UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996 Commission file number 1-996
OR
( ) TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
GENERAL SIGNAL CORPORATION
(Exact name of registrant as specified in its charter)
New York 16-0445660
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
High Ridge Park,
Box 10010, Stamford, Connecticut 06904
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (203) 329-4100
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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.
X
(Yes) (No)
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, par value $1.00 49,866,923
(Class) (Outstanding at October 18, 1996)
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Statement of Earnings
(In millions, except per share data)
(Unaudited)
Three Months Ended September 30,
1996 1995
Net Sales $521.6 $481.1
-------- --------
Cost of Sales 356.2 336.4
Selling, general and administrative expenses 97.5 93.1
------- -------
453.7 429.5
-------- --------
Operating earnings 67.9 51.6
Interest expense net 5.5 7.9
-------- ----------
Earnings from continuing operations
before income taxes 62.4 43.7
Income taxes 25.0 16.5
------- ---------
Earnings from continuing operations 37.4 27.2
Discontinued operations - (14.4)
------- ----------
Net earnings $37.4 $12.8
========= ==========
Earnings (loss) per share:
Continuing operations $0.75 $0.55
Discontinued operations - (0.29)
--------- -----------
Net earnings $0.75 0.26
========= ===========
Dividends declared per share $0.24 $0.24
======== ===========
Average shares outstanding 49.8 49.3
====== ==========
See accompanying notes to financial statements
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Statement of Earnings
(In millions, except per share data)
(Unaudited)
Nine Months Ended September 30,
1996 1995
Net Sales $1,518.3 $1,361.6
--------- -----------
Cost of Sales 1,064.9 959.1
Selling, general and administrative expenses 298.9 253.0
Gain on disposition (20.8) --
Transaction and consolidation charges -- 7.4
-------- ----------
$1,343.0 $1,219.5
--------- ----------
Operating earnings 175.3 142.1
Interest expense, net 17.9 17.5
--------- -----------
Earnings from continuing operations
before income taxes 157.4 124.6
Income taxes 63.0 44.8
-------- ------------
Earnings from continuing operations 94.4 79.8
Discontinued operations -- (64.0)
-------- -----------
Net earnings $94.4 $15.8
======= ===========
Earnings (loss) per share:
Continuing operations $ 1.90 $1.62
Discontinued operations -- (1.30)
------- -------
Net earnings $ 1.90 $0.32
======= =======
Dividends declared per share $0.72 $0.72
======= ========
Average shares outstanding 49.6 49.1
======= ========
See accompanying notes to financial statements.
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Balance Sheet
(In millions)
(Unaudited)
September 30, December 31,
1996 1995
Assets
Current assets
Cash and cash equivalents $ 24.4 $ 1.0
Accounts receivable 348.7 323.6
Inventories 237.9 234.7
Prepaid expenses and other current
assets 21.3 30.1
Assets held for sale at estimated
realizable value 9.7 60.4
Deferred income taxes 65.6 71.6
------- --------
Total current assets 707.6 721.4
Property, plant and equipment 308.3 312.7
Intangibles 393.9 406.0
Other assets 163.0 161.6
Deferred income taxes -- 11.5
--------- ----------
$1,572.8 $1,613.2
--------- -----------
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Balance Sheet - Continued
(In millions)
(Unaudited)
Liabilities and Shareholders' Equity September 30, December 31,
1996 1995
Current liabilities:
Short-term borrowings and current
maturities of long-term debt $5.3 $9.0
Accounts payable 173.2 158.1
Accrued expenses 216.9 233.8
Income taxes 39.4 31.2
------- -------
Total current liabilities 434.8 432.1
------- --------
Long-term debt, less current
maturities 306.2 428.6
Accrued postretirement and
postemployment obligations 139.5 146.9
Deferred income taxes 11.2 --
Other liabilities 25.9 27.5
------- --------
Total long term liabilities 482.8 603.0
------- --------
Shareholders' equity:
Common stock: authorized 150.0
shares; issued 64.4 shares at
September 30, 1996 and 64.3 shares
at December 31, 1995 78.1 77.9
Additional paid-in-capital 313.2 304.2
Retained earnings 641.5 582.9
Cumulative translation adjustments (2.8) (3.9)
Common stock in treasury, at cost:
14.6 shares at September 30, 1996 and
15.0 shares at December 31, 1995 (374.8) (383.0)
---------- ---------
Total shareholders' equity 655.2 578.1
------------- ----------
$1,572.8 $1,613.2
========== ===========
See accompanying notes to financial statements.
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed Statement of Cash flow
(In Millions)
(Unaudited)
Nine Months Ended
September 30,
1996 1995
CASH FLOW FROM OPERATING ACTIVITIES:
Earnings from continuing operations $94.4 $79.8
Adjustments to reconcile earnings
to net cash from operating activities:
Gain on disposition (20.8) -
Asset write down and other charges 19.7 -
Transaction and consolidation charges - 7.4
Deferred taxes 28.3 33.1
Depreciation and amortization 51.8 46.0
Pension credits (6.8) (7.1)
Other, net 6.7 5.6
Changes in working capital (36.7) (71.5)
-------- ----------
Net cash from operating activities 136.6 93.3
CASH FLOW FROM INVESTING ACTIVITIES:
Divestitures 79.2 33.7
Acquisitions, net of cash acquired - (262.5)
Capital expenditures (43.6) (35.9)
Other, net 2.8 7.4
--------- ---------
Net cash from investing activities 38.4 (257.3)
--------- ---------
CASH FROM FINANCIANG ACTIVITIES:
Net change in short and long-term
borrowings (126.1) 218.1
Dividends paid (35.6) (34.0)
Proceeds from shares sold to employees 11.3 13.0
Shares repurchased (1.2) (17.0)
-------- ---------
Net cash from financing activities (151.6) 180.1
--------- ----------
Net change in cash and cash equivalents 23.4 16.1
--------- -----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 1.0 0.3
-------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $24.4 $16.4
======== ===========
See accompanying notes to financial statements.
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Notes to Financial Statements
(Unaudited)
1. The accompanying unaudited financial statements reflect all
adjustments (consisting of normal, recurring items)
necessary for the fair presentation of results for these
interim periods. These results are based upon generally
accepted accounting principles consistently applied with
those used in the preparation of the company's 1995 Annual
Report on Form 10-K.
2. Inventories
September 30, December 31,
1996 1995
(in millions)
Finished goods $81.7 $73.9
Work in progress 66.5 66.5
Raw material and purchased parts 111.9 117.6
------- ---------
Total FIFO cost 260.1 258.0
Excess of FIFO cost over LIFO
inventory value (22.2) (23.3)
-------- ---------
Net carrying value $237.9 $234.7
========== ==========
3. Business Segment Information Three Months Ended September 30,
1996 1995
Net sales: (in millions)
Process Controls $192.1 $176.7
Electrical Controls 239.3 217.4
Industrial Technology 90.2 a 87.0
------ -------
$521.6 $481.1
======== =========
Operating earnings:
Process Controls $31.0 b $22.6
Electrical Controls 26.7 19.9
Industrial Technology 18.9 a 14.9
------ ------
Total operating earnings before
unallocated expenses and interest 76.6 57.4
Net interest expense (5.5) (7.9)
Unallocated expenses (8.7) (5.8)
-------- -------
Earnings before income taxes $62.4 $43.7
====== =======
(a) Includes $4.2 of royalty income.
(b) Includes a $1.8 insurance gain on the recovery of destroyed
assets.
3. Business Segment Information Nine Months Ended September 30,
(continued) 1996 1995
(in millions)
Net sales:
Process Controls $554.0 538.6
Electrical Controls 696.6 547.4
Industrial Technology 267.7 a 275.6
-------- -------
$1,518.3 $1,361.6
Operating earnings:
Process Controls $97.1 b $70.7
Electrical Controls 61.1 c 40.0 e
Industrial Technology 41.8 d 46.0
------ ------
Total operating earnings before
unallocated expenses and interest 200.0 156.7
Net interest expense (17.9) (17.5)
Unallocated expenses (24.7) (14.6)
--------- --------
Earnings before income taxes $157.4 $124.6
========= ========
a Includes $4.2 of royalty income.
b Includes a $20.8 gain on disposition of Kinney Vacuum, a
charge of $4.0 for product warranty costs and a $1.8
insurance gain on the recovery of destroyed assets.
c Includes an $11.1 charge related to plant closure costs,
asset valuations and environmental costs.
d Includes a $4.6 charge for asset valuations and $4.2 of royalty
income.
e Includes a $7.4 charge primarily for severance and other
consolidation costs related to the combination of General
Signal and Best Power.
4. Property, Plant and Equipment September 30, December 31,
1996 1995
(in millions)
Property, plant and equipment,
at cost $737.1 $717.8
Accumulated depreciation and
amortization (428.8) (405.1)
------- ---------
Property, plant and equipment,
net $308.3 $312.7
======= =========
5. Supplemental Information-Statement of Cash Flow
Nine Months Ended
September 30,
1996 1995
Cash paid for: (in millions)
Interest $19.0 $17.7
====== ======
Income taxes $25.3 $6.6
====== ======
Liabilities assumed in conjunction
with acquisitions:
Fair value of assets acquired $ - $327.1
Cash paid - (270.3)
----- -------
$ - $56.8
====== =========
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in millions, except per share data)
Results of Operations - Third Quarter 1996 Compared With
Third Quarter 1995
The amounts in the table below were derived from the Consolidated
Financial Statements.
1996 1995
Reported Reported Change
Net sales $521.6 $481.1 8.4%
Gross profit 165.4 144.7 14.3%
Selling, general and
administrative 97.5 93.1 4.7%
expenses
Operating earnings 67.9 51.6 31.2%
Interest expense, net 5.5 7.9 (30.4%)
Earnings from continuing
operations 37.4 27.2 37.5%
Earnings per share from
continuing operations $0.75 $0.55 36.4%
Earnings per share from
discontinued - (0.29)
operations
Net earnings per share $0.75 $0.26 100%+
During the third quarters of 1996 and 1995, the company included
the following items in reported net earnings. To facilitate a
more meaningful discussion of results of operations, these items
are excluded from the discussion of comparative results of
operations in the table below.
Royalty income: In July 1996, the company negotiated a royalty
payment related to one of its previously divested semiconductor
businesses. The company received $4.2 in connection with this
agreement and has recognized this amount in Industrial Technology
net sales.
Insurance settlement on destroyed assets: In May 1996, a fire at
a supplier facility destroyed assets of a business in the Process
Controls sector. In September 1996, the company received $1.8 in
insurance proceeds, net of related expenses, and recognized a
gain on the involuntary conversion of these assets. This amount
is included as an offset to selling, general and administrative
expenses.
Discontinued operations: The company adopted a plan to sell
Leeds and Northrup Company and Dynapower/Stratopower in November
1994. During the third quarter of 1995, the company recorded net
losses of $14.4 in connection with the divestiture of these
businesses.
The following table summarizes the results of operations for the
third quarter of 1996 and 1995 excluding the items discussed
above.
1996 1995
Adjusted Reported Change
Net sales $517.4 $481.1 7.5%
Gross profit 161.1 144.7 11.3%
Margin 31.1% 30.1%
Selling, general and
administrative 99.3 93.1 6.7%
expenses
Percent of sales 19.2% 19.4%
Operating earnings 61.8 51.6 19.8%
Interest expense, net 5.5 7.9 (30.4%)
Earnings from continuing
operations 33.8 27.2 24.3%
Earnings per share from
continuing operations $0.68 $0.55 23.6%
Net sales: Sales improved 7.5 percent over 1995 levels due to
strong order activity at several units. Twelve of the fifteen
operating units reported sales improvements over the third
quarter of 1995. International sales in 1996 represented
approximately 21 percent of total net sales. Export sales
increased approximately 5 percent. Foreign sales increased
approximately 21 percent, primarily reflecting the improvement in
international mixer sales.
Process Control sector sales increased 8.7 percent to $192.1 due
to strong unit volume of pumps, mixers and crystal growing
furnaces. The improvements for pumps and crystal growing
furnaces reflected improvements in their respective domestic
markets. The mixer improvement resulted from higher
international market share. These increases were partially
offset by the disposition of Kinney Vacuum Company which
generated revenues of $6.1 in the third quarter of 1995.
Sales in the Electrical Controls sector increased 10.1 percent to
$239.3 from an improvement in the UPS market and North American
market share gains in electrical fittings. The transformer
business, MagneTek Electric Inc. ("Waukesha Electric"), acquired
in late July of 1995, contributed $6.8 in 1996 due to an
additional month's sales as well as improved price realization.
Industrial Technology sector sales decreased 1.1 percent to
$86.0. An increase in automotive OEM sales was offset by lower
volume from the completion of several large farebox contracts and
automotive recall programs in 1995.
Gross profit: Gross profit as a percentage of sales increased
from 30.1 percent to 31.1 percent. The increase was due to
productivity improvements at several units and shifts in product
mix to more favorable margin products. Margin improvements were
strongest for mixer, broadcast antenna, electrical motor, conduit
fitting and automotive products. Gross profits in 1995 included
$0.9 of LIFO reserve liquidations.
Selling, general and administrative expenses: Selling, general
and administrative expenses as a percentage of sales were
relatively flat. Included in selling, general and administrative
expenses were pension credits of $2.0 in 1996 and $2.4 in 1995.
Operating earnings: Operating earnings for the Process Controls
sector increased 29.2 percent to $29.2 reflecting higher volume
and productivity improvements. These improvements were slightly
offset by lower earnings due to the sale of Kinney Vacuum.
Electrical Controls sector operating earnings increased 34.2
percent to $26.7 as a result of volume and productivity
improvements and improved price realization in the transformer
business.
Industrial Technology sector operating earnings decreased 1.3
percent to $14.7. Higher earnings on increased volume of
automotive OEM products were offset by lower earnings due to the
completion of several large farebox contracts and automotive
recall programs in 1995.
Unallocated expenses increased from $5.8 in the third quarter of
1995 to $8.7 in the same period in 1996. This increase is
primarily due to the inclusion of $2.5 of gains recorded on the
sale of assets in 1995. 1996 is also higher due to an increase
in retiree medical expenses.
Interest expense: Net interest expense decreased 30.4 percent
to $5.5 due to lower average debt levels and lower average
interest rates. The lower debt levels reflect the use of
proceeds from operations and divestitures to pay down debt.
Earnings from continuing operations were $33.8 or $0.68 per share
in 1996 compared to $27.2 or $0.55 per share in 1995. The
company's effective tax rate is 40.0 percent in 1996 compared to
37.7 percent in the third quarter of 1995. The increased rate is
due to an increase in non-deductible goodwill and reductions in
the deferred tax valuation allowance recorded in the prior year.
In the third quarter of 1995, an adjustment of $1.2 was recorded
to increase the 1995 full year rate from 35 percent to 36
percent.
Results of Operations - First Nine Months 1996 Compared With
First Nine Months 1995
The amounts in the table below were derived from the Consolidated
Financial Statements.
1996 1995
Reported Reported Change
Net sales $1,518.3 $1,361.6 11.5%
Gross profit 453.4 402.5 12.6%
Selling, general and
administrative expenses 298.9 253.0 18.1%
Operating earnings 175.3 142.1 23.4%
Interest expense, net 17.9 17.5 2.3%
Earnings from continuing
operations 94.4 79.8 18.3%
Earnings per share from
continuing operations $1.90 $1.62 16.6%
Earnings per share from
discontinued operations - - (1.30)
Net earnings per share $1.90 $0.32 100%+
During the first nine months of 1996 and 1995, the company
included the following items in reported net earnings. To
facilitate a more meaningful discussion of results of operations,
these items are excluded from the discussion of comparative
results of operations in the following table.
Royalty income: In July 1996, the company negotiated a royalty
payment related to one of its previously divested semiconductor
businesses. The company received $4.2 in connection with this
agreement and has recognized this amount in Industrial Technology
net sales.
Insurance settlement on destroyed assets: In May 1996, a fire at
a supplier facility destroyed assets of a business in the Process
Controls sector. In September 1996, the company received $1.8 in
insurance proceeds, net of related expenses, and recognized a
gain on the involuntary conversion of these assets. This amount
is included as an offset to selling, general and administrative
expenses.
Gain on disposition: In January 1996, the company sold Kinney
Vacuum Company, a unit of the Process Controls sector, for
approximately $29.0 and recognized a pre-tax gain of $20.8.
Included in the gain were a LIFO liquidation of approximately
$1.1 and transaction costs of approximately $0.5.
Product warranty: In March 1996, the company decided to correct
defects in certain Process Controls' products that were sold in
prior years and have warranty periods that have expired. The
company provided $4.0 to cover the cost of needed repairs.
Management believes that this plan will help the company meet the
expectations of its customers. It is anticipated that the amount
accrued will be expended in 1996 and 1997.
Capitalized software: Based on an assessment made during the
first quarter of 1996 of future market potential, the company
wrote off $4.6 of capitalized software for a product in the
Industrial Technology sector.
Factory closure and other: As part of the company's ongoing
review of facilities, product lines and operations, the company
decided, in March 1996, to close a factory in the Electrical
Controls sector and provided $4.7 primarily for lease termination
costs, asset write-downs and severance costs. Management
anticipates that the closure of this factory will result in lower
costs in the future from improved productivity.
Also in connection with this review, the company identified
property, plant and equipment that will not be utilized in future
operations and, therefore, recorded a $4.4 charge to write the
assets off.
Environmental: During the first quarter of 1996, the company
changed its estimate of costs to be incurred related to
environmental matters at one of its Electrical Controls sector
facilities. The additional accrual of $2.0 was based on
additional information received about the method and extent of
remediation required.
Transaction and consolidation charge: On June 14, 1995, the
company completed a cash tender offer for Best Power. In
connection therewith, the company recorded a $7.4 charge
primarily for severance and other consolidation costs relating to
the combination of General Signal and Best Power locations.
Discontinued operations: The company adopted a plan to sell
Leeds & Northrup Company and Dynapower/Stratopower in November
1994. During the second and third quarters of 1995, the company
recorded net losses of $49.6 million and $14.4 in connection with
the divestiture of these businesses.
The following table summarizes results of operations of the first
nine months of 1996 and 1995 excluding the items discussed above.
1996 1995
Adjusted Adjusted Change
Net sales $1,514.1 $1,361.6 11.2%
Gross profit 462.1 402.5 14.8%
Margin 30.5% 29.6%
Selling, general and
administrative expenses 294.0 253.0 16.2%
Percent of sales 19.4% 18.6%
Operating earnings 168.1 149.5 12.4%
Interest expense, net 17.9 17.5 2.3%
Earnings from continuing
operations 90.2 84.5 6.7%
Earnings per share from
continuing operations $1.82 $1.72 5.8%
Net sales: Sales improved 11.2 percent over 1995 levels due
primarily to the acquisitions of Best Power and Waukesha Electric
in June and July of 1995, respectively. Adjusted for
acquisitions and dispositions, sales improved approximately 4
percent. International sales in 1996 totaled approximately 22
percent of the company's net sales. Export sales increased
approximately 8 percent and foreign sales increased approximately
25 percent, primarily reflecting the European sales of Best Power
as well as the improvement in international mixer sales.
Process Controls' sector sales improved 2.9 percent to $554.0 on
strong third quarter volume activity in pumps, mixers and crystal
growing furnaces. These increases were partially offset by the
disposition of Kinney Vacuum which generated revenues of $19.0 in
the nine month period ended September 1995.
Sales in the Electrical Controls sector increased 27.3 percent to
$696.6, due primarily to the addition of Best Power and Waukesha
Electric. A strong UPS market and North American market share
gains in electrical fittings also contributed to the improvement.
Industrial Technology sector sales decreased 4.4 percent to
$263.5. Higher product sales to the telecommunication and
datacommunication industries were offset by the completion of
several large farebox contracts and automotive recall programs in
1995.
Gross profit: Gross profit as a percentage of sales increased
from 29.6 percent to 30.5 percent. Higher margins at Best Power
as well as improved cost structures at several operating units
were the primary reasons for the improvement. Margin
improvements were strongest for mixer, coal feeder, broadcast
antenna, conduit fitting and automotive products. Gross profit
in 1995 included $0.9 of LIFO reserve liquidations.
Selling, general and administrative expenses: Selling, general
and administrative expenses as a percentage of sales increased
from 18.6 percent to 19.4 percent. The acquisition of Best
Power, which has a higher rate of operating expenses than the
rest of the company, as well as lower credits in connection with
the settlement of insured matters, were the primary reasons for
the increase. Included in selling, general and administrative
expenses were pension credits of $6.8 in 1996 and $7.1 in 1995.
Operating earnings: Operating earnings for the Process Controls
sector increased 11 percent to $78.5. Strong third quarter
volume and productivity improvements in the pump, mixer and
crystal growing furnace businesses were the primary reasons for
the improvement. These improvements were slightly offset by
lower earnings due to the sale of Kinney Vacuum.
Electrical Controls sector operating earnings increased 52.3
percent to $72.2. The additions of Best Power and Waukesha
Electric as well as significant productivity improvements on
conduit fittings were the primary reasons for the increase.
Industrial Technology sector operating earnings decreased 8.3
percent to $42.2. The positive impact of productivity
improvements in the automotive industry was offset by lower
volume due to the completion of several large farebox contracts
and automotive recall programs in 1995.
During 1996, the settlement of insured matters increased the
earnings of Process Controls and Electrical Controls by $0.7 and
$1.3, respectively. 1996 unallocated expenses were positively
impacted by the collection of a $1.3 previously written off
receivable. During 1995, cash settlements (primarily for royalty
and insured matters) increased the earnings of Electrical
Controls by $1.8 and Industrial Technology by $2.0, and reduced
unallocated expenses by $1.9. 1995 unallocated expenses were
also positively impacted by $2.5 gains recorded on the sale of
assets as well as $2.9 of accrual adjustments related to the
semiconductor equipment operations, environmental reserves and
other accruals.
Unallocated expenses increased from $15.2 in the first nine
months of 1995 to $24.7 for the same period in 1996. The
increase is due to the items disclosed in the preceding
paragraph, higher retiree medical costs, increases in
compensation expense and other corporate activities.
Interest expense: Net interest expense is relatively flat for
the nine month period. Cash generated from operations and
divestitures was used to pay down the debt incurred in connection
with 1995 acquisitions.
Earnings from continuing operations were $90.2 or $1.82 per share
in 1996 compared to $84.5 or $1.72 per share in 1995. The
company's effective tax rate is 40.0 percent in 1996 compared to
36.0 percent in the first nine months of 1995. The increased tax
rate is due to an increase in non-deductible goodwill and
reductions in the deferred tax valuation allowance recorded in
the prior year.
Financial Condition - September 30, 1996 Compared to December 31,
1995
The following information was derived from the condensed
statement of cash flow. It summarizes the cash flow activity for
the first nine months of 1996 compared to the first nine months
of 1995.
1996 1995
Cash flow from ongoing operations $160.2 146.7
Expenditures for previously
divested operations (23.6) (53.4)
Cash flow from operating activities 136.6 93.3
Acquisitions, primarily Best Power and
Waukesha Electric - - (262.5)
Disposition of discontinued
operations and Kinney Vacuum 79.2 33.7
Capital expenditures (43.6) (35.9)
Other investing activities 2.8 7.4
Cash flow from investing activities 38.4 (257.3)
Debt repayments, net of borrowings (126.1) 218.1
Dividends (35.6) (34.0)
Other financing activities 10.1 (4.0)
Cash flow from financing activities (151.6) 180.1
Cash flow from continuing operations improved primarily from
higher earnings, after adjustment for non-cash items, and
improved working capital management.
Long-term debt-to-total capitalization was 31.8 percent at
September 30, 1996, down from 42.6 percent at year-end, due to
the use of proceeds generated from dispositions and higher cash
from operations to pay down debt. The company is well positioned
to finance future working capital requirements and capital
expenditures through current earnings and available credit
facilities.
At September 30, 1996, the company had deferred tax assets of
$195.3 that were reduced by deferred tax liabilities of $107.3
and a valuation allowance of $33.6. The valuation allowance is
based on management's assessment that it is more likely than not
that the net deferred tax assets will be realized through future
taxable earnings or alternative tax strategies.
Other Matters
Since the company is a producer of capital goods and equipment,
its results 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.
Forward-looking Statements: The company may from time to time
make projections concerning future operations and earnings. The
company's forward-looking statements are based on the company's
current expectations, which are subject to a number of risks and
uncertainties that could materially affect or reduce such
operations and earnings. In addition to the general factors
identified in "Other Matters" above, the primary factors that
could specifically affect the company's expectations include the
failure of: (1) a continuation of the increased order rate
experienced in the first nine months, (2) productivity
improvements meeting or exceeding budget, and (3) new products
under development being produced and accepted as anticipated.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
12.0 Calculation of Ratios of Earnings to Fixed
Charges.
(b) No reports were filed on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GENERAL SIGNAL CORPORATION
/s/ Terry J. Mortimer
Terry J. Mortimer
Vice President and Controller
Chief Accounting Officer
DATE: October 22, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
GENERAL SIGNAL CORPORATION
Terry J. Mortimer
Vice President and Controller
Chief Accounting Officer
DATE: October 22, 1996
Calculation of Ratios of Earnings to Fixed Charges
General Signal Corporation
(Dollars in millions) Exhibit(12.0)
Nine Months
Ended
September 30, Year Ended December 31,
1996 1995 1994 1993 1992 1991
Earnings:
Earnings from continuing
operations before
income
taxes and $157.4 $156.4 $160.3 $139.1 $9.5 $97.4
extraordinary 24.9 34.7 20.2 22.6 35.3 39.3
items
Add: fixed charges
$182.3 $191.1 $180.5 $161.7 $44.8 $136.7
Fixed charges:
Interest expense (gross) $19.7 27.7 $14.4 $18.0 $28.6 $31.8
One-third of rent 5.2 7.0 5.8 4.6 6.7 7.5
expense
$24.9 $34.7 $20.2 $22.6 $35.3 $39.3
Ratio 7.32 5.51 8.94 7.15 1.27 3.48
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