SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 1-8974
------
AlliedSignal Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2640650
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Columbia Road
P. O. Box 4000
Morristown, New Jersey 07962-2497
- ---------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(201)455-2000
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding at
Class of Common Stock September 30, 1994
- --------------------- ------------------
$1 par value 282,987,414 shares
<PAGE>
AlliedSignal Inc.
Index
-----
Page No.
--------
Part I. - Financial Information
Item 1. Condensed Financial Statements:
Consolidated Balance Sheet -
September 30, 1994 and December 31, 1993 3
Consolidated Statement of Income -
Three and Nine Months Ended September 30,
1994 and 1993 4
Consolidated Statement of Cash Flows-
Nine Months Ended September 30,
1994 and 1993 5
Notes to Financial Statements 6
Report on Review by Independent
Accountants 8
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 9
Part II. - Other Information
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
- 2 -
<PAGE>
AlliedSignal Inc.
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- ------------
(Dollars in millions)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 790 $ 892
Accounts and notes receivable - net
(Note 2) 1,539 1,343
Inventories - net (Note 3) 1,693 1,745
Other current assets 610 587
------- -------
Total current assets 4,632 4,567
Investments and long-term receivables 475 553
Property, plant and equipment 8,502 8,168
Accumulated depreciation and
amortization (4,398) (4,074)
Cost in excess of net assets of
acquired companies - net 1,114 1,087
Other assets 579 528
------- -------
Total assets $10,904 $10,829
======= =======
LIABILITIES
Current Liabilities
Accounts payable $ 1,273 $ 1,207
Short-term borrowings 88 57
Commercial paper 20 164
Current maturities of long-term debt 125 137
Accrued liabilities 1,722 1,924
------- -------
Total current liabilities 3,228 3,489
Long-term debt 1,446 1,602
Deferred income taxes 441 339
Postretirement benefit obligations
other than pensions 1,720 1,689
Other liabilities 1,271 1,320
SHAREOWNERS' EQUITY
Capital - common stock issued 358 358
- additional paid-in capital 2,457 2,453
Common stock held in treasury, at cost (1,507) (1,437)
Cumulative translation adjustment 37 (7)
Retained earnings 1,453 1,023
------- -------
Total shareowners' equity 2,798 2,390
------- -------
Total liabilities and shareowners' equity $10,904 $10,829
======= =======
</TABLE>
Notes to Financial Statements are an integral part of this statement.
- 3 -
<PAGE>
AlliedSignal Inc.
Consolidated Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
1994 1993 1994 1993
---- ---- ---- ----
(Dollars in millions except
per share amounts)
<S> <C> <C> <C> <C>
Net sales $3,110 $2,812 $9,283 $8,768
------ ------ ------ ------
Cost of goods sold 2,503 2,257 7,446 7,077
Selling, general and
administrative expenses 325 329 985 979
------ ------ ------ ------
Total costs and expenses 2,828 2,586 8,431 8,056
------ ------ ------ ------
Income from operations 282 226 852 712
Equity in income of affiliated companies 31 24 91 73
Other income (expense) (3) (2) (19) (13)
Interest and other financial charges (34) (36) (109) (124)
------ ------ ------ ------
Income before taxes on income 276 212 815 648
Taxes on income 87 47 261 170
------ ------ ------ ------
Income before cumulative effect of
change in accounting principle 189 165 554 478
Cumulative effect of change in
accounting principle:
Accounting for postemployment
benefits, net of income taxes - - - (245)
------ ------ ------ ------
Net income $ 189 $ 165 $ 554 $ 233
====== ====== ====== ======
Earnings per share of common
stock: (Note 4)
Before cumulative effect of change
in accounting principle $ .67 $ .58 $ 1.95 $ 1.69
Cumulative effect of change in
accounting principle - - - (.86)
------ ------ ------ ------
Net earnings $ .67 $ .58 $ 1.95 $ .83
====== ====== ====== ======
Cash dividends per share of
common stock $.1675 $ .145 $ .48 $ .435
====== ====== ====== ======
</TABLE>
Notes to Financial Statements are an integral part of this
statement.
- 4 -
<PAGE>
AlliedSignal Inc.
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-----------------
1994 1993
---- ----
(Dollars in millions)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 554 $ 233
Adjustments to reconcile net income to net
cash flows from operating activities:
Cumulative effect of change in accounting for
postemployment benefits - 245
Streamlining and restructuring (134) (178)
Depreciation and amortization (includes goodwill) 414 406
Undistributed earnings of equity affiliates (9) (10)
Deferred taxes 112 82
Decrease (increase) in accounts and notes
receivable (154) 94
Decrease in inventories 57 7
Decrease (increase) in other current assets (43) 6
Increase (decrease) in accounts payable 37 (159)
Increase (decrease) in accrued liabilities (111) 2
Other (131) (129)
---- ----
Net cash flow provided by operating activities 592 599
---- ----
Cash flows from investing activities:
Expenditures for property, plant and equipment (398) (441)
Proceeds from disposals of property, plant and
equipment 53 24
Decrease in other investments 15 48
(Increase) in other investments (11) (19)
Decrease (increase) in marketable securities 86 (34)
Cash paid for acquisitions (67) (30)
Proceeds from sales of businesses 136 5
---- ----
Net cash flow (used for) investing activities (186) (447)
---- ----
Cash flows from financing activities:
Net increase (decrease) in commercial paper (144) 184
Net increase in short-term borrowings 22 27
Proceeds from issuance of common stock 41 129
Proceeds from issuance of long-term debt 2 15
Repurchases of long-term debt
(including current maturities) (187) (304)
Repurchases of common stock (101) (209)
Cash dividends on common stock (134) (123)
Redemption of common stock purchase rights (7) -
---- ----
Net cash flow (used for) financing activities (508) (281)
---- ----
Net (decrease) in cash and cash equivalents (102) (129)
Cash and cash equivalents at beginning of year 892 931
---- ----
Cash and cash equivalents at end of period $ 790 $ 802
===== =====
</TABLE>
Notes to Financial Statements are an integral part of this
statement.
- 5 -
<PAGE>
AlliedSignal Inc.
Notes to Financial Statements
(Unaudited)
(Dollars in millions)
Note 1. In the opinion of management, the accompanying unaudited
consolidated financial statements reflect all adjustments,
consisting only of normal adjustments, necessary to present fairly
the financial position of AlliedSignal Inc. and its consolidated
subsidiaries at September 30, 1994 and the results of operations for
the three and nine months ended September 30, 1994 and 1993 and the
changes in cash flows for the nine months ended September 30, 1994
and 1993. The results of operations for the three-and nine-month
periods ended September 30, 1994 should not necessarily be taken as
indicative of the results of operations that may be expected for the
entire year 1994.
In the fourth quarter of 1993 the Company adopted Financial
Accounting Standards Board Statement No. 112 - "Employers'
Accounting for Postemployment Benefits" effective as of January 1,
1993. The 1993 financial statements have been restated to include
both ongoing and cumulative effects of the accounting change.
The financial information as of September 30, 1994 should be read in
conjunction with the financial statements contained in the Company's
Form 10-K Annual Report for 1993.
Note 2. Accounts and notes receivable consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- ------------
<S> <C> <C>
Trade $1,411 $1,245
Other 159 126
------ ------
1,570 1,371
Less--Allowance for doubtful
accounts and refunds (31) (28)
------ ------
$1,539 $1,343
====== ======
</TABLE>
Note 3. Inventories are valued at the lower of cost or market using
the last-in, first-out (LIFO) method for certain qualifying domestic
inventories and the first-in, first-out (FIFO) or the average cost
method for other inventories.
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- ------------
<S> <C> <C>
Raw materials $ 471 $ 504
Work in process 689 635
Finished products 777 824
Supplies and containers 53 51
------ ------
1,990 2,014
Less - Progress payments (174) (154)
Reduction to LIFO
cost basis (123) (115)
------ ------
$1,693 $1,745
====== ======
</TABLE>
- 6 -
<PAGE>
Note 4. Based on the weighted average number of shares outstanding
during each period: three months ended September 30, 1994,
283,021,071 shares, and 1993, 282,855,162 shares; and nine months
ended September 30, 1994, 283,575,248 shares, and 1993, 283,142,932
shares. No dilution results from outstanding common stock
equivalents. Share and per share data for all periods reflect the
March 1994 two-for-one stock split.
- 7 -
<PAGE>
Report on Review by Independent Accountants
-------------------------------------------
To the Board of Directors
of AlliedSignal Inc.
We have reviewed the accompanying consolidated balance sheet of
AlliedSignal Inc. and its consolidated subsidiaries as of September
30, 1994, and the consolidated statements of income for the three-
month and nine-month periods ended September 30, 1994 and 1993, and of
cash flows for the nine month periods ended September 30, 1994 and 1993.
This financial information is the responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the financial information referred to above
for it to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December
31, 1993, and the related consolidated statements of income, of
retained earnings, and of cash flows for the year then ended (not
presented herein); and in our report dated February 3, 1994 except
for Note 1 (Subsequent Events) which is as of February 7, 1994, we
expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet information as of December
31, 1993, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
Price Waterhouse LLP
4 Headquarters Plaza North
Morristown, NJ 07962
October 24, 1994
- 8 -
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Results of Operations
---------------------
Third Quarter 1994 Compared with Third Quarter 1993
- ---------------------------------------------------
Net sales in the third quarter of 1994 totaled $3.1 billion, an
increase of $298 million, or 11 percent, compared with the third
quarter of last year. Of this increase, $304 million was due to
higher sales volumes, including sales by recently acquired
businesses, and $20 million was due to the effect of foreign
exchange rates mainly on automotive's European operations. A
partial offset was a decrease in prices of $26 million. Sales for
engineered materials increased by $157 million, automotive by $136
million and aerospace by $5 million. Engineered materials' sales
improved due to substantial gains recorded by nearly all product
groups. Fluorines benefited from increased market share in the
refrigeration segment of the business, as well as from new
production of environmentally safer substitutes at the recently
completed Geismar, Louisiana plant. Fibers had improved sales and
market share. Laminate systems and performance additives had strong
revenue growth from sales in Asia and Europe. Sales of plastics
reflected successful implementation of internal growth and
globalization strategies, benefiting from new product applications
and higher sales in markets outside North America. Automotive's
sales increase reflected higher automotive production in North
America resulting in significant sales gains for antilock brakes and
air bags. Turbocharger sales were boosted by the strong North
American truck market and by continued growth of the diesel-powered
segment of the European car market. Sales of seat belts in Europe
increased following the Company's acquisition of a small seat belt
business. Although sales of truck brake systems in North America
were strong, reported worldwide sales of truck brake systems were
down, reflecting the transfer of the Company's European truck brake
business to an unconsolidated venture with Knorr-Bremse AG in
October 1993. North American aftermarket sales were essentially
flat. The aerospace sales increase was due to higher sales of
commercial avionics products and aircraft landing systems repair and
overhaul, in part reflecting the contributions of recently acquired
businesses, as well as higher sales of communications systems,
partly offset by lower sales of engines and equipment and controls.
Income from operations of $282 million increased by $56
million, or 25 percent, compared with last year's third quarter.
Operating income for engineered materials improved by 28 percent,
aerospace by 22 percent and automotive by 15 percent. Operating
expenses for corporate were unchanged. The Company's operating
margin for the third quarter of 1994 was 9.1 percent, compared with
8.0 percent for the same period last year. See the discussion of
net income below for information by segment.
Equity in income of affiliated companies of $31 million
increased by $7 million, or 29 percent, compared to last year
mainly due to improved results for the UOP process technology joint
venture and for an automotive air bag component joint venture.
- 9 -
<PAGE>
Interest and other financial charges of $34 million decreased
$2 million, or 6 percent, from 1993's third quarter reflecting a
lower level of debt outstanding.
The effective tax rate in the third quarter of 1994 was 31.4
percent. The 1993 rate of 22.4 percent reflected a net 4.7
percentage point reduction for an adjustment to deferred tax
balances, partly offset by the catch-up impact on 1993 earnings of a
higher statutory rate as a result of the 1993 U.S. tax act. The net
impact of the two items increased 1993 earnings by about $.02 a
share. The balance of the increase reflects a higher level of
earnings subject to the U.S. statutory rate and the non-
deductibility of certain expenses in 1994 as a result of the 1993
tax act.
Net income for aerospace increased 14 percent primarily
reflecting productivity actions, including business consolidations
mainly in the engines business. Automotive's net income increased
19 percent reflecting higher worldwide sales of turbochargers, as
well as higher income for both European original equipment and
aftermarket products due to market recovery and productivity
improvements. Earnings for engineered materials improved by 25
percent reflecting higher sales volumes of fluorines, laminates,
environmental catalysts and specialty chemicals. Strong licensing
activity in the Asian petrochemical industry contributed to higher
earnings from the UOP joint venture. Fibers sales improved although
the business was affected by higher raw material costs.
Net income of $189 million, or $.67 a share, was higher than
last year's $165 million, or $.58 a share, for the reasons discussed
above.
Nine Months 1994 Compared with Nine Months 1993
- -----------------------------------------------
Net sales in the first nine months of 1994 totaled $9.3
billion, an increase of $515 million, or 6 percent, compared with
the first nine months of last year. Of this increase, $647 million
was due to increased sales volumes, including sales by recently
acquired businesses. Partly offsetting was a decrease in prices of
$80 million and a decrease of $52 million due to the effect of
foreign exchange rates mainly on automotive's European operations.
Sales for engineered materials and automotive increased by $298 and
$228 million, respectively, while sales for aerospace declined by
$11 million. Engineered materials' sales improved because of higher
sales volumes of fibers, fluorine products including CFC
substitutes, laminates, specialty chemicals and environmental
catalysts. Automotive's sales increased due to higher volumes for
turbochargers in both North America and Europe and for North
American brakes and air bags. North American truck brake systems
sales increased, while worldwide sales declined, reflecting the
joint venture with Knorr-Bremse AG. The aerospace decrease is
mainly due to the effects of cutbacks in military spending and
weakness in the commercial aviation industry. Aerospace sales
include a $68 million contract settlement with the U.S. Air Force in
the first quarter of 1994. Sales from commercial avionics and aircraft
landing systems repair and overhaul were higher, in part reflecting the
contributions of recently acquired businesses.
Income from operations of $852 million increased by $140
million, or 20 percent, compared with 1993's first nine months.
Operating income for
- 10 -
<PAGE>
engineered materials improved by 21 percent, automotive by 18 percent and
aerospace by 13 percent. Operating expenses for corporate were reduced by 2
percent. The Company's operating margin for the first nine months of 1994
was 9.2 percent, compared with 8.1 percent last year. See the discussion
of net income below for information by segment.
Productivity (the constant-dollar-basis relationship of sales
to costs) of the Company's businesses improved by 5.9 percent
compared with last year's first nine months.
Equity in income of affiliated companies of $91 million
increased by $18 million, or 25 percent, compared to last year
mainly due to improved results for the Paxon Polymer Company high-
density polyethylene joint venture and an automotive air bag
component joint venture.
Other income (expense) of $(19) million was unfavorable by $6
million, or 46 percent, compared to last year's first nine months
mainly due to a higher amount of minority interest as a result of
the formation of a venture with Knorr-Bremse in the United States,
along with reduced interest income. A partial offset resulted from
reduced foreign exchange hedging costs.
Interest and other financial charges of $109 million decreased
$15 million, or 12 percent, from last year reflecting a lower level,
and a more favorable mix of debt outstanding.
The effective tax rate for the first nine months of 1994 was
32.0 percent. The 1993 rate was 26.2 percent. The 5.8 percentage
point increase is due to a higher level of earnings subject to the
U.S. statutory rate and the non-deductibility of certain expenses
resulting from the 1993 tax act, as well as the effect of the 1993
adjustment to deferred tax balances mentioned previously.
Earnings for aerospace increased 14 percent, primarily due to
cost savings from business consolidations, materials management and
other productivity programs. Income from general aviation avionics
and landing systems was higher. Productivity improvements in the
engines business contributed to significantly higher net income. A
contraction of military spending and weakness in the commercial
aviation industry resulted in lower earnings for many other
aerospace businesses. Automotive's net income increased 23 percent
reflecting productivity improvements throughout the business coupled
with higher sales for turbochargers and air bags. Economic recovery
and productivity actions in Europe contributed to increased net
income in the European original equipment and aftermarket business
areas. Income for North American braking systems was lower due to
higher costs. Earnings for engineered materials improved 20
percent, reflecting higher sales volumes, manufacturing efficiencies
and higher profit contributions from both the Paxon Polymer Company
and the UOP joint ventures.
Income before the cumulative effect of change in accounting
principle of $554 million was $76 million higher than last year, and
earnings per share of $1.95 increased $.26 for the reasons discussed
above. Net income was $554 million, or $1.95 a share, compared to
last year's $233 million, or $.83 a share. The first nine months of
1993 includes a "catch-up" charge of $245 million, or $.86 a share,
reflecting the adoption of Financial Accounting Standards Board
Statement No. 112 - "Employers' Accounting for Postemployment
Benefits."
- 11 -
<PAGE>
Financial Condition
-------------------
September 30, 1994 Compared with December 31, 1993
- --------------------------------------------------
On September 30, 1994, the Company had $790 million in cash and
cash equivalents, compared with $892 million at year-end 1993. The
$102 million decrease primarily reflects the pay down of debt,
partly offset by the current period's cash flow. The current ratio
at September 30, 1994 was 1.4X, compared with 1.3X at year-end 1993.
On September 30, 1994, the Company's long-term debt amounted to
$1,446 million, down $156 million from year-end 1993. Total debt of
$1,679 million on September 30,1994 was down $281 million from
$1,960 million at year-end, mainly reflecting a reduction in
commercial paper outstanding and the redemption of a Deutschemark
bond issue. The Company's total debt as a percent of capital
decreased from 42.7 percent at year-end to 34.9 percent at September
30, 1994.
During the first nine months of 1994, the Company spent $398
million for capital expenditures, compared with $441 million in the
corresponding period in 1993. Spending by the business segments and
corporate for the 1994 nine month period was as follows: aerospace-
$92 million; automotive-$138 million; engineered materials-$162
million, and corporate-$6 million.
During the first nine months of 1994, the Company repurchased
2.9 million shares of common stock for $104 million. Common stock
is repurchased to meet the requirements for shares issued under
employee benefit plans and a shareowner dividend reinvestment and
share purchase plan. At September 30, 1994, the Company had
remaining authority to repurchase 13.6 million shares of common
stock.
During the second quarter of 1994, the Company completed the
sales of its mechanical and hydraulic actuation business and of its
general aviation hangar operations. The Company will continue to
supply the hangar facilities with engine parts, technical support
and quality assurance on engine-related maintenance. These
dispositions will result in a reduction of annual sales of
approximately $180 million. As a result of the disposal of these
two businesses, and the disposal of another small business in the
first quarter, the Company realized cash proceeds of $136 million.
In October 1994 the Company completed the acquisition of Lycoming
Turbine Engine Division (Lycoming Division) from Textron Inc. for
$375 million plus the assumption of certain liabilities. The
Lycoming Division's 1993 sales were approximately $620 million. The
Lycoming Division manufactures turbofan engines for regional
airlines, helicopter engines for commercial, military and utility
aircraft, military tank engines and marine propulsion engines.
Review by Independent Accountants
- ---------------------------------
The "Independent Accountants' Report" included herein is not a
"report" or "part of a Registration Statement" prepared or certified
by an independent accountant within the meanings of Section 7 and 11
of the Securities Act of 1933, and the accountants' Section 11
liability does not extend to such report.
- 12 -
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported, the Alabama Department of
Environmental Management proposed on July 20, 1994 a civil penalty
for alleged violations of Alabama's hazardous waste management
regulations relating to the Company's acceptance and handling of
certain shipments of wastewaters to the Company's plant in
Fairfield, Alabama. On August 24, 1994 the Company agreed to settle
this matter by payment of a civil penalty of $250,000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed with this Form 10-Q:
--------
15 Independent Accountants' Acknowledgment Letter as to the
incorporation of their report relating to unaudited interim
financial statements
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed
-------------------
during the quarter ended September 30, 1994.
- 13 -
<PAGE>
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.
AlliedSignal Inc.
Date: November 7, 1994 By: /s/ G. Peter D'Aloia
-----------------------------
G. Peter D'Aloia
Vice President and Controller
(on behalf of the Registrant
and as the Registrant's
Principal Accounting Officer)
- 14 -
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
2 Omitted (Inapplicable)
4 Omitted (Inapplicable)
10 Omitted (Inapplicable)
11 Omitted (Inapplicable)
15 Independent Accountants'
Acknowledgment Letter as
to the incorporation of their
report relating to unaudited
interim financial statements
18 Omitted (Inapplicable)
19 Omitted (Inapplicable)
22 Omitted (Inapplicable)
23 Omitted (Inapplicable)
24 Omitted (Inapplicable)
27 Financial Data Schedule
99 Omitted (Inapplicable)
- 15 -
EXHIBIT 15
November 7, 1994
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that the September 30, 1994 Quarterly
Report on Form 10-Q of AlliedSignal Inc. which includes our
report dated October 24, 1994 (issued pursuant to the
provisions of Statement on Auditing Standards Nos. 42 and 71)
will be incorporated by reference in the Prospectuses
constituting part of AlliedSignal Inc.'s Registration
Statements, on Forms S-8 (Nos. 33-09896, 33-50314, 33-51031,
33-51455, 33-55410 and 33-65792), on Forms S-3 (Nos. 33-
00631, 33-13211, 33-14071 and 33-55425) and on Form S-8
(filed as an amendment to Form S-14, No. 2-99416-01). We are
also aware of our responsibilities under the Securities Act
of 1933.
Very truly yours,
/s/ Price Waterhouse LLP
Price Waterhouse LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet at September 30, 1994, the consolidated statement
of income for the nine months ended September 30, 1994 and the notes to
financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 790
<SECURITIES> 0
<RECEIVABLES> 1,411
<ALLOWANCES> 31
<INVENTORY> 1,693
<CURRENT-ASSETS> 4,632
<PP&E> 8,502
<DEPRECIATION> 4,398
<TOTAL-ASSETS> 10,904
<CURRENT-LIABILITIES> 3,228
<BONDS> 1,446
<COMMON> 358
0
0
<OTHER-SE> 2,440
<TOTAL-LIABILITY-AND-EQUITY> 10,904
<SALES> 9,283
<TOTAL-REVENUES> 9,283
<CGS> 7,446
<TOTAL-COSTS> 7,446
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 109
<INCOME-PRETAX> 815
<INCOME-TAX> 261
<INCOME-CONTINUING> 554
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 554
<EPS-PRIMARY> 1.95
<EPS-DILUTED> 1.95
</TABLE>
