.9
----- -----
Shareholders' equity:
Common stock: authorized 150.0 shares; issued
63.7 in 1994 and 63.4 in 1993 77.4 77.1
Additional paid-in capital 281.1 272.0
Retained earnings 620.5 583.1
Cumulative translation adjustments (12.1) (8.5)
----- ----
966.9 923.7
Common stock in treasury, at cost: 16.6 shares in
1994 and 16.0 shares in 1993 (419.0) (398.5)
------ ------
Total shareholders' equity 547.9 525.2
----- -----
Total liabilities and shareholders' equity $1,342.6 $1,224.9
======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>21
Statement of Shareholders' Equity
<TABLE>
<CAPTION>
General Signal Corporation and Additional Cumulative Common
Consolidated Subsidiaries Common Paid-In Retained Translation Stock In
(In millions, except per-share data) Stock Capital Earnings Adjustments Treasury
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1991 $42.2 $313.5 $701.3 $5.5 $(586.0)
Restatement for acquisition of Revco 2.6 (63.3) 2.3 - 65.3
Net loss - - (80.3) - -
Dividends declared ($0.90 per share) - - (35.2) - -
Exercise of stock options and savings and stock
ownership plan funding 0.3 12.6 - - 8.7
Translation adjustments - - - (14.5) -
----- ------ ------ ---- -------
Balance at December 31, 1992 45.1 262.8 588.1 (9.0) (512.0)
Net earnings - - 34.7 - -
Dividends declared ($0.90 per share) - - (39.7) - -
Sale of common stock - 20.4 - - 102.9
Stock split 31.6 (31.6) - - -
Exercise of stock options and savings and stock
ownership plan funding 0.4 20.4 - - 10.6
Translation adjustments - - - 0.5 -
----- ------ ------ ---- -------
Balance at December 31, 1993 77.1 272.0 583.1 (8.5) (398.5)
Net earnings - - 80.7 - -
Dividends declared ($0.90 per share) - - (43.3) - -
Purchase of common stock - - - - (18.5)
Exercise of stock options and savings and stock
ownership plan funding 0.3 9.1 - - (2.0)
Translation adjustments - - - (3.6) -
----- ------ ------ ---- -------
Balance at December 31, 1994 $77.4 $281.1 $620.5 $(12.1) $(419.0)
===== ====== ====== ====== =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>22
Statement of Cash Flows
<TABLE>
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries Increase (Decrease) in Cash and Cash Equivalents
Year Ended December 31, (In millions) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Earnings from continuing operations $104.1 $98.1 $6.3
Adjustments to reconcile earnings to net cash from operating
activities:
Discontinued operations (23.4) (31.5) 6.1
Disposition of businesses and special items - 10.1 85.6
Deferred income taxes 32.3 (3.7) (38.5)
Depreciation and amortization 48.4 46.4 56.7
Pension credits (9.7) (8.6) (14.0)
Extraordinary charges on early extinguishment of debt - (6.6) (0.3)
Other, net (4.2) 6.6 (2.3)
Changes in assets and liabilities, net of
effects from acquisitions and divestitures:
Accounts receivable (25.2) 5.3 (2.2)
Inventories (26.8) 12.9 (1.5)
Prepaid expenses and other current assets (1.0) 5.4 (5.2)
Accounts payable 29.5 (2.4) 9.5
Accrued expenses and other (20.3) (75.3) (22.4)
Income taxes 7.9 (13.7) (17.2)
--- ----- -----
Net cash from operating activities 111.6 43.0 60.6
----- ---- ----
Cash flows from investing activities:
Dispositions 26.2 97.6 6.2
Capital expenditures (74.8) (55.1) (49.9)
Acquisitions (83.3) (20.0) (57.3)
Other, net 0.5 (1.1) (0.9)
--- ---- ----
Net cash from investing activities (131.4) 21.4 (101.9)
------ ---- ------
Cash flows from financing activities:
Issuance of long-term debt 77.9 9.3 210.6
Redemption of debt (7.0) (189.8) (144.5)
Purchase of common stock (18.5) - -
Issuance of common stock 9.3 139.1 10.3
Dividends paid (42.6) (37.9) (35.1)
----- ----- -----
Net cash from financing activities 19.1 (79.3) 41.3
---- ----- ----
Effect of exchange rate changes on cash (0.3) (0.3) (2.0)
---- ---- ----
Net changes in cash and cash equivalents (1.0) (15.2) (2.0)
Cash and cash equivalents at beginning of year 1.3 16.5 18.5
--- ---- ----
Cash and cash equivalents at end of year $0.3 $1.3 $16.5
==== ==== =====
Interest paid $12.4 $23.6 $30.4
===== ===== =====
Income taxes paid $21.5 $26.7 $17.0
===== ===== =====
</TABLE>
See accompanying notes to financial statements.
<PAGE>23
Notes to the Financial Statements
Accounting Policies
Consolidation: The financial statements include the accounts of General
Signal Corporation and consolidated subsidiaries after elimination of
intercompany accounts and transactions. Investments in unconsolidated
companies where management exercises significant influence are accounted for
using the equity method.
Cash Equivalents: The company considers its highly liquid money market
investments with original maturities of three months or less to be cash
equivalents.
Inventories: Inventories are stated at the lower of cost or market. Cost is
primarily determined using the first-in, first-out (FIFO) method. All other
inventories are valued using the last-in, first-out (LIFO) method.
Property: Property, plant and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are
provided using the straight-line method over the estimated useful lives of
assets. Leasehold improvements are amortized over the life of the related
asset or the life of the lease, whichever is shorter.
Intangibles: Intangible assets (primarily the excess of purchase price
over the fair value of net assets acquired) are amortized on a straight-line
basis over periods not exceeding 40 years. The company periodically reviews
the carrying value of intangibles for recoverability in relation to future
undiscounted operating earnings.
Revenue Recognition: Revenues are primarily recognized as products are
shipped and services are rendered. The percentage- of-completion method of
accounting is followed for long-term contracts. Under this method, earnings
accrue as contracts progress toward completion, generally based on the
percentage of costs incurred or the units of product delivered.
Environmental: The company's environmental accruals cover all
anticipated costs, including capital expenditures, investigation,
remediation, and operation and maintenance of clean-up sites. Environmental
obligations generally are not discounted and are not reduced by anticipated
insurance recoveries.
Postemployment Benefits: Effective January 1, 1993, the company adopted
the accrual method (FAS 112) of accounting for postemployment benefits,
primarily severance and long-term disability. Previously, the company had
used the pay-as-you-go method. The cumulative effect at January 1, 1993 of
adopting FAS 112 reduced 1993 net income by $25.3, net of $12.7 of income tax
benefits.
Earnings Per Share: Earnings per share of common stock was calculated by
dividing net earnings by the weighted average number of common shares
outstanding. There was no dilutive impact from stock options or convertible
debt securities outstanding during the period.
Reclassifications: Certain reclassifications were made to conform prior years'
data to the current presentation.
Accounts Receivable
Accounts receivable are net of allowances for doubtful accounts of $10.1 and
$10.5 at December 31, 1994 and 1993, respectively.
Inventories
December 31, 1994 1993
---- ----
Finished goods $62.1 $56.1
Work in process 68.0 63.3
Raw material and purchased parts 106.4 104.0
----- -----
Total FIFO cost 236.5 223.4
Excess of FIFO cost over LIFO
inventory value (23.2) (27.1)
----- -----
Net carrying value $213.3 $196.3
====== ======
Inventories valued using LIFO were approximately $66.4 and $70.6 at
December 31, 1994 and 1993, respectively. During 1993 and 1992, reductions in
inventory quantities resulted in liquidations of LIFO inventory layers
carried at lower costs prevailing in prior years as compared with the costs
in 1993 and 1992. The effects were to reduce the amount of beginning LIFO
reserves and increase before-tax income by $2.5 and $1.1 in 1993 and 1992,
respectively. Had cost of sales related to the LIFO inventory layers that
were liquidated been valued using current costs, the effects would have been
to decrease net earnings $1.3 or $0.03 per share in both 1993 and 1992.
During 1994, $3.9 of LIFO reserves related to discontinued operations were
reclassified to assets held for sale at estimated realizable value.
Progress payments, netted against work in process at year end, were $4.7
in 1994 and $4.1 in 1993.
<PAGE>24
Contracts in Progress
Prepaid expenses and other current assets included contracts in progress of
$30.8 and $46.0 at December 31, 1994 and 1993, respectively. Contracts in
progress represent revenue recognized on a percentage-of-completion basis over
related progress billings of $72.6 and $122.3 at December 31, 1994 and 1993,
respectively. Substantially all contracts in progress at year-end are billed
during the subsequent year.
Property, Plant and Equipment
December 31, 1994 1993
---- ----
Land $9.1 $12.3
Buildings and leasehold
improvements 138.4 157.0
Machinery and equipment 464.3 466.0
----- -----
611.8 635.3
----- -----
Less accumulated depreciation
and amortization (331.3) (371.9)
------ ------
$280.5 $263.4
====== ======
Income Taxes
For financial reporting purposes, earnings from continuing operations before
income taxes includes the following components:
1994 1993 1992
---- ---- ----
Pretax income:
United States $159.3 $137.9 $(2.0)
Foreign 1.0 1.2 11.5
--- --- ----
$160.3 $139.1 $9.5
====== ====== ====
The reconciliation of income tax computed at the U.S. federal statutory
tax rate to the company's effective income tax rate is:
Year Ended December 31, 1994 1993 1992
---- ---- ----
Tax at U.S. federal
statutory rate 35.0% 35.0% 34.0%
State and local income
taxes, net of U.S.
federal benefit 3.4 2.7 5.7
Foreign sales corporation (1.4) (1.5) (19.6)
Goodwill amortization 1.0 1.3 14.0
Income from Puerto
Rican operations (0.8) (0.7) (16.5)
Foreign rates and
foreign dividends (1.1) (0.9) (1.4)
Effect of enacted U.S.
federal rate change
on deferred taxes - (2.0) -
Adjustments to prior
years' tax liabilities - (2.6) -
Other (1.1) (1.8) 17.5
---- ---- ----
Total 35.0% 29.5% 33.7%
==== ==== ====
The components of the provision for income taxes are as follows:
1994 1993 1992
---- ---- ----
Current:
Federal $11.5 $(1.1) $5.3
Foreign 4.6 (0.4) 7.5
State 3.3 0.5 0.6
--- --- ---
Total current 19.4 (1.0) 13.4
---- ---- ----
Deferred:
Federal 51.5 9.9 (58.3)
Foreign 0.4 (0.9) (0.9)
State 9.5 3.0 (10.7)
--- --- -----
Total deferred 61.4 12.0 (69.9)
---- ---- -----
$80.8 $11.0 $(56.5)
===== ===== ======
Income tax expense is included in the financial statements as follows:
1994 1993 1992
---- ---- ----
Continuing operations $56.2 $41.0 $3.2
Discontinued operations 24.6 (13.2) 3.1
Extraordinary charges - (4.1) (0.2)
Cumulative effect of
accounting changes - (12.7) (62.6)
---- ---- -----
$80.8 $11.0 $(56.5)
===== ===== ======
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the company's deferred tax assets and liabilities
are as follows:
1994 1993
---- ----
Deferred tax assets:
Acquired tax benefits and
basis differences $52.0 $58.4
Other postretirement and
postemployment benefits 70.0 73.1
Losses on dispositions and
restructuring 21.0 27.6
Inventory 15.1 14.0
NOL and credit carryforwards 46.0 27.8
Other 24.1 23.0
---- ----
Total deferred tax assets 228.2 223.9
Valuation allowance (43.2) (43.2)
----- -----
Net deferred tax assets 185.0 180.7
----- -----
Deferred tax liabilities:
Accelerated depreciation 28.8 29.8
Pension credits 34.0 24.2
Reliance gain 19.8 -
Discontinued operations 23.0 -
Other 16.1 18.0
---- ----
Total deferred tax liabilities 121.7 72.0
----- ----
$63.3 $108.7
===== ======
<PAGE>25
Based on management's assessment, it is more likely than not that the
net deferred tax assets will be realized through future taxable earnings or
alternative tax strategies. In the event that the tax benefits relating to
the valuation allowance are subsequently realized, $6.6 of such benefits
would reduce goodwill.
At December 31, 1994, the company had the following net federal
operating loss and tax credit carryforwards available:
Expiration Operating Tax
Dates Losses Credits
----- ------ -------
1995 - 1996 $ - $8.7
1997 - 1998 6.4 15.6
1999 - 2000 35.4 3.7
2001 - 2002 31.8 -
No expiration - 2.7
Undistributed earnings of the company's foreign subsidiaries amounted to
approximately $57.3 at December 31, 1994. Those earnings are considered to be
indefinitely reinvested and accordingly, no provision for U.S. federal and
state income taxes or foreign withholding taxes has been made. Upon
distribution of those earnings, the company would be subject to U.S. income
taxes (subject to a reduction for foreign tax credits) and withholding taxes
payable to the various foreign countries. Determination of the amount of
unrecognized deferred U.S. income tax liability is not practicable; however,
unrecognized foreign tax credit carryovers would be available to reduce some
portion of the U.S. liability. Withholding taxes of approximately $4.9 would
be payable upon remittance of all previously unremitted earnings at December
31, 1994.
Debt
December 31, 1994 1993
---- ----
5.75% Convertible Subordinated
Debentures due 2002 $100.0 $100.0
Commercial paper
1994, 6.1%; 1993, 3.4% 85.7 9.7
Industrial Revenue Bonds due
2000-2014; no stipulated
principal repayments prior
to maturity (primarily
variable rate) 45.7 45.7
Notes due 1995 7.14% 25.0 25.0
Other long-term borrowings 13.8 14.1
---- ----
270.2 194.5
----- -----
Less current maturities 1.1 3.1
--- ---
$269.1 $191.4
====== ======
Maturities of long-term debt through 1999 are: 1995 $1.1; 1996 $8.6;
1997 $0.4; 1998 $0.3; and 1999 $0.2.
Short-term notes payable to banks were $1.1 and $6.2 as of December 31,
1994 and 1993, respectively.
During 1993, a portion of the proceeds from the issuance of common stock
and the sale of SEO was used for the early extinguishment of higher-rate debt
and swap agreements, which resulted in an extraordinary charge of $10.7 (net
of tax, $6.6).
The Convertible Subordinated Notes are convertible into the company's
common stock at a conversion rate of approximately $39.50 per share.
The company maintains credit arrangements with banks in the U.S. and
abroad, which aggregated $382.9 and $702.0 at December 31, 1994 and 1993,
respectively. At year-end 1994, the company had two revolving credit
agreements of $160.0 and $200.0 which matured on January 12, 1995. The $160.0
credit agreement expired and the $200.0 credit agreement was amended by
increasing the amount to $360.0 and extending the maturity date to January
11, 2000. The agreement permits domestic and Eurodollar borrowings at
interest rates offered to investment grade customers. The agreement is also
convertible into a one-year term loan at maturity.
Commercial paper and notes due 1995 are classified as long-term debt as
the company intends to refinance them on a long-term basis either through
continued short-term borrowing or available credit facilities.
In May 1994, the company established a $300.0 financing program under a
universal shelf registration that permits the issuance of debt, equity and
equity-linked securities, replacing an earlier shelf registration for only
debt securities that had been in place since April 1990. The universal shelf
registration permits the company to issue junior or senior debt,
convertibles, equity warrants, preferred shares and medium-term notes under
one filing without specifying any dollar amounts for any security. As of
December 31, 1994, no amounts had been issued under the shelf registration.
The company entered into an interest rate exchange agreement, expiring
in 2000, with a financial institution to limit exposure to interest rate
volatility. The agreement involved a transaction with a notional principal
amount of $25.0 and $25.0 at December 31, 1994 and 1993, respectively. In
1992, the company also entered into an interest rate exchange agreement to
reduce the borrowing cost associated with the $25.0 notes due 1995. The
company monitors the risk of default by the swap counterparties and does not
anticipate non-performance.
<PAGE>26
Foreign Exchange Contracts
The company conducts its business in various foreign currencies.
Accordingly, it is subject to transaction exposures that arise from foreign
exchange rate movements between the dates that foreign currency transactions
are recorded and the dates they are consummated. The company utilized some
natural hedging to reduce these transaction exposures. The company also
entered into forward exchange contracts to hedge certain foreign currency
transactions for periods consistent with the terms of the underlying
transactions for periods through October 1997. These contracts did not
subject the company to currency risk from exchange rate movements, as gains
and losses on these contracts are deferred and offset against losses and
gains on the underlying transactions. At December 31, 1994, the company had
approximately $56.3 of such contracts outstanding, including $26.2 related to
discontinued operations.
Fair Value of Financial Instruments
Cash and cash equivalents, short- and long-term debt, and foreign
currency and interest rate exchange contracts had fair values, based upon
quoted prices or discounted cash flow analyses, that approximated their
carrying amounts. Financial guarantees and letters of credit were issued by
the company in the ordinary course of business as required and had a fair
value of approximately $22.0 as of December 31, 1994. The fair values of
financial guarantees and letters of credit were based on the face value of
the underlying instruments and the related amounts accrued.
Contingencies and Commitments
Litigation: The company and certain of its subsidiaries are defendants
in legal proceedings incidental to its business. Although the ultimate
disposition of these proceedings is not presently determinable, management
does not expect the outcome to have a material adverse impact on the
company's financial position or results of operations.
Leases: The future minimum rental payments under leases with remaining
noncancelable terms in excess of one year are:
Year Ending December 31,
1995 $11.5
1996 8.0
1997 6.2
1998 4.8
1999 4.7
Subsequent to 1999 7.3
---
Total minimum payments $42.5
=====
Minimum payments exclude sublease rentals of $5.5 under noncancelable
subleases. Total rent expense in 1994, 1993, and 1992 was $17.4, $13.8, and
$20.0, respectively.
Environmental Matters: The company is involved in various stages of
investigation and remediation relative to environmental protection matters,
arising from its own initiative, from indemnification of purchasers of
divested operations, or from legal or administrative proceedings, some of
which include waste disposal sites. In certain instances, the company may be
exposed to joint and several liability for remedial action or damages. The
company, along with several other entities, has been named as a Potentially
Responsible Party for remedial costs at certain third-party sites listed on
the National Priorities List under CERCLA.
The potential costs related to such matters and the possible impact on
future operations are uncertain due in part to the complexity of government
laws and regulations and their interpretations, the varying costs and
effectiveness of clean-up technologies, the uncertain level of insurance or
other types of recovery, and the questionable level of the company's
responsibility. In management's opinion, after considering reserves
established for such purposes, remedial actions for compliance with the
present laws and regulations governing the protection of the environment are
not expected to have a material adverse impact on the company's results of
operations or financial position.
Capital Stock
Preferred Stock: Ten million shares of cumulative preferred stock, par
value $1.00 per share, are authorized but unissued.
Common Stock: The 1,960,000 shares issued through 1969 have a par value
of $6.67 per share. Shares issued since then have a par value of $1.00 per
share.
Treasury Stock:
Number of shares (In millions) 1994 1993 1992
---- ---- ----
Balance at beginning of year 16.0 20.6 23.6
Restatement for the
acquisition of Revco - - (2.6)
Common stock reacquired 0.6 - -
Common stock sold - (4.1) -
Common stock issued
under the company's
incentive compensation
and savings and stock
ownership plans - (0.5) (0.4)
---- ----
Balance at end of year 16.6 16.0 20.6
==== ==== ====
<PAGE>27
In March 1994, the company's board of directors approved a program to
repurchase up to 3.4 percent or 1.6 million shares of the common stock
outstanding at that time. These shares will be purchased systematically over
two years in open market transactions, and will be used to offset dilution
from the expected increased exercise of employee stock options arising from
the company's executive stock ownership program. To date, approximately 600
thousand shares have been repurchased under the program.
Common Stock Purchase Rights: On March 7, 1986, the Board of Directors
declared a dividend distribution of one common stock purchase right (Right)
for each share of company common stock. The Rights expire on March 21, 1996,
unless redeemed earlier by the company. Each right entitles its registered
holder to purchase from the company one share of the company's common stock
at a price of $75 per share, subject to adjustment to prevent dilution.
The Rights are not exercisable and cannot be transferred separately from
the company common stock until: 1) a person or group publicly announces the
acquisition of, or obtains the right to acquire, 20% or more of the
outstanding shares of the company's common stock; or 2) a tender or exchange
offer is announced or commenced that would result in such an acquisition.
Within 10 days after such a 20% interest has actually been obtained, the
company is entitled to redeem all of the Rights at a price of five cents per
Right.
If certain triggering events occur, and unless the Rights are redeemed
by the company, the Rights holder is entitled to receive for $75 per Right
the number of shares of the company's or an acquiring company's common stock
having a market value of $150 per share, subject to adjustment to prevent
dilution. This provision does not apply to Rights that are beneficially owned
by the acquirer. These triggering events are: 1) the company is acquired in
a merger or other business combination transaction; 2) 50% or more of the
company's assets or earnings power are sold; 3) an acquirer engages in one of
a number of self-dealing transactions specified in the Rights Agreement; or
4) an acquirer becomes the beneficial owner of 20% or more of outstanding
shares of the company's common stock.
Employee Benefit Plans
Pension Plans: The company's pension plans cover substantially all
salaried and hourly paid employees, including certain employees in foreign
countries. The plans generally provide benefit payments using a formula based
on an employee's compensation and length of service or, in some cases, stated
amounts for each year of service. The company funds United States pension
plans in amounts equal to the minimum funding requirements of the Employee
Retirement Income Security Act of 1974, plus additional amounts that may be
approved from time to time. Substantially all plan assets are invested in
cash and short-term investments or listed stocks and bonds and real estate.
Plan assets and obligations of non-U.S. subsidiaries were not material.
The periodic net pension income related to continuing operations is
comprised of the following:
Year Ended December 31, 1994 1993 1992
---- ---- ----
Service cost-benefits
earned during the period $12.2 $11.9 $11.9
Interest cost on projected
benefit obligation 31.4 32.2 30.3
Actual return on assets 12.5 (58.3) (18.8)
Net amortization and deferral (67.9) 3.5 (39.5)
Amounts allocated to
discontinued operations 2.1 2.1 2.1
--- --- ---
Net pension income $(9.7) $(8.6) $(14.0)
===== ===== ======
The following table shows the plans' funded status and amounts
recognized in the balance sheet:
December 31, 1994 1993
---- ----
Actuarial present value of
benefit obligations:
Vested benefit obligation $(359.9) $(407.0)
======= =======
Accumulated benefit obligation $(378.4) $(430.8)
======= =======
Fair value of plan assets $503.1 $554.1
Projected benefit obligation (397.4) (448.2)
------ ------
Plan assets in excess of
projected benefit obligation 105.7 105.9
Unrecognized net loss 10.0 4.0
Prior service cost not yet
recognized in net pension cost 9.0 11.1
Unrecognized net asset (41.0) (49.2)
----- -----
Prepaid pension $83.7 $71.8
===== =====
The actuarial assumptions used were:
Discount rate 8.75% 7.40%
Rate of increase in compensation levels 5.00% 5.00%
Expected long-term rate of return
on assets 9.50% 9.50%
---- ----
Under the Savings and Stock Ownership Plan and other supplemental plans,
the company matches employee contributions in cash and common stock equal to
a percentage of certain amounts contributed by employees. The company
contributions under these plans amounted to $7.9 in 1994, $8.3 in 1993, and
$8.7 in 1992 and were invested in shares of the company's common stock. At
December 31, 1994, 1,452,000 shares were reserved for issuance under these
plans.
Nonpension Retirement Benefits: The company and its U.S. subsidiaries
have postretirement plans that provide health and life insurance benefits for
retirees. Some of these plans require employee contributions at varying
rates. Not all employees are eligible to receive these benefits, with
eligibility governed by the plan in effect at a particular location.
<PAGE>28
Effective January 1, 1992, the company changed its method of accounting
for postretirement benefits other than pensions from the pay-as-you-go method
to the accrual method as required by FAS 106. As permitted under the new
rules, prior years' financial statements have not been restated.
The cumulative effect of adopting FAS 106 as of January 1, 1992 resulted
in a charge of $96.0 to 1992 earnings, net of approximately $59.0 of income
tax benefits. The impact of the change on 1992 earnings from continuing
operations was a reduction of approximately $4.7.
The accumulated postretirement benefit obligation at December 31, 1994
was determined using the terms of the company's various plans, together with
relevant actuarial assumptions and health care cost trend rates projected at
estimated annual rates ranging from 8.2 percent in 1994 and 7.6 percent in
1995 to 5.5 percent through the year 2004 and a weighted average discount
rate of 8.75 percent. Generally, where applicable, the discount rate and the
actuarial assumptions used for pension plans also apply to the non-pension
retirement plans.
A one percent annual increase in these assumed cost trend rates would
increase the accumulated postretirement benefit obligation by approximately
$1.7 and annual service costs by approximately $0.2.
Certain of the company's non-U.S. subsidiaries have similar plans for
retirees. The company's obligations for such plans are not material.
During 1993, the company changed its postretirement health benefit plans
to cap certain costs and require the coordination of benefits with Medicare
in certain instances beginning January 1, 2000. The effect of these changes
was to reduce 1993 expense by $3.4 and to reduce the accumulated
postretirement benefit obligation. Future years' expense will be similarly
affected by these changes.
The net periodic postretirement benefit cost related to continuing
operations is comprised of the following:
1994 1993 1992
---- ---- ----
Service cost for benefits attributed
to service during the period $0.7 $0.9 $1.8
Interest cost on the accumulated
postretirement benefit obligation 7.3 9.6 12.9
Net amortization and deferral (4.9) (4.4) (0.1)
Amounts allocated to discontinued
operations (4.0) (4.0) (2.7)
---- ---- ----
Net periodic postretirement
benefits $(0.9) $2.1 $11.9
===== ==== =====
The unrecognized prior service cost at December 31, 1994 and 1993
represents unamortized amounts for plan amendments resulting from revisions
to company-sponsored health plans, which reduced benefit levels.
The following table shows the plans' funded status and amounts
recognized in the balance sheet as of December 31, 1994 and 1993:
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
Health Life Health Life
-------------------------------------------
<S> <C> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $(68.7) $(14.5) $(78.7) $(13.9)
Fully eligible active plan participants (2.3) (0.7) (6.6) (4.6)
Other active plan participants (10.4) (6.5) (12.3) (2.8)
----- ---- ----- ----
Total (81.4) (21.7) (97.6) (21.3)
Unrecognized net (gain) loss (12.3) 1.2 1.5 1.6
Unrecognized prior service cost (30.4) - (40.6) -
----- ----- ----
Accrued postretirement benefit cost (124.1) (20.5) (136.7) (19.7)
Less amounts classified as current 8.0 0.6 8.0 0.6
--- --- --- ---
$(116.1) $(19.9) $(128.7) $(19.1)
======= ====== ======= ======
</TABLE>
Stock Incentive Program
The company has a stock incentive program whereby executive officers and
designated employees have been or may be granted restricted stock and options
to purchase shares of company common stock. Restricted stock awards were
granted during 1994 and 1993 for 22,900 shares and 8,200 shares of company
common stock, respectively. The shares covered by the restricted stock award
granted in 1994 vest at a rate of 331/3 percent per year over a three-year
period, and the awards granted in 1993 vest at a rate of 20 percent per year
over a five-year period. In addition, non-employee directors may elect to
defer all or part of their cash compensation as a director and to receive in
lieu thereof restricted stock. During 1994, five non-employee directors
received 4,400 shares of company common stock subject to a five-year
restriction period. Options under all the plans are exercisable during
specified dates at prices at least equal to 100 percent of the fair market
value on the date of grant. The options granted during 1994 and 1993 were at
100 percent of the fair market value of the company's common stock at the
date of grant. 3,145,900 and 3,470,000 shares of company common stock were
reserved for issuance as of December 31, 1994 and 1993, respectively.
<PAGE>29
Shares Option Price
Option Activity: (In Millions) per Share
Options outstanding at
December 31, 1991 2.7 $19.44-$31.00
Options granted - -
Options exercised (0.5) $19.44-$29.25
Options terminated - -
---- -------------
Options outstanding at
December 31, 1992 2.2 $19.44-$36.20
Options granted 0.3 $32.25-$34.88
Options exercised (0.6) $19.44-$30.32
Options terminated - -
---- -------------
Options outstanding at
December 31, 1993 1.9 $19.44-$36.20
Options granted 0.6 $31.88-$37.25
Options exercised (0.3) $19.44-$32.25
Options terminated - -
---- -------------
Options outstanding at
December 31, 1994 2.2 $19.44-$37.25
=== =============
Options exercisable:
1994 1.0 $19.44-$34.88
1993 1.0 $19.44-$31.38
Business Combinations
In August 1994, the company negotiated an agreement to merge with
Reliance Electric Company. However, subsequent to the consummation of the
agreement, Reliance was acquired by another company in a cash tender offer.
Under the terms of the merger agreement, the company received $50.0 in
break-up fees and $5.2 in reimbursement of expenses. The company incurred
$9.0 of transaction costs in connection with the merger.
During 1993, the company acquired Revco Scientific, Inc. (Revco) in
exchange for 2,631,210 shares of common stock, and accounted for the
acquisition as a pooling of interests. Principally as a result of the
acquisition, the company incurred transaction and consolidation costs of
$13.2. The transaction costs included investment banker and other
professional fees. The consolidation and integration costs included
provisions for streamlining marketing and distribution arrangements,
consolidation of field service and sales offices, relocation of certain
product lines and key personnel, and severance-related costs, primarily at
the company's locations existing prior to the merger. Charges of $2.3 also
were made during the second quarter of 1993 to conform Revco's accounting
practices to the company's accounting policies and practices principally for
inventory and warranties. During 1994, $1.5 of excess reserves were returned
to earnings.
During the three-year period ended December 31, 1994, the company
acquired the 16 entities described below for cash and common stock valued at
$246.0 plus, in certain instances, amounts that are contingent upon future
earnings, and liabilities assumed. The acquisitions, except Revco, were
accounted for as purchases and accordingly, the results of operations of the
acquired companies are included in the statement of earnings for the periods
during which they were owned by the company.
Principal Business Date Acquired
Fairbanks Morse Water treatment, December 1994
Pump Corporation irrigation, residential
and general industrial-
use pumps
Neer Zinc die-cast fittings April 1994
Manufacturing, Inc.
Assets of Berger Steel fittings March 1994
Industries, Inc.
Benjamin Signals Audible and visual March 1994
signal products
Layne & Bowler Vertical turbine pumps November 1993
Jannette Drives Drive units for dampers November 1993
and valves primarily
used for utilities
Revco Ultra-low temperature October 1993
Scientific, Inc. freezers, laboratory
refrigerators, and
CO2 incubators
Northwest Metal tubing, November 1992
Alabama connectors, and
Industries couplings
Ryken Tube Automotive tubular October 1992
Manufacturing replacement parts
Unival Ported gate valves August 1992
Valex's magnetic Magnetic mixers July 1992
mixer product line
GMV Fixed mount and July 1992
portable mixers
Fire Alarm Advanced fire alarm April 1992
and Systems control products
Technology, Inc.
Associated Hazardous location March 1992
Lighting conduits and fittings
ABB's Uninterruptible power January 1992
Uninterruptible supplies
Power Supply
Division
Real Time Multichannel signal January 1992
Techniques testing equipment
<PAGE>30
Discontinued Operations
In November 1994, the company adopted a plan to sell Leeds & Northrup
Company, formerly a part of the Process Controls business sector, and
Dynapower/ Stratopower, formerly a part of the Industrial Technology sector
(the operations). The operations have been accounted for as discontinued
operations, and the consolidated financial statements have reported
separately their net assets and operating results.
Net assets of the operations at December 31, 1994 consisted primarily of
working capital ($73.0), property, plant and equipment ($43.1) and
intangibles ($37.5) amounting to $153.6 after deducting an allowance for
estimated loss on disposal and including expected postretirement benefit plan
curtailment gains and operations through the expected disposal dates in 1995.
The loss on disposal of these operations of $25.8 includes $23.4 of tax
charges primarily resulting from differences in carrying values for financial
reporting and tax purposes, and from adjustments related to tax planning
strategies that will not be utilized as a result of the planned disposal of
the operations. From the measurement date to the end of the year, the
operations incurred after-tax operating losses of $1.6 million. Sales of the
discontinued operations from January 1 to the measurement date and for the
years ended December 31, 1993 and 1992 were $155.2, $175.8 and $196.4,
respectively.
During 1994, the company recognized as part of earnings from
discontinued operations $6.1 of before-tax curtailment gains related to Leeds
& Northrup's nonpension postretirement benefits plan.
During 1993, the company recorded a $14.4 before-tax charge related to
the remaining portion of the discontinued transportation businesses,
primarily Dynapower/Stratopower, and for environmental and contractual
obligations retained related to New York Air Brake and General Railway
Signal. This provision, which was reclassified to discontinued operations in
1994, was made primarily to write these operations down to estimated
realizable value and to recognize 1993 operating losses.
Disposition of Businesses and Special Items
During the fourth quarter of 1994, the company recognized $46.2 million
of charges for the consolidation of operations ($11.8), asset valuations
($24.1), environmental matters ($4.9) and other issues ($5.4), all related to
the continuing operations of the company. The charges are included in cost of
sales ($27.7), selling, general and administrative expenses ($16.1), and
income taxes ($2.4).
During 1993, $30.5 was provided for factory consolidation and
rearrangement ($20.9), product restructuring and realignment ($6.8), and
reorganization of lines of distribution and administration ($2.8). The
activities related to these charges were substantially completed during 1994,
and $3.5 of excess reserves were returned to earnings. Included in this
charge was $15.5 related to operations discontinued in 1994.
During 1993, the company provided a $22.5 charge in cost of sales to
reflect a continuing review of world-wide assets to identify any permanent
declines in the value of assets. Included in this charge was $18.1 related to
operations discontinued in 1994.
Also in 1993, the company recorded a charge of $5.2 related to other
previously divested operations
At the beginning of the fourth quarter of 1992, the company adopted a
plan to divest its semiconductor equipment operations. The company recorded a
before-tax charge of $85.6 ($58.2 net of tax benefits) to provide for net
losses on dispositions ($23.6), estimated operating losses of the operations
through disposition ($18.0), severance ($12.0), idle facilities resulting
from the disposition ($30.0), and restructuring costs ($2.0).
During 1993 and 1994, the company completed the sale of the
semiconductor businesses. In connection with these operations, the company
incurred approximately $13.8 in 1994 and $38.4 in 1993 of operating losses,
severance payments, idle facility costs, and restructuring costs. The company
also realized $53.2 in 1993 of excess reserves relating to the disposition of
the semiconductor equipment operations as a result of higher proceeds from
the sale of units and lower severance costs.
<PAGE>31
Business Sector Information
<TABLE>
<CAPTION>
Product Sectors 1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales:
Process Controls $606.4 $545.8 $548.7 $515.8 $540.9
Electrical Controls 618.6 547.1 567.5 515.4 503.2
Industrial Technology 302.7 261.3 226.7 392.9 439.8
Dispositions - - 134.9 - 13.3
---- ---- ----- ---- ----
$1,527.7 $1,354.2 $1,477.8 $1,424.1 $1,497.2
======== ======== ======== ======== ========
Operating earnings:
Process Controls $66.8(1) $45.1(2) $60.5 $73.3 $77.7 (4)
Electrical Controls 30.7(1) 29.2(2) 43.1 43.9 47.0 (4)
Industrial Technology 47.4(1) 44.8 33.1 18.3 (51.7)(4)
Prior dispositions - - (7.4) - (7.9)
Dispositions and special items 46.2 48.0(3) (85.6) - (5.5)
---- ---- ---- ---- ----
191.1 167.1 43.7 135.5 59.6
Equity income 1.0 0.2 1.9 2.1 2.0
Interest expense, net (11.8) (16.6) (24.8) (28.0) (31.5)
Unallocated expenses (20.0) (11.6) (11.3) (12.2) (14.6)
----- ----- ----- ----- -----
Earnings from continuing operations
before income taxes $160.3 $139.1 $9.5 $97.4 $15.5
====== ====== ==== ===== =====
Identifiable assets:
Process Controls $391.4 $474.3 $477.0 $473.9 $516.7
Electrical Controls 399.4 326.5 330.8 295.7 287.0
Industrial Technology 181.3 167.2 181.7 305.4 329.8
Assets of discontinued operations - - - - -
---- ---- ---- ---- ----
972.1 968.0 989.5 1,075.0 1,133.5
General corporate assets 196.5 213.1 160.3 89.0 105.0
Assets held for sale at estimated
realizable value 153.6 25.7 91.1 - 42.6
Investments in and advances to
affiliates 20.4 18.1 17.5 16.2 13.5
---- ---- ---- ---- ----
Total assets $1,342.6 $1,224.9 $1,258.4 $1,180.2 $1,294.6
======== ======== ======== ======== ========
Depreciation and amortization
of fixed assets(6):
Process Controls $16.6 $12.4 $12.9 $11.4 $11.5
Electrical Controls 14.5 13.0 12.3 11.8 11.5
Industrial Technology 6.4 6.4(5) 6.7 14.7 16.0
Capital expenditures(6):
Process Controls $28.7 $23.1 $19.7 $16.4 $15.3
Electrical Controls 21.8 22.3 19.5 15.1 12.5
Industrial Technology 11.4 7.7(5) 5.0 10.9 15.3
<FN>
(1) Includes 1994 charges in Process Controls ($11.9), Electrical Controls
($19.2) and Industrial Technology ($9.9) for the consolidation of
operations, asset valuations, environmental and other.
(2) Includes 1993 charges in Process Controls ($22.1) and Electrical Controls
($10.5) for asset valuations, restructuring, and transaction and
consolidation charges related to Revco.
(3) Represents credits for the divested semiconductor operations ($53.2) and
charges for the transportation businesses ($5.2).
(4) Includes charges for restructuring in Industrial Technology ($77.6) and
Electrical Controls ($0.2).
(5) Excludes semiconductor equipment operations. (6)Excludes discontinued
operations.
</FN>
</TABLE>
<PAGE>32
<TABLE>
<CAPTION>
Geographic Areas 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net sales:
United States $1,390.0 $1,218.9 $1,290.4 $1,225.4 $1,301.4
Foreign 180.7 173.7 238.5 257.7 257.8
Intergeographic (43.0) (38.4) (51.1) (59.0) (62.0)
----- ----- ----- ----- -----
$1,527.7 $1,354.2 $1,477.8 $1,424.1 $1,497.2
======== ======== ======== ======== ========
Operating earnings:
United States $135.7 $113.4 $118.5 $118.1 $49.2
Dispositions and special items 46.2 48.0 (85.6) - -
Foreign 9.2 5.7 10.8 17.4 10.4
--- --- ---- ---- ----
$191.1 $167.1 $43.7 $135.5 $59.6
====== ====== ===== ====== =====
Identifiable assets:
United States $875.8 $822.5 $769.2 $838.5 $920.0
Foreign 96.3 145.5 220.3 236.5 213.5
---- ----- ----- ----- -----
$972.1 $968.0 $989.5 $1,075.0 $1,133.5
====== ====== ====== ======== ========
Export sales to unaffiliated
customers(1) $125.4 $110.9 $131.9 $130.5 $112.8
====== ====== ====== ====== ======
<FN>
(1) Included in United States sales.
</FN>
</TABLE>
Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $342.4 $334.0 $378.6 $340.6 $390.0 $328.7 $416.7 $350.9
Gross profit 99.4 95.4 109.7 94.4 113.7 100.6 95.4 104.8
Earnings from continuing operations 22.2 16.2 25.3 36.6 27.5 24.5 29.1 20.8
Discontinued operations 2.4 1.8 (0.3) (17.3) 0.3 (0.1) - (15.9)
Disposal of discontinued operations - - - - - - (25.8) -
Extraordinary charge - - - (6.6) - - - -
Cumulative effect of accounting changes - (25.3) - - - - - -
----- ----- ----- ----- ----- ----- ---- ----
Net earnings (loss) $24.6 $(7.3) $25.0 $12.7 $27.8 $24.4 $3.3 $4.9
===== ===== ===== ===== ===== ===== ==== ====
Earnings (loss) per share of common
stock:
Continuing operations $0.47 $0.38 $0.53 $0.83(1) $0.58 $0.52 $0.62(2)(4) $0.44(3)(4)
Discontinued operations 0.05 0.04 - (0.39) 0.01 - (0.34)
Disposal of discontinued operations - - - - - - (0.55) -
Extraordinary charge - - - (0.15) - - - -
Cumulative effect of accounting
changes - (0.60) - - - - - -
----- ----- ----- ----- ----- ----- ---- ----
Net earnings (loss) $0.52 $(0.18) $0.53 $0.29 $0.59 $0.52 $0.07 $0.10
===== ====== ===== ===== ===== ===== ===== =====
Common stock price range - high 38 31 7/8 34 5/8 33 7/8 37 1/2 33 7/8 37 1/4 37 7/8
- low 32 1/2 30 1/8 30 1/8 30 1/16 32 1/4 30 1/2 31 31 1/2
====== ====== ====== ======= ====== ====== == ======
<FN>
Note: The sum of the quarters' earnings per share does not equal the full
year per-share amounts.
(1) Includes $0.68 of credits for reversal of excess SEO reserves, $0.24 of
charges for restructuring, and $0.06 of charges for asset valuations.
(2) Includes $0.64 of charges for consolidation of operations, asset
valuations, environmental and other, $0.64 of proceeds from Reliance
Electric, $0.07 of credits for reversal of excess restructuring and
consolidation reserves upon completion of those programs, and $0.03 of
charges for acquisition integration activities.
(3) Includes $0.16 of credits for reversal of excess SEO reserves, and $0.20 of
charges for Revco transaction and consolidation costs.
(4) LIFO liquidations benefitted the fourth quarter of 1993 by $0.03, and had
no impact in the fourth quarter of 1994.
</FN>
</TABLE>
<PAGE>33
Supplementary Information
<TABLE>
<CAPTION>
December 31, 1994 1993
---- ----
<S> <C> <C> <C>
Intangibles:
Excess of cost over net assets acquired $210.9 $219.8
Other intangibles 35.0 32.6
---- ----
245.9 252.4
Accumulated amortization (51.6) (68.2)
----- -----
$194.3 $184.2
------ ------
Accrued expenses:
Dispositions and special items $37.1 $35.1
Payroll and compensation 37.8 34.4
Environmental and legal 20.7 18.0
---- ----
Year Ended December 31, 1994 1993 1992
---- ---- ----
Liabilities assumed in conjunction with acquisitions:
Fair value of assets acquired $105.4 $24.4 $68.5
Cash paid (83.3) (20.0) (57.3)
----- ----- -----
$22.1 $4.4 $11.2
===== ==== =====
Research and development $49.7 $53.1 $56.2
===== ===== =====
Advertising expense $8.6 $8.0 $9.2
==== ==== ====
</TABLE>
<PAGE>34 and 35
Eleven-Year Financial Summary
General Signal Corporation and Consolidated Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in millions, except per-share data) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Net sales $1,527.7 $1,354.2 $1,477.8 $1,424.1 $1,497.3 $1,522.4
Cost of sales 1,109.5 959.0 1,070.2 1,015.7 1,061.8 1,075.7
Selling, general and administrative expenses 292.3 259.3 287.7 282.7 304.9 326.7
Disposition of businesses and special items (46.2) (19.8) 85.6 - 83.3 (8.7)
----- ----- ---- ---- ----
Total operating costs and expenses 1,355.6 1,198.5 1,443.5 1,298.4 1,450.0 1,393.7
------- ------- ------- ------- ------- -------
Operating earnings 172.1 155.7 34.3 125.7 47.3 128.7
Interest expense, net (11.8) (16.6) (24.8) (28.3) (31.8) (38.7)
----- ----- ----- ----- ----- -----
Earnings from continuing operations before income taxes 160.3 139.1 9.5 97.4 15.5 90.0
Income taxes 56.2 41.0 3.2 28.2 7.3 23.4
---- ---- --- ---- --- ----
Earnings from continuing operations 104.1 98.1 6.3 69.2 8.2 66.6
Earnings (loss) from discontinued operations,
net of income taxes 2.4 (31.5) 6.1 (5.2) (26.9) 11.9
Loss on disposal of discontinued operations,
net of income taxes (25.8) - - (9.8) (14.2) -
----- ---- -----
Earnings (loss) before extraordinary charges
and cumulative effect of accounting changes 80.7 66.6 12.4 54.2 (32.9) 78.5
Extraordinary charges - (6.6) (0.3) - - -
Cumulative effect of accounting changes - (25.3) (92.4) - - -
----- -----
Net earnings (loss) $80.7 $34.7 $(80.3) $54.2 $(32.9) $78.5
===== ===== ====== ===== ====== =====
Per-share Data
Earnings (loss) per share of common stock
Continuing operations $2.20 $2.17 $0.15 $1.80 $0.21 $1.75
Discontinued operations (0.49) (0.70) 0.15 (0.40) (1.07) 0.31
Extraordinary charges - (0.14) (0.01) - - -
Cumulative effect of accounting changes - (0.56) (2.21) - - -
----- -----
Net earnings (loss) $1.71 $0.77 $(1.92) $1.40 $(0.86) $2.06
===== ===== ====== ===== ====== =====
Cash dividends per share 0.90 0.90 0.90 0.90 0.90 0.90
Book value per share 11.64 11.09 8.90 12.32 11.69 13.25
===== ===== ==== ===== ===== =====
Summary of Financial Position
Working capital 360.1 268.8 347.8 243.9 310.6 328.8
Property, plant and equipment 280.5 263.4 246.9 263.7 283.0 325.1
Total assets 1,342.6 1,224.9 1,258.4 1,180.2 1,294.6 1,324.3
Total long-term liabilities 437.6 373.9 537.7 345.7 440.8 373.1
Shareholders' equity 547.9 525.2 374.8 476.4 450.3 506.1
===== ===== ===== ===== ===== =====
Financial Ratios
Working capital to sales 13.5% 17.9% 16.3% 15.8% 20.2% 20.1%
Selling, general and administrative expenses to sales 19.1% 19.1% 19.5% 19.9% 20.4% 21.5%
Operating margin 11.3% 11.5% 2.3% 8.8% 3.2% 8.5%
After-tax return on net sales 6.8% 7.2% 0.4% 4.9% 0.5% 4.4%
Return on average shareholders' equity from continuing
operations 19.4% 21.8% 1.5% 14.9% 1.7% 13.8%
Current ratio 2.0 1.8 2.0 1.7 1.8 1.7
Long-term debt to capitalization 32.9% 26.7% 49.5% 37.8% 46.9% 39.6%
==== ==== ==== ==== ==== ====
Supplemental Information
Capital expenditures 74.8 55.1 49.9 48.1 68.8 62.0
Depreciation and amortization of fixed assets 41.7 35.4 40.6 42.1 44.5 44.7
Research and development 49.7 53.1 56.2 87.3 93.4 92.8
Common stock price range:
High 38 37 7/8 32 5/8 26 7/8 29 5/8 28 7/8
Low 30 1/8 30 25 7/8 17 5/8 15 5/8 22 7/8
Price-earnings ratio range - continuing operations 17.3-13.7 17.5-13.8 21.1-16.8(1) 14.9-9.8 21.7-11.5(1) 16.5-13.1(1)
Average common shares outstanding 47.3 45.2 41.8 38.6 38.4 38.1
Employees 12.2 11.2 12.1 12.6 11.6 16.9
==== ==== ==== ==== ==== ====
<FN>
(1) Excludes impact of after-tax charges related to dispositions of businesses.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in millions, except per-share data) 1988 1987 1986 1985 1984
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Summary of Operations
Net sales $1,397.7 $1,249.2 $1,210.2 $1,407.0 $1,398.7
Cost of sales 983.6 885.0 846.1 996.7 951.4
Selling, general and administrative expenses 335.8 276.0 263.2 289.1 289.3
Disposition of businesses and special items 24.1 - - 72.0 -
---- ----
Total operating costs and expenses 1,343.5 1,161.0 1,109.3 1,357.8 1,240.7
------- ------- ------- ------- -------
Operating earnings 54.2 88.2 100.9 49.2 158.0
Interest expense, net 1.9 1.7 (2.3) (1.4) 3.7
--- --- ---- ---- ---
Earnings from continuing operations before income taxes 56.1 89.9 98.6 47.8 161.7
Income taxes 25.9 25.5 36.0 18.4 68.6
---- ---- ---- ---- ----
Earnings from continuing operations 30.2 64.4 62.6 29.4 93.1
Earnings (loss) from discontinued operations,
net of income taxes (5.0) 5.1 12.0 19.9 15.4
Loss on disposal of discontinued operations,
net of income taxes - - - - -
Earnings (loss) before extraordinary charges
and cumulative effect of accounting changes 25.2 69.5 74.6 49.3 108.5
Extraordinary charges - - - - -
Cumulative effect of accounting changes - - - - -
Net earnings (loss) $25.2 $69.5 $74.6 $49.3 $108.5
===== ===== ===== ===== ======
Per-share Data
Earnings (loss) per share of common stock
Continuing operations $0.55 $1.14 $1.09 $0.51 $1.63
Discontinued operations (0.09) 0.09 0.21 0.35 0.27
Extraordinary charges - - - - -
Cumulative effect of accounting changes - - - - -
Net earnings (loss) $0.46 $1.23 $1.30 $0.86 1.90
===== ===== ===== ===== ====
Cash dividends per share 0.90 0.90 0.90 0.90 0.86
Book value per share 12.09 16.51 16.16 15.73 15.76
===== ===== ===== ===== =====
Summary of Financial Position
Working capital 496.3 540.8 536.3 520.6 571.2
Property, plant and equipment 312.5 310.6 345.6 361.5 344.9
Total assets 1,396.6 1,397.4 1,458.1 1,483.2 1,438.4
Total long-term liabilities 539.9 163.3 179.8 172.9 149.7
Shareholders' equity 461.0 907.2 927.4 904.0 901.7
===== ===== ===== ===== =====
Financial Ratios
Working capital to sales 29.7% 36.7% 40.7% 34.8% 37.7%
Selling, general and administrative expenses to sales 24.0% 22.1% 21.7% 20.6% 20.7%
Operating margin 3.9% 7.1% 8.3% 3.5% 11.3%
After-tax return on net sales 2.2% 5.1% 5.2% 2.1% 6.7%
Return on average shareholders' equity from continuing
operations 4.4% 7.0% 6.8% 3.3% 10.7%
Current ratio 2.3 2.7 2.5 2.3 2.5
Long-term debt to capitalization 51.6% 10.9% 11.8% 12.1% 9.7%
==== ==== ==== ==== ===
Supplemental Information
Capital expenditures 38.8 34.0 45.7 68.1 88.7
Depreciation and amortization of fixed assets 42.1 42.4 41.4 37.6 32.4
Research and development 93.7 84.1 74.4 79.4 68.1
Common stock price range:
High 28 1/8 30 5/8 27 1/8 26 7/8 27
Low 20 16 5/8 19 5/8 18 1/2 19 3/4
Price-earnings ratio range - continuing operations 36.1-25.7(1) 26.9-14.6 24.9-18.0 20.9-14.4(1) 16.6-12.1
Average common shares outstanding 55.4 56.5 57.5 57.4 57.1
Employees 16.6 16.6 17.5 19.3 21.0
==== ==== ==== ==== ====
<FN>
(1) Excludes impact of after-tax charges related to dispositions of businesses.
</FN>
</TABLE>
<PAGE>36
Directors and Officers
Directors
Ralph E. Bailey 2,3,5
Chairman and Chief Executive Officer
American Bailey Corporation and
Chairman, United Meridian Corporation,
Chairman, Committee on Directors
Van C. Campbell 1,4
Vice Chairman - Finance and Administration Corning Incorporated
Edmund M. Carpenter 2
Chairman and Chief Executive Officer
Ronald E. Ferguson 2,3,5
Chairman, President and Chief Executive Officer General Re Corporation,
Chairman, Personnel & Compensation Committee
John P. Horgan 2,3,4
Private Investor
Chairman, Employee Benefits Committee
C. Robert Kidder 1,4
Chairman and Chief Executive Officer
Borden, Inc.
Richard J. Kogan 1,3
President and Chief Operating Officer
Schering-Plough Corporation
Michael D. Lockhart
President and Chief Operating Officer
Nathan R. Owen 2,4
Retired Chairman and Chief Executive Officer, General Signal Corporation
Chairman, Executive Committee
Roland W. Schmitt 4,5
President Emeritus and
Retired President, Rensselaer Polytechnic
Institute; Retired Senior Vice President
Science & Technology, General Electric Company
John R. Selby 1,2,3
Retired Chairman and Chief Executive Officer
SPS Technologies, Inc.
Chairman, Audit Committee
Director Emeritus
Reginald H. Jones
Retired Chairman and Chief Executive Officer,
General Electric Company
Officers
Edmund M. Carpenter
Chairman and Chief Executive Officer
Michael D. Lockhart
President and Chief Operating Officer
Terence D. Martin
Executive Vice President and
Chief Financial Officer
Joel S. Friedman
Senior Vice President - Operations
George Falconer
Vice President - Human Resources
Nino J. Fernandez
Vice President - Investor Relations
Philip A. Goodrich
Vice President - Corporate Development
Darryl A. Littleton
Vice President - Manufacturing
Terry J. Mortimer
Vice President and Controller
Edgar J. Smith, Jr.
Vice President, General Counsel,
and Secretary
Thomas E. Taylor
Vice President - Taxes
Julian B. Twombly
Vice President and Treasurer
Operating Unit Presidents
Process Controls Sector
Cleive C. Dumas
General Signal Pump Group
Thomas W. Frey
DeZurik
Horst P. Engelbrecht
Lightnin
Daniel B. Dawley
Revco/Lindberg
Electrical Controls Sector
James J. Beville
Dielectric Communications
Timothy J. Mellen
GS Building Systems Corporation
Michael R. Jacqmin
GS Electric
Michael J. Cheshire
GS Electrical Power Systems Group
Industrial Technology Sector
Robert Coackley
GS Telecom Group
James A. Pacelli
GFI Genfare
Henry G. Anzuini
Metal Forge
1Member of Audit Committee
2Member of Executive Committee
3Member of Personnel and Compensation Committee
4Member of Employee Benefits Committee
5Member of Committee on Directors
<PAGE>
Shareholder Information
Annual Meeting
The 1995 annual meeting of shareholders
will be held at 10:00 a.m. on Thursday,
April 20, 1995 at General Signal
Headquarters, One High Ridge Park,
Stamford, Connecticut.
Form 10-K
The company's 1994 Annual Report on Form
10-K, filed with the Securities and
Exchange Commission, will be available
after April 1, 1995. A copy of this
report may be obtained by writing to the
Secretary of the Corporation.
Transfer Agent
The Bank of New York
Shareholder Relations Department 11E
P.O. Box 11258
Church Street Station
New York, New York 10286
(800) 524-4458
Independent Auditors
Ernst & Young, LLP
1111 Summer Street
Stamford, Connecticut 06905
Listings
General Signal Corporation common stock
is listed and traded on the New York and
Pacific Stock Exchanges under the symbol
GSX.
Dividend Reinvestment Plan
A fee-paid Automatic Dividend
Reinvestment and Cash Payment Plan is
available to shareholders of record.
Through voluntary participation,
shareholders may purchase additional
shares of the company's stock by
reinvesting their dividends or by making
cash payments directly to The Bank of
New York. Under the latter option, cash
payments from $25 to $10,000 per quarter
may be made whenever a shareholder so
desires. Additional information about
this plan is available from:
The Bank of New York
Dividend Reinvestment Department
P.O. Box 11002
Church Street Station
New York, New York 10286-1002
An Equal Opportunity Employer
Printed in the U.S.A.
Featured photography,
sector introductory pages
Page 6 Process Controls: Regenerative
turbine pumps from General Signal Pump
Group.
Page 9 Electrical Controls: Emergency
lighting and exit signs from GS Building
Systems Corporation.
Page 12 Industrial Technology: Cirrus
auto assembly (courtesy Chrysler Motors)
from Metal Forge.
Design: Pappas MacDonnell, Inc.
Southport, Connecticut
<PAGE>
Appendix A
Description of Graphic and Image Material
Financial Highlights Section:
Bar Graphs - Two Dimensional
Graph #1 - A bar graph showing the company's net sales for
the two years ended December 31, 1994 and 1993. The plotted
values are: 1994 - $1,527.7 million; 1993 - 1,354.2
million. The caption below this graph reads: "Net Sales;
Dollars in millions."
Graph #2 - Bar graph which plots the company's earnings for the
years ended December 31, 1994 and 1993. The amounts are: 1994 -
$104.1 million; 1993 - $86.4 million. The caption below this graph
reads: "Earnings (1); Dollars in millions." The "(1)" footnote
indicates: "Excludes charges and credits related to consolidation of
operations, asset valuations, semiconductor equipment operations,
adoption of accounting standards, and other charges related to both
years. See page 14 of Management's Discussion and Analysis for
further details."
Graph #3 - Bar graph plotting the company's earnings per share for
the years ended December 31, 1994 and 1993. The two plotted values
shown are: 1994 - $2.20; 1993 - $1.91. The text below the graph
reads: "Earnings Per Share (1); Dollars." The '(1)" footnote
indicates: "Excludes charges and credits related to consolidation of
operations, asset valuations, semiconductor equipment operations,
adoption of accounting standards, and other charges related to both
years. See page 14 of Management's Discussion and Analysis for
further details."
Graph #4 - This bar graph plots the company's return on
shareholders' equity percentage for the years ended December 31,
1994 and 1993. The shown amounts are: 1994 - 19.4%; 1993 - 16.9%.
Below this graph is a caption that states: "Return on Equity (1);
Percent." The '(1)" footnote indicates: "Excludes charges and
credits related to consolidation of operations, asset valuations,
semiconductor equipment operations, adoption of accounting
standards, and other charges related to both years. See page 14 of
Management's Discussion and Analysis for further details."
<PAGE>
At A Glance Section:
Pie Chart of Net Sales
Shown is a pie chart which plots 1994 net sales of the
company's three product sectors. The caption below the
chart states: "Net Sales; Dollars in millions." The legend
lists: $606 Process Controls; $619 Electrical Controls;
$303 Industrial Technology.
Pie Chart of Operating Earnings
Shown is a pie chart which plots 1994 operating earnings of the
company's three product sectors. Text under the chart reads:
"Operating Earnings (1); Dollars in millions." The "(1)" footnote
indicates "Excludes one-time items (see page 31)." The chart's
legend shows: $79 Process Controls; $50 Electrical Controls; $57
Industrial Technology.
Process Controls Section:
Photos
Photo #1 - On the introductory page of this section is a full page
photograph of regenerative turbine pumps from General Signal Pump
Group.
Photo #2 - Photograph of a vertical in-line fire pump. The text
under the picture reads: "General Signal Pump Group expanded its
presence in the fire protection market, introducing vertical in-line
fire pumps for smaller high-rise buildings. The unit's acquisition
of Fairbanks Morse also broadened its fire pump offerings for the
industrial market."
Photo #3 - Photograph of three laboratory refrigerators. The text to
the left of the photograph reads: "Revco/Lindberg's new line of
environmentally friendly refrigerators free of chlorofluorocarbons
was introduced in advance of 1996 federal air quality deadlines."
<PAGE>
Photo #4 - Photograph of a DeZurik valve. The text below the
photograph states: "DeZurik increased its share of the municipal
market, delivering AWWA butterfly and eccentric plug valves for
water and wastewater treatment applications."
Bar Graphs - Two Dimensional
Graph #1 - A bar graph which plots net sales for the Process
Controls sector for the three years ended December 31, 1994,
1993, and 1992. The values that are shown are as follows:
1994 - $606 million; 1993 - $546 million; 1992 - $549
million. The caption under the graph reads: "Process
Controls Net Sales; Dollars in millions."
Graph #2 - This bar graph plots the operating earnings for the
Process Controls sector for the three years ended December 31, 1994,
1993, and 1992. The values that are shown are as follows: 1994 - $79
million; 1993 - $67 million; 1992 - $61 million. The text below the
graph states: "Process Controls Operating Earnings (1); Dollars in
millions." The "(1)" footnote indicates: "Excludes one-time items
(see page 31)."
Electrical Controls Section:
Photos
Photo #1 - Shown on the introductory page of this section is a full
page photograph of emergency lighting and exit signs from GS
Building Systems Corporation.
Photo #2 - Shown is a photograph of a smoke detector attached to a
ceiling with smoke below it. The caption above the picture states:
"GS Building Systems Corporation's revolutionary new line of smoke
detectors adapt to their environment to distinguish between latent
and burning fires."
Photo #3 - A photograph of various electrical fittings that are part
of the company's GS Electrical Power Systems Group. The caption to
the right of the photo reads: "Bolt-on acquisitions completed in
1994 gave GS Electrical Power Systems Group's product line the
broadest array of fittings in the electrical industry."
<PAGE>
Photo #4 - A photograph of two power supply systems. Sticking out
from under this photo is a cover page of Compumagazine. The text to
the right of the picture states: "GS Electrical Power Systems
Group's new series 700 on-line uninterruptible power supply system
gave the unit access to new global markets, including Argentina,
where the product was the top choice of Compumagazine, the country's
leading computer magazine."
Bar Graphs - Two Dimensional
Graph #1 - A bar graph showing net sales for the Electrical
Controls sector for the three years ended December 31, 1994,
1993 and 1992. The values plotted are as follows: 1994 -
$619 million; 1993 - $547 million; 1992 - $568 million.
Below the graph reads: "Electrical Controls Net Sales;
Dollars in millions."
Graph #2 - A bar graph which plots the Electrical Controls sector's
operating earnings for the three years ended December 31, 1994,
1993, and 1992. The amounts plotted are as follows: 1994 - $50
million; 1993 - $40 million; 1992 - $43 million. The description of
the graph states: "Electrical Controls Operating Earnings (1);
Dollars in millions." The "(1)" footnote indicates: "Excludes
one-time items (see page 31)."
Industrial Technology Section:
Photos
Photo #1 - A full page picture of a Cirrus auto assembly is
shown on the introductory page of this section. The
picture's description (printed on the inside of the back
cover) is as follows: "Industrial Technology: Cirrus auto
assembly (courtesy Chrysler Motors) from Metal Forge."
Photo #2 - Shown is a GS Telecom Group switch. The caption below the
photograph states: "The new 2700 LAN/WAN switch from GS Telecom
Group gave the unit a leading position in the growing market for
systems that can manage both local and wide-area networks."
<PAGE>
Photo #3 - A photograph of a stamp vending machine. The text below
this picture reads: "Like an automated teller for the post office,
GFI Genfare's new stamp vending machine will soon dispense stamps
and make change for customers at thousands of U.S. Postal Service
facilities throughout the country."
Bar Graphs - Two Dimensional
Graph #1 - The description of this graph reads: "Industrial
Technology Net Sales; Dollars in millions." Plotted are the net
sales of the Industrial Technology sector for the three years ended
December 31, 1994, 1993, and 1992. The values are as follows: 1994 -
$303 million; 1993 - $261 million; 1992 - $227 million.
Graph #2 - The caption under this bar graph states: "Industrial
Technology Operating Earnings (1); Dollars in millions." The "(1)"
footnote indicates: "Excludes one-time items (see page 31)." This
graph plots the Industrial Technology sector's operating earnings
for the three years ended December 31, 1994, 1993, and 1992. These
plotted values are as follows: 1994 - $57 million; 1993 - $45
million; 1992 - $33 million.
Management's Discussion and Analysis of Financial Condition
and Results of Operations Section:
Bar Graphs - Two Dimensional
Graph #1 - A bar graph which plots the company's net sales for the
three years ended December 31, 1994, 1993, and 1992. The plotted
amounts are: 1994 - $1,528 million; 1993 - $1,354 million; 1992 -
$1,343 million. The caption under this graph reads: "Net Sales;
Dollars in millions; Excludes divested operations."
Graph #2 - A bar graph plotting the company's gross profit for the
year ended December 31, 1994, 1993, and 1992. The caption below this
graph reads: "Gross Profit; Dollars in millions; Excludes divested
operations and one-time items." The amounts plotted are as follows:
1994 - $446 million; 1993 - $400 million; 1992 - $391 million.
<PAGE>
Graph #3 - A bar graph which shows net interest expense of the
company for the years ended December 31, 1994, 1993, and 1992. Under
this graph is text which reads: "Net Interest Expense; Dollars in
millions." The three values plotted are: 1994 - $12 million; 1993 -
$17 million; 1992 - $25 million.
Graph #4 - A bar graph which plots the company's earnings from its
continuing operations for the years ended December 31, 1994, 1993,
and 1992. The caption below the graph reads: "Earnings from
Continuing Operations; Dollars in millions; Adjusted to exclude
one-time items." The three shown amounts are: 1994 - $104 million;
1993 - $86 million; 1992 - $70 million.
Graph #5 - A bar graph which plots working capital as of
December 31, 1994, 1993, and 1992. These values are as
follows: 1994 - $360 million; 1993 - $269 million; 1992 -
$348 million. The caption under the graph states: "Working
Capital; Dollars in millions."
Graph #6 - A bar graph plotting capital expenditures and research
and development expense. Capital expenditures (on the top section of
each of three bars) plotted for the years ended December 31, 1994,
1993, and 1992 are $67 million, $53 million, and $48 million,
respectively. Research and development expense (on the bottom
section of each bar) for the years ended December 31, 1994, 1993,
and 1992 are $50 million, $53 million, and $56 million,
respectively. The caption below this graph reads: "Capital
Expenditures and R&D; Dollars in millions; Excludes divested
operations."
Graph #7 - A bar graph plotting total capitalization and the ratio
of long-term debt to capitalization. Each of three bars shows both
items - total capitalization on the top and the ratio below. The
total capitalization values as of December 31, 1994, 1993, and 1992
are $817.0 million, $716.6 million, and $742.5 million,
respectively. Ratio amounts are 32.9%, 26.7%, and 49.5% as of
December 31, 1994, 1993, and 1992. Below the graph is a caption
which reads:
"Capitalization; Dollars in millions."
