<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ 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 1-10404
RELIANCE ELECTRIC COMPANY
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-1538687
- ------------------------------- ------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6065 Parkland Blvd., Cleveland, OH 44124-6106
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(216) 266-5800
- -------------------------------------------------------------------------------
(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 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.
Class Outstanding at October 31, 1994
- ------------------------------------ -------------------------------
Class A Common Stock, $.01 par value 32,935,714 shares
Class B Common Stock, $.01 par value 3,161,032 shares
Class C Common Stock, $.01 par value 5,250,000 shares
Page 1 of 15
<PAGE> 2
<TABLE>
RELIANCE ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
(Dollars in millions, except per share amounts)
(Shares in thousands)
==============================================================================
<CAPTION>
Three Months Ended September 30, 1994 1993
- -------------------------------- ---- ----
<S> <C> <C>
Net Sales
Industrial......................... $ 335 $ 287
Telecommunications................. 115 116
Eliminations....................... (1) (1)
---- ----
Total 449 402
Costs and Expenses:
Cost of Sales
Industrial......................... 248 224
Telecommunications................. 86 87
Eliminations....................... (1) (1)
---- ----
Total 333 310
Selling, general and administrative... 71 67
Other expense, net.................... 1 1
---- ----
Earnings Before Interest and Taxes..... 44 24
Interest expense....................... 6 6
---- ----
Earnings Before Taxes.................. 38 18
Provision for income taxes............. 17 8
---- ----
Net Earnings .......................... $ 21 $ 10
==== ====
Net earnings per equivalent share of
common stock (Exhibit 1):
Net earnings .......................... $ .41 $ .19
==== ====
Weighted average equivalent shares of
common stock outstanding (A) 50,960 50,732
====== ======
<FN>
- ----------
(A) Weighted average equivalent share amounts give effect to the conversion
of each share of Class C Common Stock into 2.708 shares of Class A
Common Stock, as well as the exercise of nonqualified stock options
when the effect of such exercise is dilutive.
The accompanying notes are an integral part of these financial statements.
</TABLE>
-2-
<PAGE> 3
<TABLE>
RELIANCE ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
(Dollars in millions, except per share amounts)
(Shares in thousands)
==============================================================================
<CAPTION>
Nine Months Ended September 30, 1994 1993
- ------------------------------- ---- ----
<S> <C> <C>
Net Sales
Industrial......................... $ 944 $ 876
Telecommunications................. 338 330
Eliminations....................... (2) (3)
----- -----
Total 1,280 1,203
Costs and Expenses:
Cost of Sales
Industrial......................... 704 670
Telecommunications................. 249 249
Eliminations....................... (2) (3)
----- -----
Total 951 916
Selling, general and administrative... 213 202
Restructure........................... -0- 4
Other expense, net.................... 4 3
----- -----
Earnings Before Interest and Taxes..... 112 78
Interest expense....................... 18 20
----- -----
Earnings Before Taxes.................. 94 58
Provision for income taxes............. 43 27
----- -----
Earnings Before Extraordinary Items
and Cumulative effect of Accounting
Change................................ 51 31
Extraordinary Items.................... -0- (7)
Cumulative effect of accounting change
(net of income tax effect)............ (2) -0-
----- -----
Net Earnings .......................... $ 49 $ 24
===== =====
Net earnings per equivalent share of
common stock (Exhibit 1):
Earnings before extraordinary items
and cumulative effect of accounting
change................................ $1.01 $ .61
Extraordinary items.................... -0- (.14)
Cumulative effect of accounting change. (.05) -0-
----- -----
Net earnings .......................... $ .96 $ .47
===== =====
Weighted average equivalent shares of
common stock outstanding (A) 50,956 50,698
====== ======
- ----------
(A) Weighted average equivalent share amounts give effect to the
conversion of each share of Class C Common Stock into 2.708 shares of
Class A Common Stock, as well as the exercise of nonqualified stock
options when the effect of such exercise is dilutive.
The accompanying notes are an integral part of these financial statements.
</TABLE>
-3-
<PAGE> 4
<TABLE>
RELIANCE ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollars in millions, except per share amounts)
(Shares in thousands)
==============================================================================
<CAPTION>
Assets September 30, 1994 December 31, 1993
------------------ -----------------
<S> <C> <C>
Cash and cash equivalents.................... $ 30 $ 41
Accounts receivable, net..................... 254 217
Inventories.................................. 353 328
Other........................................ 24 29
------ ------
Total Current Assets...................... 661 615
Goodwill, net................................ 204 209
Investments and other........................ 87 73
Property, plant and equipment................ 667 625
Less accumulated depreciation............... (353) (327)
------ ------
314 298
------ ------
Total Assets.............................. $1,266 $1,195
====== ======
Liabilities and Stockholders' Equity
Notes payable and current maturities of
long-term debt.............................. $ -0- $ -0-
Accounts payable............................. 72 78
Other........................................ 203 186
------ ------
Total Current Liabilities................. 275 264
Long-term debt............................... 332 351
Other........................................ 225 199
Stockholders' equity
Common stock (convertible, $.01 par value):
Class A, 32,962 and 32,865 shares issued at
September 30, 1994 and December 31, 1993,
respectively.............................. 339 339
Class B, 3,161 and 3,180 shares issued at
September 30, 1994 and December 31, 1993,
respectively.............................. 1 1
Class C, 5,250 shares issued............... 4 4
Retained earnings.......................... 86 37
Other stockholders' equity................. 4 -0-
------ ------
Total Stockholders' Equity................ 434 381
------ ------
Total Liabilities and Stockholders' Equity $1,266 $1,195
====== ======
<FN>
Commitments and contingencies (Part II., Item 1)
The accompanying notes are an integral part of these financial statements.
</TABLE>
-4-
<PAGE> 5
<TABLE>
RELIANCE ELECTRIC COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
===============================================================================
<CAPTION>
Nine Months Ended September 30, 1994 1993
- ------------------------------- ---- ----
<S> <C> <C>
CASH PROVIDED FROM OPERATIONS
Net Earnings .......................................... $ 49 $ 24
Adjustments to reconcile to net cash
provided from operations:
Extraordinary items.................................. -0- 7
Cumulative effect of accounting change............... 2 -0-
Depreciation and amortization........................ 35 47
Provision for deferred income taxes.................. 4 (9)
Changes in operating assets and liabilities:
Accounts receivable................................. (37) (22)
Inventories......................................... (25) (12)
Accounts payable.................................... (6) (8)
Income taxes payable................................ 8 (1)
Advances from customers............................. 4 3
Other................................................ 19 13
---- ----
Net Cash Provided from Operations....................... 53 42
CASH PROVIDED FROM INVESTING ACTIVITIES
Capital expenditures................................... (46) (46)
Other.................................................. -0- -0-
---- ----
Net Cash Provided from Investing Activities............. (46) (46)
CASH PROVIDED FROM FINANCING ACTIVITIES
Proceeds from issuance of 6.8% Notes Due April 15, 2003 -0- 149
Net proceeds/payments on New Credit Facility........... 18 127
Net proceeds/payments from money market lines of credit (37) 69
Net proceeds/payments on term loan..................... -0- (364)
Proceeds from Revolving Credit Facility................ -0- 71
Payments on Revolving Credit Facility.................. -0- (71)
Tax benefit from option exercises...................... -0- 11
Other.................................................. 1 3
---- ----
Net Cash Provided from Financing Activities............. (18) (5)
---- ----
Net Increase (Decrease) in Cash and Cash
Equivalents............................................ (11) (9)
Cash and Cash Equivalents at January 1.................. 41 32
---- ----
Cash and Cash Equivalents at September 30............... $ 30 $ 23
==== ====
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<PAGE> 6
RELIANCE ELECTRIC COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information as of and for the three months
ended September 30, 1994 and 1993 is unaudited)
======================================================================
1. Basis of Presentation of Financial Statements
The data as of September 30, 1994 and for the three months and nine
months ended September 30, 1994 and 1993 are unaudited and, in the
opinion of management, include all adjustments (which are normal and
recurring in nature) necessary for a fair presentation of financial
position and results of operations. The statements, which do not
include all information and footnotes required by generally accepted
accounting principles for complete financial statements, should be
read in conjunction with the audited consolidated financial statements
contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1993.
2. Inventories
Inventories consist of:
<TABLE>
<CAPTION>
September 30, 1994 December 31, 1993
------------------ -----------------
(Dollars in millions)
<S> <C> <C>
Raw materials............ $100 $104
Work in process.......... 89 68
Finished goods........... 77 68
--- ---
Total (approximates
replacement cost)....... 266 240
Difference to LIFO....... 87 88
--- ---
LIFO..................... $353 $328
=== ===
</TABLE>
3. Supplemental Information to the Consolidated Statement of Cash Flows
Cash interest paid was $13 million for the nine months ended September
30, 1994, which equalled the $13 million cash interest paid for the
comparable period of 1993. The Company also paid $32 million and $27
million of income taxes during the nine months ended September 30,
1994 and 1993, respectively. The increase in cash taxes paid is
primarily attributable to higher earnings. In addition, 1993 cash
taxes paid were lower due to the benefits of credits associated with
stock option exercises in late 1992.
4. Adoption of Accounting Pronouncements
The Company adopted Statement of Financial Standards No. 112 -
"Employers' Accounting for Postemployment Benefits" in the first
quarter of 1994. The Company also adopted the provisions set forth in
SEC Staff Accounting Bulletin No. 92, "Accounting and Disclosures
Related to Loss Contingencies" in the first quarter of 1994. See Form
10-Q for the quarterly period ended March 31, 1994 for a discussion of
the impact of adopting these accounting pronouncements.
-6-
<PAGE> 7
5. Other Event
On August 30, 1994 the Company announced that the boards of directors
of Reliance Electric Company and General Signal Corporation had agreed
to merge the two companies, subject to the approval of the
shareholders of both Reliance Electric and General Signal, and the
fulfillment of certain customary conditions including obtaining the
approval of appropriate regulatory agencies. Under the terms of the
merger agreement, Reliance Class A common stockholders would receive
.739 shares of General Signal Corporation stock for each share of
Reliance Electric Company Class A stock and an equivalent number of
shares for convertible shares.
6. Subsequent Event
On October 21, 1994 Rockwell International Corporation commenced an
all-cash tender offer for all shares of Reliance Electric Company at a
price of $30 per share of Class A common stock and an equivalent price
for convertible shares.
-7-
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OPERATING RESULTS
Industrial segment sales increased to $335 million and $944 million for the
three and nine month periods ended September 30, 1994, from $287 and $876
million for the comparable 1993 periods. For the quarter, all businesses
contributed to the increase, with improvements in transformer sales and in the
large, engineered drive systems portion of the electrical equipment business
being made off weak prior year comparisons. The continued strengthening of the
U. S. economy and broad-based demand benefited all businesses. In addition,
mechanical power transmission products increased market share in some areas,
and motion control products benefited from new products and new markets. Within
the electrical equipment business, weakness persisted in Europe. Favorable
currency translation rates accounted for approximately $5 million of the
year-to-date sales increase within the Industrial segment. Backlog was
essentially flat for the quarter.
For the nine months ended September 30, 1994, all businesses except
transformers showed sales increases versus the comparable period in 1993, with
most of the 1994 year-to-date increase in overall electrical equipment sales
occurring in the third quarter. Transformer sales were flat in comparison with
1993. For the electrical equipment business, the year-to-date sales pattern
generally parallels the quarterly results except for reduced sales of large,
engineered drive systems projects, which partially offset strength in the
standard product lines. Most of the sales increases are attributable to the
general economic recovery, except for motion control products which have had
strong new business activity, particularly overseas, and mechanical power
transmission products which have increased market share in some areas. First
quarter 1994 price increases in portions of the electrical equipment and
mechanical power transmission products business also contributed to the
increased sales levels.
Telecommunications segment net sales were $115 and $338 million for the three
and nine months ended September 30, 1994 versus $116 and $330 million for the
corresponding 1993 periods. For 1994's third quarter the slight sales decrease
is primarily due to a strong prior year comparison; during the third quarter of
1993 certain back-ordered parts became available from a supplier and backlog
was drawn down. On a year-to-date basis, domestic sales increases,
particularly for newer products, more than offset some weakness in Canada and
Mexico. Backlog increased slightly during the quarter.
The Industrial segment gross profit margins of 26.0% and 25.4% for the three
and nine months ended September 30, 1994, respectively, compare favorably with
the margins of 22.0% and 23.5% for the corresponding 1993 periods. For the
quarter, all business units had improved margins, as margins rebounded from the
weak third quarter of 1993 for electrical equipment, transformers and motion
control products. Margins increased for mechanical power transmission products
partially due to higher sales prices. Also, costs increased at a lower rate
than volume increased. Restructure actions announced during 1993 are also
beginning to contribute to increased margins. On a year-to-date basis, margins
are up for all businesses except transformers. Transformer margins have
suffered due primarily to price, as the 1993 period includes sales which were
booked at the peak of the market in 1991/1992.
The Telecommunications segment gross profit margins of 25.2% and 26.3% for the
three month and nine month periods ended September 30, 1994 compared with
-8-
<PAGE> 9
25.0% and 24.5% for the comparable 1993 periods. Increased plant utilization,
lower plant spending and favorable product mix, partially offset by higher
material and plant administration costs, contributed to the margin increase on
a year-to-date basis.
Consolidated selling, general and administrative ("SG&A") expenses were 15.8%
and 16.6% of net sales for the three and nine month periods ended September 30,
1994 versus 16.7% and 16.8% for the same periods of 1993. For the quarter ended
September 30, 1994, actual SG&A spending within the Industrial segment has
increased marginally and has decreased as a percentage of sales due to general
cost containment measures and restructure actions. On a year-to-date basis,
Industrial segment SG&A spending is essentially flat in dollar terms and is
down as a percentage of sales.
In the Telecommunications segment, third quarter 1994 SG&A spending has
increased by $2 million over the third quarter of 1993 and, on a year-to-date
basis, 1994 spending increased by $8 million over 1993. This increase is
largely for research and development spending, and for additional
sales/marketing expenses to increase penetration in selected markets. Research
and development expenses should level off and then begin to decline in future
periods as a more customer-specific program is implemented.
The restructuring actions initiated during the second and fourth quarters of
1993 within the Industrial segment have provided almost a $7 million cost
reduction for the first nine months of 1994 as their impact increased in the
quarter ended September 30, 1994. This amount should increase slightly in the
fourth quarter. The 1993 restructuring charges totalled $11 million and
represented charges for workforce reductions, closure of satellite
manufacturing/service facilities and consolidation of business processes. The
significant components of the restructure charge related to employee severance
costs ($6 million), non-cash provisions for the write-down of assets to be sold
($2 million) and provisions for lease termination payments and other provisions
($3 million). Approximately $9 million of the $11 million restructure charge
represents cash payments, of which $3 million has been expended through
September 30, 1994. The remaining $6 million will be paid through 1996 as a
result of making severance payments to certain employees on a monthly basis.
The restructuring action announced by the Telecommunications segment in the
fourth quarter of 1993 was completed at the end of the second quarter of 1994.
Cost savings associated with the restructuring should begin in the fourth
quarter as anticipated productivity improvements begin to take effect. The
restructure charge of approximately $5 million was related to the closure of a
redundant manufacturing facility. The amount consists of involuntary severance
costs ($2 million), the write-down of assets to be sold, principally a
building ($2 million), and $1 million of other costs. Approximately $2 million
of the $5 million restructure charge represents cash costs, all of which were
expended by September 30, 1994.
Interest expense is flat at $6 million in the third quarter of 1994 compared to
the third quarter of 1993. On a year-to-date basis, 1994 interest expense is
down $2 million compared to the same period of 1993, primarily as a result of
the refinancing which occurred in the second quarter of 1993 and resulted in a
lower effective interest rate.
-9-
<PAGE> 10
The worldwide effective tax rates were 45.3% and 46.6% for the quarters ended
September 30, 1994 and 1993, respectively, versus the U.S. statutory rate of
35% for 1994 and 34% in 1993. During the first nine months of 1994 and 1993 the
effective tax rates were 45.8% and 46.8% versus the U.S. statutory rates of 35%
for 1994 and 34% for 1993. The effective tax rates were higher than the
statutory rate primarily due to permanent differences between book and taxable
income and the effects of state, local and non-U.S. taxes. The permanent
differences result from charges which are not deductible for income tax
purposes, primarily goodwill. Due to the fixed amount of permanent differences
between book and taxable income, higher earnings before taxes result in a
relatively lower tax rate, even after taking the increase in the U.S. statutory
rate into account.
During the second quarter of 1993, the Company recognized a $7 million
extraordinary charge, net of a related tax benefit of $4 million, in connection
with refinancing activities carried out during that period. This charge was due
primarily to the accelerated amortization of issuance fees and interest rate
swaps related to a previous credit facility.
The Company adopted Statement of Financial Standards No. 112 - "Employers'
Accounting for Postemployment Benefits" in the first quarter of 1994. The
Company also adopted the provisions set forth in SEC Staff Accounting Bulletin
No. 92, "Accounting and Disclosures Related to Loss Contingencies" in the first
quarter of 1994. See Form 10-Q for the quarterly period ended March 31, 1994
for a discussion of the impact of adopting these accounting pronouncements.
LIQUIDITY AND CAPITAL RESOURCES
CASH PROVIDED FROM OPERATIONS
Operations generated $53 million of cash for the nine months ended September
30, 1994 versus $42 million for the nine months ended September 30, 1993. The
increase in cash generation is primarily due to increased earnings, offset by
increases in inventory to support higher production levels and an increased
accounts receivable balance, resulting from higher sales. Programs have been
implemented to manage inventory levels more closely, where appropriate, and
inventory levels are expected to decrease in the fourth quarter. Year-over-year
depreciation is lower as assets acquired at the Company's formation become
fully depreciated. The year-over-year change in deferred taxes is the result of
decreased bases differences in fixed assets and utilization of restructure
reserves.
INVESTING ACTIVITIES
Capital expenditures were $46 million in the first nine months of both 1994 and
1993. The Company expects to continue to fund capital expenditures to broaden
manufacturing improvement programs and implement new technologies. Management
believes that cash provided from operations and available funds under existing
credit facilities will be sufficient to fund capital expenditures for the
foreseeable future. Capital expenditures are expected to accelerate somewhat
in the fourth quarter.
-10-
<PAGE> 11
FINANCING ACTIVITIES
The Company reduced borrowings by $19 million during the nine months ended
September 30, 1994, which equalled the reduction for the comparable 1993
period. Also, during the first nine months of 1993 the Company realized, for
cash flow purposes, $11 million of tax benefits related to stock option
exercises. During the quarter ended September 30, 1994 bank credit agreements
were renegotiated to reduce the interest spread on certain borrowings and to
reduce facility fees on available credit. The Company maintains interest rate
swap agreements to reduce the impact of potential interest rate increases.
Present swap agreements have remaining lives of one to three years and cover a
notional principal amount of $150 million.
OTHER EVENTS
On August 30, 1994 the Company announced that the boards of directors of
Reliance Electric Company and General Signal Corporation had agreed to merge
the two companies, subject to the approval of the shareholders of both Reliance
Electric and General Signal, and the fulfillment of certain customary
conditions including obtaining the approval of appropriate regulatory agencies.
Under the terms of the merger agreement, Reliance Class A common stockholders
would receive .739 shares of General Signal Corporation stock for each share of
Reliance Electric Company Class A stock and an equivalent number of shares for
convertible shares.
On October 21, 1994 Rockwell International Corporation commenced an all-cash
tender offer for all shares of Reliance Electric Company at a price of $30 per
share of Class A common stock and an equivalent price for convertible shares.
-11-
<PAGE> 12
<TABLE>
RELIANCE ELECTRIC COMPANY
EXHIBIT 1
COMPUTATION OF NET EARNINGS PER EQUIVALENT SHARE OF COMMON STOCK
(Dollars in millions, except per share amounts)
(Shares in thousands)
=============================================================================
<CAPTION>
Three Months Ended September 30, 1994 1993
- ------------------------------- ---- ----
<S> <C> <C>
Weighted average number of common
shares outstanding..................... 41,316 41,251
Add: Net shares issuable pursuant to
conversion of Class C Common
Stock into Class A Common Stock
on a one share to 2.708 shares
basis............................ 8,967 8,967
Weighted average of nonqualified
stock options.................... 677 514
------ ------
Weighted average equivalent shares of
common stock outstanding............... 50,960 50,732
====== ======
Earnings for computation of net earnings
per equivalent share of common stock.. $ 21 $ 10
Net earnings available for common stock. $ 21 $ 10
==== ====
Net earnings per equivalent share of
common stock:
Net earnings ........................... $ .41 $ .19
==== ====
</TABLE>
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<PAGE> 13
<TABLE>
RELIANCE ELECTRIC COMPANY
EXHIBIT 1
COMPUTATION OF NET EARNINGS PER EQUIVALENT SHARE OF COMMON STOCK
(Dollars in millions, except per share amounts)
(Shares in thousands)
==============================================================================
<CAPTION>
Nine Months Ended September 30, 1994 1993
- ------------------------------ ---- ----
<S> <C> <C>
Weighted average number of common
shares outstanding..................... 41,306 41,170
Add: Net shares issuable pursuant to
conversion of Class C Common
Stock into Class A Common Stock
on a one share to 2.708 shares
basis............................ 8,967 8,967
Weighted average of nonqualified
stock options.................... 683 561
------ ------
Weighted average equivalent shares of
common stock outstanding............... 50,956 50,698
====== ======
Earnings before extraordinary items and
cumulative effect of accounting change
for computation of net earnings per
equivalent share of common stock....... $ 51 $ 31
Extraordinary items..................... -0- (7)
Cumulative effect of accounting change.. (2) -0-
------ ------
Net earnings available for common stock. $ 49 $ 24
====== ======
Net earnings per equivalent share of
common stock:
Earnings before extraordinary items and
cumulative effect of accounting
change................................. $1.01 $ .61
Extraordinary items..................... -0- (.14)
Cumulative effect of accounting change.. (.05) -0-
------ ------
Net earnings ........................... $ .96 $ .47
====== ======
</TABLE>
-13-
<PAGE> 14
RELIANCE ELECTRIC COMPANY
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
No material changes have occurred in any of the pending legal
proceedings that were discussed in the Annual Report on Form
10-K for the year ended December 31, 1993 or in Part II, Item
1 of Form 10-Q for the period ended June 30, 1994. These
proceedings are not expected to have a material effect on the
Company's financial position, results of operations, or cash
flows.
Item 2. Changes in Securities.
On August 29, 1994, the Board of Directors of the Company
declared a dividend distribution of one Right for each
outstanding Class A Share, Class B Share and Class C Share to
purchase one one-hundredth of a share of a new Series A,
Series B or Series C Preferred Stock, respectively. The
distribution was paid on September 15, 1994 to stockholders of
record on that date. Each Right entitles the registered holder
of Class A or Class B Shares to purchase from the Company one
one-hundredth of a share of Series A or Series B Preferred
stock, respectively, at an exercise price of $60.00, subject
to adjustment, and the registered holder of Class C shares, to
purchase from the Company one one-hundredth of a share of
Series C Preferred Stock at an exercise price of $162.48,
subject to adjustment.
At its meeting on November 1, 1994, the Board of Directors of
the Company resolved that the Distribution Date shall not
occur until the earlier of the date on which an Acquiring
Person (as defined by the Rights Agreement) becomes such, and
such date as may be determined by action of the Board of
Directors of the Company prior to the time any person or Group
becomes an acquiring person.
Item 5. Other Information.
On October 21, 1994, a complaint entitled Nancy S. Friedman,
IRA v. Morley, C.A. No. 13823 (the "Friedman Complaint") and a
complaint entitled Keim v. Morley, C.A. No. 13827 (the "Keim
Complaint") were each filed in the Court of Chancery of the
State of Delaware in and for New Castle County. The Friedman
Complaint and the Keim Complaint both alleged, among other
things, that the directors of the Company had breached their
fiduciary responsibilities to the stockholders of the Company
by (i) depriving the stockholders of the Company of the
opportunity to obtain the best available price for their
Shares, (ii) attempting to entrench themselves in management
positions and prevent a fair auction of the Company and (iii)
prior to announcing the proposed Reliance-General Signal
Merger, failing to undertake an adequate evaluation of the
Company's worth as a potential merger or acquisition
candidate.
Item 6. Exhibits and Reports on Form 8-K.
Exhibit 27 - Financial Data Schedule.
-14-
<PAGE> 15
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.
Reliance Electric Company
-------------------------
(Registrant)
Dated: November 14, 1994 /s/ J. A. Guseilo
------------------- ----------------------------------------
J. A. Guseilo
Vice President and Controller
(Duly Authorized and Principal
Accounting Officer)
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 30
<SECURITIES> 0
<RECEIVABLES> 254
<ALLOWANCES> 0
<INVENTORY> 353
<CURRENT-ASSETS> 661
<PP&E> 667
<DEPRECIATION> 353
<TOTAL-ASSETS> 1266
<CURRENT-LIABILITIES> 275
<BONDS> 332
<COMMON> 344
0
0
<OTHER-SE> 90
<TOTAL-LIABILITY-AND-EQUITY> 1266
<SALES> 1280
<TOTAL-REVENUES> 1280
<CGS> 951
<TOTAL-COSTS> 1164
<OTHER-EXPENSES> 4
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18
<INCOME-PRETAX> 94
<INCOME-TAX> 43
<INCOME-CONTINUING> 51
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 2
<NET-INCOME> 49
<EPS-PRIMARY> 1.01
<EPS-DILUTED> .96
</TABLE>
