<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
Commission file number 1-1035
Rockwell International Corporation
(Exact name of registrant as specified in its charter)
Delaware 95-1054708
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2201 Seal Beach Boulevard, Seal Beach, California 90740-8250
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (412) 565-4090
(Office of the Corporate Secretary)
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
183,678,027 shares of registrant's Common Stock, $1.00 par value, and
33,429,581 shares of registrant's Class A Common Stock, $1.00 par value, were
outstanding on July, 31 1995.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Page
No.
Condensed Consolidated Balance Sheet--
June 30, 1995 and September 30, 1994............ 2
Statement of Consolidated Income--Three Months
and Nine Months Ended June 30, 1995 and 1994.... 3
Statement of Consolidated Cash Flows--
Nine Months Ended June 30, 1995 and 1994........ 4
Notes to Financial Statements.................... 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations.................................... 10
Other Financial Information...................... 16
Exhibit 11 - Computation of Earnings Per Share............. 17
PART II. OTHER INFORMATION:
Item 5. Other Information................................ 18
Item 6. Exhibits and Reports on Form 8-K................. 18
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ROCKWELL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
June 30 September 30
1995 1994
(Unaudited)
ASSETS (In millions)
Current assets:
Cash........................................... $ 577.3 $ 628.3
Receivables.................................... 2,550.3 2,267.2
Inventories.................................... 2,064.9 1,532.8
Other current assets........................... 505.1 499.5
Business held for sale......................... 475.0
Total current assets................... 6,172.6 4,927.8
Net property...................................... 2,895.0 2,383.4
Intangible assets................................. 2,026.0 777.0
Other assets...................................... 1,716.2 1,772.6
TOTAL.................... $12,809.8 $9,860.8
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt................................ $ 1,295.6 $ 160.2
Accounts payable - trade....................... 941.1 976.9
Accrued compensation and benefits.............. 781.2 668.8
Advance payments from customers................ 313.1 294.6
Accrued income taxes........................... 120.6 137.6
Other current liabilities...................... 978.7 781.7
Total current liabilities.............. 4,430.3 3,019.8
Long-term debt.................................... 1,777.7 831.0
Accrued retirement benefits....................... 2,533.8 2,414.8
Other liabilities................................. 407.3 239.6
Total liabilities............. 9,149.1 6,505.2
Shareowners' equity:
Preferred stock ............................... 1.3 1.4
Common Stock (shares issued - 209.5 million)... 209.5 209.5
Class A Common Stock (shares issued:
June 30, 1995, 34.2 million;
September 30, 1994, 36.9 million)............ 34.2 36.9
Additional paid-in capital..................... 183.5 174.0
Retained earnings.............................. 4,060.6 3,762.3
Currency translation........................... (93.9) (97.1)
Common Stock in treasury, at cost (shares held:
June 30, 1995, 26.6 million;
September 30, 1994, 27.8 million).......... (734.5) (731.4)
Total shareowners' equity..... 3,660.7 3,355.6
TOTAL.................... $12,809.8 $9,860.8
See Notes to Financial Statements.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
STATEMENT OF CONSOLIDATED INCOME
(Unaudited)
Three Months Ended Nine Months Ended
June 30 June 30
1995 1994 1995 1994
(In millions)
Revenues:
Sales.......................... $3,452.4 $2,872.3 $9,436.3 $8,234.7
Other income................... 32.6 12.3 72.7 42.0
Total revenues............... 3,485.0 2,884.6 9,509.0 8,276.7
Costs and expenses:
Cost of sales.................. 2,660.9 2,217.6 7,263.4 6,403.7
Selling, general and
administrative............... 445.8 369.2 1,209.6 1,018.1
Interest....................... 51.9 23.6 119.5 74.6
Total costs and expenses..... 3,158.6 2,610.4 8,592.5 7,496.4
Income before income taxes....... 326.4 274.2 916.5 780.3
Provision for income taxes....... 129.4 109.3 363.4 311.2
Net income ...................... $ 197.0 $ 164.9 $ 553.1 $ 469.1
(In dollars)
Earnings per common share:
Primary....................... $ .90 $ .74 $ 2.54 $ 2.12
Fully diluted................. $ .88 $ .73 $ 2.49 $ 2.08
Cash dividends per common share.. $ .27 $ .25 $ .81 $ .75
(In millions)
Average common shares outstanding:
Primary....................... 216.8 220.4 217.3 220.9
Fully diluted................. 221.8 224.3 222.5 225.1
See Notes to Financial Statements.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
Nine Months Ended
June 30
1995 1994
(In millions)
OPERATING ACTIVITIES:
Net income........................................... $ 553.1 $ 469.1
Adjustments to net income to arrive at
cash provided by operating activities:
Depreciation..................................... 336.9 322.3
Amortization of intangible assets................ 69.6 38.5
Deferred income taxes............................ 82.5 36.8
Net pension income and contributions............. (60.6) (80.7)
Changes in assets and liabilities, excluding
effects of acquisitions and foreign currency
adjustments:
Receivables.................................. (74.1) 0.4
Inventories.................................. (184.1) (116.2)
Accounts payable - trade..................... (134.3) (54.2)
Accrued compensation and benefits............ 21.9 (26.1)
Advance payments from customers.............. (6.3) (2.4)
Income taxes................................. (68.9) 56.3
Other assets and liabilities................. (6.1) (73.2)
Cash provided by operating activities..... 529.6 570.6
INVESTING ACTIVITIES:
Property additions................................... (443.8) (349.9)
Acquisition of businesses, net of cash balances of
$59.7 million in 1995 and $3.2 million in 1994..... (1,616.2) (13.3)
Proceeds from disposition of property and businesses. 28.8 8.0
Cash used for investing activities........ (2,031.2) (355.2)
FINANCING ACTIVITIES:
Debt activity excluding the acquisition of
existing Reliance debt:
Increase in short-term borrowings................ 921.9 26.5
Increase in long-term debt....................... 826.7 17.7
Payments of long-term debt....................... (43.9) (208.2)
Net increase (decrease) in debt................ 1,704.7 (164.0)
Purchase of treasury stock.......................... (120.4) (108.8)
Dividends........................................... (176.3) (165.9)
Reissuance of common stock.......................... 42.6 36.3
Cash provided by (used for) financing
activities.............................. 1,450.6 (402.4)
DECREASE IN CASH..................................... (51.0) (187.0)
CASH AT BEGINNING OF PERIOD.......................... 628.3 772.8
CASH AT END OF PERIOD................................ $ 577.3 $ 585.8
Income tax payments were $337.3 million and $206.1 million in the nine months
ended June 30, 1995 and 1994, respectively.
See Notes to Financial Statements.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of the company the unaudited financial statements contain
all adjustments, consisting solely of adjustments of a normal recurring
nature, necessary to present fairly the financial position, results of
operations and cash flows for the periods presented. These statements
should be read in conjunction with the company's Annual Report for the
fiscal year ended September 30, 1994. The results of operations for the
three- and nine-month periods ended June 30, 1995 are not necessarily
indicative of the results for the full year.
It is the company's practice at the end of each interim reporting period
to make an estimate of the effective tax rate expected to be applicable
for the full fiscal year. The rate so determined is used in providing
for income taxes on a year-to-date basis.
2. In January 1995, the company completed its acquisition of Reliance
Electric Company (Reliance), a major manufacturer of industrial products
and telecommunications equipment, for $1,586 million. The purchase price
was financed through $786 million of short-term borrowings and $800 million
of long-term debt. A portion of the short-term debt was repaid with the
$475 million proceeds from the August 1995 sale of Reliance's
telecommunications business to an affiliate of Kohlberg Kravis Roberts &
Co. The company's results of operations do not include the results of
Reliance's telecommunications business or the interest expense during the
holding period related to the incremental borrowings that were repaid with
the sales proceeds. The carrying value of the business as of
June 30, 1995, which is reflected in the accompanying balance sheet as
"Business held for sale", has been adjusted to equal the approximate sales
proceeds, with a corresponding increase to goodwill.
The acquisition of Reliance has been accounted for as a purchase as of
December 31, 1994 and the results of operations of Reliance (exclusive of
its telecommunications business) are included in the company's statement
of consolidated income commencing January 1, 1995. The assets acquired and
liabilities assumed were recorded at estimated fair values determined by
the company's management based on appraisals, evaluations, estimations and
other studies, some of which are still in process. The excess of the
purchase price over the estimated fair value of the net tangible assets
acquired has been recorded as identifiable intangibles of $380.9 million
and goodwill of $851.9 million, which are being amortized over periods
ranging from seven to forty years (see Note 5).
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. (Continued)
The following unaudited pro forma condensed consolidated results of
operations combine the historical results of operations of the company and
Reliance, assuming Reliance had been acquired and its telecommunications
business had been sold at the beginning of each period. The pro forma
results are presented for information purposes only and are not necessarily
indicative of the results which would have occurred if the business
combination had been in effect on the dates presented, or of the results
which may occur in the future. Further, the results do not reflect cost
savings or other synergies expected to result from the integration of
Reliance and the company's Automation business.
Nine Months Ended June 30
1995 1994
(In millions, except per share amounts)
Sales and other income $ 9,838 $ 9,181
Net income 553 437
Earnings per common share:
Primary 2.54 1.98
Fully Diluted 2.49 1.94
The company also purchased several other businesses at a cost of
$109.4 million. The results of operations of these businesses were not
material in relation to the company's consolidated results of operations.
3. Receivables are summarized as follows (in millions):
June 30 September 30
1995 1994
Accounts and notes receivable:
Commercial, less allowance for doubtful
accounts (June 30, 1995, $77.1;
September 30, 1994, $68.0)............ $1,762.2 $1,364.2
United States Government................ 138.4 128.1
Unbilled costs and accrued profits,
less related progress payments
(June 30, 1995, $291.2;
September 30, 1994, $387.4)............. 649.7 774.9
Receivables............................. $2,550.3 $2,267.2
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. Inventories are summarized as follows (in millions):
June 30 September 30
1995 1994
Finished goods............................ $ 471.4 $ 355.5
Long-term contracts in process............ 374.7 300.0
Work in process........................... 868.8 619.5
Raw materials, parts and supplies......... 578.8 472.6
Total................................... 2,293.7 1,747.6
Less allowance to adjust the carrying value
of certain inventories to a last-in,
first-out (LIFO) basis.................. 74.0 67.8
Remainder................................. 2,219.7 1,679.8
Less related progress payments............ 154.8 147.0
Inventories............................. $2,064.9 $1,532.8
5. Intangible assets are summarized as follows (in millions):
June 30 September 30
1995 1994
Goodwill................................. $1,467.2 $ 589.3
Trademarks, patents, product technology
and other intangibles.................. 558.8 187.7
Intangible assets...................... $2,026.0 $ 777.0
The increases in goodwill and other intangible assets are due primarily to
the acquisition of Reliance (see Note 2).
6. Other assets are summarized as follows (in millions):
June 30 September 30
1995 1994
Prepaid pension costs.................... $1,291.2 $1,214.6
Deferred income taxes.................... 79.8 299.7
Customer finance receivables............. 149.6 137.3
Investments and other assets............. 195.6 121.0
Other assets........................... $1,716.2 $1,772.6
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
7. Short-term debt consisted of the following (in millions):
June 30 September 30
1995 1994
Commercial paper......................... $1,153.2 $ 40.0
Short-term bank borrowings,
principally foreign.................... 123.9 105.2
Current portion of long-term debt........ 18.5 15.0
Short-term debt......................... $1,295.6 $ 160.2
The short-term commercial paper borrowings are primarily due to financing
of the Reliance acquisition and refinancing $200 million of Reliance
short-term borrowings (see Note 2).
8. Other current liabilities are summarized as follows (in millions):
June 30 September 30
1995 1994
Accounts payable - other................... $319.5 $227.0
Accrued product warranties................. 219.8 217.4
Accrued taxes other than income taxes...... 67.7 81.8
Other...................................... 371.7 255.5
Other current liabilities................ $978.7 $781.7
9. Long-term debt consisted of the following (in millions):
June 30 September 30
1995 1994
7-5/8% notes, payable in 1998............ $ 300.0
8-7/8% notes, payable in 1999............ 300.0 $ 300.0
8-3/8% notes, payable in 2001............ 200.0 200.0
6-3/4% notes, payable in 2002............ 300.0 300.0
6.8% notes, payable in 2003.............. 137.5
7-7/8% notes, payable in 2005............ 200.0
6-5/8% notes, payable in 2005............ 300.0
Other obligations, principally foreign... 58.7 46.0
Total.................................. 1,796.2 846.0
Less current portion..................... 18.5 15.0
Long-term debt......................... $1,777.7 $ 831.0
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
9. (Continued)
In June 1995 the company issued $300 million of 6-5/8% notes due
June 1, 2005, and in February 1995 the company issued $300 million of
7-5/8% notes due February 17, 1998 and $200 million of 7-7/8% notes due
February 15, 2005. The proceeds were used to reduce short-term debt
incurred in connection with the acquisition of Reliance.
The 6.8% notes, payable in 2003, represent $150 million of long-term debt
of Reliance which has been adjusted to reflect interest rates in effect at
the time of the acquisition. The discount is being amortized over the
remaining term of the debt as interest expense.
10. The company's financial instruments include cash, notes receivable,
short-and long-term debt and foreign currency forward exchange contracts.
At June 30, 1995, the carrying values of the company's financial
instruments approximate their fair values based on current market rates.
The company enters into foreign currency forward exchange contracts to
protect itself from adverse currency rate fluctuations on firm and
identifiable foreign currency commitments entered into in the ordinary
course of business. These foreign currency forward exchange contracts are
executed with creditworthy banks for terms of generally less than six
months and are denominated in currencies of major industrial countries.
Outstanding foreign currency forward exchange contracts, netted on a
bank-by-bank basis, amounted to approximately $195 million at
June 30, 1995. The company does not anticipate any material adverse effect
on its results of operations or financial position relating to these
foreign currency forward exchange contracts.
11. Accrued retirement benefits consisted of the following (in millions):
June 30 September 30
1995 1994
Accrued retirement medical costs......... $2,555.1 $2,507.0
Accrued pension costs.................... 176.1 97.8
Total.................................. 2,731.2 2,604.8
Amount classified as current liability... 197.4 190.0
Accrued retirement benefits............ $2,533.8 $2,414.8
12. In the quarter ended June 30, 1995, the company purchased 0.6 million
shares of Common Stock for $27 million. Since the company's Common Stock
repurchase program began in 1984, the company has purchased 113.6 million
shares of Common Stock for $2.6 billion.
13. Various lawsuits, claims and proceedings have been or may be instituted or
asserted against the company relating to the conduct of its business,
including those pertaining to product liability, environmental, safety and
health, employment and government contract matters. Although the outcome
of litigation cannot be predicted with certainty and some lawsuits, claims
or proceedings may be disposed of unfavorably to the company, management
believes the disposition of matters which are pending or asserted will not
have a material adverse effect on the company's financial statements.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
1995 Third Quarter Compared to 1994 Third Quarter
The contributions to sales and earnings by business segment of the company for
the third quarter of fiscal 1995 and 1994 are presented below (in millions).
Three Months Ended
June 30
1995 1994
Sales
Electronics
Automation $ 1,029 $ 545
Avionics 325 292
Telecommunications 236 187
Defense Electronics 260 252
Total Electronics 1,850 1,276
Aerospace
Space Systems 474 502
Aircraft 133 147
Total Aerospace 607 649
Automotive
Heavy Vehicle Systems 510 470
Light Vehicle Systems 325 251
Total Automotive 835 721
Graphic Systems 160 169
Sales of ongoing businesses 3,452 2,815
Divested business 58
Total $ 3,452 $ 2,873
Operating Earnings
Electronics
Automation $ 139.1 $ 74.7
Avionics/Telecom/Defense 115.6 99.4
Total Electronics 254.7 174.1
Aerospace 83.6 87.9
Automotive 60.6 48.0
Graphic Systems 13.1 9.7
Operating earnings of ongoing businesses 412.0 319.7
Divested business 2.8
General corporate - net (33.7) (24.7)
Interest expense (51.9) (23.6)
Provision for income taxes (129.4) (109.3)
Net Income $ 197.0 $ 164.9<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
Sales for the third quarter of $3.5 billion were nearly $600 million, or
20 percent, higher than 1994's third quarter sales of $2.9 billion. Sales of
the recently acquired Reliance contributed $354 million to this increase, while
the remaining increase was attributable to growth in the company's other
commercial businesses. In the quarter, commercial and international sales were
up 34 percent from last year's third quarter, and now comprise 73.5 percent of
total sales compared to 66 percent in the third quarter of 1994.
Earnings per share for the 1995 third quarter of 90 cents increased 22 percent
over last year's 74 cents per share, marking the tenth consecutive quarter the
company has achieved double-digit earnings per share growth. Reliance added
three cents per share to the company's third quarter results, after considering
the financing cost of the acquisition and amortization of goodwill and other
intangible assets. In its third quarter earnings release the company's chairman
and chief executive officer said, "We see continued strong earnings by our
businesses in the fourth quarter and expect to achieve full year earnings per
share of around $3.40."
Net income for 1995's third quarter increased 19 percent from 1994's third
quarter net income primarily due to strong performances by the company's
Automation, Avionics, Telecommunications and Automotive component systems
businesses.
Third quarter earnings of the Electronics businesses were up 46 percent over
last year's third quarter due to strong contributions from the Automation,
Avionics and Telecommunications businesses. Operating earnings of the
Automation business, which exclude interest expense related to the Reliance
acquisition, were up $64 million from the year earlier quarter. The earnings
increase was due about equally to the continued strong worldwide markets for
Allen-Bradley products and to the inclusion of Reliance in this quarter's
results. Integration of the Allen-Bradley and Reliance businesses, which
collectively form Rockwell Automation, is proceeding successfully and enhancing
the company's ability to serve customers worldwide with a broad range of
automation products.
In the company's other Electronics businesses, earnings of the Avionics business
were 55 percent higher than last year's third quarter due to strengthening of
the air transport market and substantial completion of development work on the
Boeing 777 program. Telecommunications third quarter earnings were up
30 percent over 1994 principally due to strong customer acceptance of the
business' new high-speed data modem products. Third quarter earnings of Defense
Electronics were below 1994 due to favorable contract adjustments in last year's
third quarter.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
Aerospace third quarter earnings were down five percent from the year earlier
third quarter primarily due to lower sales and award fees.
Automotive's third quarter earnings increased 26 percent from 1994's third
quarter reflecting higher sales in both the Heavy and Light Vehicle Systems
businesses. These results were achieved while significant investments are being
made to launch several new products in Light Vehicle Systems. Automotive's
third quarter return on sales increased to 7.3 percent compared to 6.7 percent
in the year earlier quarter.
Third quarter earnings of the Graphic Systems business were up as a result of
its continuing cost containment and productivity programs, even though sales
were below 1994's third quarter. As expected, Graphic Systems' third quarter
earnings were below the levels recorded in the first and second quarters of this
year principally due to less favorable pricing on large newspaper presses
combined with continuing weak commercial press markets. The company continues
to expect Graphic Systems' earnings for the second half of 1995 will be lower
than this year's first half.
The company's current year third quarter results included higher corporate
expenses, principally related to the timing of contributions to the company's
charitable trust. Interest expense for the third quarter increased due to
borrowings for the Reliance acquisition.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
Nine Months Ended June 30, 1995 Compared to Nine Months Ended June 30, 1994
The contributions to sales and earnings by business segment of the company for
the nine months ended June 30, 1995 and 1994 are presented below (in millions).
Nine Months Ended
June 30
1995 1994
Sales
Electronics
Automation $ 2,575 $ 1,518
Avionics 899 899
Telecommunications 614 527
Defense Electronics 652 773
Total Electronics 4,740 3,717
Aerospace
Space Systems 1,397 1,506
Aircraft 397 411
Total Aerospace 1,794 1,917
Automotive
Heavy Vehicle Systems 1,473 1,302
Light Vehicle Systems 901 674
Total Automotive 2,374 1,976
Graphic Systems 528 456
Sales of ongoing businesses 9,436 8,066
Divested business 169
Total $ 9,436 $ 8,235
Operating Earnings
Electronics
Automation $ 368.7 $ 199.3
Avionics/Telecom/Defense 280.3 322.2
Total Electronics 649.0 521.5
Aerospace 255.3 263.2
Automotive 170.4 108.7
Graphic Systems 51.3 23.8
Operating earnings of ongoing businesses 1,126.0 917.2
Divested business 6.3
General corporate - net (90.0) (68.6)
Interest expense (119.5) (74.6)
Provision for income taxes (363.4) (311.2)
Net Income $ 553.1 $ 469.1<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
Sales of $9.4 billion for the first nine months of 1995 increased $1.2 billion,
or 15 percent, over the same period a year ago principally due to the inclusion
of Reliance and to strong demand for the company's Allen-Bradley Automation
products and Automotive heavy and light vehicle components products. Sales of
the company's Defense Electronics and Aerospace businesses were lower due to
reduced government spending levels. Net income for the first nine months of
1995 was up 18 percent over 1994's first nine months.
Electronics earnings for the first nine months of fiscal 1995 were up 24 percent
from the same period a year ago. Earnings of the Automation business for the
first nine months of 1995 increased substantially due to strong worldwide
markets and the inclusion of Reliance. In the company's other Electronics
businesses, Avionics earnings were slightly lower due to higher new product
investments. Earnings of the Telecommunications business were down due to
pricing pressures on lower-speed data modems and launch costs associated with
the next generation high-speed data modem products. Defense Electronics
earnings were below those of last year's first nine months due to lower sales
and favorable contract adjustments in last year's comparable period.
Aerospace earnings for the first nine months of 1995 were below those of the
comparable 1994 period primarily as a result of lower sales.
Automotive's earnings for the first nine months of 1995 increased 57 percent
over last year's first nine months primarily due to substantial earnings growth
in its Heavy Vehicle Systems business resulting from strong North American truck
markets, improved operating performance and lower product warranty costs.
Earnings of Automotive's Light Vehicle Systems business were also up from last
year's first nine months due to improved volume which more than offset higher
new product launch costs.
Earnings of the Graphic Systems business for the first nine months of 1995
improved significantly from the year earlier due to increased sales in the
higher-margin large newspaper printing press business principally in the
first half of fiscal 1995.
The company's results for the first nine months of 1995 included higher
corporate expenses, principally related to the timing of contributions to the
company's charitable trust and adjustments to reserves for costs related to
divested businesses. Interest expense for the first nine months of 1995
increased due to borrowings for the Reliance acquisition.
FINANCIAL CONDITION
Changes to the company's financial condition since its September 30, 1994 fiscal
year-end are principally related to the inclusion of the assets and liabilities
of Reliance and the financing of the company's acquisition of Reliance. In
addition, the company also purchased several other businesses at a cost of
$109.4 million (see Note 2 of Notes to Financial Statements).
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
FINANCIAL CONDITION (CONTINUED)
A summary of the assets and liabilities of businesses acquired (including
Reliance) during the first nine months of 1995 is as follows:
Working capital 524.9
Property 405.6
Intangibles resulting from acquisitions 1,302.1
Investments and other assets 106.7
Long-term debt (146.1)
Long-term liabilities (497.7)
Cost of purchased businesses 1,695.5
The company's working capital at June 30, 1995 was $1,742 million, down
$166 million from working capital at September 30, 1994. The decrease is
principally due to the $786 million short-term financing of the Reliance
acquisition at June 30, 1995 offset by the addition of $553 million in working
capital of Reliance.
At June 30, 1995, the company had financed the $1,586 million purchase price of
Reliance through $786 million of short-term debt and $800 million of long-term
debt. The company's total debt to total capital ratio (debt as a percent of
shareowners' equity plus debt) increased to 46 percent at June 30, 1995 from 23
percent at September 30, 1994. Had the proceeds from the sale of Reliance's
telecommunications business of $475 million been received and used to repay
short-term debt at June 30, 1995, the company's debt to total capital ratio
would have been 41 percent.
During the quarter the company completed its acquisition of the aerostructure
components and defense business of Aero Space Technologies of Australia (ASTA)
Limited from the Commonwealth of Australia.
On July 31, 1995 the company agreed to pay the U.S. Government $23.6 million to
settle a government claim that the company provided inaccurate cost and pricing
information during the negotiation of the original B-1B aircraft contract in
1981. The payment was previously reserved by the company and will have no
adverse effect on the company's financial results.
Information with respect to the effect on the company and its manufacturing
operations of compliance with environmental protection requirements and
resolution of environmental claims is contained under the caption Results of
Operations, Environmental Issues in Item 7, Management's Discussion and Analysis
of Financial Condition and Results of Operations, on pages 18 - 19 of the
company's Annual Report on Form 10-K for the fiscal year ended September 30,
1994 and, with respect to Reliance, in Item 2, Management's Discussion and
Analysis of Financial Condition and Results of Operations, on page 15 of the
company's Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1994. Management believes that at June 30, 1995 there has been
no material change to this information.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
FINANCIAL CONDITION (CONTINUED)
Other Financial Information
(a) The company's backlog on June 30, 1995 was $11.2 billion compared to
$10.9 billion on June 30, 1994. The backlog includes $5.0 billion of
commercial orders, $2.1 billion of funded government orders and
$4.1 billion of unfunded government orders. Backlog by major businesses
is as follows (in millions):
June 30 June 30
1995 1994
Electronics
Automation $ 617 $ 209
Avionics 1,072 1,102
Telecommunications 608 231
Defense Electronics 1,429 1,286
3,726 2,828
Aerospace
Space Systems 4,271 5,137
Aircraft 2,126 1,789
6,397 6,926
Automotive 538 597
Graphic Systems 497 541
Total Backlog $11,158 $10,892
(b) The composition of the company's sales by customer is as follows (in
millions):
Three Months Ended Nine Months Ended
June 30 June 30
1995 1994 1995 1994
U.S. Commercial $1,399 $ 973 $3,625 $2,744
International 1,139 922 3,175 2,579
U.S. Government:
DOD 524 555 1,535 1,683
NASA 390 423 1,101 1,229
Total $3,452 $2,873 $9,436 $8,235
<PAGE>
EXHIBIT 11
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Nine Months Ended
June 30 June 30
1995 1994 1995 1994
(In millions, except per share amounts)
Primary earnings per share:
Net income...................... $197.0 $164.9 $553.1 $469.1
Deduct dividend requirements
on preferred stock............ 0.1 0.1 0.2 0.2
Total primary earnings.......... $196.9 $164.8 $552.9 $468.9
Average number of common
shares outstanding during
the period............... 216.8 220.4 217.3 220.9
Primary earnings per share...... $ .90 $ .74 $ 2.54 $ 2.12
Fully diluted earnings per share:
Net income...................... $197.0 $164.9 $553.1 $469.1
Average number of common shares
outstanding during the period
assuming full dilution:
Common stock................ 216.8 220.4 217.3 220.9
Assumed issuance of stock
under award plans and
conversion of preferred
stock..................... 5.0 3.9 5.2 4.2
Total fully diluted shares...... 221.8 224.3 222.5 225.1
Fully diluted earnings
per share.................... $ .88 $ .73 $ 2.49 $ 2.08
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
The company's government contract operations are subject to
U.S. Government investigations of business practices and audits of
contract performance and cost classification from which claims have
been or may be asserted against the company. Although such claims are
usually resolved through fact-finding and negotiation, civil, criminal
or administrative proceedings may result and a contractor can be fined,
as well as be suspended or debarred from government contracts.
Management believes there are no claims, audits or investigations
currently pending against the company which will have a material
adverse effect on either the company's business or its financial
condition.
The company's financial statements have been prepared on the basis of
reasonable estimates, supported by the opinion of outside legal
counsel, of the revenue expected to be recovered from the company's
claims against the U.S. Government arising out of the government's
termination of contracts for its convenience and certain contractual
disputes. While management cannot reasonably estimate the length of
time that will be required to resolve its claims or whether they will
be resolved through negotiation or litigation, it believes their
resolution will not have a material adverse effect on the company's
financial statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3 - Copy of By-Laws of the company as
amended effective July 10, 1995
Exhibit 10 - Copy of the company's Deferred
Compensation Plan as amended
effective July 1, 1995
Exhibit 11 - Computation of Earnings Per Share
Exhibit 12 - Computation of Ratio of Earnings to
Fixed Charges and Computation of Pro
Forma Ratio of Earnings to Fixed
Charges for the nine months ended
June 30, 1995.
Exhibit 27 - Financial Data Schedule
Exhibit 99-a - Unaudited pro forma condensed
consolidated statement of income of
the company and Reliance for the
nine months ended June 30, 1995
<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
Item 6. Exhibits and Reports on Form 8-K (Continued)
(b) Reports on Form 8-K:
The Registrant filed a Current Report on Form 8-K, dated
June 14, 1995, in respect of the issuance of $300 million aggregate
principal amount of its 6-5/8% Notes due June 1, 2005. The items
reported in such current report were Item 5 (Other Events) and Item 7
(Financial Statements, Pro Forma Financial Information and Exhibits).<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.
ROCKWELL INTERNATIONAL CORPORATION
(Registrant)
Date August 9, 1995 By L. J. Komatz
L. J. Komatz
Vice President and Controller
(Principal Accounting Officer)
Date August 9, 1995 By W. J. Calise, Jr.
W. J. Calise, Jr.
Senior Vice President,
General Counsel and Secretary
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
INDEX OF EXHIBITS TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
Page
Exhibit 3 Copy of By-Laws of the company as amended
effective July 10, 1995 22
Exhibit 10 Copy of the company's Deferred Compensation Plan
as amended effective July 1, 1995 49
Exhibit 12 Computation of Ratio of Earnings to Fixed
Charges and Computation of Pro Forma Ratio of
Earnings to Fixed Charges for the nine months
ended June 30, 1995 75
Exhibit 99-a Unaudited pro forma condensed consolidated
statement of income of the company and Reliance
for the nine months ended June 30, 1995 76
<PAGE>
EXHIBIT 3
BY-LAWS
of Rockwell International Corporation
As Amended Effective July 10, 1995
BY-LAWS
OF
Rockwell International Corporation
ARTICLE I.
Offices
SECTION 1. Registered Office in Delaware; Resident Agent. The
address of the Corporation's registered office in the State of Delaware and
the name and address of its resident agent in charge thereof are as filed
with the Secretary of State of the State of Delaware.
SECTION 2. Other Offices. The Corporation may also have an
office or offices at such other place or places either within or without the
State of Delaware as the Board of Directors may from time to time
determine or the business of the Corporation requires.
ARTICLE II.
Meetings Of Shareowners
SECTION 1. Place of Meetings. All meetings of the shareowners
of the Corporation shall be held at such place, within or without the State
of Delaware, as may from time to time be designated by resolution passed
by the Board of Directors.
SECTION 2. Annual Meeting. An annual meeting of the
shareowners for the election of directors and for the transaction of such
other proper business, notice of which was given in the notice of meeting,
shall be held on a date and at a time as may from time to time be
designated by resolution passed by the Board of Directors.
SECTION 3. Special Meetings. A special meeting of the
shareowners for any purpose or purposes, unless otherwise prescribed by
law, may be called at any time by the Chairman of the Board, the
President, by order of the Board of Directors or by a shareowner or
shareowners holding of record at least twenty percent of the outstanding
stock of the Corporation entitled to vote at such meeting.
SECTION 4. Notice of Meetings. Except as otherwise provided
by law, written notice of each meeting of the shareowners, whether annual
or special, shall be mailed, postage prepaid, not less than ten nor more
than sixty days before the date of the meeting, to each shareowner entitled
to vote at such meeting, at the shareowner's address as it appears on the
records of the Corporation. Every such notice shall state the place, date
and hour of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called. Notice of any adjourned
meeting of the shareowners shall not be required to be given, except when
expressly required by law.
SECTION 5. List of Shareowners. The Secretary shall, from
information obtained from the transfer agent, prepare and make, at least
ten days before every meeting of shareowners, a complete list of the
shareowners entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each shareowner and the number of
shares registered in the name of each shareowner. Such list shall be open
to the examination of any shareowner, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the meeting,
or if not so specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any shareowner
who is present. The stock ledger shall be the only evidence as to who are
the shareowners entitled to examine the stock ledger, the list referred to
in this section or the books of the Corporation, or to vote in person or by
proxy at any meeting of shareowners.
SECTION 6. Quorum. At each meeting of the shareowners, the
holders of a majority of the issued and outstanding stock of the
Corporation present either in person or by proxy shall constitute a quorum
for the transaction of business except where otherwise provided by law or
by the Certificate of Incorporation or by these by-laws for a specified
action. At each meeting at which the holders of the Preferred Stock are
entitled to elect a director or directors, the holders of a majority of the
issued and outstanding Preferred Stock, present either in person or by
proxy, shall constitute a quorum for the election of said director or
directors. Except as otherwise provided by law, in the absence of a
quorum, a majority in interest of the shareowners of the Corporation
present in person or by proxy and entitled to vote shall have the power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until shareowners holding the requisite
amount of stock shall be present or represented. At any such adjourned
meeting at which a quorum may be present, any business may be
transacted which might have been transacted at a meeting as originally
called. The absence from any meeting of the number of shareowners
required by law or by the Certificate of Incorporation or by these by-laws
for action upon any given matter shall not prevent action at such meeting
upon any other matter or matters which may properly come before the
meeting, if the number of shareowners required in respect of such other
matter or matters shall be present.
SECTION 7. Organization. At every meeting of the shareowners
the Chairman of the Board, or, in his absence, the President, or in the
absence of the Chairman and the President, a director or an officer of the
Corporation designated by the Board shall act as Chairman. The
Secretary, or, in his absence, an Assistant Secretary, shall act as Secretary
at all meetings of the shareowners. In the absence from any such meeting
of the Secretary and the Assistant Secretaries, the Chairman may appoint
any person to act as Secretary of the meeting.
SECTION 8. Business and Order of Business. At each meeting
of the shareowners such business may be transacted as may properly be
brought before such meeting, except as otherwise provided by law or in
these by-laws. The order of business at all meetings of the shareowners
shall be as determined by the Chairman, unless otherwise determined by
a majority in interest of the shareowners present in person or by proxy at
such meeting and entitled to vote thereat.
SECTION 9. Voting. Except as otherwise provided by law, the
Certificate of Incorporation or these by-laws, each shareowner shall at
every meeting of the shareowners be entitled to one vote for each share
of stock held by such shareowner. Any vote on stock may be given by
the shareowner entitled thereto in person or by proxy appointed by an
instrument in writing, subscribed (or transmitted by electronic means and
authenticated as provided by law) by such shareowner or by the
shareowner's attorney thereunto authorized, and delivered to the
Secretary; provided, however, that no proxy shall be voted after three
years from its date unless the proxy provides for a longer period. Except
as otherwise provided by law, the Certificate of Incorporation or these by-
laws, at all meetings of the shareowners, all matters shall be decided by
the vote (which need not be by ballot) of a majority in interest of the
shareowners present in person or by proxy and entitled to vote thereat, a
quorum being present.
ARTICLE III.
Board of Directors
SECTION 1. General Powers. The property, affairs and business
of the Corporation shall be managed by or under the direction of its Board
of Directors.
SECTION 2. Number, Qualifications, and Term of Office. The
number of directors shall be fixed from time to time, but at not less than
three, by resolution passed by a majority of the whole Board. Directors
need not be shareowners. Except as otherwise provided in these by-laws,
the directors shall be elected annually, and each director shall hold office
until the annual meeting held next after his or her election and until his or
her successor shall have been elected and shall qualify, or until his or her
death or until he or she shall resign or shall have been removed in the
manner hereinafter provided.
SECTION 3. Election of Directors. At each meeting of the
shareowners for the election of directors, at which a quorum is present,
the directors shall be the persons receiving the greatest number of votes
cast by the holders of stock entitled to vote for such directors.
SECTION 4. Quorum and Manner of Acting. A majority of the
members of the Board of Directors shall constitute a quorum for the
transaction of business at any meeting, and the act of a majority of the
directors present at any meeting at which a quorum is present shall be the
act of the Board of Directors unless otherwise provided by law, the
Certificate of Incorporation or these by-laws. In the absence of a quorum,
a majority of the directors present may adjourn any meeting from time to
time until a quorum shall be obtained. Notice of any adjourned meeting
need not be given. The directors shall act only as a board and the
individual directors shall have no power as such.
SECTION 5. Place of Meetings. The Board of Directors may
hold its meetings at such place or places within or without the State of
Delaware as the Board may from time to time determine or as shall be
specified or fixed in the respective notices or waivers of notice thereof.
SECTION 6. First Meeting. Promptly after each annual election
of directors, the Board of Directors shall meet for the purpose of
organization, the election of officers and the transaction of other business,
at the same place as that at which the annual meeting of shareowners was
held or as otherwise determined by the Board. Notice of such meeting
need not be given. Such meeting may be held at any other time or place
which shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors.
SECTION 7. Regular Meetings. Regular meetings of the Board
of Directors shall be held at such places and at such times as the Board
shall from time to time determine. If any day fixed for a regular meeting
shall be a legal holiday at the place where the meeting is to be held, then
the meeting which would otherwise be held on that day shall be held at the
same hour on the next succeeding business day not a legal holiday.
Notice of regular meetings need not be given.
SECTION 8. Special Meetings; Notice. Special meetings of the
Board of Directors shall be held whenever called by the Chairman of the
Board and shall be called by the Chairman of the Board or the Secretary
at the written request of three directors. Notice of each such meeting
stating the time and place of the meeting shall be given to each director
by mail, telephone, other electronic transmission or personally. If by
mail, such notice shall be given not less than five days before the meeting;
and if by telephone, other electronic transmission or personally, not less
than two days before the meeting. A notice mailed at least two weeks
before the meeting need not state the purpose thereof except as otherwise
provided in these by-laws. In all other cases the notice shall state the
principal purpose or purposes of the meeting. Notice of any meeting of
the Board need not be given to a director, however, if waived by the
director in writing before or after such meeting or if the director shall be
present at the meeting.
SECTION 9. Organization. At each meeting of the Board of
Directors, the Chairman of the Board, or, in his absence, the President,
or, in the absence of the Chairman and the President, a director or an
officer of the Corporation designated by the Board shall act as Chairman.
The Secretary, or, in the Secretary's absence, any person appointed by the
Chairman, shall act as Secretary of the meeting.
SECTION 10. Order of Business. At all meetings of the Board
of Directors, business shall be transacted in the order determined by the
Board.
SECTION 11. Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board,
the President or the Secretary of the Corporation. The resignation of any
director shall take effect at the time specified therein, and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
SECTION 12. Removal of Directors. Any director may be
removed, either with or without cause, at any time, by the affirmative
vote of a majority in interest of the holders of record of the stock having
voting power at a special meeting of the shareowners called for the
purpose; and the vacancy in the Board of Directors caused by any such
removal may be filled by the shareowners at such meeting; provided, that
a director elected by the holders of the Preferred Stock, voting as a class,
may be so removed only by the affirmative vote of a majority in interest
of the holders of record of such Preferred Stock, and the vacancy in the
Board of Directors caused by such removal may be filled as provided in
the Certificate of Incorporation.
SECTION 13. Vacancies. Any vacancy in the Board of Directors
caused by death, resignation, removal, disability, disqualification, an
increase in the number of directors, or any other cause (except a vacancy
in the office of a director elected by the holders of the Preferred Stock,
voting as a class) may be filled by the majority vote of the remaining
directors, though less than a quorum, or by the shareowners of the
Corporation at the next annual meeting or any special meeting called for
the purpose, and each director so elected shall hold office for a term to
expire at the next annual election of directors, and until his or her
successor shall be duly elected and qualified, or until his or her death or
until he or she shall resign or shall have been removed in the manner
herein provided. A vacancy in the office of a director elected by the
holders of the Preferred Stock, voting as a class, may be filled as
provided in the Certificate of Incorporation. In case all the directors shall
die or resign or be removed or disqualified, any shareowner having voting
powers may call a special meeting of the shareowners, upon notice given
as herein provided for meetings of the shareowners, at which directors for
the unexpired terms may be elected.
SECTION 14. Compensation. Each director shall be paid such
compensation, if any, as shall be fixed by the Board of Directors.
SECTION 15. Indemnification of Directors and Officers. (A) The
Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation)
by reason of the fact that such person is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent (except in
each of the foregoing situations to the extent any agreement, arrangement
or understanding of agency contains provisions that supersede or abrogate
indemnification under this section) of another corporation or of any
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
or her conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his or her conduct was unlawful.
(B) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure
a judgment in its favor by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee
or agent (except in each of the foregoing situations to the extent any
agreement, arrangement or understanding of agency contains provisions
that supersede or abrogate indemnification under this section) of another
corporation or of any partnership, joint venture, trust, employee benefit
plan or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if such person acted in good
faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery of Delaware or such other court shall deem proper.
(C) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (A) and (B), or
in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by or on behalf of such person in connection
therewith. If any such person is not wholly successful in any such action,
suit or proceeding but is successful, on the merits or otherwise, as to one
or more but less than all claims, issues or matters therein, the Corporation
shall indemnify such person against all expenses (including attorneys' fees)
actually and reasonably incurred by or on behalf of such person in
connection with each claim, issue or matter that is successfully resolved.
For purposes of this subsection and without limitation, the termination of
any claim, issue or matter by dismissal, with or without prejudice, shall
be deemed to be a successful result as to such claim, issue or matter.
(D) Notwithstanding any other provision of this section, to the
extent any person is a witness in, but not a party to, any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent (except in each of
the foregoing situations to the extent any agreement, arrangement or
understanding of agency contains provisions that supersede or abrogate
indemnification under this section) of another corporation or of any
partnership, joint venture, trust, employee benefit plan or other enterprise,
such person shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by or on behalf of such person in
connection therewith.
(E) Indemnification under subsections (A) and (B) (unless ordered
by a court) shall be made only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because such person has met the
applicable standard of conduct set forth in subsections (A) and (B). Such
determination shall be made (1) if a Change of Control (as hereinafter
defined) shall not have occurred, (a) by the Board of Directors by a
majority vote of the Disinterested Directors (as hereinafter defined), even
though less than a quorum or (b) if there are no Disinterested Directors
or, even if there are Disinterested Directors, a majority of such
Disinterested Directors so directs, by (i) Independent Counsel (as
hereinafter defined) in a written opinion to the Board of Directors, a copy
of which shall be delivered to the claimant, or (ii) the shareowners of the
Corporation; or (2) if a Change of Control shall have occurred, by
Independent Counsel selected by the claimant in a written opinion to the
Board of Directors, a copy of which shall be delivered to the claimant,
unless the claimant shall request that such determination be made by or at
the direction of the Board of Directors, in which case it shall be made in
accordance with clause (1) of this sentence. Any claimant shall be entitled
to be indemnified against the expenses (including attorneys' fees) actually
and reasonably incurred by such claimant in cooperating with the person
or entity making the determination of entitlement to indemnification
(irrespective of the determination as to the claimant's entitlement to
indemnification) and, to the extent successful, in connection with any
litigation or arbitration with respect to such claim or the enforcement
thereof.
(F) If a Change of Control shall not have occurred, or if a
Change of Control shall have occurred and a director, officer, employee
or agent requests pursuant to clause (2) of the second sentence in
subsection (E) that the determination whether the claimant is entitled to
indemnification be made by or at the direction of the Board of Directors,
the claimant shall be conclusively presumed to have been determined
pursuant to subsection (E) to be entitled to indemnification if (1)(a) within
fifteen days after the next regularly scheduled meeting of the Board of
Directors following receipt by the Corporation of the request therefor, the
Board of Directors shall not have resolved by majority vote of the
Disinterested Directors to submit such determination to (i) Independent
Counsel for its determination or (ii) the shareowners for their
determination at the next annual meeting, or any special meeting that may
be held earlier, after such receipt, and (b) within sixty days after receipt
by the Corporation of the request therefor (or within ninety days after
such receipt if the Board of Directors in good faith determines that
additional time is required by it for the determination and, prior to
expiration of such sixty-day period, notifies the claimant thereof), the
Board of Directors shall not have made the determination by a majority
vote of the Disinterested Directors, or (2) after a resolution of the Board
of Directors, timely made pursuant to clause (1)(a)(ii) above, to submit the
determination to the shareowners, the shareowners meeting at which the
determination is to be made shall not have been held on or before the date
prescribed (or on or before a later date, not to exceed sixty days beyond
the original date, to which such meeting may have been postponed or
adjourned on good cause by the Board of Directors acting in good faith);
provided, however, that this sentence shall not apply if the claimant has
misstated or failed to state a material fact in connection with his or her
request for indemnification. Such presumed determination that a claimant
is entitled to indemnification shall be deemed to have been made (I) at the
end of the sixty-day or ninety-day period (as the case may be) referred to
in clause (1)(b) of the immediately preceding sentence or (II) if the Board
of Directors has resolved on a timely basis to submit the determination to
the shareowners, on the last date within the period prescribed by law for
holding such shareowners meeting (or a postponement or adjournment
thereof as permitted above).
(G) Expenses (including attorneys' fees) incurred in defending a
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding to a director or officer, promptly after receipt
of a request therefor stating in reasonable detail the expenses incurred,
and to an employee or agent as authorized by the Board of Directors;
provided that in each case the Corporation shall have received an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that such person is
not entitled to be indemnified by the Corporation as authorized in this
section.
(H) The Board of Directors shall establish reasonable procedures
for the submission of claims for indemnification pursuant to this section,
determination of the entitlement of any person thereto and review of any
such determination. Such procedures shall be set forth in an appendix to
these by-laws and shall be deemed for all purposes to be a part hereof.
(I) For purposes of this section,
(1) "Change of Control" means a change of control of the
Corporation of a nature that would be required to be reported in response
to Item 5(f) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) promulgated under the
Securities Exchange Act of 1934 (the "Act"), whether or not the
Corporation is then subject to such reporting requirement; provided,
however, that, without limitation, a Change of Control shall be deemed
to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities
of the Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities without the prior
approval of at least two-thirds of the members of the Board of Directors
in office immediately prior to such person attaining such percentage
interest; (ii) the Corporation is a party to a merger, consolidation, sale of
assets or other reorganization, or a proxy contest, as a consequence of
which members of the Board of Directors in office immediately prior to
such transaction or event constitute less than a majority of the Board of
Directors immediately thereafter; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors (including for this purpose any new
director whose election or nomination for election by the Corporation's
shareowners was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such period)
cease for any reason to constitute at least a majority of the Board of
Directors.
(2) "Disinterested Director" means a director of the
Corporation who is not and was not a party to an action, suit or
proceeding in respect of which indemnification is sought by a director,
officer, employee or agent.
(3) "Independent Counsel" means a law firm, or a member
of a law firm, that (i) is experienced in matters of corporation law; (ii)
neither presently is, nor in the past five years has been, retained to
represent the Corporation, the director, officer, employee or agent
claiming indemnification or any other party to the action, suit, or
proceeding giving rise to a claim for indemnification under this section,
in any matter material to the Corporation, the claimant or any such other
party; and (iii) would not, under applicable standards of professional
conduct then prevailing, have a conflict of interest in representing either
the Corporation or such director, officer, employee or agent in an action
to determine the Corporation's or such person's rights under this section.
(J) The Indemnification and advancement of expenses herein
provided, or granted pursuant hereto, shall not be deemed exclusive of
any other rights to which any of those indemnified or eligible for
advancement of expenses may be entitled under any agreement, vote of
shareowners or Disinterested Directors or otherwise, both as to action in
such person's official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such person. Notwithstanding
any amendment, alteration or repeal of this section or any of its
provisions, or of any of the procedures established by the Board of
Directors pursuant to subsection (H) hereof, any person who is or was a
director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee
or agent of another corporation or of any partnership, joint venture,
employee benefit plan or other enterprise shall be entitled to
indemnification in accordance with the provisions hereof and thereof with
respect to any action taken or omitted prior to such amendment, alteration
or repeal except to the extent otherwise required by law.
(K) No indemnification shall be payable pursuant to this section
with respect to any action against the Corporation commenced by an
officer, director, employee or agent unless the Board of Directors shall
have authorized the commencement thereof or unless and to the extent that
this section or the procedures established pursuant to subsection (H) shall
specifically provide for indemnification of expenses relating to the
enforcement of rights under this section and such procedures.
ARTICLE IV.
Committees
SECTION 1. Appointment and Powers. The Board of Directors
may, by resolution passed by a majority of the whole Board, designate
one or more committees, each committee to consist of two or more
directors of the Corporation, which, to the extent provided in said
resolution or in these by-laws and not inconsistent with Section 141 of the
Delaware Corporation Law, as amended, shall have and may exercise the
powers of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation
to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors.
SECTION 2. Term of Office and Vacancies. Each member of a
committee shall continue in office until a director to succeed him or her
shall have been elected and shall have qualified, or until he or she ceases
to be a director or until he or she shall have resigned or shall have been
removed in the manner hereinafter provided. Any vacancy in a committee
shall be filled by the vote of a majority of the whole Board of Directors
at any regular or special meeting thereof.
SECTION 3. Alternates. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
SECTION 4. Organization. Unless otherwise provided by the
Board of Directors, each committee shall appoint a chairman. Each
committee shall keep a record of its acts and proceedings and report the
same from time to time to the Board of Directors.
SECTION 5. Resignations. Any regular or alternate member of
a committee may resign at any time by giving written notice to the
Chairman of the Board, the President or the Secretary of the Corporation.
Such resignation shall take effect at the time of the receipt of such notice
or at any later time specified therein, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make
it effective.
SECTION 6. Removal. Any regular or alternate member of a
committee may be removed with or without cause at any time by
resolution passed by a majority of the whole Board of Directors at any
regular or special meeting.
SECTION 7. Meetings. Regular meetings of each committee, of
which no notice shall be necessary, shall be held on such days and at such
places as the chairman of the committee shall determine or as shall be
fixed by a resolution passed by a majority of all the members of such
committee. Special meetings of each committee will be called by the
Secretary at the request of any two members of such committee, or in
such other manner as may be determined by the committee. Notice of
each special meeting of a committee shall be mailed to each member
thereof at least two days before the meeting or shall be given personally
or by telephone or other electronic transmission at least one day before the
meeting. Every such notice shall state the time and place, but need not
state the purposes of the meeting. No notice of any meeting of a
committee shall be required to be given to any alternate.
SECTION 8. Quorum and Manner of Acting. Unless otherwise
provided by resolution of the Board of Directors, a majority of a
committee (including alternates when acting in lieu of regular members of
such committee) shall constitute a quorum for the transaction of business
and the act of a majority of those present at a meeting at which a quorum
is present shall be the act of such committee. The members of each
committee shall act only as a committee and the individual members shall
have no power as such.
SECTION 9. Compensation. Each regular or alternate member
of a committee shall be paid such compensation, if any, as shall be fixed
by the Board of Directors.
ARTICLE V.
Officers
SECTION 1. Officers. The officers of the Corporation shall be
a Chairman of the Board of Directors and a President, each of whom shall
be chosen from the members of the Board of Directors, one or more Vice
Presidents (one or more of whom may be Executive Vice Presidents,
Senior Vice Presidents or otherwise as may be designated by the Board),
a Secretary and a Treasurer, all of whom shall be elected by the Board of
Directors. Any two or more offices may be held by the same person.
The Board of Directors may also from time to time elect such other
officers as it deems necessary.
SECTION 2. Term of Office. Each officer shall hold office until
his or her successor shall have been duly elected and qualified in his or
her stead, or until his or her death or until he or she shall have resigned
or shall have been removed in the manner hereinafter provided.
SECTION 3. Additional Officers; Agents. The Chairman of the
Board or the President may from time to time appoint and remove such
additional officers and agents as may be deemed necessary. Such persons
shall hold office for such period, have such authority, and perform such
duties as in these by-laws provided or as the Chairman of the Board or the
President may from time to time prescribe. The Board of Directors or the
Chairman of the Board or the President may from time to time authorize
any officer to appoint and remove agents and employees and to prescribe
their powers and duties.
SECTION 4. Salaries. Unless otherwise provided by resolution
passed by a majority of the whole Board, the salaries of all officers
elected by the Board of Directors shall be fixed by the Board of Directors.
SECTION 5. Removal. Except where otherwise expressly
provided in a contract authorized by the Board of Directors, any officer
may be removed, either with or without cause, by the vote of a majority
of the Board at any regular or special meeting or, except in the case of an
officer elected by the Board, by any superior officer upon whom the
power of removal may be conferred by the Board or by these by-laws.
SECTION 6. Resignations. Any officer elected by the Board of
Directors may resign at any time by giving written notice to the Chairman
of the Board, the President or the Secretary. Any other officer may
resign at any time by giving written notice to the Chairman of the Board
or the President. Any such resignation shall take effect at the date of
receipt of such notice or at any later time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 7. Vacancies. A vacancy in any office because of
death, resignation, removal, or otherwise, shall be filled for the unexpired
portion of the term in the manner provided in these by-laws for regular
election or appointment to such office.
SECTION 8. Chairman of the Board of Directors. The Chairman
of the Board of Directors shall be chief executive officer of the
Corporation and, subject to the control of the Board of Directors, shall
have general and overall charge of the business and affairs of the
Corporation and of its officers. He shall keep the Board of Directors
appropriately informed on the business and affairs of the Corporation. He
shall preside at all meetings of the shareowners and of the Board of
Directors and shall enforce the observance of the rules of order for the
meetings of the Board and the shareowners and the by-laws of the
Corporation.
SECTION 9. President. The President shall be the chief
operating officer of the Corporation and, subject to the control of the
Chairman of the Board, shall direct and be responsible for the operation
of the business and affairs of the Corporation. The President shall keep
the Chairman of the Board and the Board of Directors appropriately
informed on the business and affairs of the Corporation. In the case of
the absence or disability of the Chairman of the Board, the President shall
perform all the duties and functions and exercise all the powers of, and be
subject to all the restrictions upon, the Chairman of the Board.
SECTION 10. Executive Vice Presidents. One or more Executive
Vice Presidents shall, subject to the control of the Chairman of the Board
and the President, have lead accountability for components or functions
of the Corporation as and to the extent designated by the Chairman of the
Board and the President. Each Executive Vice President shall keep the
Chairman of the Board and President appropriately informed on the
business and affairs of the designated components or functions of the
Corporation.
SECTION 11. Vice Presidents. The Vice Presidents shall perform
such duties as may from time to time be assigned to them or any of them
by the Chairman of the Board or the President.
SECTION 12. Secretary. The Secretary shall keep or cause to be
kept in books provided for the purpose the minutes of the meetings of the
shareowners, of the Board of Directors and of any committee constituted
pursuant to Article IV of these by-laws. The Secretary shall be custodian
of the corporate seal and see that it is affixed to all documents as required
and attest the same. The Secretary shall perform all duties incident to the
office of Secretary and such other duties as from time to time may be
assigned to him or her.
SECTION 13. Assistant Secretaries. At the request of the
Secretary, or in his or her absence or disability, the Assistant Secretary
designated by him or her shall perform all the duties of the Secretary and,
when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the Secretary. The Assistant Secretaries shall perform
such other duties as from time to time may be assigned to them.
SECTION 14. Treasurer. The Treasurer shall have charge of and
be responsible for the receipt, disbursement and safekeeping of all funds
and securities of the Corporation. The Treasurer shall deposit all such
funds in the name of the Corporation in such banks, trust companies or
other depositories as shall be selected in accordance with the provisions
of these by-laws. From time to time and whenever requested to do so, the
Treasurer shall render statements of the condition of the finances of the
Corporation to the Board of Directors. The Treasurer shall perform all
the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him or her.
SECTION 15. Assistant Treasurers. At the request of the
Treasurer, or in his or her absence or disability, the Assistant Treasurer
designated by him or her shall perform all the duties of the Treasurer and,
when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the Treasurer. The Assistant Treasurers shall perform
such other duties as from time to time may be assigned to them.
SECTION 16. Certain Agreements. The Board of Directors shall
have power to authorize or direct the proper officers of the Corporation,
on behalf of the Corporation, to enter into valid and binding agreements
in respect of employment, incentive or deferred compensation, stock
options, and similar or related matters, notwithstanding the fact that a
person with whom the Corporation so contracts may be a member of its
Board of Directors. Any such agreement may validly and lawfully bind
the Corporation for a term of more than one year, in accordance with its
terms, notwithstanding the fact that one of the elements of any such
agreement may involve the employment by the Corporation of an officer,
as such, for such term.
ARTICLE VI.
Authorizations
SECTION 1.Contracts. The Board of Directors, except as in
these by-laws otherwise provided, may authorize any officer, employee or
agent of the Corporation to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 2. Loans. No loan shall be contracted on behalf of the
Corporation and no negotiable paper shall be issued in its name, unless
authorized by the Board of Directors.
SECTION 3. Checks, Drafts, Etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the Corporation shall be signed by such officer or
officers, employee or employees, of the Corporation as shall from time to
time be determined in accordance with authorization of the Board of
Directors.
SECTION 4. Deposits. All funds of the Corporation shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board of Directors may from
time to time designate, or as may be designated by any officer or officers
of the Corporation to whom such power may be delegated by the Board,
and for the purpose of such deposit the officers and employees who have
been authorized to do so in accordance with the determinations of the
Board may endorse, assign and deliver checks, drafts, and other orders for
the payment of money which are payable to the order of the Corporation.
SECTION 5. Proxies. Except as otherwise provided in these by-
laws or in the Certificate of Incorporation, and unless otherwise provided
by resolution of the Board of Directors, the Chairman of the Board, the
President or any other officer may from time to time appoint an attorney
or attorneys or agent or agents of the Corporation, in the name and on
behalf of the Corporation to cast the votes which the Corporation may be
entitled to cast as a stockholder or otherwise in any other corporation any
of whose stock or other securities may be held by the Corporation, at
meetings of the holders of the stock or other securities of such other
corporations, or to consent in writing to any action by such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such vote or giving such consent, and may execute or
cause to be executed in the name and on behalf of the Corporation and
under its corporate seal, or otherwise, all such written proxies or other
instruments as he may deem necessary or proper in the premises.
ARTICLE VII.
Shares and Their Transfer
SECTION 1. Certificates of Stock. Certificates for shares of the
stock of the Corporation shall be in such form as shall be approved by the
Board of Directors. They shall be numbered in the order of their issue,
by class and series, and shall be signed by the Chairman of the Board, the
President or a Vice President, and the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary, of the Corporation.
If such certificate is countersigned (1) by a transfer agent other than the
Corporation or its employee, or (2) by a registrar other than the
Corporation or its employee, any other signature on the certificate may be
a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent, or registrar before
such certificate is issued, it may be issued by the Corporation with the
same effect as if such person were such officer, transfer agent, or
registrar at the date of issue.
SECTION 2. Record Ownership. A record of the name and
address of the holder of each certificate, the number of shares represented
thereby and the date of issuance thereof shall be made on the
Corporation's books. The Corporation shall be entitled to treat the holder
of record of any share of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim
to or interest in such share on the part of any other person, whether or not
it shall have express or other notice thereof, except as required by law.
SECTION 3. Transfer of Stock. Shares of stock shall be
transferable on the books of the Corporation by the person named in the
certificate for such stock in person or by such person's attorney or other
duly constituted representative upon surrender of such certificate with an
assignment endorsed thereon or attached thereto duly executed and with
such guarantee of signature as the Corporation may reasonably require.
SECTION 4. Lost, Destroyed and Mutilated Certificates. The
Corporation may issue a new certificate of stock in the place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen
or destroyed certificate, or such person's legal representative, to give the
Corporation a bond sufficient to indemnify it against any claim that may
be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
SECTION 5. Transfer Agent and Registrar; Regulations. The
Corporation shall, if and whenever the Board of Directors shall so
determine, maintain one or more transfer offices or agencies, each in
charge of a transfer agent designated by the Board of Directors, where the
shares of the stock of the Corporation shall be directly transferable, and
also one or more registry offices, each in charge of a registrar designated
by the Board of Directors, where such shares of stock shall be registered,
and no certificate for shares of the stock of the Corporation, in respect of
which a registrar and transfer agent shall have been designated, shall be
valid unless countersigned by such transfer agent and registered by such
registrar. The Board of Directors may also make such additional rules
and regulations as it may deem expedient concerning the issue, transfer
and registration of certificates for shares of stock of the Corporation.
SECTION 6. Fixing Record Date. For the purpose of determining
the shareowners entitled to notice of or to vote at any meeting of
shareowners or any adjournment thereof, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more
than sixty nor less than ten days before the date of such meeting, nor
more than sixty days prior to any other action. If no record date is fixed
(1) the record date for determining shareowners entitled to notice of or to
vote at a meeting of shareowners shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on
which the meeting is held and (2) the record date for determining
shareowners for any other purpose shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto.
A determination of shareowners of record entitled to notice of or to vote
at a meeting of shareowners shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 7. Examination of Books by Shareowners. The Board
of Directors shall, subject to the laws of the State of Delaware, have
power to determine from time to time, whether and to what extent and
under what conditions and regulations the accounts and books of the
Corporation, or any of them, shall be open to the inspection of the
shareowners; and no shareowner shall have any right to inspect any book
or document of the Corporation, except as conferred by the laws of the
State of Delaware, unless and until authorized so to do by resolution of
the Board of Directors or of the shareowners of the Corporation.
ARTICLE VIII.
Notice
SECTION 1. Manner of Giving Written Notice. Any notice in
writing required by law or by these by-laws to be given to any person
may be delivered personally, may be transmitted by electronic means or
may be given by depositing the same in the post office or letter box in a
postpaid envelope addressed to such person at such address as appears on
the books of the Corporation. Notice by mail shall be deemed to be given
at the time when the same shall be mailed, and notice by other means
shall be deemed given when actually delivered (and in the case of notice
transmitted by electronic means, when authenticated if and as required by
law).
SECTION 2. Waiver of Notice. Whenever any notice is required
to be given to any person, a waiver thereof by such person in writing or
transmitted by electronic means (and authenticated if and as required by
law), whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE IX.
Seal
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal"
and "Delaware."
ARTICLE X.
Fiscal Year
The fiscal year of the Corporation shall begin on the first day of
October in each year.
ARTICLE XI.
Amendments
All by-laws of the Corporation shall be subject to alteration,
amendment or repeal, and new by-laws not inconsistent with any provision
of the Certificate of Incorporation or any provision of law may be made,
either by the affirmative vote of the holders of record of a majority of the
outstanding stock of the Corporation entitled to vote in respect thereof,
given at an annual meeting or at any special meeting, provided that notice
of the proposed alteration, amendment or repeal or of the proposed new
by-laws be included in the notice of such meeting, or by the Board of
Directors at any regular or special meeting. By-laws made, altered or
amended by the Board of Directors shall be subject to alteration,
amendment or repeal by the shareowners or by the Board.
APPENDIX
Procedures for Submission and Determination of Claims
for Indemnification Pursuant to Article III, Section 15 of
the By-Laws.
SECTION 1. Purpose. Effective as of November 5, 1986, the
Board of Directors of Rockwell International Corporation, a Delaware
corporation (the "Corporation"), has adopted these Procedures for
Submission and Determination of Claims for Indemnification Pursuant to
Article III, Section 15 of the by-laws (the "Procedures") to implement the
provisions of Article III, Section 15 of the by-laws of the Corporation (the
"by-laws") in compliance with the requirement of subsection (H) thereof.
SECTION 2. Definitions. For purposes of these Procedures:
(A) All terms that are defined in Article III, Section 15 of the by-
laws shall have the meanings ascribed to them therein when used in these
Procedures unless otherwise defined herein.
(B) "Expenses" include all reasonable attorneys' fees, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery
service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness
in, a Proceeding; and shall also include such retainers as counsel may
reasonably require in advance of undertaking the representation of an
indemnitee in a Proceeding.
(C) "Indemnitee" includes any person who was or is, or is
threatened to be made, a witness in or a party to any Proceeding by
reason of the fact that such person is or was a director, officer, employee
or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent (except in each of
the foregoing situations to the extent any agreement, arrangement or
understanding of agency contains provisions that supersede or abrogate
indemnification under Article III, Section 15 of the by-laws) of another
corporation or of any partnership, joint venture, trust, employee benefit
plan or other enterprise.
(D) "Proceeding" includes any action, suit, arbitration, alternative
dispute resolution mechanism, investigation, administrative hearing or any
other proceeding, whether civil, criminal, administrative or investigative,
except one initiated by an Indemnitee unless the Board of Directors shall
have authorized the commencement thereof.
SECTION 3. Submission and Determination of Claims.
(A) To obtain indemnification or advancement of Expenses under
Article III, Section 15 of the by-laws, an Indemnitee shall submit to the
Secretary of the Corporation a written request therefor, including therein
or therewith such documentation and information as is reasonably
available to the Indemnitee and is reasonably necessary to permit a
determination as to whether and what extent the Indemnitee is entitled to
indemnification or advancement of Expenses, as the case may be. The
Secretary shall, promptly upon receipt of a request for indemnification,
advise the Board of Directors thereof in writing if a determination in
accordance with Article III, Section 15(E) of the by-laws is required.
(B) Upon written request by an Indemnitee for indemnification
pursuant to Section 3(A) hereof, a determination with respect to the
Indemnitee's entitlement thereto in the specific case, if required by the by-
laws, shall be made in accordance with Article III, Section 15(E) of the
by-laws, and, if it is so determined that the Indemnitee is entitled to
indemnification, payment to the Indemnitee shall be made within ten days
after such determination. The Indemnitee shall cooperate with the person,
persons or entity making such determination, with respect to the
Indemnitee's entitlement to indemnification, including providing to such
person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to the
Indemnitee and reasonably necessary to such determination.
(C) If entitlement to indemnification is to be made by Independent
Counsel pursuant to Article III, Section 15(E) of the by-laws, the
Independent Counsel shall be selected as provided in this Section 3(C).
If a Change of Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Corporation shall give
written notice to the Indemnitee advising the Indemnitee of the identity of
the Independent Counsel so selected. If a Change of Control shall have
occurred, the Independent Counsel shall be selected by the Indemnitee
(unless the Indemnitee shall request that such selection be made by the
Board of Directors, in which event the immediately preceding sentence
shall apply), and the Indemnitee shall give written notice to the
Corporation advising it of the identity of the Independent Counsel so
selected. In either event, the Indemnitee or the Corporation, as the case
may be, may, within seven days after such written notice of selection shall
have been given, deliver to the Corporation or to the Indemnitee, as the
case may be, a written objection to such selection. Such objection may
be asserted only on the ground that the Independent Counsel so selected
does not meet the requirements of "Independent Counsel" as defined in
Article III, Section 15 of the by-laws, and the objection shall set forth
with particularity the factual basis of such assertion. If such written
objection is made, the Independent Counsel so selected may not serve as
Independent Counsel unless and until a court has determined that such
objection is without merit. If, within twenty days after the next regularly
scheduled Board of Directors meeting following submission by the
Indemnitee of a written request for indemnification pursuant to Section
3(A) hereof, no Independent Counsel shall have been selected and not
objected to, either the Corporation or the Indemnitee may petition the
Court of Chancery of the State of Delaware or other court of competent
jurisdiction for resolution of any objection which shall have been made by
the Corporation or the Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person
selected by the Court or by such other person as the Court shall designate,
and the person with respect to whom an objection is favorably resolved or
the person so appointed shall act as Independent Counsel under Article III,
Section 15(E) of the by-laws. The Corporation shall pay any and all
reasonable fees and expenses (including without limitation any advance
retainers reasonably required by counsel) of Independent Counsel incurred
by such Independent Counsel in connection with acting pursuant to Article
III, Section 15(E) of the by-laws, and the Corporation shall pay all
reasonable fees and expenses (including without limitation any advance
retainers reasonably required by counsel) incident to the procedures of
Article III, Section 15(E) of the by-laws and this Section 3(C), regardless
of the manner in which Independent Counsel was selected or appointed.
Upon the delivery of its opinion pursuant to Article III, Section 15 of the
by-laws or, if earlier, the due commencement of any judicial proceeding
or arbitration pursuant to Section 4(A)(3) of these Procedures, Independent
Counsel shall be discharged and relieved of any further responsibility in
such capacity (subject to the applicable standards of professional conduct
then prevailing).
(D) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification under the by-
laws, the person, persons or entity making such determination shall
presume that an Indemnitee is entitled to indemnification under the by-
laws if the Indemnitee has submitted a request for indemnification in
accordance with Section 3(A) hereof, and the Corporation shall have the
burden of proof to overcome that presumption in connection with the
making by any person, persons or entity of any determination contrary to
that presumption.
SECTION 4. Review and Enforcement of Determination.
(A) In the event that (1) advancement of Expenses is not timely
made pursuant to Article III, Section 15(G) of the by-laws, (2) payment
of indemnification is not made pursuant to Article III, Section 15(C) or
(D) of the by-laws within ten days after receipt by the Corporation of
written request therefor, (3) a determination is made pursuant to Article
III, Section 15(E) of the by-laws that an Indemnitee is not entitled to
indemnification under the by-laws, (4) the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Article
III, Section 15(E) of the by-laws and such determination shall not have
been made and delivered in a written opinion within ninety days after
receipt by the Corporation of the written request for indemnification, or
(5) payment of indemnification is not made within ten days after a
determination has been made pursuant to Article III, Section 15(E) of the
by-laws that an Indemnitee is entitled to indemnification or within ten days
after such determination is deemed to have been made pursuant to Article
III, Section 15(F) of the by-laws, the Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any
other court of competent jurisdiction, of the Indemnitee's entitlement to
such indemnification or advancement of Expenses. Alternatively, the
Indemnitee, at his or her option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association. The Indemnitee shall commence such proceeding
seeking an adjudication or an award in arbitration within one year
following the date on which the Indemnitee first has the right to
commence such proceeding pursuant to this Section 4(A). The
Corporation shall not oppose the Indemnitee's right to seek any such
adjudication or award in arbitration.
(B) In the event that a determination shall have been made
pursuant to Article III, Section 15(E) of the by-laws that an Indemnitee is
not entitled to indemnification, any judicial proceeding or arbitration
commenced pursuant to this Section 4 shall be conducted in all respects
as a de novo trial, or arbitration, on the merits and the Indemnitee shall
not be prejudiced by reason of that adverse determination. If a Change
of Control shall have occurred, the Corporation shall have the burden of
proving in any judicial proceeding or arbitration commenced pursuant to
this Section 4 that the Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
(C) If a determination shall have been made or deemed to have
been made pursuant to Article III, Section 15 (E) or (F) of the by-laws
that an Indemnitee is entitled to indemnification, the Corporation shall be
bound by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 4, absent (1) a misstatement or
omission of a material fact in connection with the Indemnitee's request for
indemnification, or (2) a prohibition of such indemnification under
applicable law.
(D) The Corporation shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 4
that the procedures and presumptions of these Procedures are not valid,
binding and enforceable, and shall stipulate in any such judicial
proceeding or arbitration that the Corporation is bound by all the
provisions of these Procedures.
(E) In the event that an Indemnitee, pursuant to this Section 4,
seeks to enforce the Indemnitee's rights under, or to recover damages for
breach of, Article III, Section 15 of the by-laws or these Procedures in a
judicial proceeding or arbitration, the Indemnitee shall be entitled to
recover from the Corporation, and shall be indemnified by the
Corporation against, any and all expenses (of the types described in the
definition of Expenses in Section 2 of these Procedures) actually and
reasonably incurred in such judicial proceeding or arbitration, but only if
the Indemnitee prevails therein. If it shall be determined in such judicial
proceeding or arbitration that the Indemnitee is entitled to receive part but
not all of the indemnification or advancement of Expenses sought, the
expenses incurred by the Indemnitee in connection with such judicial
proceeding or arbitration shall be appropriately prorated.
SECTION 5. Amendments. These Procedures may be amended
at any time and from time to time in the same manner as any by-law of
the Corporation in accordance with Article XI of the by-laws; provided,
however, that notwithstanding any amendment, alteration or repeal of
these Procedures or any provision hereof, any Indemnitee shall be entitled
to utilize these Procedures with respect to any claim for indemnification
arising out of any action taken or omitted prior to such amendment,
alteration or repeal except to the extent otherwise required by law.
EXHIBIT 10
ROCKWELL INTERNATIONAL CORPORATION
DEFERRED COMPENSATION PLAN
AS AMENDED EFFECTIVE JULY 1, 1995
ROCKWELL INTERNATIONAL CORPORATION
DEFERRED COMPENSATION PLAN
THIS PLAN is established by Rockwell International Corporation
effective April 3, 1985, for the benefit of certain employees of
the Corporation in executive, managerial or professional
capacities so as to enhance the Corporation's ability to attract
and retain outstanding employees who are expected to contribute to
its success. It shall remain in effect, as it may be amended from
time to time, until termination as provided in Article VII of the
Plan.
ARTICLE I
DEFINITIONS
For the purposes of the Plan, the following words and phrases
shall mean:
1.1 Account. The bookkeeping or accounting records maintained
(having and requiring no segregation or holding of any assets) by
Rockwell pursuant to Article IV with respect to and resulting from
a Participant's Deferral Election.
1.2 Affiliate. (a) Any corporation incorporated under the laws
of one of the United States of America of which Rockwell owns,
directly or indirectly, eighty percent (80%) or more of the
combined voting power of all classes of stock or eighty percent
(80%) or more of the total value of the shares of all classes of
stock (all within the meaning of section 1563 of the Code);
(b) any partnership or other business entity organized
under such laws, in which Rockwell owns, directly or indirectly,
(i) eighty percent (80%) or more of the total capital or profits
interest of such partnership, or (ii) eighty percent (80%) or more
of the total value of such other business entity (all within the
meaning of section 414(c) of the Code); and
(c) any other company designated as an Affiliate by the
Board of Directors of Rockwell.
1.3 Base Compensation. Salary paid by the Corporation to an
Executive for services as an employee of the Corporation, including
Compensation Deferral Contributions as defined in Section 1.13 of
the Savings Plan, but excluding other contributions by Rockwell to
any pension, profit sharing, employee stock ownership or other
similar plan, compensation for overtime, bonuses and other
incentive compensation, payments under Rockwell's Performance
Award Plan; foreign service premiums, differentials and
allowances; tuition payments, relocation payments, imputed income
on employee benefits; patent awards and such other similar awards
or payments as the Committee may determine.
1.4 Beneficiary. The person, persons or entity entitled under
Article VI to receive any Plan Benefits payable after a
Participant's death.
1.5 Board. The Board of Directors of Rockwell.
1.6 Change in Control. A change of control of the Corporation
of a nature that would be required to be reported in response to
Item 5(f) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) promulgated under the
Securities Exchange Act, whether or not the Corporation is then
subject to such reporting requirement; provided, however, that,
without limitation, a Change of Control shall be deemed to have
occurred if:
(a) any "person" (as such term is used in sections 13(d)
and 14(d) of the Securities Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power
of the Corporation's then outstanding securities without the prior
approval of at least two-thirds of the members of the Board of
Directors in office immediately prior to such person attaining such
percentage interest;
(b) the Corporation is a party to a merger, consolidation,
sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office
immediately prior to such transaction or event constitute less than
a majority of the Board of Directors immediately thereafter; or
(c) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose
election or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning
of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
1.7 Code. The Internal Revenue Code of 1986, as amended.
References in the Plan to sections of the Code are to such sections
as in effect on August 1, 1993.
1.8 Committee. The Compensation and Management Development
Committee of the Board.
1.9 Corporate Officer. Any Executive who has been elected by
the Board as an officer of Rockwell.
1.10 Corporation. Rockwell or an Affiliate of Rockwell.
1.11 Deferral Election. An election pursuant to Article III by
an Executive to defer receipt of all or part of his Incentive
Compensation.
1.12 Deferred Compensation. The portion of Incentive
Compensation which an Executive elects to defer pursuant to a
Participation Agreement.
1.13 Determination Date. The last day of each calendar quarter;
that is March 31, June 30, September 30 and December 31.
1.14 Director. The Corporate Director of Compensation.
1.15 Effective Date. April 3, 1985, the effective date of the
establishment of the Plan.
1.16 Executive. A person in the full time active salaried employ
of the Corporation in Salary Grade 17 or above on Rockwell's
Executive Payroll.
1.17 Financial Hardship. A severe financial hardship to the
Participant resulting from a sudden and unexpected illness or
accident of the Participant or of a dependent (as defined in
section 152(a) of the Code) of the Participant, loss of the
Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstance arising as a result
of events beyond the control of the Participant. In case of the
Participant's death, the word "Beneficiary or other person or
entity entitled to receive a Plan Benefit" shall be substituted for
the word "Participant" wherever the latter appears in this Section
1.16.
1.18 Incentive Compensation. Any award payable to an Executive
under Rockwell's Incentive Compensation Plan that, but for a
Deferral Election under the Plan, would be paid to the Executive
and considered to be "wages" for purposes of United States federal
income tax withholding.
1.19 Incentive Compensation Plan. Rockwell's Incentive
Compensation Plan as approved by the Board and as amended from
time to time.
1.20 Installment Payment Sub-Account. A Sub-Account of a
Participant's Account established pursuant to Section 4.3 to which
Deferred Compensation under a single Deferral Election, and all
interest accrued thereon, as to which the Participant has elected
payment of his Plan Benefit in installments is credited.
1.21 Interest Rate. One-twelfth of the annual interest rate for
quarterly compounding that is 120% of the "applicable Federal long-
term rate" determined by the Secretary of the Treasury pursuant to
Section 1274(d) of the Code, or any successor provision, as
applicable for each of the months in the three-month period ending
on each Determination Date.
1.22 Lump Sum Payment Sub-Account. A Sub-Account of a
Participant's Account established pursuant to Section 4.3 to which
Deferred Compensation under all Deferral Elections, and all
interest accrued thereon, as to which the Plan Benefit is payable
only in the form of a lump sum payment is credited.
1.23 Participant. An Executive who has elected to participate
in the Plan and has executed and filed with Rockwell a
Participation Agreement as provided in Article III; provided,
however, that such term shall include a person who no longer has
an effective Deferral Election so long as he retains, under the
Plan, an interest in an Account under the Plan.
1.24 Participant Agreement. An agreement between Rockwell and
a Participant setting forth the Participant's Deferral Election.
1.25 Plan. This Deferral Compensation Plan, as it may be amended
from time to time.
1.26 Plan Benefit. The benefit payable to a Participant in
accordance with Article V hereof.
1.27 Plan Year. Each of the twelve (12) month periods ending
December 31 and occurring while the Plan remains in effect
beginning with the twelve (12) month period ending December 31,
1986. The term "Plan Year" shall also include the period
beginning on the Effective Date and ending December 31, 1985, and
any period of less than twelve (12) months beginning January 1 and
ending on the date the Plan is terminated.
1.28 Rockwell. Rockwell International Corporation, a Delaware
Corporation.
1.29 Savings Plan. The Rockwell International Corporation
Savings Plan as amended from time to time.
1.30 Securities Exchange Act means the Securities Exchange Act
of 1934, as amended.
1.31 Sub-Account. An Installment Payment Sub-Account or a Lump
Sum Payment Sub-Account.
1.32 Termination of Employment. Any severance of a Participant
from full-time active salaried employment by the Corporation for
any reason.
ARTICLE II
ADMINISTRATION
2.1 Administrators. The Plan shall be administered by the
Committee and the Director.
2.2 Committee. The Committee shall have the authority (a) to
make, amend, interpret and enforce all rules and regulations for
the administration of the Plan and (b) to decide all questions,
including interpretation of the Plan, as may arise in connection
with the Plan insofar as it is applicable to Executives (i) who
are Corporate Officers or whose annual Base Compensation shall
require the approval of the Board or the Committee, or (ii) with
respect to whom questions are referred to the Committee by the
Director. A majority of the members of the Committee shall
constitute a quorum. The Committee may act by a vote of a majority
of a quorum at a meeting, or by a writing signed by a majority of
the members of the Committee.
2.3 Director. The Director shall administer the Plan in
accordance with the terms of the Plan and the rules and
regulations of the Plan as established by the Committee. The
Director shall have the authority to decide all questions,
including interpretations of the Plan, as may arise in connection
with the Plan insofar as it is applicable to Executives other than
those described in Section 2.2(b)(i); provided, however, that the
Director shall follow precedents established by the Committee under
Section 2.2(b) in deciding all subsequent questions arising in
connection with the Plan. The Director may, in his discretion,
decline to decide any question presented to him and refer such
question to the Committee for decision.
ARTICLE III
PARTICIPATION
3.1 Participation. (a) Subject to the limitations set forth
in this Article III, any person who is an Executive on the last
date in any Plan Year specified for filing Deferral Elections
under this Section 3.1 may participate in the Plan by executing
and filing with the Director a Participation Agreement.
(b) In each Participation Agreement, the Executive shall
specify the percentage of Incentive Compensation in respect of a
specified Rockwell fiscal year to be deferred and, subject to the
limitations of Section 5.1.A or 5.1.B, as applicable, the form of
Plan Benefit.
(c) For a Deferral Election applicable to Incentive
Compensation payable in respect of Rockwell's fiscal year ending
September 30, 1985, a Participation Agreement must be filed no
later than April 30, 1985. Any such Deferral Election may not be
amended or revoked after September 6, 1985.
(d) On or before September 15, 1985, and September 15 of each
subsequent Plan Year, each Executive who elects to become a
Participant shall file with the Director a Participation Agreement
specifying his Deferral Election for any Incentive Compensation
payable in respect of Rockwell's fiscal year commencing October 1
in that Plan Year.
3.2 Deferral Elections. Any Executive may elect to defer any
percentage of his Incentive Compensation; provided, however, that
each Deferral Election, to be effective, must result in deferral
of a minimum of $1,000 and the amount deferred shall be rounded to
the nearest $100.
3.3 Modification of Deferral Election. By written notice to
Rockwell, a Deferral Election filed in any Plan Year (other than
the Deferral Election described in Section 3.1(c)) may be modified
or revoked at any time prior to October 1 of such Plan Year.
Thereafter, a Deferral Election specified in a Participation
Agreement shall be irrevocable, except that the Committee or the
Director, as appropriate under Article II, may permit a
Participant at any time to reduce the designated percentage to be
deferred upon a finding, based upon uniform standards established
by the Committee, that the Participant has suffered a Financial
Hardship.
3.4 Limited Election for Participants Who Have Elected
Installment Payments Prior to August 1, 1993. During the period
October 1 through November 30, 1993, a Participant who prior to
August 1, 1993, has elected installment payments pursuant to a
Deferral Election, and whose employment has not terminated, but who
would receive a lump sum under Section 5.1.A(a) if his employment
terminates prior to his attaining age 62, may elect that his entire
Plan Benefit shall be paid in accordance with Section 5.1.B. Such
election shall be irrevocable, except as provided in Section 5.2
and shall apply to all Deferral Elections made prior to August 1,
1993.
ARTICLE IV
DEFERRED COMPENSATION
4.1 Deferred Compensation. The amount of Incentive Compensation
deferred pursuant to a Deferral Election shall be withheld in a
single lump sum at the time such Incentive Compensation, but for
a Deferral Election, would be paid.
4.2 Withholding of Taxes. Any withholding of taxes or other
amounts which is required by any federal, state, or local law shall
be withheld from the Participant's remaining undeferred Incentive
Compensation, if any. If necessary in order to comply with any
federal, state or local law, the amount of Incentive Compensation
deferred may be reduced by an amount equal to any required
withholding. Otherwise, such withholding may be made from any of
the Participant's other compensation payable by the Corporation,
or, at the election of the Director, a Participant may be
permitted to pay to the Corporation the amount of any such
required withholding at or prior to the time such withholding would
otherwise be required to be made.
4.3 Accounts. For recordkeeping purposes only, a separate
Account shall be established and maintained by Rockwell for each
Participant to which his Deferred Compensation and interest
accrued thereon pursuant to Section 4.4 shall be credited. Each
such Account shall be divided into the following Sub-Accounts for
purposes of Section 5.1: (i) a Lump-Sum Payment Sub-Account to
which there shall be credited all Incentive Compensation deferred
(and all interest thereon) pursuant to all Deferral Elections
under which a Plan Benefit is payable only in the form of a lump
sum; and (ii) a separate Installment Payment Sub-Account for each
Deferral Election under which the Participant has elected that his
Plan Benefit be payable in installments (if he qualifies therefor
under Section 5.1(b)), to which the Incentive Compensation deferred
(and all interest thereon) pursuant to such Deferral Election
shall be credited. For administrative purposes, all Installment
Payment Sub-Accounts under which the number of installment payments
selected is the same may be combined into a single Installment
Payment Sub-Account except that if a Participant was eligible to
make the election under Section 3.4 but did not do so, separate
Installment Payment Sub-Accounts shall be maintained for Deferral
Elections made before August 1, 1993 until the Participant becomes
eligible to receive distribution of those Installment Payment Sub-
Accounts pursuant to Section 5.1.A(b).
4.4 Determination of Account. The value of each Participant's
Account as of each Determination Date shall be the total of the
Participant's Lump Sum Payment and Installment Payment Sub-
Accounts. The value of each such Sub-Account shall consist of (i)
the balance of such Sub-Account as of the last preceding
Determination Date plus (ii) any Deferred Compensation credited to
such Sub-Account since the last preceding Determination date, plus
(iii) the sum of the three monthly amounts determined by
multiplying the average daily balance of such Sub-Account during
each of the three calendar months since the last preceding
Determination Date by the Interest Rate applicable to such month,
less (iv) the amount of all Plan Benefits, if any, paid during the
period since the last preceding Determination Date. Interest,
determined as provided in (iii) above, shall be credited to each
such Sub-Account as of the Determination Date as of which such
Sub-Account is valued.
4.5 Statement of Accounts. Rockwell shall submit to each
Participant, within one hundred twenty (120) days after the close
of each Plan Year and at such other times as determined by the
Committee, a statement setting forth the total balance of the
Participant's Account, and the balance of each Sub-Account
thereof, as of the last day of such Plan Year and as of the
immediately preceding Plan Year, the Deferred Compensation and
interest credited to each Sub-Account during the Plan Year and the
payments of Plan Benefits from each Sub-Account during the Plan
ARTICLE V
PLAN BENEFITS
5.1.A Plan Benefit Payable on Termination of Employment
With Respect to Deferral Elections Made Prior to August 1, 1993.
(a) Subject to the provisions of (b) and (c) of this Section,
upon Termination of Employment a Participant shall receive a Plan
Benefit equal to the balance of his Account as of the
Determination Date immediately preceding such Termination of
Employment, plus the amount of any Deferred Compensation credited
to his Account after such Determination Date. Such Plan Benefit
shall be payable as a single lump sum on the forty-fifth (45th) day
following such Termination of Employment. In addition, the
Participant shall receive concurrently interest on the balance of
his Account for the period from such Determination Date to the
date of payment at a daily simple interest rate equivalent to the
Interest Rate during such period.
(b) In the event that a Participant's Termination of
Employment occurs as a result of his retirement under circumstances
entitling him to a benefit calculated in accordance with Section
5.1 or 5.2(b)(i) of the Rockwell International Corporation
Retirement Income Plan for Certain Salaried Employees as in effect
on the Effective Date (or, if he is not then a participant under
said Retirement Income Plan, under circumstances which would
entitle him to such benefit if he were then a participant
thereunder) the Participant shall receive the Plan Benefit payable
in respect of each of his Installment Payment Sub-Accounts in the
number of annual installments (not exceeding ten (10)) specified by
him in the Deferral Election or Elections to which each such
Installment Payment Sub-Account relates. In such event, any lump
sum payment received by the Participant pursuant to Section
5.1.A(a) shall be limited to the balance of his Lump-Sum Payment
Sub-Account.
Each annual installment payable out of an Installment Payment
Sub-Account shall be paid during the period January 2 through
January 5 in each calendar year commencing with the calendar year
next following the Participant's Termination of Employment. Each
such installment shall be based on the unpaid balance of such
Installment Payment Sub-Account as of the immediately preceding
December 31, including interest credited pursuant to Section 4.4
through such date, and shall be in an amount determined by
dividing such unpaid balance by the number then remaining unpaid
installments.
(c) In the event that a Participant's Termination of
Employment occurs because of his death, his Beneficiary or, if no
designated Beneficiary shall survive him, his estate shall receive
the Plan Benefit in the manner provided in Section 5.1.A(a);
provided, however, that if the Participant's Beneficiary
designation shall result in all or any part of his Plan Benefit
passing to his surviving spouse or to an entity for the benefit of
his surviving spouse in such a way as to qualify for the marital
deduction under section 2056 of the Code, and at the time of his
death the Participant was eligible to retire and would have been
entitled thereafter to receive all or such part of his Plan
Benefit in installments pursuant to Section 5.1.A(b), payments from
his Installment Payment Sub-Account or Sub-Accounts shall be made
to such surviving spouse or to such entity for the benefit of such
surviving spouse, as the case may be, in the manner provided in
Section 5.1.A(b). Notwithstanding the foregoing, if such surviving
spouse shall die prior to complete distribution of all Plan
Benefits, the balance then remaining in such Installment Payment
Sub-Account or Sub-Accounts shall be paid to the estate of such
surviving spouse or to such entity for the benefit of such
surviving spouse, as the case may be, in a lump sum on the forty-
fifth (45th) day following such spouse's death, with interest on
the balance of such Sub-Account or Sub-Accounts from the
Determination Date immediately preceding such spouse's death to the
date of payment at a daily simple interest rate equivalent to the
Interest Rate during such period.
5.1.B Plan Benefit Payable on Termination of Employment
With Respect to Deferral Elections Made on or After August 1, 1993.
(a) Subject to the provisions of Section 5.1.B(b), upon Termination
of Employment a Participant shall receive the Plan Benefit
attributable to Deferral Elections made on or after August 1, 1993,
(i) payable in respect of the portion, if any, of the Participant's
Lump-Sum Payment Sub-Account relating to those Deferral Elections
in the manner provided in Section 5.1.A(a); and (ii) payable in
respect of each of the Participant's Installment Payment Sub-
Accounts relating to those Deferral Elections in the number of
annual installments (not exceeding ten (10)) specified by him in
those Deferral Elections. Each annual installment payable out of
an Installment Payment Sub-Account shall be paid during the period
January 2 through January 5 in each calendar year commencing with
the calendar year next following the Participant's Termination of
Employment. Each such installment shall be based on the unpaid
balance of such Installment Payment Sub-Account as of the
immediately preceding December 31, including interest credited
pursuant to Section 4.4 through such date, and shall be in an
amount determined by dividing such unpaid balance by the number of
then remaining unpaid installments.
(b) In the event that a Participant's Termination of
Employment occurs because of his death, his Beneficiary or, if no
designated Beneficiary shall survive him, his estate shall receive
the Plan Benefit attributable to the Participant's Deferral
Elections made on or after August 1, 1993, payable in the manner
provided in Section 5.1.A(a) with respect to the Plan Benefit
attributable to Deferral Elections made prior to August 1, 1993;
provided, however, that if the Participant's Beneficiary
designation shall result in all or any part of his Plan Benefit
passing to his surviving spouse or to an entity for the benefit of
his surviving spouse in such a way as to qualify for the marital
deduction under section 2056 of the Code, payments from each of his
Installment Payment Sub-Accounts, if any, relating to Deferral
Elections made on or after August 1, 1993, shall be made to such
surviving spouse or to such entity for the benefit of such
surviving spouse, as the case may be, in the manner provided in
Section 5.1.B(a). Notwithstanding the foregoing, if such surviving
spouse shall die prior to complete distribution of all Plan
Benefits, the balance then remaining in such Installment Payment
Sub-Account or Sub-Accounts shall be paid to the estate of such
surviving spouse or to such entity for the benefit of such
surviving spouse, as the case may be, in a lump sum on the forty-
fifth (45th) day following such spouse's death, with interest on
the balance of such Sub-Account or Sub-Accounts from the
Determination Date immediately preceding such spouse's death to the
date of payment at a daily simple interest rate equivalent to the
Interest Rate during such period.
5.1.C Form of Plan Benefit Payable on Termination of
Employment Upon Occurrence of a Change in Control. Notwithstanding
any election to the contrary previously made by a Participant or
beneficiary (including, for purposes of this Section 2.040, a
Participant or beneficiary who is currently receiving installment
payments from this Plan) such Participant or beneficiary may elect
to have his Plan Benefit paid in a lump sum in the event of the
occurrence of a Change in Control, subject to the following:
(a) To be effective, the election of a Participant or
beneficiary pursuant to this Section must be made in writing and
filed with the Corporation's Vice President of Corporate
Compensation and Benefits prior to the occurrence of a Change in
Control.
(b) An election made hereunder shall be revocable by the
Participant or his beneficiary until such time as a Change in
Control shall have occurred at which point the said election shall
be irrevocable.
(c) Plan Benefits paid in a single lump sum pursuant to this
Section 5.1.C shall be paid within forty-five (45) days following
the Participant's retirement, termination of employment or death;
provided, however, that lump sum payments which are to be made
under this Section to Participants or beneficiaries
who are currently receiving annual installment payments pursuant to
Sections 5.1.A and/or 5.1.B at the time of a Change in Control
shall be made within forty-five (45) days following the Change in
Control.
5.2 Withdrawal of Plan Benefit. No Plan Benefit shall be
payable prior to the Participant's Termination of Employment or
other than in the form determined pursuant to Section 5.1.A or
5.1.B, except that the Committee or the Director, as appropriate
under Article II, may permit a Participant or, after a
Participant's death, a Participant's Beneficiary or other person or
entity entitled to receive such Plan Benefit, (i) to withdraw from
the Participant's Account an amount necessary to meet a Financial
Hardship, or (ii) to withdraw his entire account balance prior to
the Participant's Termination of Employment with interest at the
Interest Rate for the period from the immediately preceding
Determination Date to the date of payment if a Participant's
Account shall exceed the amount of $100,000 determined as of the
immediately preceding Determination Date. Either type of
withdrawal shall be requested by written notice to Rockwell and the
amount of the withdrawal shall be paid within forty-five (45) days
after receipt of the written notice. If a Participant does make
such withdrawal other than for Financial Hardship, the Participant
shall forfeit all further rights to participate in the Plan, and
any previously executed election with respect to the deferral of
Incentive Compensation that has not yet been transferred to the
Plan shall be void.
5.3 Withholding; Payroll Taxes. Rockwell shall withhold from
Plan Benefits payable under the Plan any taxes required to be
withheld from an employee's wages for the federal or any state or
local governments.
5.4 Full Payment of Benefits. Notwithstanding any other
provision of the Plan, all Plan Benefits shall be paid to the
Participant no later than the January 5 next preceding the
Participant's eightieth (80th) birthday.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 Beneficiary Designation. Each Participant shall have the
right, at any time, to designate any person or persons as his
Beneficiary (both principal as well as contingent) to whom payment
under the Plan shall be made in the event of his death prior to
complete distribution of all Plan Benefits due him under the Plan.
Any Beneficiary designation shall be made in writing on a form
prescribed by the Committee and shall become effective only when
filed with the Director. Notwithstanding the foregoing, if a
Participant's Incentive Compensation is community property, any
designation (other than of the Participant's spouse) made by a
Participant then married shall not be valid or effective unless the
Participant's spouse is specified to receive at least fifty percent
(50%) of such Participant's aggregate Plan Benefits or unless the
spouse shall approve such designation in writing and in accordance
with such other requirements as may be established by the
Committee.
6.2 Amendments. Subject to the limitations of Section 6.1 of
the Plan, any Beneficiary designation may be changed by a
Participant only by written notice of such change to the Director
on a form prescribed by the Committee. The filing of a new
Beneficiary designation form will cancel all prior Beneficiary
designations.
6.3 Absence of Effective Beneficiary Designation. If a
Participant fails to designate a Beneficiary as provided above or
if all designated Beneficiaries predecease the Participant or die
prior to complete distribution of the Participant's Plan Benefit,
the Participant's remaining Plan Benefit shall be paid to his
estate.
6.4 Effect of Payment. Payment to the Beneficiary designated
pursuant to Sections 6.1 and 6.2 or to the Participant's estate
pursuant to Section 6.3 shall completely discharge Rockwell's
obligations under the Plan.
ARTICLE VII
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Committee shall have the power in its sole
discretion to amend, suspend or terminate the Plan at any time,
except that no such action shall adversely affect rights with
respect to any Account without the consent of the person affected.
ARTICLE VIII
MISCELLANEOUS
8.1 Unfunded Plan. The Plan is an unfunded plan maintained by
Rockwell primarily to provide Deferred Compensation benefits for a
select group of the management or highly compensated employees of
the Corporation.
8.2 Unsecured General Creditor. Participants and their
Beneficiaries, estates, heirs, successors and assigns shall have no
legal or equitable rights, interest or claims in any property or
assets of Rockwell. Such assets of Rockwell shall not be held
under any trust or in any other way as collateral security for the
fulfillment of the obligations of Rockwell under the Plan. Any
and all of Rockwell's assets shall be, and remain, the general,
unpledged, unrestricted assets of Rockwell. Rockwell's sole
obligation under the Plan shall be merely that of an unfunded and
unsecured promise of Rockwell to pay money in the future.
8.3 Nonassignability. Neither a Participant nor any other
person shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey, in advance of actual receipt, any Plan
Benefit. Plan Benefits and all rights to Plan Benefits are and
shall be nonassignable and nontransferable prior to actual payment
as provided by the Plan. Any such attempted assignment or transfer
shall be ineffective with respect to Rockwell, and Rockwell's sole
obligation shall be to pay Plan Benefits to the Participant, his
Beneficiary or his estate as appropriate. No part of any Plan
Benefit shall, prior to actual payment as provided by the Plan, be
subject to seizure or sequestration for the payment of any debts,
judgements, alimony or separate maintenance owed by a Participant
or any other person; nor shall any Plan Benefit be transferable by
operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency, except as required by law.
8.4 Not a Contract of Employment. Neither the terms and
conditions of the Plan nor those of any Participation Agreement
shall be deemed to constitute a contract of employment between the
Corporation and the Participant, and neither the Participant, his
Beneficiary nor his estate shall have any rights against Rockwell
under the Plan except as may otherwise be specifically provided in
the Plan. Moreover, nothing in the Plan shall be deemed to give
a Participant the right to be retained in the service of the
Corporation or to interfere with the right of the Corporation to
discipline, discharge or change the status of a Participant at any
time.
8.5 Protective Provisions. A Participant will cooperate with
Rockwell by furnishing any and all information requested by
Rockwell in order to facilitate the payment of Plan Benefits under
the Plan, and by taking such other action as may be reasonably
requested by Rockwell.
8.6 Terms. Whenever any words are used in the Plan in the
masculine, they shall be construed as though they were used in the
feminine in all cases where they would so apply; and wherever any
words are used in the Plan in the singular or in the plural, they
shall be construed as though they were used in the plural or the
singular, as the case may be, in all cases where they would so
apply.
8.7 Captions. The captions of the articles and sections of the
Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
8.8 Governing Law. The provisions of the Plan shall be
construed and interpreted according to the laws of the State of
Delaware.
8.9 Validity. In case any provision of the Plan shall be held
illegal or invalid for any reason, said illegality or invalidity
shall not affect the remaining provisions of the Plan, and the Plan
shall be construed and enforced as if such illegal or invalid
provision were not included in the Plan.
8.10 Notice or Filing. Any notice or filing required or
permitted to be given to Rockwell or a Participant under the Plan
shall be sufficient if in writing and hand delivered, or sent by
regular mail or by registered or certified mail, to the principal
office of Rockwell or to the last known address of the Participant,
as the case may be. Such notice or filing shall be deemed given
or made (i) when hand delivered to the residence or offices of the
recipient, (ii) as of five (5) days after the date of mailing if
delivery is made by regular mail, or (iii) as of five (5) days
after the date shown on the postmark on the receipt for
registration or certification provided to the sender at the time of
mailing, if by registered or certified mail.
8.11 Successors. The provisions of the Plan shall bind and
obligate Rockwell and any successors. The term "successors" as
used in this Section 8.11 shall include any corporate or other
business entity which shall, whether by merger, consolidation,
purchase or otherwise acquire all or substantially all of the
business and assets of Rockwell, and successors of any such
corporation or other business entity.
8.12 Insurance. Rockwell may elect at any time to acquire for
its own benefit such forms of insurance on the life of any
Participant as it in its sole discretion believes to be in the
best interests of Rockwell. If Rockwell so elects to acquire
insurance, and if the acquisition of such insurance shall not in
any way adversely affect the Participant, the Participant shall
complete and authenticate such insurance applications and other
forms, and assist Rockwell in any and all matters Rockwell may
reasonably request to enable Rockwell to acquire such desired
insurance. In no event shall the Participants or their
Beneficiaries, heirs or estates have any legal or equitable right,
interest or claim in any such life insurance policy, annuity
contract or the proceeds therefrom owned or acquired by Rockwell
pursuant to this Section 8.12.
8.13 Expenses and Costs. Rockwell shall bear all expenses and
costs in connection with the operation of the Plan.
8.14 Reliance on Certified Public Accountants. Rockwell, the
Board, the Committee, the Director and any employee of Rockwell or
the Corporation shall be fully protected in relying in good faith
on the computations and reports made pursuant to or in connection
with the Plan by the independent certified public accountants who
audit Rockwell's accounts.
ARTICLE IX
CLAIMS PROCEDURE
9.1 Claim. Any person claiming a Plan Benefit, requesting an
interpretation or ruling under the Plan, or requesting information
under the Plan shall present the request in writing to the
Director who (a) shall respond in writing within ninety (90) days
following his receipt of the request or (b) in the case of a
claimant who is a person described in Section 2.2 (b)(i), shall
refer the claim with his recommended response to the Committee,
which shall respond in writing within one hundred twenty (120) days
following the Director's receipt of the request.
9.2 Denial of Claim. If the claim or request is denied, the
written notice of denial shall state (i) the reasons for denial;
(ii) a description of any additional material or information
required and an explanation of why it is necessary; and (iii) an
explanation of the Plan's claim review procedure.
9.3 Review of Claim. Any person whose claim or request is
denied may make a second request for review by notice given in
writing to the Director. The claim or request shall be reviewed
further by the Director or the Committee, as appropriate, and he
or it may, but shall not be required to, grant the claimant a
hearing.
9.4 Final Decision. A decision on such second request shall
normally be made within sixty (60) days after the date of the
second request. If an extension of time is required for a hearing
or other special circumstances, the claimant shall be notified and
the time limit shall be one hundred twenty (120) days from the
date of the second request. The decision shall be in writing and,
whether made by the Director of the Committee, shall be final and
bind all parties concerned.
Exhibit 12
ROCKWELL INTERNATIONAL CORPORATION
<TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
NINE MONTHS ENDED JUNE 30, 1995
(In millions, except for ratios)
<CAPTION>
Pro Forma Pro Forma
Rockwell(1) Reliance(2) Adjustments Combined
<S> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR FIXED CHARGES:
Income before income taxes $ 916.5 $(51.3) $52.9 (3) $ 918.1
Adjustments:
Undistributed (income) of affiliates........ (5.0) (5.0)
Minority interest in loss of subsidiaries... 8.4 8.4
919.9 (51.3) 52.9 921.5
Add fixed charges included in earnings:
Interest expense.......................... 119.5 6.0 21.0 146.5
Interest element of rentals............... 49.3 2.5 51.8
Total................................... 168.8 8.5 21.0 198.3
Total earnings available for fixed charges.. $1,088.7 $(42.8) $73.9 $1,119.8
FIXED CHARGES:
Fixed charges included in earnings............. $ 168.8 $ 8.5 $21.0 $ 198.3
Capitalized interest........................... 10.3 10.3
Total fixed charges.......................... $ 179.1 $ 8.5 $21.0 $ 208.6
RATIO OF EARNINGS TO FIXED CHARGES (4) 6.1 5.4
(1) The Rockwell information presented includes Reliance for the
six months ended June 30, 1995.
(2) The Reliance information presented is for the three months ended
December 31, 1994.
(3) Pro forma adjustments include the following (see Exhibit 99-a):
A)To reflect the divestiture of Reliance's telecommunications business $ (8.2)
B)Amortize over periods ranging from seven to forty years the excess of
purchase price over the estimated fair value of net tangible assets
acquired (7.6)
C)Recognize interest expense on borrowings to fund acquisition
(at assumed rates of 7% on short-term debt and 8.2% on long-term debt) (21.0)
D)Remove unusual expenses incurred by Reliance relatingto costs
associated with abandonment of a prior merger agreement and costs
associated with the acquisition by Rockwell 89.7
Total adjustments to income before income taxes $ 52.9
(4) In computing the ratio of earnings to fixed charges, earnings are defined
as income before income taxes adjusted for minority interest in income
or loss of subsidiaries, undistributed earnings of affiliates and fixed
charges exclusive of capitalizedinterest. Fixed charges consist of interest
on borrowings and that portion of rentals deemed representative of the
interest factor.<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1995 CONSOLIDATED BALANCE SHEET, STATEMENT OF CONSOLIDATED INCOME FOR THE NINE
MONTHS ENDED JUNE 30, 1995 AND NOTES TO FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 577
<SECURITIES> 0
<RECEIVABLES> 2550
<ALLOWANCES> 77
<INVENTORY> 2065
<CURRENT-ASSETS> 6173
<PP&E> 2895
<DEPRECIATION> 0
<TOTAL-ASSETS> 12810
<CURRENT-LIABILITIES> 4430
<BONDS> 1778
<COMMON> 244
0
1
<OTHER-SE> 3416
<TOTAL-LIABILITY-AND-EQUITY> 12810
<SALES> 9436
<TOTAL-REVENUES> 9509
<CGS> 7263
<TOTAL-COSTS> 8593
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120
<INCOME-PRETAX> 916
<INCOME-TAX> 363
<INCOME-CONTINUING> 553
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 553
<EPS-PRIMARY> 2.54
<EPS-DILUTED> 2.49
</TABLE>
Exhibit 99-a
ROCKWELL INTERNATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
The following unaudited pro forma condensed consolidated statement of income
has been prepared by Rockwell's management. This statement reflects Rockwell's
acquisition of Reliance and combines the historical consolidated income
statements of Rockwell and Reliance for the nine months ending June 30, 1995,
using the purchase method of accounting.
The unaudited pro forma condensed consolidated statement of income has been
prepared assuming the acquisition of Reliance had occurred at the beginning of
Rockwell's fiscal year ending September 30, 1995. This pro forma statement
should be read in conjunction with the historical consolidated financial
statements and related notes of Rockwell and Reliance. The pro forma statement
includes preliminary estimates and assumptions which Rockwell management
believes are reasonable. Pro forma adjustments reflecting anticipated cost
savings and other synergies resulting from the integration of Reliance and
Rockwell's Automation business are, under most circumstances, not permitted.
As a result, the pro forma results are not intended to be a projection of future
results and are not necessarily indicative of the results which would have
occurred if the business combination had been in effect on the dates presented.
The pro forma condensed consolidated statement of income has been prepared using
the following facts and assumptions:
Rockwell acquires all the common stock of Reliance for a total cash payment
of $1,586 million. Simultaneously with the acquisition of Reliance,
Rockwell sells the telecommunications business of Reliance for $475 million
to fund a portion of the acquisition price.
Rockwell borrows $1,111 million to finance the remaining portion of the
$1,586 million acquisition price.
In accordance with generally accepted accounting principles, the purchase
price of Reliance was allocated to the assets and liabilities of Reliance
based upon their respective fair values. Such allocations were based upon
appraisals, evaluations, estimations and other studies, some of which are
still in process. For purposes of the accompanying pro forma statement,
the pro forma adjustments have been reflected on an estimated basis using
information currently available. Accordingly, the allocation of the
purchase price to the acquired assets and assumed liabilities of Reliance
is subject to revision as a result of the final determination of fair
values.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED JUNE 30, 1995
(Dollars in Millions)
<TABLE>
Pro Forma
Business Adjustments
Sold By Increase Pro Forma
Rockwell (1) Reliance (2) Rockwell (3) (Decrease) Combined
<S> <C> <C> <C> <C> <C>
Sales and other income........................ $ 9,509 $ 449 $(120) $ 9,838
Costs and expenses:
Cost of sales............................... 7,239 337 (89) 7,487
Selling, general and administrative......... 1,234 68 (19) 1,283
Other expense, net.......................... 89 (3) $ 7 (4) 3
(90)(5)
Interest.................................... 120 6 21 (6) 147
Total costs and expenses.................. 8,593 500 (111) (62) 8,920
Income before income taxes.................... 916 (51) (9) 62 918
Provision for income taxes.................... (363) 5 (7)(7) (365)
Net income.................................... $ 553 $ (51) $ (4) $ 55 $ 553
Earnings per common share (in dollars) (8):
Primary..................................... $ 2.54 $ 2.54
Fully diluted............................... $ 2.49 $ 2.49
Average common shares outstanding (in millions):
Primary..................................... 217.3 217.3
Fully diluted............................... 222.5 222.5
See accompanying notes to unaudited pro forma condensed consolidated statement of income.
</TABLE>
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
1. The Rockwell information presented includes Reliance for the six months ended
June 30, 1995.
2. The Reliance information presented is for the three months ended
December 31, 1994.
3. To reflect the divestiture of Reliance's telecommunications business.
4. Amortize over periods ranging from seven to forty years the excess of
purchase price over the estimated fair value of net tangible assets acquired.
5. Remove unusual expenses incurred by Reliance relating to costs associated
with abandonment of a prior merger agreement and costs associated with the
acquisition by Rockwell.
6. Recognize interest expense on borrowings to fund acquisition (at assumed
rates of 7% on short-term debt and 8.2% on long-term debt).
7. Increase in the provision for income taxes primarily associated with the
removal of unusual expenses noted in 5 above and reduced by the effect of
additional interest expense.
8. Pro forma primary and fully-diluted earnings per share are computed on the
same basis as historical amounts.
