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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 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 OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2201 SEAL BEACH BOULEVARD, 90740-8250
SEAL BEACH, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (412) 565-4090 (OFFICE OF
THE SECRETARY)
------------------------
SECURITIES REGISTERED PURSUANT
TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
------------------- ------------------------------
<S> <C>
$4.75 Convertible Preferred Stock, Series A New York and Boston Stock Exchanges
$1.35 Convertible Preferred Stock, Series B New York Stock Exchange
Common Stock, $1 Par Value New York, Boston, Chicago, Pacific,
Philadelphia, Basel, Frankfurt,
Geneva, Lausanne, London and
Zurich Stock Exchanges
7 5/8% Notes due February 17, 1998 New York Stock Exchange
8 7/8% Notes due September 15, 1999 New York Stock Exchange
8 3/8% Notes due February 15, 2001 New York Stock Exchange
6 3/4% Notes due September 15, 2002 New York Stock Exchange
7 7/8% Notes due February 15, 2005 New York Stock Exchange
6 5/8% Notes due June 1, 2005 New York Stock Exchange
</TABLE>
------------------------
SECURITIES REGISTERED PURSUANT
TO SECTION 12(G) OF THE ACT:
CLASS A COMMON STOCK, $1 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of registrant's voting stock held by
non-affiliates of registrant on November 30, 1995 was approximately $10.5
billion.
184,655,768 shares of registrant's Common Stock, par value $1 per share,
and 32,328,424 shares of registrant's Class A Common Stock, par value $1 per
share, were outstanding on November 30, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Certain information contained in the Annual Report to Shareowners of
registrant for the fiscal year ended September 30, 1995 is incorporated
by reference into Part I, Part II and Part IV hereof.
(2) Certain information contained in the Proxy Statement for the Annual
Meeting of Shareowners of registrant to be held on February 7, 1996 is
incorporated by reference into Part III hereof.
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<PAGE> 2
PART I
ITEM 1. BUSINESS.
Rockwell International Corporation (the Company or Rockwell), a Delaware
corporation incorporated in 1928, is a diversified corporation engaged in
research, development and manufacture of many products for commercial and
government markets. In fiscal 1995, 72% of the Company's total sales were made
to U.S. commercial and international customers, 16% of the Company's total sales
were made under United States Government defense contracts and subcontracts, and
12% of the Company's total sales were made under contracts with the National
Aeronautics and Space Administration (NASA) for space activities.
For purposes hereof, whenever reference is made in any Item of this Annual
Report on Form 10-K to information under specific captions in Item 7,
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (the MD&A), to information under specific captions or on specific
pages of the 1995 Annual Report to Shareowners of the Company (the 1995 Annual
Report) or to information in the Proxy Statement for the Annual Meeting of
Shareowners of the Company to be held on February 7, 1996 (the 1996 Proxy
Statement), such information shall be deemed to be incorporated therein by such
reference.
As used herein, the terms the "Company" or "Rockwell" (and in the 1995
Annual Report, the "company") include subsidiaries and predecessors unless the
context indicates otherwise.
BUSINESS SEGMENTS
The Company's business segments are engaged in research, development, and
manufacture of diversified products as follows:
Electronics:
Automation--industrial automation equipment and systems.
Avionics--avionics products and systems and related communications
technologies primarily used in commercial and military aircraft.
Semiconductor Systems--semiconductor-based subsystems including fax
and data modems, global positioning system receiver engines, and
gallium arsenide devices.
Defense Electronics--defense electronics systems and products for
precision guidance and control, for tactical weapons, and for
command, control, communications, and intelligence.
Aerospace--manned and unmanned space systems, rocket engines, advanced
space-based surveillance systems, high-energy laser and other
directed-energy programs, and space electric power (Space Systems); and
military aircraft and modifications and military and commercial aircraft
structural components (Aircraft).
Automotive--components and systems for heavy- and medium-duty trucks,
buses, trailers, and heavy-duty off-highway vehicles (Heavy Vehicle
Systems); and components and systems for light trucks and passenger cars
(Light Vehicle Systems).
Graphic Systems--high-speed printing presses and related graphic arts
equipment.
Financial information with respect to the Company's business segments,
including their contributions to sales and operating earnings and their
identifiable assets for the three years ended September 30, 1995, is contained
under the captions RESULTS OF OPERATIONS, Sales and Earnings by Business
Segment, 1995 Compared to 1994 and 1994 Compared to 1993 in the MD&A on pages
13-16 hereof, and in Note 22 of the NOTES TO FINANCIAL STATEMENTS in the 1995
Annual Report. Information with respect to the Company's total backlog at
September 30, 1995 is contained under the caption BACKLOG in the MD&A on page 19
hereof. Additional information with respect to the Company's sales under United
States Government contracts is contained in Notes 14 and 22 of the NOTES TO
FINANCIAL STATEMENTS in the 1995 Annual Report and under the caption GOVERNMENT
CONTRACTS in the MD&A on page 18 hereof.
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Electronics
The sales and operating earnings of the businesses that comprise the
Company's Electronics business segment for the three fiscal years ended
September 30, 1995 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Sales:
Automation....................................... $ 3,590 $ 2,085 $ 1,716
Avionics......................................... 1,368 1,343 1,299
Semiconductor Systems............................ 760 581 423
Defense Electronics.............................. 987 998 1,213
------- ------- -------
Total............................................ $ 6,705 $ 5,007 $ 4,651
======= ======= =======
Operating Earnings:
Automation....................................... $ 481 $ 265 $ 193
Avionics/Semiconductor Systems/Defense........... 440 432 409
------- ------- -------
Total............................................ $ 921 $ 697 $ 602
======= ======= =======
</TABLE>
Automation. The acquisition of Reliance Electric Company (Reliance) in the
second fiscal quarter made Automation the Company's largest business. The
Company's automation products include programmable controllers, human-machine
interface devices, communications networks, programming and application
software, AC/DC drives and drive systems, sensing and motion control devices,
machine vision, computer numeric control systems, data acquisition products and
global support services; the Reliance acquisition added standard and engineered
motors and mechanical power transmission equipment. The Company is a leader in
plant floor automation, focusing on helping customers control processes and
become more competitive through increased flexibility, improved productivity and
information flow.
Avionics. Rockwell's Avionics businesses provide electronic equipment for
flight control, cockpit display, navigation, voice and data communication,
cockpit management, radar, global positioning and other systems for airlines,
corporate aircraft, government and military applications. During fiscal 1995,
Rockwell's Switching Systems business, which provides call distribution
equipment to telephone companies, airlines, hotels, telemarketing bureaus and
similar high call volume businesses, was moved from the Company's Semiconductor
Systems business into Avionics.
Semiconductor Systems. The Company's Semiconductor Systems business
(formerly named Telecommunications) is the world leader in semiconductors for
fax, voice and data modems for fax machines, personal computers and other uses
and produces other advanced semiconductor devices to process, transmit and
receive all types of information. Rockwell's leadership stems from continuous
product improvement, new product development and expansion into related
products. The business has now entered the market for wireless communications,
supplying chipsets for cellular and cordless phones, wireless modem devices for
laptop computers, and modules for Global Positioning System receivers.
Defense Electronics. Rockwell provides a wide range of electronics
products for defense markets worldwide. These products include command, control
and communications devices and systems; aircraft electronic upgrades and
modifications; tactical weapons; space defense sensors and electronics;
navigation and guidance systems; and naval combat systems for ships and
submarines. The Company also provides products for the commercial intelligent
vehicle highway systems marketplace. Sales of the Company's Defense Electronics
business for fiscal 1995 continued to be affected by reductions in government
spending in defense programs.
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Aerospace
The sales and operating earnings of the businesses that comprise the
Company's Aerospace business segment for the three fiscal years ended September
30, 1995 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------ -------
(IN MILLIONS)
<S> <C> <C> <C>
Sales:
Space Systems.................................... $ 1,882 $2,044 $ 2,279
Aircraft......................................... 565 583 727
------- ------ -------
Total............................................ $ 2,447 $2,627 $ 3,006
======= ====== =======
Operating Earnings............................... $ 361 $ 372 $ 369
======= ====== =======
</TABLE>
Space Systems. The Company is a world leader in spacecraft and rocket
propulsion systems. Its space systems businesses built and perform support,
maintenance and modification work for the Space Shuttle orbiters, their main
engines and the Shuttle flight program. The Company also designs the power
system for the space station, builds propulsion systems for Atlas and Delta
expendable launch vehicles, and develops advanced technologies for national
defense and space programs. The Company is one of NASA's largest contractors in
terms of dollar volume. Sales of these businesses during fiscal 1995 declined
due to continuing reductions in government spending in space programs. In
November 1995, United Space Alliance, in which the Company participates 50/50
with Lockheed Martin Corporation, was selected by NASA for sole source
negotiation of a contract for operation of the Space Shuttle.
Aircraft. The Company's aircraft operations design, build and modify
military aircraft and supply metal and composite to military and commercial
aerostructures. Current activities include support and modification of the B-1B
Lancer bomber, advanced technology programs, including the X-31 experimental
aircraft, and aerostructures for Boeing 737, 747 and 777 aircraft. In June 1995,
the Company acquired Aero Space Technologies of Australia (ASTA), which
manufactures military aircraft equipment and parts for the international
airliner and military aerostructure components markets.
Automotive
The sales and operating earnings of the businesses that comprise the
Company's Automotive business segment for the three fiscal years ended September
30, 1995 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
Sales:
Heavy Vehicle Systems............................ $ 1,929 $ 1,744 $ 1,455
Light Vehicle Systems............................ 1,192 900 893
------- ------- -------
Total............................................ $ 3,121 $ 2,644 $ 2,348
======= ====== =======
Operating Earnings............................... $ 212 $ 114 $ 135
======= ======= =======
</TABLE>
Heavy Vehicle Systems. Automotive's heavy vehicle systems business is a
major global supplier of drivetrain components and systems for heavy- and
medium-duty commercial trucks, buses, trailers and off-highway vehicles, and
government heavy-duty wheeled vehicles. Major components produced include front
steer axles, single and tandem rear drive axles, trailer axles, clutches,
transmissions, drivelines, brakes, automatic slack adjusters, anti-lock braking
systems (ABS), and air dryers for brake systems. North American factory sales of
heavy-duty trucks totaled a record 244,000 units in fiscal 1995, compared with
215,000 the prior year. Sales of medium-duty trucks, used primarily for short
hauls and local delivery, were 150,000 units, up from 125,000 in fiscal 1994.
Trailer sales rose to a record 321,000 units, up from 255,000 in the previous
year.
Light Vehicle Systems. The Company's light vehicle systems business is a
leading supplier of sunroof, door, access control and seat adjusting systems and
of suspensions and wheels for the world's passenger car
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and light truck industries. In the automotive electronics market, the Company
also provides new products such as anti-squeeze windows, electronic controls and
the PathMaster navigation system for automobiles. In the face of continuing
customer pressure for reduced costs, the Company is emphasizing product
enhancements that provide added value and concentrating its resources on the
systems and electronics product lines. For example, Rockwell is moving from
providing just individual components toward more comprehensive systems with
various power and electronic options. To enhance its ability to support North
American customers for door systems, the Company acquired the automotive window
regulator business of Dura Automotive Systems, Inc. during fiscal 1995.
Graphic Systems
The sales and operating earnings of the Company's Graphic Systems business
segment for the three fiscal years ended September 30, 1995 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C>
Sales................................................. $ 697 $ 655 $ 632
===== ===== =====
Operating Earnings.................................... $ 66 $ 31 $ 15
===== ===== =====
</TABLE>
Graphic Systems is the world's leading supplier of newspaper printing press
systems and a major supplier of commercial web presses. The Company's commercial
presses are used to produce advertising inserts, catalogs, magazines and books.
Performance of this business improved significantly in fiscal 1995, due
primarily to internal programs that improved product costs, efficiency, and
productivity. In response to a complaint filed by the Company, the U.S. Commerce
Department is considering whether German and Japanese large newspaper presses
are being sold in the United States at artificially low prices.
COMPETITIVE POSTURE
The Company competes with many manufacturers which, depending on the
product involved, range from large diversified enterprises comparable in scope
and resources to the Company to smaller companies specializing in particular
products. Factors which affect the Company's competitive posture are its
research and development efforts, the quality of its products and services and
its marketing and pricing strategies. For the United States Government's fiscal
year ended September 30, 1994 (the latest year for which data have been
published), the Company was awarded the second largest dollar volume of NASA's
prime contracts and the thirteenth largest dollar volume of prime contracts for
the Defense Department.
The products of the Company's Electronics and Graphic Systems business
segments are sold by their own sales forces and through distributors and agents.
The Company's automotive components primarily are sold directly to original
equipment manufacturers, some of which also are competitors in that they produce
for their own use many of the products manufactured by the Company. Management
believes that the Company is one of the largest independent manufacturers of
automotive components and parts in North America and the world's largest
manufacturer of newspaper printing press systems.
GOVERNMENT CONTRACTING RISKS
In addition to normal business risks, companies engaged in supplying
military and space equipment to the United States Government are subject to
unusual risks, including dependence on Congressional appropriations and
administrative allotment of funds, changes in governmental procurement
legislation and regulations and other policies which may reflect military and
political developments, significant changes in contract scheduling, complexity
of designs and the rapidity with which they become obsolete, constant necessity
for design improvements, intense competition for available United States
Government business necessitating increases in time and investment for design
and development, difficulty of forecasting costs and schedules when bidding on
developmental and highly sophisticated technical work and other factors
characteristic of the industry. Changes are customary over the life of United
States Government contracts, particularly development contracts, and generally
result in adjustments of contract prices. Additional information on the
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Company's pending claims for termination costs and certain contractual disputes
is contained under the caption GOVERNMENT CONTRACTS in the MD&A on page 18
hereof.
Moreover, various claims (whether based on United States Government or
Company audits and investigations or otherwise) have been or may be instituted
or asserted against the Company related to its United States Government contract
work, including claims based on business practices and cost classifications.
Although such claims are usually resolved by detailed fact-finding and
negotiation, on those occasions when they are not so resolved, civil or criminal
legal or administrative proceedings may ensue. Depending on the circumstances
and the outcome, such proceedings could result in fines, the cancellation of or
suspension of payments under one or more United States Government contracts,
suspension or debarment proceedings affecting potential further business with
the United States Government, or alteration of the Company's procedures relating
to the performance or obtaining of United States Government contracts.
Management of the Company believes there are no claims, audits or investigations
currently pending which will have a material adverse effect on either the
Company's business or its financial condition.
ACQUISITIONS AND DISPOSITIONS
The Company regularly considers the acquisition or development of new
businesses and reviews the prospects of its existing businesses to determine
whether any of them should be modified, sold or otherwise discontinued. In
January 1995, the Company completed its acquisition of Reliance, a major
manufacturer of industrial products and telecommunications equipment for $1,586
million. The purchase price was financed through $311 million of short-term
borrowings, $800 million of long-term debt, and the $475 million of proceeds
from the August 1995 sale of Reliance's telecommunications business. The Company
also acquired several other businesses during fiscal 1995 at an aggregate cost
of $121 million.
GEOGRAPHIC INFORMATION
The Company conducts operations in the United States and in 37 foreign
countries. Selected financial information by major geographic area for the three
years ended September 30, 1995 is contained in Note 22 of the NOTES TO FINANCIAL
STATEMENTS in the 1995 Annual Report.
The Company's principal markets outside the United States are in Australia,
Brazil, Canada, France, Germany, Italy, Japan, the Netherlands, Spain and the
United Kingdom. In addition to normal business risks, operations outside the
United States are subject to other risks including, among other factors, the
political, economic and social environments, governmental laws and regulations,
and currency revaluations and fluctuations.
RESEARCH AND DEVELOPMENT
Information with respect to research and development efforts of the
Company, which are conducted principally under United States Government
contracts, is contained in Note 16 of the NOTES TO FINANCIAL STATEMENTS in the
1995 Annual Report. The Company's Science Center conducts a basic research
program to support the strategies of the operating businesses.
At September 30, 1995, the Company employed approximately 14,869
professional engineers and scientists and 3,616 supporting technical personnel,
most of whom are engaged in a wide variety of activities on United States
Government contracts and subcontracts.
EMPLOYEES
At September 30, 1995, the Company had 82,671 employees, of whom 20,791
were employed outside the United States.
RAW MATERIALS AND SUPPLIES
Raw materials essential to the conduct of all the Company's business
segments generally are available at competitive prices. Many items of equipment
and components used in the production of the Company's
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products in all the Company's business segments are purchased from others. In
addition, the Company's Aerospace business segment and the Defense Electronics
and Avionics businesses in the Electronics business segment generally
subcontract major portions of systems. Although the Company has a broad base of
suppliers and subcontractors, it is dependent upon the ability of its suppliers
and subcontractors to meet performance and quality specifications and delivery
schedules.
ENVIRONMENTAL PROTECTION REQUIREMENTS
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 ENVIRONMENTAL
ISSUES in the MD&A on pages 17-18 hereof. See also Item 3, LEGAL PROCEEDINGS, on
pages 8-9 hereof.
PATENTS, LICENSES AND TRADEMARKS
Numerous patents and patent applications are owned by the Company and
utilized in its activities and manufacturing operations. It also is licensed
under patents owned by others. Various claims of patent infringement have been
made against the Company. Management believes that none of these claims will
have a material adverse effect on the consolidated financial statements of the
Company. While in the aggregate the Company's patents and licenses are
considered important in the operation of its business, management does not
consider them of such importance that loss or termination of any one of them
would materially affect the Company's business.
The Company's name, its registered trademarks "Rockwell" and "Rockwell
International" and its symbol are important to all of its business segments. In
addition, the Company owns a large number of other important trademarks
applicable to only certain of its products, such as "Collins" for navigation and
communication equipment, "Allen-Bradley" and "A-B" for electronic controls and
systems for industrial automation, "Reliance" for electric motors and mechanical
power transmission products and "Goss" for printing presses.
SEASONALITY
None of the Company's business segments is seasonal.
ITEM 2. PROPERTIES.
At September 30, 1995, the Company operated 213 plants and research and
development facilities throughout the United States and in Europe, Brazil,
Canada, Mexico, Australia and the Far East. It also had approximately 350 sales
offices, warehouses and service centers. These facilities had an aggregate floor
space of approximately 48.9 million square feet. Of this floor space,
approximately 76% was owned by the Company and approximately 21% was leased,
with the balance being made available under facilities contracts for use in the
performance of United States Government contracts. At September 30, 1995, the
Company had 3.9 million square feet of floor space (including 3.5 million square
feet in Company-owned facilities) that were not in use, with 67% of that total
represented by facilities previously used under United States Government
contracts. There are no major encumbrances (other than financing arrangements
which in the aggregate are not material) on any of the Company's plants or
equipment. In the opinion of management, the Company's properties have been well
maintained, are in sound operating condition and contain all equipment and
facilities
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necessary to operate at present levels. A summary of floor space of these
facilities at September 30, 1995 is as follows:
<TABLE>
<CAPTION>
COMPANY- GOVERNMENT-
OWNED LEASED FURNISHED
LOCATION AND SEGMENTS FACILITIES FACILITIES FACILITIES TOTAL
--------------------- ---------- ---------- ----------- -----
(IN MILLIONS OF SQUARE FEET)
<S> <C> <C> <C> <C>
United States:
Electronics....................................... 15.2 4.8 20.0
Aerospace......................................... 6.1 1.6 1.8 9.5
Automotive........................................ 4.4 0.4 4.8
Graphic Systems................................... 1.2 0.3 1.5
Europe:
Electronics....................................... 0.6 1.3 1.9
Automotive........................................ 3.8 0.3 4.1
Graphic Systems................................... 0.9 0.9
South America:
Electronics....................................... 0.2 0.2
Automotive........................................ 2.0 2.0
Canada and other areas:
Electronics....................................... 0.5 0.7 1.2
Automotive........................................ 0.8 0.8
Graphic Systems................................... 0.1 0.1
Corporate Offices (including centralized computing
and certain research and development
facilities)....................................... 1.4 0.5 1.9
---- ---- --- ----
Total..................................... 37.0 10.1 1.8 48.9
==== ==== === ====
</TABLE>
ITEM 3. LEGAL PROCEEDINGS.
Rocky Flats Plant. On January 30, 1990, a civil action was brought in the
United States District Court for the District of Colorado against the Company
and another former operator of the Rocky Flats Plant (the Plant), Golden,
Colorado, operated from 1975 through December 31, 1989 by the Company for the
Department of Energy (DOE). The action alleges the improper production, handling
and disposal of radioactive and other hazardous substances, constituting, among
other things, violations of various environmental, health and safety laws and
regulations, and misrepresentation and concealment of the facts relating
thereto. The plaintiffs, who purportedly represent two classes, sought
compensatory damages of $250 million for diminution in value of real estate and
other economic loss; the creation of a fund of $150 million to finance medical
monitoring and surveillance services; exemplary damages of $300 million; CERCLA
response costs in an undetermined amount; attorneys' fees; an injunction; and
other proper relief. On February 13, 1991, the court granted certain of the
motions of the defendants to dismiss the case. The plaintiffs subsequently filed
a new complaint, and on November 26, 1991, the court granted in part a renewed
motion to dismiss. The remaining portion of the case is pending before the
court. On October 8, 1993, the court certified separate medical monitoring and
property value classes. The case is currently in discovery, and trial is
expected in 1996.
The Company believes that it is entitled under applicable law and its
contract with the DOE to be indemnified for all costs and any liability
associated with this action, and the Company has been reimbursed for all such
costs incurred to date.
On November 13, 1990, the Company was served with a summons and complaint
in another civil action, which the Company believes is totally without merit,
brought against the Company in the same court by James Stone, claiming to act in
the name of the United States, alleging violations of the U.S. False Claims Act
in connection with the Company's operation of the Plant (and seeking treble
damages and forfeitures) as well as a personal cause of action for alleged
wrongful termination of employment, seeking reinstatement with back pay and
other unspecified damages. On August 8, 1991, the court dismissed the personal
cause of action.
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On February 2, 1994, the court denied Rockwell's motion to dismiss the complaint
for lack of subject matter jurisdiction, and discovery is proceeding. On
November 14, 1995, the Department of Justice (DOJ) filed a motion seeking leave
to intervene in the case on the government's behalf. In response to that action
the DOE notified the Company on December 6, 1995 that it will no longer
reimburse costs incurred by the Company in defense of this action. The Company
believes intervention by the DOJ would be improper, and is therefore opposing
both governmental actions.
Hanford Nuclear Reservation. On August 6, 1990 and August 9, 1990, civil
actions were filed in the United States District Court for the Eastern District
of Washington against the Company and the present and other former operators of
the DOE's Hanford Nuclear Reservation (Hanford), Hanford, Washington. The
Company operated part of Hanford for the DOE from 1977 through June 1987. Both
actions purport to be brought on behalf of various classes of persons and
numerous individual plaintiffs who resided, worked, owned or leased real
property, or operated businesses, at or near Hanford or downwind or downriver
from Hanford, at any time since 1944. The actions allege the improper handling
and disposal of radioactive and other hazardous substances and assert various
statutory and common law claims. The relief sought includes unspecified
compensatory and punitive damages for personal injuries and for economic losses,
and various injunctive and other equitable relief.
Other cases asserting similar claims (the follow-on claims) on behalf of
the same and similarly situated individuals and groups have been filed from time
to time since August 1990, and may continue to be filed from time to time in the
future. These actions and the follow-on claims have been (and any additional
follow-on claims that may be filed are expected to be) consolidated in the
United States District Court for the Eastern District of Washington under the
name In re Hanford Nuclear Reservation Litigation. Because the claims and
classes of claimants included in the actions described in the preceding
paragraph are so broadly defined, the follow-on claims filed as of December 21,
1995 have not altered, and possible future follow-on claims are not expected to
alter, in any material respect the scope of the litigation.
Effective October 1, 1994, the DOE assumed control of the defense of
certain of the contractor defendants (including the Company) in the In re
Hanford Nuclear Reservation Litigation. Beginning on that date, the costs of the
Company's defense, which had previously been reimbursed to the Company by the
DOE, have been and are being paid directly by the DOE. The Company believes it
is entitled under applicable law and its contracts with the DOE to be
indemnified for all costs and any liability associated with these actions.
Other. Various other 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, intellectual property, 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.
Information with respect to a pending investigation is contained under the
caption OTHER MATTERS in the MD&A on page 18 hereof.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the 1995 fiscal year.
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ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY.
The name, age, positions and offices held with the Company and principal
occupations and employment during the past five years of each of the executive
officers of the Company as of November 30, 1995 are as follows:
<TABLE>
<CAPTION>
NAME, OFFICE AND POSITION, AND PRINCIPAL OCCUPATIONS AND EMPLOYMENT AGE
----------------------------------------------------------------------------- ---
<S> <C>
DONALD R. BEALL--Chairman of the Board and Chief Executive Officer of
Rockwell................................................................... 57
DON H. DAVIS, JR.--President and Chief Operating Officer of Rockwell since
July 1995; Executive Vice President and Chief Operating Officer of Rockwell
from January 1994 to July 1995; Senior Vice President and President,
Automation of Rockwell from June 1993 to January 1994; President of
Allen-Bradley from July 1989 to January 1994............................... 56
W. MICHAEL BARNES--Senior Vice President, Finance & Planning and Chief
Financial Officer of Rockwell since July 1991; Vice President, Business
Development and Planning of Rockwell prior thereto......................... 53
KENT M. BLACK--Executive Vice President and Chief Operating Officer of
Rockwell................................................................... 56
WILLIAM J. CALISE, JR.--Senior Vice President, General Counsel and Secretary
of Rockwell since November 1994; senior partner of Chadbourne & Parke (law
firm) prior thereto........................................................ 57
LEE H. CRAMER--Vice President and Treasurer of Rockwell...................... 50
WILLIAM D. FLETCHER--Senior Vice President, International of Rockwell since
October 1995; President, Asia-Pacific Sales Region of Allen-Bradley from
March 1995 to October 1995; President of the Asia-Pacific Region of
Allen-Bradley from June 1993 to March 1995; Senior Vice President,
International Group and Motion Control Division of Allen-Bradley from
January 1992 to June 1993; Senior Vice President, International Group of
Allen-Bradley prior thereto................................................ 56
JODIE K. GLORE--Senior Vice President of Rockwell and President & Chief
Operating Officer-Rockwell Automation since October 1995; President of
Allen-Bradley from January 1994 to October 1995; Senior Vice President,
Automation Group (formerly Industrial Computer and Communication Group) of
Allen-Bradley from January 1992 to January 1994; Vice President, Sales and
Marketing of Square D Company (electrical distribution and industrial
control products) from October 1990 to January 1992; Vice President &
General Manager, Power Equipment Business of Square D Company prior
thereto.................................................................... 48
THOMAS L. GUNCKEL, II--Senior Vice President, Research, Engineering and
Operations of Rockwell since June 1994; Senior Vice President, Research and
Engineering of Rockwell from March 1994 to June 1994; Vice President and
General Manager, Autonetics Electronic Systems Division of Rockwell prior
thereto.................................................................... 59
CHARLES H. HARFF--Senior Vice President and Special Counsel of Rockwell since
November 1994; Senior Vice President, General Counsel and Secretary of
Rockwell
prior thereto.............................................................. 66
LAWRENCE J. KOMATZ--Vice President and Controller of Rockwell................ 53
ROBERT R. LIND--Vice President, Corporate Development of Rockwell since
December 1994; Managing Director of Lehman Brothers (investment banking)
prior thereto.............................................................. 47
RICHARD R. MAU--Senior Vice President of Rockwell since September 1995;
Senior Vice President, Communications of Rockwell prior thereto............ 64
JOHN A. MCLUCKEY--Senior Vice President and President & Chief Operating
Officer-Aerospace and Defense of Rockwell since September 1995; Senior Vice
President and President, Defense Systems of Rockwell from June 1993 to
September 1995; President, Defense Electronics of Rockwell prior thereto... 55
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
NAME, OFFICE AND POSITION, AND PRINCIPAL OCCUPATIONS AND EMPLOYMENT AGE
----------------------------------------------------------------------------- ---
<S> <C>
ROBERT H. MURPHY--Senior Vice President, Organization and Human Resources of
Rockwell................................................................... 57
WILLIAM A. SANTE, II--General Auditor of Rockwell............................ 52
JOHN R. STOCKER--Vice President, Law of Rockwell since November 1994; Vice
President and Associate General Counsel of Rockwell prior thereto.......... 54
CHARLES C. STOOPS, JR.--General Tax Counsel of Rockwell...................... 62
EARL S. WASHINGTON--Senior Vice President, Communications of Rockwell since
September 1995; Vice President, Advertising and Public Relations of
Rockwell from March 1994 to September 1995; Vice President, Business
Development of Rockwell from June 1993 to March 1994; Vice President of
Strategic Management for Rockwell's Defense Electronics businesses from
June 1990 to June 1993 and Vice President of Transportation Systems of
Rockwell's Defense Electronics businesses from June 1992 to June 1993...... 51
</TABLE>
There are no family relationships, as defined, between any of the above
executive officers. No officer of the Company was selected pursuant to any
arrangement or understanding between him and any person other than the Company.
All executive officers are elected annually.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The principal market on which the Company's Common Stock, par value $1 per
share, is traded is the New York Stock Exchange. The Company's Common Stock, par
value $1 per share, is also traded on the Boston, Chicago, Pacific and
Philadelphia Stock Exchanges as well as certain stock exchanges outside the
United States as set forth on the cover of this Report. There is no trading
market for the Class A Common Stock, par value $1 per share, but a sale may be
effected by selling the Common Stock into which Class A Common Stock is
convertible. On November 30, 1995, there were 62,551 shareowners of record of
the Company's Common Stock and 47,622 shareowners of record of the Company's
Class A Common Stock.
The following table sets forth the high and low trading price of the
Company's Common Stock on the New York Stock Exchange--Composite Transactions
during each quarter of the Company's fiscal years ended September 30, 1995 and
1994:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
FISCAL QUARTERS HIGH LOW HIGH LOW
--------------- ---- --- ---- ---
<S> <C> <C> <C> <C>
First..................................... 36 7/8 33 5/8 38 1/2 33
Second.................................... 39 7/8 35 44 1/8 35 3/8
Third..................................... 47 1/8 38 3/4 41 34 1/2
Fourth.................................... 48 43 37 7/8 33 1/2
</TABLE>
During fiscal year 1995 the Company repurchased, through daily open-market
purchases, 3.5 million shares of Common Stock. Shares repurchased under the
Company's stock repurchase program are to be used for employee stock option and
other benefit and compensation plans, conversion of the Company's convertible
securities and other corporate purposes.
11
<PAGE> 12
The following table sets forth the aggregate quarterly dividends per common
share (comprised of the Common Stock and Class A Common Stock) during each of
the Company's five fiscal years ended September 30, 1995:
<TABLE>
<CAPTION>
DIVIDENDS PER
FISCAL YEAR COMMON SHARE
----------- -------------
<S> <C>
1995.......................................................... $1.08
1994.......................................................... 1.02
1993.......................................................... 0.96
1992.......................................................... 0.92
1991.......................................................... 0.86
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA.
See the information in the table captioned SELECTED FINANCIAL DATA in the
1995 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
For Rockwell and its shareowners, 1995 was an outstanding year. The Company
exceeded the financial goals in its long-term strategy to continuously enhance
shareowner value. The total investment return on Rockwell stock, including stock
price appreciation and cash dividends, was 41 percent when measured from
September 30, 1994 to September 30, 1995.
In 1992 Rockwell management established long-term financial goals of low
double-digit average annual earnings per share growth and annual return on
shareowners' equity in the 18 to 20 percent range. Since that time, Rockwell has
posted eleven consecutive quarters of double-digit earnings per share increases.
In 1995 earnings per share rose 19 percent over 1994 and for the period 1992 to
1995, earnings per share increased at an average annual rate of about 17
percent. In addition, in 1995 the Company achieved a return on shareowners'
equity of 20.8 percent, the third straight year it has met or exceeded its goal.
With respect to cash flow, the Company's goal is that cash provided by
operating activities together with proceeds from the sale of property and
businesses will be sufficient not only to fund the capital expenditure programs
of its businesses, but also provide at least $400 million a year to be used for
dividends, acquisitions, debt reduction, and, as appropriate, stock repurchases.
With cash provided by operating activities increasing 22 percent to $1.1 billion
for the year, the Company has for the fourth consecutive year met this cash flow
goal.
For 1996 the Company's capital expenditures are planned to increase
significantly to more than $800 million to accommodate the growth profile of our
leadership businesses, particularly the fast-growing Automation and
Semiconductor Systems businesses. Management believes, however, that with the
excellent earnings potential of the Company's businesses and aggressive asset
management, the Company's cash flow goal will be achieved.
The biggest event at Rockwell in 1995 was the acquisition of Reliance. The
integration of Reliance with the Company's Allen-Bradley Automation business
positions Rockwell to become the world leader in factory automation. Reliance
was immediately accretive to Rockwell earnings, contributing eight cents per
share to Rockwell's results for the three quarters following its acquisition,
after deducting the financing cost of the acquisition and amortization of
goodwill and other intangible assets.
Financing the Reliance acquisition has raised the Company's 1995 year-end
debt to total capital ratio to 39 percent, which is above the Company's goal of
25 to 35 percent. However, the Company expects to return to its goal over the
next two years. Notwithstanding this increase in debt, the major rating agencies
rate Rockwell long-term debt as AA/AA- and its commercial paper has the highest
possible rating.
12
<PAGE> 13
Looking ahead, Rockwell's management is committed to achieving the
Company's financial goals, which will substantially enhance shareowner value
and, over the long-term, help Rockwell reach its vision to be the best
diversified high-technology company in the world.
RESULTS OF OPERATIONS
Sales and Earnings by Business Segment
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
---------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
SALES
Electronics
Automation............................. $ 3,590 $ 2,085 $ 1,716 $ 1,471 $ 1,387
Avionics............................... 1,368 1,343 1,299 1,420 1,470
Semiconductor Systems.................. 760 581 423 333 297
Defense Electronics.................... 987 998 1,213 1,378 1,477
------- ------- ------- ------- -------
Total................................ 6,705 5,007 4,651 4,602 4,631
------- ------- ------- ------- -------
Aerospace
Space Systems.......................... 1,882 2,044 2,279 2,372 2,644
Aircraft............................... 565 583 727 797 891
------- ------- ------- ------- -------
Total................................ 2,447 2,627 3,006 3,169 3,535
------- ------- ------- ------- -------
Automotive
Heavy Vehicle Systems.................. 1,929 1,744 1,455 1,373 1,363
Light Vehicle Systems.................. 1,192 900 893 896 791
------- ------- ------- ------- -------
Total................................ 3,121 2,644 2,348 2,269 2,154
------- ------- ------- ------- -------
Graphic Systems........................... 697 655 632 688 962
------- ------- ------- ------- -------
Sales of ongoing businesses................. 12,970 10,933 10,637 10,728 11,282
Divested businesses......................... 11 190 203 182 645
------- ------- ------- ------- -------
Total................................ $12,981 $11,123 $10,840 $10,910 $11,927
======= ======= ======= ======= =======
OPERATING EARNINGS
Electronics
Automation............................. $ 481 $ 265 $ 193 $ 102 $ 96
Avionics/Semiconductor
Systems/Defense...................... 440 432 409 387 457
------- ------- ------- ------- -------
Total Electronics...................... 921 697 602 489 553
Aerospace................................. 361 372 369 328 409
Automotive................................ 212 114 135 107 61
Graphic Systems........................... 66 31 15 21 121
------- ------- ------- ------- -------
Operating Earnings of ongoing businesses.... 1,560 1,214 1,121 945 1,144
Divested businesses......................... (31) 8 (13) 16 372
Restructuring of businesses................. (272)
General corporate--net...................... (133) (104) (100) (75) (85)
Interest expense............................ (170) (97) (104) (108) (135)
Provision for income taxes.................. (484) (387) (342) (295) (423)
------- ------- ------- ------- -------
Total................................ $ 742 $ 634 $ 562 $ 483 $ 601
======= ======= ======= ======= =======
<FN>
- ---------
Total earnings for 1992 exclude the one-time charge related to the change in
accounting for retirement medical benefits. Divested businesses include the
sales, operating earnings and gains or losses on the disposition of significant
businesses and product lines (see Note 22 of the NOTES TO FINANCIAL STATEMENTS
in the 1995 Annual Report). Amortization of intangible assets related to the
Allen-Bradley and Reliance acquisitions reduced Automation earnings by (in
millions): 1995, $49; 1994, $22; 1993, $26; 1992, $56; and 1991, $67.
</TABLE>
13
<PAGE> 14
1995 Compared to 1994
Sales for 1995 increased 17 percent to a record $13 billion from $11.1
billion in 1994. Reliance contributed $1 billion to this increase, while strong
markets, new product introductions, and increased market share led to record
sales by the Company's Semiconductor Systems, Allen-Bradley Automation, and
Light and Heavy Vehicle Systems businesses. Avionics and Graphic Systems sales
were also up for the year, while sales by the Company's Aerospace and Defense
Electronics businesses declined due to the continuing reduction in government
spending in defense and space programs.
In 1995 sales to U.S. commercial and international customers were up 30
percent from 1994 and now comprise 72 percent of the Company's total sales
compared to 65 percent in 1994. Sales to the U.S. Department of Defense
accounted for 16 percent of total sales compared to 20 percent in 1994, while
sales to NASA were 12 percent compared to 15 percent a year ago. The Company's
1995 international sales increased 24 percent to $4.3 billion, the highest level
in the Company's history.
Net income for 1995 increased 17 percent over 1994. Seven of Rockwell's
nine businesses had higher 1995 earnings, with six achieving double digit
earnings growth from 1994. Operating earnings of the Company's businesses
increased 28 percent over 1994.
Electronics. 1995 earnings increased 32 percent primarily due to record
sales and earnings performances by the Allen-Bradley Automation and
Semiconductor Systems businesses and to the inclusion of Reliance's nine months
operating earnings in Automation's results. The Electronics businesses accounted
for 52 percent of the Company's total sales and 59 percent of total operating
earnings.
Automation is Rockwell's largest business with 28 percent of total sales
and 31 percent of total operating earnings. Automation's 1995 earnings were up
82 percent over 1994, 45 percent due to strong worldwide markets for
Allen-Bradley products and 37 percent to the inclusion of Reliance in this
year's results. Excluding the newly acquired Reliance operations, Automation
posted sales increases of 19 percent in the United States, 36 percent in Canada,
38 percent in Asia-Pacific, 28 percent in Europe, and 26 percent in Latin
America.
Semiconductor Systems earnings were 14 percent higher than 1994 due to
strong customer demand for the Company's new high speed data modem products,
which reached full production during this year's third quarter. In the fourth
quarter, Semiconductor Systems earnings were more than three times higher than
last year's fourth quarter earnings. Semiconductor Systems is the fastest
growing business in Rockwell with sales up 25 percent annually during the past
five years.
Avionics earnings were ahead of 1994 principally due to strengthening
commercial avionics markets in the second half of this year and substantial
completion of development work on the Boeing 777 program. This more than offset
significant investments in products to address the growing land transportation
electronics market.
Defense Electronics 1995 earnings were the second highest in its history
although slightly below last year's record earnings due to lower sales and a
favorable contract adjustment a year ago.
Aerospace. Space Systems continued to generate strong returns and cash
flow, although earnings were down 7 percent from a year ago due to lower volume.
Aircraft's earnings were up 11 percent primarily due to the effect of
unfavorable contract adjustments last year.
Automotive. Earnings were up 86 percent over 1994 due to an 18 percent
sales increase, improved operating performance, and lower Heavy Vehicle Systems
product warranty costs. Earnings of Heavy Vehicle Systems more than doubled
1994's results, while earnings of Light Vehicle Systems were up 32 percent.
Automotive's return on sales increased to 6.8 percent in 1995 compared to 4.3
percent last year.
Graphic Systems. Earnings more than doubled 1994 earnings due to increased
sales, particularly in the large newspaper printing press business, and
continuing cost containment and productivity programs.
14
<PAGE> 15
Corporate. 1995 earnings were reduced by higher interest expense, related
to borrowings for the Reliance acquisition, higher contributions to the
Company's charitable trust, and increased environmental costs related to
previously disposed businesses.
1996 Outlook. Assuming continued moderate inflation and economic growth,
the Company's management expects that the Company will again post double-digit
earnings per share growth and achieve return on shareowners' equity in the 20
percent range. Automation and Semiconductor Systems are expected again to
achieve double-digit sales and earnings increases. Automotive's earnings are
expected to improve with sales increases planned by Light Vehicle Systems, and
the Company also expects continued improvement in Avionics and Graphic Systems
earnings. The Company expects earnings of the Aerospace and Defense Electronics
businesses to approximate 1995's results.
1994 Compared to 1993
Sales in 1994 increased three percent from 1993, even though sales by the
Company's Aerospace and Defense Electronics businesses declined 14 percent due
to the continuing reduction in government spending in defense and space
programs.
All of the Company's commercial businesses achieved higher sales in 1994
compared to 1993 led by significant increases in Automation, Semiconductor
Systems, and Heavy Vehicle Systems. Automation sales increased 22 percent and
Semiconductor Systems sales increased 37 percent due to strong markets and new
product driven increased market shares. Sales of Heavy Vehicle Systems increased
20 percent reflecting the strong North American truck markets.
Net income for 1994 increased 13 percent over 1993 with earnings increases
recorded by seven of the Company's nine business units.
Electronics. 1994 earnings increased 16 percent from 1993 due to the
higher sales and improved earnings performance of the Automation and
Semiconductor Systems businesses, as well as higher earnings by Defense
Electronics resulting from excellent performance and cost containment programs.
Although the general aviation and government avionics product lines had
increased sales and earnings in 1994, total Avionics earnings were below 1993
due to weak air transport markets and investments in new product development.
Automation's higher earnings were due to strong demand for Allen-Bradley
products in all of its primary markets worldwide. Automation's incoming orders
in 1994 averaged $8.8 million per day, up 21 percent from 1993 and international
sales surpassed 30 percent of total sales for the first time.
Semiconductor Systems experienced strong demand for its data modems,
principally in the fast growing personal computer market. The business shipped
over 15 million data modems in 1994 compared to approximately 9 million in 1993,
and shipped 8 million facsimile machine modems compared to 6 million in 1993.
Aerospace. 1994 earnings were slightly ahead of 1993 even though sales
declined due to the continuing reduction in government spending on defense and
space programs. Higher earnings of the Space Systems business, primarily due to
favorable contract performance and continuing cost reduction programs, more than
offset lower volume-related earnings by the Aircraft business.
Automotive. Earnings declined in 1994 as compared to 1993 as increased
earnings in Heavy Vehicle Systems were more than offset by decreased earnings in
Light Vehicle Systems. Significant 1994 gains in Heavy Vehicle Systems earnings
attributable to the strong North American truck markets were largely offset by
higher product warranty provisions. The product warranty provisions included
higher than anticipated costs related to the business' extended warranty program
as well as a charge to recognize the cost of inspections and potential field
modifications of certain transmission products.
In Light Vehicle Systems, 1994 earnings were lower due to the effect of
weak international markets and investments in automotive electronics.
15
<PAGE> 16
Graphic Systems. Earnings in 1994 more than doubled from 1993 due to
improved profitability in all its product lines as a result of the business
substantially lowering its cost structure and downsizing its manufacturing
capacity to reflect market realities.
FINANCIAL CONDITION
Rockwell's financial condition continues to be a major strength, providing
the liquidity and flexibility for its businesses to grow through research and
new product development, capital investments, and acquisitions.
In 1995 cash flow continued to be strong with cash provided by operating
activities increasing 22 percent to $1.1 billion. This is after substantial
investments by the Company's businesses in research and new product development.
Rockwell invested a record $649 million in Company-funded research and new
product development. In addition, the Company spent over $1 billion in research
and development under contracts sponsored by the U.S. Government.
Capital expenditures rose to a record $685 million in 1995 compared to $568
million in 1994. Substantially all of this year's capital expenditures were for
facilities and equipment to support business growth initiatives as well as cost
reduction and quality improvement programs. About 60 percent of the 1995 capital
expenditures were in the Automation and Semiconductor Systems businesses and an
additional 17 percent was spent by the Automotive businesses.
The major use of cash in 1995 was the acquisition of Reliance for $1,586
million. The acquisition price was financed through the subsequent sale of
Reliance's telecommunications business for $475 million and the issuance of $300
million in three-year notes, $500 million in ten-year notes and $311 million of
commercial paper. During the year, the Company also acquired five other
businesses and entered into two joint ventures for an aggregate investment of
$121 million to support growth initiatives in Automation, Semiconductor Systems,
Automotive, Aircraft, and Avionics.
Other important uses of the Company's cash are the payment of dividends and
stock repurchases. In 1995 dividend payments totaled a record $235 million, or
32 percent of net income. The Company also spent $137 million in stock
repurchases. Since the Company initiated its stock repurchase program in 1984,
it has purchased a total of 114 million shares of common stock at an average
price of $23.07 per share.
INCOME TAXES
The Company's consolidated effective income tax rate in 1995 was 39.5%
compared to 37.9% in 1994. The increase is principally due to (1) the
amortization of goodwill recorded in the Reliance acquisition, which is not
deductible for tax purposes, and (2) lower research and experimentation tax
credits in the United States and Australia.
At September 30, 1995, the Company had unrecognized tax benefits from
foreign net operating loss carryforwards of approximately $65 million, including
$28 million incurred by AeroSpace Technologies of Australia, which was acquired
by Rockwell in 1995. Of the loss carryforwards, $35 million expire between 1996
and 2003 and the remaining $30 million do not expire. From tax strategy
initiatives, the Company realized benefits from the utilization of foreign net
operating loss carryforwards of $17 million in 1995 and $11 million in 1994. The
Company also had foreign tax credit carryforwards of approximately $55 million
at September 30, 1995, which expire through 2000.
In 1993 the Company filed a research and experimentation tax credit refund
claim for the years 1981 through 1991. In 1994 a small portion of the claim was
favorably resolved and the remaining portion, approximately $90 million
including interest, related to fixed-price government contracts was disallowed.
The Company has appealed this decision to the Internal Revenue Service Appeals
Office. The tax benefit of this disputed claim has not been recognized for
financial reporting purposes.
16
<PAGE> 17
PENSIONS
At September 30, 1995, the Company's pension plans were overfunded by more
than $1.1 billion based on actual benefits earned to date and by $650 million
after considering the effect of projected compensation increases on benefits
earned.
The Company has reported net pension income since adopting the pension
accounting standard in 1987, primarily due to the requirement to recognize the
initial net asset (pension assets in excess of pension liabilities at date of
adoption) over the average remaining service life of active employees. The
Company is recognizing its initial net asset of $1.7 billion over a 13 year
amortization period (see Note 18 of the NOTES TO FINANCIAL STATEMENTS in the
1995 Annual Report). The yearly amortization benefit of this initial net asset
is largely related to the Company's Aerospace and Defense Electronics
businesses.
HEALTH CARE
During the past four years, the Company has made amendments to its medical
benefit plans designed to limit the growth in its future cost while still
providing access to quality care for employees and retirees. The initial
retirement medical benefit liability of $2.5 billion recorded by the Company in
1992, upon adoption of the accounting standard on retirement medical benefits,
has been reduced by over $400 million as a result of these plan amendments. This
reduction is being amortized into income over 3 to 12 years in accordance with
the standard's requirements and has resulted in reduced retirement medical
expense (see Note 17 of the NOTES TO FINANCIAL STATEMENTS in the 1995 Annual
Report). The yearly amortization of the retirement medical benefit liability
reduction is largely related to the Company's Aerospace and Defense Electronics
businesses.
ENVIRONMENTAL ISSUES
Federal, state and local requirements relating to the discharge of
substances into the environment, the disposal of hazardous wastes and other
activities affecting the environment have had and will continue to have an
impact on the manufacturing operations of the Company. Thus far, compliance with
environmental requirements and resolution of environmental claims have been
accomplished without material effect on the Company's liquidity and capital
resources, competitive position or financial statements.
It is difficult to estimate the timing and ultimate amount of environmental
costs to be incurred in the future due to uncertainties about the status of the
law, regulations, technology and information related to individual sites.
Nevertheless, to assess the materiality for financial statement disclosure
purposes, management estimates the total reasonably possible remediation costs
that could be incurred by the Company. In the determination of such estimates
consideration is given to the professional judgment of the Company's
environmental engineers, in consultation with outside environmental specialists
when necessary, and counsel, including assessments as to the likelihood that
other companies which have been designated potentially responsible parties
(PRPs) have the financial resources and commitment to fulfill their obligations
at Superfund sites where they and the Company may be jointly and severally
liable. For certain sites only a range of reasonably possible costs can be
estimated. In these cases, the top end of the range is included in management's
estimate of total reasonably possible costs; however, in the determination of
accruals the low end of the range is accrued as prescribed by generally accepted
accounting principles.
The Company records accruals for environmental issues in the accounting
period in which its responsibility is established and the cost can be reasonably
estimated. The Company records receivables for expected recoveries from third
parties only when it is probable that such parties will fulfill their obligation
to pay and have the financial resources to do so.
The Company, including the newly acquired Reliance, has been designated as
a PRP at 50 Superfund sites, excluding sites as to which the Company's records
disclose no involvement or as to which the Company's potential liability has
been finally determined. Management estimates the total reasonably possible
costs the Company could incur for the remediation of Superfund sites at
September 30, 1995 to be about $57 million, of which $35 million has been
accrued.
17
<PAGE> 18
Various other lawsuits, claims, and proceedings have been asserted against
the Company alleging violations of federal, state and local environmental
protection requirements, or seeking remediation of alleged environmental
impairments, principally at previously disposed of properties. For these matters
management has estimated the total reasonably possible costs the Company could
incur at September 30, 1995 to be about $140 million, an increase of $65 million
from last year primarily due to Reliance environmental matters. The Company has
recorded environmental accruals for these matters of $110 million, of which $46
million relate to Reliance.
A major portion of the $46 million accrual for Reliance's environmental
obligations will be recoverable from Exxon Corporation, based on an agreement
between Exxon and Reliance whereby Exxon agreed to pay substantially all costs
related to certain environmental matters. Therefore, an offsetting $25 million
receivable from Exxon has been recorded at September 30, 1995. In addition, the
Company believes it is entitled to indemnification from Exxon with respect to
one site involving approximately $18 million of cost, as to which Exxon is
disputing its indemnification obligation.
Based on its assessment, management believes that the Company's
expenditures for environmental capital investment and remediation necessary to
comply with present regulations governing environmental protection and other
expenditures for the resolution of environmental claims will not have a material
adverse effect on the Company's liquidity and capital resources, competitive
position or financial statements. Management cannot assess the possible effect
of compliance with future requirements.
GOVERNMENT CONTRACTS
The Company's government contract operations are subject to U.S. Government
audits of contract performance and cost classification and investigations of
business practices 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 debarred or suspended from receiving new
government contracts for a period of time. Management believes there are no
claims, audits or investigations currently pending against the Company with
respect to government contracts which will have a material adverse effect on
either the Company's business or its financial condition.
Certain of the Company's U.S. Government contracts have been terminated for
convenience during the past several years. The Company has filed claims for
termination costs it believes are reimbursable under the contract terms. At
September 30, 1995, such outstanding termination claims aggregated approximately
$110 million, net of $30 million collected through progress payments. In
addition, the Company has submitted claims aggregating $547 million with respect
to contractual disputes on the AC-130U Gunship full-scale development and
production contracts.
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 these claims. At September 30, 1995,
receivables include $205 million relating to these claims, a major portion of
which relates to the AC-130U Gunship claim. 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.
OTHER MATTERS
In July 1995 a federal grand jury in Los Angeles began an investigation of
the July 1994 explosion at Rocketdyne's Santa Susana Field Laboratory in which
two scientists were killed and a technician injured. The grand jury is
attempting to determine whether the accident occurred during an illegal disposal
of hazardous waste and whether hazardous wastes were being illegally stored. The
Company is assisting the government's investigation. While there is a risk that
civil or criminal fines may be imposed, and that Rocketdyne or the Company may
be suspended or debarred from government contracts as a result of the incident,
management believes the outcome of matters related to the Santa Susana matter
will not have a material adverse effect on either the Company's business or its
financial statements.
18
<PAGE> 19
BACKLOG
The Company's 1995 year-end backlog was $11.8 billion compared to last
year's $10.8 billion. This year's backlog includes $6 billion of commercial
orders, $1.8 billion of funded government orders and $4 billion of unfunded
government orders. The increase in 1995's backlog is principally due to orders
of the Semiconductor Systems business, which may reflect, in part, multiple
ordering by customers due to industry capacity constraints.
Commercial orders may be canceled or deferred by customers, subject in
certain cases to cancellation penalties. Funded government orders include
amounts that have been appropriated by Congress and allotted under contracts by
the procuring government agency. Typically only a portion of the price of a
large government contract is funded at the time work commences. For the unfunded
portion of government orders, there is no assurance that congressional
appropriations or agency allotments requisite for funding will be forthcoming.
All government contracts, whether funded or unfunded, can be curtailed or
terminated at the convenience of the government.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See STATEMENT OF CONSOLIDATED INCOME, CONSOLIDATED BALANCE SHEET, STATEMENT
OF CONSOLIDATED CASH FLOWS, STATEMENT OF CONSOLIDATED SHAREOWNERS' EQUITY, NOTES
TO FINANCIAL STATEMENTS, and REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
in the 1995 Annual Report.
See also the table under the caption RESULTS OF OPERATIONS, Sales and
Earnings by Business Segment in the MD&A on page 13 hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
See the information under the captions NOMINEES FOR ELECTION AS DIRECTORS
and INFORMATION AS TO NOMINEES FOR DIRECTORS on pages 3-7 of the 1996 Proxy
Statement. No nominee for director was selected pursuant to any arrangement or
understanding between the nominee and any person other than the Company pursuant
to which such person is or was to be selected as a director or nominee. See also
the information with respect to executive officers of the Company under Item 4a
of Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION.
See the information under the captions EXECUTIVE COMPENSATION, OPTION
GRANTS, AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES and RETIREMENT
PLANS on pages 10-12 and 18, respectively, of the 1996 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
See the information under VOTING SECURITIES and OWNERSHIP BY MANAGEMENT OF
EQUITY SECURITIES on pages 3 and 9, respectively, of the 1996 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See the information under the caption CERTAIN TRANSACTIONS AND OTHER
RELATIONSHIPS on page 8 of the 1996 Proxy Statement.
19
<PAGE> 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements, Financial Statement Schedules and Exhibits.
(1) Financial Statements (all financial statements listed below are
those of the Company and its consolidated subsidiaries and are
incorporated herein by reference in Item 8 hereof from the 1995
Annual Report).
Statement of Consolidated Income, years ended September 30, 1995,
1994 and 1993.
Consolidated Balance Sheet, September 30, 1995 and 1994.
Statement of Consolidated Cash Flows, years ended September 30, 1995,
1994 and 1993.
Statement of Consolidated Shareowners' Equity, years ended September
30, 1995, 1994 and 1993.
Notes to Financial Statements.
Report of Independent Certified Public Accountants.
Sales and Earnings by Business Segment, years ended September 30,
1991 through 1995.
(2) Financial Statement Schedule for the years ended September 30, 1995,
1994 and 1993.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report........................................ S-1
Schedule II--Valuation and Qualifying Accounts...................... S-2
</TABLE>
Schedules not filed herewith are omitted because of the absence of
conditions under which they are required or because the information
called for is shown in the financial statements or notes thereto.
(3) Exhibits.
<TABLE>
<S> <C>
3-a-1 Copy of Restated Certificate of Incorporation of the Company, as
amended, filed as Exhibit 3-a-1 to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1994, is hereby
incorporated by reference.
3-b-1 Copy of By-Laws of the Company, filed as Exhibit 3 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1995, is hereby incorporated by reference.
4-a-1 Indenture dated as of October 1, 1982 between the Company and Chemical
Bank, as successor by merger to Manufacturers Hanover Trust Company,
as Trustee, pursuant to which the 7 5/8% Notes due February 17, 1998,
the 8 7/8% Notes due September 15, 1999, the 8 3/8% Notes due February
15, 2001, the 6 3/4% Notes due September 15, 2002, the 7 7/8% Notes
due February 15, 2005 and the 6 5/8% Notes due June 1, 2005 have been
issued, filed as Exhibit 4-a to Registration Statement No. 33-39510,
is hereby incorporated by reference.
4-a-2 First Supplemental Indenture dated as of February 27, 1987 to the
Indenture listed as Exhibit 4-a-1 above, filed as Exhibit 4-a to the
Company's Current Report on Form 8-K dated March 11, 1987, is hereby
incorporated by reference.
4-a-3 Indenture dated as of April 1, 1993 between Reliance and Bankers Trust
Company as Trustee, pursuant to which the 6.8% Notes of Reliance due
April 15, 2003 have been issued, filed as Exhibit 4.7 to Registration
Statement No. 33-60066, is hereby incorporated by reference.
</TABLE>
20
<PAGE> 21
<TABLE>
<S> <C>
4-a-4 First Supplemental Indenture dated April 14, 1993 to the Indenture
listed as Exhibit 4-a-3 above, filed as Exhibit 4.1 to Current Report
on Form 8-K of Reliance dated April 19, 1993, is hereby incorporated
by reference.
4-a-5 Form of the 8 7/8% Notes due September 15, 1999, filed as Exhibit 4-a
to the Company's Current Report on Form 8-K dated September 19, 1989,
is hereby incorporated by reference.
4-a-6 Form of the 8 3/8% Notes due February 15, 2001, filed as Exhibit 4-a
to the Company's Current Report on Form 8-K dated February 28, 1991,
is hereby incorporated by reference.
4-a-7 Form of the 6 3/4% Notes due September 15, 2002, filed as Exhibit 4-a
to the Company's Current Report on Form 8-K dated September 22, 1992,
is hereby incorporated by reference.
4-a-8 Form of the 7 5/8% Notes due February 17, 1998, filed as Exhibit 4-a
to the Company's Current Report on Form 8-K dated February 23, 1995,
is hereby incorporated by reference.
4-a-9 Form of the 6.8% Notes of Reliance due April 15, 2003, filed as
Exhibit 4-8 to Registration Statement No. 33-60066, is hereby
incorporated by reference.
4-a-10 Form of the 7 7/8% Notes due February 15, 2005, filed as Exhibit 4-b
to the Company's Current Report on Form 8-K dated February 23, 1995,
is hereby incorporated by reference.
4-a-11 Form of the 6 5/8% Notes due June 1, 2005, filed as Exhibit 4-a to the
Company's Current Report on Form 8-K dated June 14, 1995, is hereby
incorporated by reference.
*10-a-1 Copy of the Company's 1981 Incentive Stock Option Plan for Key
Employees, as amended, filed as Exhibit 4-c-1 to Registration
Statement No. 33-11946, is hereby incorporated by reference.
*10-a-2 Form of Stock Option Agreement under the Company's 1981 Incentive
Stock Option Plan for Key Employees, as amended, for options granted
prior to January 1, 1986, filed as Exhibit 10-a-2 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 30,
1994, is hereby incorporated by reference.
*10-a-3 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1981 Incentive Stock Option Plan for Key Employees, as
amended, for options and stock appreciation rights granted after
December 31, 1985 and prior to February 24, 1987, filed as Exhibit
4-c-5 to Registration Statement No. 33-11946, are hereby incorporated
by reference.
*10-b-1 Copy of the Company's 1979 Stock Plan for Key Employees, as amended,
filed as Exhibit 4-d-1 to Registration Statement No. 33-11946, is
hereby incorporated by reference.
*10-b-2 Form of Stock Option Agreement under the Company's 1979 Stock Plan for
Key Employees, as amended, for options granted prior to January 1,
1986, filed as Exhibit 10-b-2 to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1994, is hereby
incorporated by reference.
*10-b-3 Form of Stock Option and Stock Appreciation Rights Agreement under the
Company's 1979 Stock Plan for Key Employees, as amended, for options
and stock appreciation rights granted prior to January 1, 1986, filed
as Exhibit 10-b-3 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994, is hereby incorporated by
reference.
<FN>
---------
* Management contract or compensatory plan or arrangement.
</TABLE>
21
<PAGE> 22
<TABLE>
<S> <C>
*10-b-4 Form of Stock Appreciation Rights Agreement under the Company's 1979
Stock Plan for Key Employees, as amended, filed as Exhibit 10-b-4 to
the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1994, is hereby incorporated by reference.
*10-b-5 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1979 Stock Plan for Key Employees, as amended, for
options and stock appreciation rights granted after December 31, 1985
and prior to February 24, 1987, filed as Exhibit 4-d-5 to Registration
Statement No. 33-11946, are hereby incorporated by reference.
*10-b-6 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1979 Stock Plan for Key Employees, as amended, for
options and stock appreciation rights granted after February 23, 1987
and prior to December 2, 1987, filed as Exhibit 4-d-6 to Registration
Statement No. 33-11946, are hereby incorporated by reference.
*10-b-7 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1979 Stock Plan for Key Employees, as amended, for
options and stock appreciation rights granted after December 1, 1987,
filed as Exhibit 10-b-7 to the Company's Annual Report on Form 10-K
for the year ended September 30, 1987, are hereby incorporated by
reference.
*10-c-1 Copy of resolution of the Board of Directors of the Company, adopted
May 7, 1980, adjusting the number of shares subject to outstanding
options and stock appreciation rights under the Company's 1979 Stock
Option Plan for Key Employees (now the 1979 Stock Plan for Key
Employees, as amended) and the number of shares transferable under the
Company's Incentive Compensation Plan, filed as Exhibit 10-d-2 to the
Company's Annual Report on Form 10-K for the year ended September 30,
1987, is hereby incorporated by reference.
*10-c-2 Copy of resolution of the Board of Directors of the Company, adopted
May 4, 1983, adjusting the number of shares subject to outstanding
options and stock appreciation rights under the Company's 1981
Incentive Stock Option Plan for Key Employees, as amended, and 1979
Stock Plan for Key Employees, as amended, filed as Exhibit 4-e-5 to
Registration Statement No. 33-11946, is hereby incorporated by
reference.
*10-c-3 Copy of resolution of the Board of Directors of the Company, adopted
February 11, 1987, adjusting the number of shares subject to
outstanding options and stock appreciation rights under the Company's
1981 Incentive Stock Option Plan for Key Employees, as amended, and
1979 Stock Plan for Key Employees, as amended, filed as Exhibit 4-e-6
to Registration Statement No. 33-11946, is hereby incorporated by
reference.
*10-d-1 Copy of the Company's 1988 Long-Term Incentives Plan, as amended
through November 30, 1994, filed as Exhibit 10-d-1 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 30,
1994, is hereby incorporated by reference.
*10-d-2 Forms of Stock Option Agreements under the Company's 1988 Long-Term
Incentives Plan for options granted prior to May 1, 1992, filed as
Exhibit 10-d-2 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1988, are hereby incorporated by reference.
<FN>
---------
* Management contract or compensatory plan or arrangement.
</TABLE>
22
<PAGE> 23
<TABLE>
<S> <C>
*10-d-3 Forms of Stock Option and Stock Appreciation Rights Agreements under
the Company's 1988 Long-Term Incentives Plan for options and stock
appreciation rights granted prior to May 1, 1992, filed as Exhibit
10-d-3 to the Company's Annual Report on Form 10-K for the year ended
September 30, 1988, are hereby incorporated by reference.
*10-d-4 Form of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after May 1, 1992 and prior to
March 1, 1993, filed as Exhibit 28-a-1 to the Company's Form 10-Q for
the quarter ended June 30, 1992, is hereby incorporated by reference.
*10-d-5 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after March 1, 1993 and prior to
November 1, 1993, filed as Exhibit 28-a to the Company's Form 10-Q for
the quarter ended March 31, 1993, are hereby incorporated by
reference.
*10-d-6 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after November 1, 1993 and before
December 1, 1994, filed as Exhibit 10-d-6 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1993, are hereby
incorporated by reference.
*10-d-7 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after December 1, 1994, filed as
Exhibit 10-d-7 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1994, are hereby incorporated by reference.
*10-e-1 Copy of the Company's 1995 Long-Term Incentives Plan, filed as Exhibit
10-e-1 to the Company's Annual Report on Form 10-K for the year ended
September 30, 1994, is hereby incorporated by reference.
*10-e-2 Forms of Stock Option Agreement under the Company's 1995 Long-Term
Incentives Plan, filed as Exhibit 10-e-2 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1994, are hereby
incorporated by reference.
*10-f-1 Copy of the Company's Incentive Compensation Plan, as amended through
February 23, 1987, filed as Exhibit 10-e-1 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1991, is hereby
incorporated by reference.
*10-f-2 Copy of resolutions of the Board of Directors of the Company, adopted
December 6, 1995, amending the Company's Incentive Compensation Plan.
10-g-1 Copy of the Company's Deferred Compensation Plan, as amended effective
as of October 1, 1992, filed as Exhibit 10-g-1 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1993, is hereby
incorporated by reference.
*10-h-1 Copy of resolutions of the Board of Directors of the Company, adopted
November 3, 1993, providing for the Company's Deferred Compensation
Policy for Non-Employee Directors, filed as Exhibit 10-h-1 to the
Company's Annual Report on Form 10-K for the year ended September 30,
1994, is hereby incorporated by reference.
*10-h-2 Copy of resolutions of the Compensation Committee of the Board of
Directors of the Company, adopted July 5, 1994, modifying the
Company's Deferred Compensation Policy for Non-Employee Directors,
filed as Exhibit 10-h-2 to the Company's Annual Report on Form 10-K
for the year ended September 30, 1994, is hereby incorporated by
reference.
*10-i-1 Copy of the Company's Directors Stock Plan, filed as Exhibit 10-i-1 to
the Company's Annual Report on Form 10-K for the year ended September
30, 1994, is hereby incorporated by reference.
<FN>
---------
* Management contract or compensatory plan or arrangement.
</TABLE>
23
<PAGE> 24
<TABLE>
<S> <C>
*10-i-2 Copy of resolutions of the Board of Directors of the Company, adopted
December 6, 1995, modifying the Company's Directors Stock Plan subject
to approval by the Company's shareowners at the 1996 Annual Meeting of
Shareowners.
*10-j-1 Copy of resolutions of the Board of Directors of the Company, adopted
November 2, 1994, providing for the Company's Retirement Policy for
Non-Employee Directors, filed as Exhibit 10-j-1 to the Company's
Annual Report on Form 10-K for the year ended September 30, 1994, is
hereby incorporated by reference.
*10-j-2 Copy of resolutions of the Board of Directors of the Company, adopted
December 6, 1995, rescinding (subject to approval of the modifications
to the Directors Stock Plan by the Company's shareowners at the 1996
Annual Meeting of Shareowners) the Company's Retirement Policy for
Non-Employee Directors (except to the extent applicable to Directors
then age 67 and former Directors then retired).
*10-k-1 Copy of the Company's Annual Incentive Compensation Plan for Senior
Executive Officers, adopted by the Board of Directors of the Company on
December 6, 1995 subject to approval by the Company's shareowners at
the 1996 Annual Meeting of Shareowners.
*10-l-1 Restricted Stock Agreement dated December 6, 1995 between the Company
and Don H. Davis, Jr.
*10-m-1 Copy of letter dated February 1, 1995 from the Company to Judith L.
Estrin, filed as Exhibit 10 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1995, is hereby incorporated by
reference.
11 Computation of Earnings Per Share for the Five Years Ended September
30, 1995.
12 Computation of Ratio of Earnings to Fixed Charges and Computation of
Pro Forma Ratio of Earnings to Fixed Charges for the year ended
September 30, 1995.
13 Portions of the 1995 Annual Report to Shareowners of the Company.
21 List of Subsidiaries of the Company.
23 Independent Auditors' Consent.
24 Powers of Attorney authorizing certain persons to sign this Annual
Report on Form 10-K on behalf of certain directors and officers of the
Company.
27 Financial Data Schedule for September 30, 1995 Form 10-K.
99-a-1 Copy of the Company's Savings Plan, as amended and restated as of
January 1, 1995.
99-b-1 Unaudited pro forma condensed consolidated statement of income of the
Company and Reliance for the year ended September 30, 1995.
99-c-1 Approval dated December 23, 1994 amending the Company's Savings Plan
for Certain Represented Hourly Employees.
<FN>
---------
* Management contract or compensatory plan or arrangement.
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of the period
covered by this Report.
24
<PAGE> 25
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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
By /s/ WILLIAM J. CALISE, JR.
----------------------------------
WILLIAM J. CALISE, JR.
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Dated: December 21, 1995
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW ON THE 21ST DAY OF DECEMBER 1995 BY THE FOLLOWING
PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED.
DONALD R. BEALL*
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER) AND DIRECTOR
DON H. DAVIS, JR.*
DIRECTOR
LEW ALLEN, JR.*
DIRECTOR
RICHARD M. BRESSLER*
DIRECTOR
JOHN J. CREEDON*
DIRECTOR
ROBIN CHANDLER DUKE*
DIRECTOR
JUDITH L. ESTRIN*
DIRECTOR
WILLIAM H. GRAY, III*
DIRECTOR
JAMES CLAYBURN LA FORCE, JR.*
DIRECTOR
WILLIAM T. MCCORMICK*
DIRECTOR
JOHN D. NICHOLS*
DIRECTOR
BRUCE M. ROCKWELL*
DIRECTOR
WILLIAM S. SNEATH*
DIRECTOR
JOSEPH F. TOOT, JR.*
DIRECTOR
W. MICHAEL BARNES*
SENIOR VICE PRESIDENT, FINANCE & PLANNING AND
CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL
OFFICER)
LAWRENCE J. KOMATZ*
VICE PRESIDENT AND CONTROLLER (PRINCIPAL ACCOUNTING
OFFICER)
*By /s/ WILLIAM J. CALISE, JR.
---------------------------
WILLIAM J. CALISE, JR.,
ATTORNEY-IN-FACT**
** BY AUTHORITY OF POWERS OF ATTORNEY FILED HEREWITH.
25
<PAGE> 26
INDEPENDENT AUDITORS' REPORT
ROCKWELL INTERNATIONAL CORPORATION:
We have audited the consolidated financial statements of Rockwell
International Corporation and subsidiaries as of September 30, 1995 and 1994,
and for each of the three years in the period ended September 30, 1995, and have
issued our report thereon dated October 31, 1995; such financial statements and
report are included in your 1995 Annual Report to Shareowners, portions of which
are incorporated herein by reference. Our audits also included the financial
statement schedule of Rockwell International Corporation and subsidiaries,
listed in Item 14(a)(2). This financial statement schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
October 31, 1995
S-1
<PAGE> 27
SCHEDULE II
ROCKWELL INTERNATIONAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER END OF
DESCRIPTION OF YEAR(A) EXPENSES ACCOUNTS(B) DEDUCTIONS YEAR(A)
- ----------- ---------- ---------- ----------- ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Year ended September 30, 1995:
Allowance for doubtful accounts.... $ 78.3 $ 22.8 $ .2 $ 15.3 (c) $111.4
(25.4)(d)
Year ended September 30, 1994:
Allowance for doubtful accounts.... $ 56.9 $ 29.2 $ 1.1 $ 9.5 (c) $ 78.3
(0.6)(d)
Year ended September 30, 1993:
Allowance for doubtful accounts.... $ 46.5 $ 25.5 $ 1.3 $ 13.3 (c) $ 56.9
3.1 (d)
<FN>
- ---------------
(a) Includes allowances for commercial, customer finance and other long-term
receivables.
(b) Collection of accounts previously written off.
(c) Uncollectible accounts written off.
(d) Consists principally of amounts relating to businesses acquired, businesses
sold and foreign currency translation adjustments.
</TABLE>
S-2
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ------------ ------------------------------------------------------------------- -------
<S> <C> <C>
3-a-1 Copy of Restated Certificate of Incorporation of the Company, as
amended, filed as Exhibit 3-a-1 to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1994, is hereby
incorporated by reference.
3-b-1 Copy of By-Laws of the Company, filed as Exhibit 3 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1995, is hereby incorporated by reference.
4-a-1 Indenture dated as of October 1, 1982 between the Company and
Chemical Bank, as successor by merger to Manufacturers Hanover
Trust Company, as Trustee, pursuant to which the 7 5/8% Notes due
February 17, 1998, the 8 7/8% Notes due September 15, 1999, the
8 3/8% Notes due February 15, 2001, the 6 3/4% Notes due September
15, 2002, the 7 7/8% Notes due February 15, 2005 and the 6 5/8%
Notes due June 1, 2005 have been issued, filed as Exhibit 4-a to
Registration Statement No. 33-39510, is hereby incorporated by
reference.
4-a-2 First Supplemental Indenture dated as of February 27, 1987 to the
Indenture listed as Exhibit 4-a-1 above, filed as Exhibit 4-a to
the Company's Current Report on Form 8-K dated March 11, 1987, is
hereby incorporated by reference.
4-a-3 Indenture dated as of April 1, 1993 between Reliance and Bankers
Trust Company as Trustee, pursuant to which the 6.8% Notes of
Reliance due April 15, 2003 have been issued, filed as Exhibit 4.7
to Registration Statement No. 33-60066, is hereby incorporated by
reference.
*10-b-4 Form of Stock Appreciation Rights Agreement under the Company's
1979 Stock Plan for Key Employees, as amended, filed as Exhibit
10-b-4 to the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1994, is hereby incorporated by reference.
*10-b-5 Forms of Stock Option and Stock Appreciation Rights Agreements
under the Company's 1979 Stock Plan for Key Employees, as amended,
for options and stock appreciation rights granted after December
31, 1985 and prior to February 24, 1987, filed as Exhibit 4-d-5 to
Registration Statement No. 33-11946, are hereby incorporated by
reference.
*10-b-6 Forms of Stock Option and Stock Appreciation Rights Agreements
under the Company's 1979 Stock Plan for Key Employees, as amended,
for options and stock appreciation rights granted after February
23, 1987 and prior to December 2, 1987, filed as Exhibit 4-d-6 to
Registration Statement No. 33-11946, are hereby incorporated by
reference.
*10-b-7 Forms of Stock Option and Stock Appreciation Rights Agreements
under the Company's 1979 Stock Plan for Key Employees, as amended,
for options and stock appreciation rights granted after December 1,
1987, filed as Exhibit 10-b-7 to the Company's Annual Report on
Form 10-K for the year ended September 30, 1987, are hereby
incorporated by reference.
<FN>
- ---------
* Management contract or compensatory plan or arrangement.
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ------------ ------------------------------------------------------------------- -------
<S> <C> <C>
*10-c-1 Copy of resolution of the Board of Directors of the Company,
adopted May 7, 1980, adjusting the number of shares subject to
outstanding options and stock appreciation rights under the
Company's 1979 Stock Option Plan for Key Employees (now the 1979
Stock Plan for Key Employees, as amended) and the number of shares
transferable under the Company's Incentive Compensation Plan, filed
as Exhibit 10-d-2 to the Company's Annual Report on Form 10-K for
the year ended September 30, 1987, is hereby incorporated by
reference.
*10-c-2 Copy of resolution of the Board of Directors of the Company,
adopted May 4, 1983, adjusting the number of shares subject to
outstanding options and stock appreciation rights under the
Company's 1981 Incentive Stock Option Plan for Key Employees, as
amended, and 1979 Stock Plan for Key Employees, as amended, filed
as Exhibit 4-e-5 to Registration Statement No. 33-11946, is hereby
incorporated by reference.
*10-c-3 Copy of resolution of the Board of Directors of the Company,
adopted February 11, 1987, adjusting the number of shares subject
to outstanding options and stock appreciation rights under the
Company's 1981 Incentive Stock Option Plan for Key Employees, as
amended, and 1979 Stock Plan for Key Employees, as amended, filed
as Exhibit 4-e-6 to Registration Statement No. 33-11946, is hereby
incorporated by reference.
*10-d-1 Copy of the Company's 1988 Long-Term Incentives Plan, as amended
through November 30, 1994, filed as Exhibit 10-d-1 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 30,
1994, is hereby incorporated by reference.
*10-d-2 Forms of Stock Option Agreements under the Company's 1988 Long-Term
Incentives Plan for options granted prior to May 1, 1992, filed as
Exhibit 10-d-2 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1988, are hereby incorporated by
reference.
*10-d-3 Forms of Stock Option and Stock Appreciation Rights Agreements
under the Company's 1988 Long-Term Incentives Plan for options and
stock appreciation rights granted prior to May 1, 1992, filed as
Exhibit 10-d-3 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1988, are hereby incorporated by
reference.
*10-d-4 Form of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after May 1, 1992 and prior to
March 1, 1993, filed as Exhibit 28-a-1 to the Company's Form 10-Q
for the quarter ended June 30, 1992, is hereby incorporated by
reference.
*10-d-5 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after March 1, 1993 and prior
to November 1, 1993, filed as Exhibit 28-a to the Company's Form
10-Q for the quarter ended March 31, 1993, are hereby incorporated
by reference.
*10-d-6 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after November 1, 1993 and
before December 1, 1994, filed as Exhibit 10-d-6 to the Company's
Annual Report on Form 10-K for the year ended September 30, 1993,
are hereby incorporated by reference.
<FN>
- ---------
* Management contract or compensatory plan or arrangement.
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ------------ ------------------------------------------------------------------- -------
<S> <C> <C>
*10-d-7 Forms of Stock Option Agreement under the Company's 1988 Long-Term
Incentives Plan for options granted after December 1, 1994, filed
as Exhibit 10-d-7 to the Company's Annual Report on Form 10-K for
the year ended September 30, 1994, are hereby incorporated by
reference.
*10-e-1 Copy of the Company's 1995 Long-Term Incentives Plan, filed as
Exhibit 10-e-1 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1994, is hereby incorporated by reference.
*10-e-2 Forms of Stock Option Agreement under the Company's 1995 Long-Term
Incentives Plan, filed as Exhibit 10-e-2 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1994, are
hereby incorporated by reference.
*10-f-1 Copy of the Company's Incentive Compensation Plan, as amended
through February 23, 1987, filed as Exhibit 10-e-1 to the Company's
Annual Report on Form 10-K for the year ended September 30, 1991,
is hereby incorporated by reference.
*10-f-2 Copy of resolutions of the Board of Directors of the Company,
adopted December 6, 1995, amending the Company's Incentive
Compensation Plan.
10-g-1 Copy of the Company's Deferred Compensation Plan, as amended
effective as of October 1, 1992, filed as Exhibit 10-g-1 to the
Company's Annual Report on Form 10-K for the year ended September
30, 1993, is hereby incorporated by reference.
*10-h-1 Copy of resolutions of the Board of Directors of the Company,
adopted November 3, 1993, providing for the Company's Deferred
Compensation Policy for Non-Employee Directors, filed as Exhibit
10-h-1 to the Company's Annual Report on Form 10-K for the year
ended September 30, 1994, is hereby incorporated by reference.
*10-h-2 Copy of resolutions of the Compensation Committee of the Board of
Directors of the Company, adopted July 5, 1994, modifying the
Company's Deferred Compensation Policy for Non-Employee Directors,
filed as Exhibit 10-h-2 to the Company's Annual Report on Form 10-K
for the year ended September 30, 1994, is hereby incorporated by
reference.
*10-i-1 Copy of the Company's Directors Stock Plan, filed as Exhibit 10-i-1
to the Company's Annual Report on Form 10-K for the year ended
September 30, 1994, is hereby incorporated by reference.
*10-i-2 Copy of resolutions of the Board of Directors of the Company,
adopted December 6, 1995, modifying the Company's Directors Stock
Plan subject to approval by the Company's shareowners at the 1996
Annual Meeting of Shareowners.
*10-j-1 Copy of resolutions of the Board of Directors of the Company,
adopted November 2, 1994, providing for the Company's Retirement
Policy for Non-Employee Directors, filed as Exhibit 10-j-1 to the
Company's Annual Report on Form 10-K for the year ended September
30, 1994, is hereby incorporated by reference.
<FN>
- ---------
* Management contract or compensatory plan or arrangement.
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ------------ ------------------------------------------------------------------- -------
<S> <C> <C>
*10-j-2 Copy of resolutions of the Board of Directors of the Company,
adopted December 6, 1995, rescinding (subject to approval of the
modifications to the Directors Stock Plan by the Company's
shareowners at the 1996 Annual Meeting of Shareowners) the
Company's Retirement Policy for Non-Employee Directors (except to
the extent applicable to Directors then age 67 and former Directors
then retired).
*10-k-1 Copy of the Company's Annual Incentive Compensation Plan for Senior
Executive Officers, adopted by the Board of Directors of the Company
on December 6, 1995 subject to approval by the Company's
shareowners at the 1996 Annual Meeting of Shareowners.
*10-l-1 Restricted Stock Agreement dated December 6, 1995 between the
Company and Don H. Davis, Jr.
*10-m-1 Copy of letter dated February 1, 1995 from the Company to Judith L.
Estrin, filed as Exhibit 10 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995, is hereby
incorporated by reference.
11 Computation of Earnings Per Share for the Five Years Ended
September 30, 1995.
12 Computation of Ratio of Earnings to Fixed Charges and Computation
of Pro Forma Ratio of Earnings to Fixed Charges for the year ended
September 30, 1995.
13 Portions of the 1995 Annual Report to Shareowners of the Company.
21 List of Subsidiaries of the Company.
23 Independent Auditors' Consent.
24 Powers of Attorney authorizing certain persons to sign this Annual
Report on Form 10-K on behalf of certain directors and officers of
the Company.
27 Financial Data Schedule for September 30, 1995 Form 10-K.
99-a-1 Copy of the Company's Savings Plan, as amended and restated as of
January 1, 1995.
99-b-1 Unaudited pro forma condensed consolidated statement of income of
the Company and Reliance for the year ended September 30, 1995.
99-c-1 Approval dated December 23, 1994 amending the Company's Savings
Plan for Certain Represented Hourly Employees.
<FN>
- ---------
* Management contract or compensatory plan or arrangement.
</TABLE>
<PAGE> 1
EXHIBIT 10-f-2
ROCKWELL INTERNATIONAL CORPORATION
RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS
ON DECEMBER 6, 1995 AMENDING THE COMPANY'S
INCENTIVE COMPENSATION PLAN
RESOLVED, that the amendments to the Corporation's Incentive
Compensation Plan, as amended (the ICP), substantially in the form reflected in
the composite copy of the ICP, as amended thereby, presented to and hereby
ordered filed with the records of this meeting, be, and they hereby are,
adopted, subject, however, to approval of the Senior Executive Plan by
shareowners at the 1996 Annual Meeting of Shareowners.
<PAGE> 2
ROCKWELL INTERNATIONAL CORPORATION
INCENTIVE COMPENSATION PLAN
1. PURPOSES.
The purposes of the Incentive Compensation Plan (the "Plan") are to
provide a reward and an incentive to employees in managerial, staff or
technical capacities who have contributed and, in the future, are likely to
contribute to the success of the Corporation and to enhance the Corporation's
ability to attract and retain outstanding employees to serve in such
capacities.
2. DEFINITIONS.
For the purpose of the Plan, the following terms shall have the
meanings shown:
(a) Rockwell. Rockwell International Corporation.
(b) Corporation. Rockwell and such of its subsidiaries and affiliates
as may be designated by the Board of Directors.
(c) Board of Directors. The Board of Directors of Rockwell.
(d) Employees. Persons in the salaried employ of the Corporation
(including those on authorized leave of absence) during some part of the fiscal
year for which an award is made. Unless he or she is also an employee of the
Corporation, no member of the Board of Directors shall be eligible to
participate in the Plan.
(e) Committee. An Incentive Compensation Committee, designated by the
Board of Directors, consisting of three or more members of the Board of
Directors who are not eligible to participate in the Plan.
(f) Applicable Net Earnings. For any fiscal year, the net income before
provision for domestic and foreign taxes based on income of Rockwell and its
consolidated subsidiaries, determined in accordance with generally accepted
accounting principles. Amounts charged or credited to the Incentive Fund shall
not be included in determining applicable net earnings.
<PAGE> 3
(g) Incentive Fund or Fund. A Fund maintained by Rockwell to which there
shall be credited for each fiscal year an amount, as determined by the
Committee, which shall not exceed either the aggregate amount declared by
Rockwell in such year as dividends upon its common and preferred stock or the
aggregate amount calculated by adding 2% of the first $100 million of the
applicable net earnings for such fiscal year, 3% of the next $50 million of
such earnings, 4% of the next $25 million of such earnings, and 5% of the
balance of such earnings. The Fund shall be debited with the amounts of awards
made under the Plan and under the Senior Executive Plan for any fiscal year,
and credited with the amount of any such award which lapses or is forfeited.
The Fund shall be a single continuing fund, which may (but need not) be
maintained and treated for accounting purposes as a separate fund. At any time
and from time to time, the Board of Directors may direct the transfer to the
general funds of Rockwell of all or any part of unawarded balances in the
Fund.
(h) Stock. Common stock and Class A Common Stock of Rockwell.
(i) Senior Executive Plan. Rockwell's Annual Executive Compensation
Plan for Senior Executive Officers.
3. DETERMINATION OF APPLICABLE NET EARNINGS AND INCENTIVE FUND.
(a) After the end of each fiscal year, the independent certified public
accountants who audit Rockwell's accounts shall compute the amount of the
Incentive Fund at the end of such fiscal year and shall compute the applicable
net earnings and the maximum amount thereof which may be credited to the
Incentive Fund for such fiscal year. Such computations shall be reported to the
Board of Directors and the Committee.
(b) After such computations and reports have been made, the Committee
shall determine the amounts, if any, of applicable net earnings to be credited
to and awarded from the Incentive Fund for any fiscal year.
4. AWARDS.
(a) The Chief Executive Officer of Rockwell shall submit to the
Committee, before its determinations are to be made, his recommendations
concerning awards.
(b) The Committee, in its discretion, shall determine (i) the extent to
which awards, if any, shall be made; (ii) the employees to whom any such awards
shall be made; (iii) the amount of any award; and (iv) the form, terms and
conditions of awards. The Committee may determine, among other things,
-2-
<PAGE> 4
whether and to what extent awards shall be paid in installments and in cash or
in stock or partly in cash and partly in stock.
(c) Of that portion of the Incentive Fund awarded for any fiscal year,
not more than 10% shall be awarded under the Plan and the Senior Executive Plan
to any one employee nor more than 50% to the ten employees receiving the
highest awards.
(d) The Corporation shall promptly notify each person to whom an award
has been made and pay the award in accordance with the determinations of the
Committee.
(e) A cash award may be made with respect to an employee who has died.
Any such award shall be paid to the legal representative or representatives of
the estate of such employee.
(f) No unpaid installment of any award shall bear interest.
(g) No employee who is eligible for an award under the Senior Executive
Plan for any fiscal year of the Corporation shall be eligible for an award
under this Plan for that fiscal year.
5. AWARDS IN STOCK.
(a) Rockwell shall make available, as required, stock to meet the
needs of the Plan. The total number of shares of stock which may be awarded
under the Plan shall not exceed 1,000,000, except as provided in paragraph (b)
below. Such shares may consist in whole or in part of unissued or reacquired
shares. Stock subject to an award which lapses or is forfeited, for any
reason, shall be available for further awards under the Plan.
(b) If any change shall occur in or affect stock subject to or awarded
under the Plan on account of a merger, consolidation, stock dividend, split-up,
reclassification, recapitalization or distribution to common shareowners
(other than cash dividends), the Board of Directors may make such adjustments
in the total number of shares subject to or awarded under the Plan as may be
reasonably appropriate in the circumstances.
(c) When an award is paid wholly or partly in stock, the Incentive Fund
shall be charged for each share of stock issued by an amount equal to the
closing price of the stock on the New York Stock Exchange on the last trading
date before the date on which the Committee makes the award. Until issuance of
the shares of stock, the employee shall not have any of the rights or
privileges of a shareowner.
-3-
<PAGE> 5
6. FINALITY OF DETERMINATIONS.
The Committee shall have the power to administer and interpret the
Plan. All determinations, interpretations and actions of the Committee and all
actions of the Board of Directors under or in connection with the Plan shall be
final, conclusive and binding upon all concerned.
7. AMENDMENT OF THE PLAN.
The Board of Directors shall have the power, in its sole discretion, to
amend, suspend or terminate the Plan at any time, except that:
(a) No such action shall adversely affect rights under an award already
made, without the consent of the person affected; and
(b) Without approval of the shareowners of Rockwell, the Board of
Directors shall not increase the total number of shares of stock subject
to the Plan (except as provided in paragraph 5(b)) or so modify the
method of determining the Incentive Fund as to increase materially the maximum
amount that may be credited to it.
8. MISCELLANEOUS.
(a) A majority of the members of the Committee shall constitute a
quorum. The Committee may act by the vote of a majority of a quorum at a
meeting, or by a writing or writings signed by a majority of the members of the
Committee.
(b) The Corporation shall bear all expenses and costs in connection
with the operation of the Plan, including costs related to the purchase or
issue of shares of stock and any losses that may result if reacquired stock
decreases in value before the fund is debited with the amount thereof, and no
part thereof shall be charged against the Fund.
(c) The Corporation, the Board of Directors, the Committee and the
officers of 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.
As amended through December 6, 1995.
-4-
<PAGE> 1
EXHIBIT 10-i-2
ROCKWELL INTERNATIONAL CORPORATION
RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS
ON DECEMBER 6, 1995 PROVIDING FOR
MODIFICATION OF THE COMPANY'S DIRECTORS STOCK PLAN
RESOLVED, that the amendments to the Corporation's Directors Stock
Plan (the Directors Plan), substantially in the form reflected in the composite
copy of the Directors Plan, as amended thereby, presented to and hereby ordered
filed with the records of this meeting be, and they hereby are, adopted,
subject, however, to approval by the vote of shareowners having a majority of
the capital stock of the Corporation present in person or represented by proxy
and entitled to vote at the 1996 Annual Meeting of Shareowners, a quorum being
present.
<PAGE> 2
DIRECTORS STOCK PLAN OF
ROCKWELL INTERNATIONAL CORPORATION
(LANGUAGE TO BE ADDED IS SET IN CAPITAL LETTERS.
LANGUAGE TO BE DELETED IS BRACKETED.)
1. PURPOSE OF THE PLAN.
The purpose of the Directors Stock Plan (the Plan) is to [provide a formal
means of implementing the compensation policy adopted by the Board of Directors
(the Board) of Rockwell International Corporation (Rockwell) on November 3,
1993, to] STRENGTHEN THE link [a portion] of the compensation of non-employee
directors of Rockwell INTERNATIONAL CORPORATION (ROCKWELL) directly with the
interests of the shareowners.
2. PARTICIPANTS.
Participants in the Plan shall consist of directors of Rockwell who are not
employees of Rockwell or any of its subsidiaries (Non-Employee Director). The
term "subsidiary" as used in the Plan means a corporation more than 50% of the
voting stock of which, or an unincorporated business entity more than 50% of the
equity interest in which, shall at the time be owned directly or indirectly by
Rockwell.
3. SHARES RESERVED UNDER THE PLAN.
Subject to the provisions of Section [8]10 of the Plan, there shall be
reserved for delivery under the Plan SHARES OF COMMON STOCK OF ROCKWELL
(SHARES) IN THE FOLLOWING [an] aggregate AMOUNTS: [of] 75,000 S[s]hares [of
Common Stock of Rockwell (Shares)]. UNDER SECTION 6; 150,000 SHARES UNDER
SECTION 8; AND 75,000 SHARES UNDER SECTION 9. Shares to be delivered under
the Plan may be authorized and unissued Shares, Shares held in treasury or any
combination thereof.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation and Management Development
Committee of the Board of Directors of Rockwell (the Committee). The Committee
shall have authority to interpret the Plan, and to prescribe, amend and rescind
rules and regulations relating to the administration of the Plan, and all such
interpretations, rules and regulations shall be conclusive and binding on all
persons.
5. EFFECTIVE DATE OF THE PLAN.
The Plan, AS AMENDED ON DECEMBER 6, 1995, shall be submitted to the
shareowners of Rockwell for approval at the Annual Meeting of Shareowners to be
held on February [1]7, 199[5]6, or any adjournment thereof, and, if approved
by the shareowners, shall become effective on the date and at the time of such
approval. THE PLAN APPROVED AT THE ANNUAL MEETING OF SHAREOWNERS HELD FEBRUARY
1, 1995 SHALL BE IN FULL FORCE AND EFFECT IF THE PLAN, AS AMENDED, IS NOT SO
APPROVED.
6. AWARD OF SHARES.
Each Non-Employee Director who is elected a director at any Annual Meeting of
Shareowners of Rockwell shall receive an award of 400 Shares effective
immediately after that Annual Meeting. Each Non-Employee Director who is elected
a director at any meeting of the Board shall receive effective immediately after
that meeting an award of 400 Shares if elected after the annual meeting and
prior to May 1; an award of 300 Shares if elected between May 1 and July 31; an
award of 200 Shares if elected between August 1 and October 31; and an award of
100 Shares if elected between November 1 and the next annual meeting. A
participant shall not be required to make any payment for any Shares delivered
under the Plan. Upon the delivery of Shares under the Plan, the recipient shall
have the entire beneficial ownership interest in, and all rights and privileges
of a shareowner as to those Shares, including the right[s] to vote [those] THE
Shares and to receive dividends thereon.
EACH NON-EMPLOYEE DIRECTOR MAY ELECT EACH YEAR, NOT LATER THAN DECEMBER 31 OF
THE YEAR PRECEDING THE YEAR IN WHICH THE ANNUAL AWARD OF SHARES IS TO BE MADE,
TO RECEIVE THE ANNUAL GRANT IN THE FORM OF RESTRICTED STOCK (RESTRICTED SHARES).
UPON RECEIPT OF RESTRICTED SHARES, THE RECIPIENT SHALL HAVE THE RIGHT TO VOTE
THE SHARES AND TO RECEIVE DIVIDENDS THEREON, AND THE SHARES SHALL HAVE ALL THE
ATTRIBUTES OF OUTSTANDING SHARES, EXCEPT THAT CERTIFICATES FOR SUCH SHARES SHALL
BE DELIVERED TO AND HELD BY
B-1
<PAGE> 3
ROCKWELL UNTIL TEN DAYS AFTER THE RECIPIENT RETIRES FROM THE BOARD UNDER THE
BOARD'S RETIREMENT POLICY OR IF THE RECIPIENT RESIGNS FROM THE BOARD OR CEASES
TO BE A DIRECTOR BY REASON OF THE ANTITRUST LAWS, COMPLIANCE WITH ROCKWELL'S
CONFLICT OF INTEREST POLICIES, DEATH, DISABILITY OR OTHER CIRCUMSTANCES THE
BOARD DETERMINES NOT TO BE ADVERSE TO THE BEST INTERESTS OF ROCKWELL, WHEN
CERTIFICATES SO HELD SHALL BE DELIVERED TO THE DIRECTOR AND CEASE TO BE
RESTRICTED SHARES.
7. RESTRICTION ON TRANSFER OF SHARES.
No Shares received by a participant under SECTION 6 OR 9 OF the Plan may be
sold, assigned, transferred, pledged or otherwise encumbered or disposed of for
a period of six months after receipt of those Shares, except in the case of the
participant's death or disability during that six-month period.
8. STOCK OPTIONS.
EACH NON-EMPLOYEE DIRECTOR (EXCEPT ANY NON-EMPLOYEE DIRECTOR IN OFFICE ON
FEBRUARY 6, 1996 WHO HAD ATTAINED AGE 67) WHO IS ELECTED A DIRECTOR AT ANY
ANNUAL MEETING OF SHAREOWNERS OF ROCKWELL SHALL RECEIVE AN OPTION TO PURCHASE
1,000 SHARES IMMEDIATELY AFTER THAT ANNUAL MEETING, PROVIDED, HOWEVER, THAT IF
R.M. BRESSLER, J.D. NICHOLS AND J.F. TOOT ARE REELECTED DIRECTORS AT THE
CORPORATION'S 1996 ANNUAL MEETING, OPTIONS TO PURCHASE 9,000, 9,000 AND 5,000
SHARES, RESPECTIVELY, SHALL BE GRANTED TO THEM IMMEDIATELY THEREAFTER. EACH NON-
EMPLOYEE DIRECTOR WHO IS ELECTED A DIRECTOR AT ANY MEETING OF THE BOARD SHALL
RECEIVE IMMEDIATELY AFTER THAT MEETING AN OPTION TO PURCHASE 1,000 SHARES IF
ELECTED AFTER THE ANNUAL MEETING AND PRIOR TO MAY 1; AN OPTION TO PURCHASE 750
SHARES IF ELECTED BETWEEN MAY 1 AND JULY 31; AN OPTION TO PURCHASE 500 SHARES IF
ELECTED BETWEEN AUGUST 1 AND OCTOBER 31; AND AN OPTION TO PURCHASE 250 SHARES IF
ELECTED BETWEEN NOVEMBER 1 AND THE NEXT ANNUAL MEETING. THE EXERCISE PRICE FOR
EACH OPTION SO GRANTED SHALL BE ONE-HUNDRED PERCENT (100%) OF THE CLOSING PRICE
(THE FAIR MARKET VALUE) OF THE COMMON STOCK OF ROCKWELL ON THE DATE OF GRANT AS
REPORTED IN THE NEW YORK STOCK EXCHANGE-COMPOSITE TRANSACTIONS (OR ON THE NEXT
PRECEDING DAY SUCH STOCK WAS TRADED IF IT WAS NOT TRADED ON THE DATE OF GRANT).
THE PURCHASE PRICE OF THE SHARES WITH RESPECT TO WHICH AN OPTION OR PORTION
THEREOF IS EXERCISED SHALL BE PAYABLE IN FULL IN CASH, SHARES OF COMMON STOCK OF
ROCKWELL VALUED AT THEIR FAIR MARKET VALUE ON THE DATE OF EXERCISE, OR A
COMBINATION THEREOF. EACH OPTION MAY BE EXERCISED IN WHOLE OR IN PART AT ANY
TIME AFTER IT BECOMES EXERCISABLE; AND EACH OPTION SHALL BECOME EXERCISABLE IN
APPROXIMATELY THREE EQUAL INSTALLMENTS ON EACH OF THE FIRST, SECOND AND THIRD
ANNIVERSARIES OF THE DATE THE OPTION IS GRANTED. NO OPTION SHALL BE EXERCISABLE
PRIOR TO ONE YEAR NOR AFTER TEN YEARS FROM THE DATE OF THE GRANT THEREOF;
PROVIDED, HOWEVER, THAT IF THE HOLDER OF AN OPTION DIES, THE OPTION MAY BE
EXERCISED FROM AND AFTER THE DATE OF THE OPTIONEE'S DEATH FOR A PERIOD OF THREE
YEARS (OR UNTIL THE EXPIRATION DATE SPECIFIED IN THE OPTION IF EARLIER) EVEN IF
IT WAS NOT EXERCISABLE AT THE DATE OF DEATH. MOREOVER, IF AN OPTIONEE RETIRES AT
AGE 72 OR PRIOR THERETO WITH AT LEAST TEN YEARS SERVICE, ALL OPTIONS THEN HELD
BY SUCH OPTIONEE SHALL BE EXERCISABLE EVEN IF THEY WERE NOT EXERCISABLE AT SUCH
RETIREMENT DATE; PROVIDED, HOWEVER, THAT EACH SUCH OPTION SHALL EXPIRE AT THE
EARLIER OF FIVE YEARS FROM THE DATE OF THE OPTIONEE'S RETIREMENT OR THE
EXPIRATION DATE SPECIFIED IN THE OPTION. IF A CHANGE OF CONTROL AS DEFINED IN
ARTICLE III, SECTION 15(l)(1) OF ROCKWELL'S BY-LAWS SHALL OCCUR, THEN, UNLESS
PRIOR TO THE OCCURRENCE THEREOF THE BOARD OF DIRECTORS SHALL DETERMINE OTHERWISE
BY VOTE OF AT LEAST TWO-THIRDS OF ITS MEMBERS, ALL OPTIONS THEN OUTSTANDING
PURSUANT TO THE PLAN SHALL FORTHWITH BECOME FULLY EXERCISABLE WHETHER OR NOT
THEN EXERCISABLE.
OPTIONS GRANTED UNDER THE PLAN ARE NOT TRANSFERABLE OTHER THAN (i) BY WILL OR
BY THE LAWS OF DESCENT AND DISTRIBUTION; OR (ii) BY GIFT TO THE GRANTEE'S SPOUSE
OR NATURAL, ADOPTED OR STEP-CHILDREN OR GRANDCHILDREN (IMMEDIATE FAMILY MEMBERS)
OR TO A TRUST FOR THE BENEFIT OF ONE OR MORE OF THE GRANTEE'S IMMEDIATE FAMILY
MEMBERS OR TO A FAMILY CHARITABLE TRUST ESTABLISHED BY THE GRANTEE OR A MEMBER
OF THE GRANTEE'S FAMILY. IF AN OPTIONEE CEASES TO BE A DIRECTOR WHILE HOLDING
UNEXERCISED OPTIONS, SUCH OPTIONS ARE THEN VOID, EXCEPT IN THE CASE OF (i)
DEATH, (ii) DISABILITY, (iii) RETIREMENT AFTER ATTAINING THE AGE OF 72 OR HAVING
COMPLETED TEN YEARS SERVICE AS A DIRECTOR, OR (iv) RESIGNATION FROM THE BOARD
FOR REASONS OF THE ANTITRUST LAWS, COMPLIANCE WITH THE CORPORATION'S CONFLICT OF
INTEREST POLICIES OR
B-2
<PAGE> 4
OTHER CIRCUMSTANCES THAT THE COMMITTEE MAY DETERMINE AS SERVING THE BEST
INTERESTS OF ROCKWELL.
9. SHARES IN LIEU OF CASH COMPENSATION.
EACH NON-EMPLOYEE DIRECTOR MAY ELECT EACH YEAR, NOT LATER THAN DECEMBER 31 OF
THE YEAR PRECEDING THE YEAR AS TO WHICH DEFERRAL OF FEES IS TO BE APPLICABLE, TO
DEFER ALL OR ANY PORTION OF THE CASH RETAINER TO BE PAID FOR BOARD, COMMITTEE OR
OTHER SERVICE IN THE FOLLOWING CALENDAR YEAR THROUGH THE ISSUANCE OR TRANSFER OF
RESTRICTED SHARES, VALUED AT THE CLOSING PRICE ON THE NEW YORK STOCK EXCHANGE
COMPOSITE TRANSACTIONS ON THE DATE WHEN EACH PAYMENT OF SUCH RETAINER AMOUNT
WOULD OTHERWISE BE MADE IN CASH. SUCH RESTRICTED SHARES SHALL BE THE SAME AS
AND SUBJECT TO THE SAME PROVISIONS AS ARE APPLICABLE TO THE RESTRICTED SHARES
ISSUED OR DELIVERED PURSUANT TO SECTION 6 OF THE PLAN.
[8]10. ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION.
If there shall be any change in or affecting Shares on account of any merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split or combination, or other distribution to holders of Shares
(other than a cash dividend), there shall be made or taken such amendments to
the Plan and such adjustments and actions thereunder as the Board may deem
appropriate under the circumstances.
[9]11. GOVERNMENT AND OTHER REGULATIONS.
The obligations of Rockwell to deliver Shares under SECTION 6 of the Plan OR
UPON EXERCISE OF OPTIONS GRANTED UNDER SECTION 8 OF THE PLAN shall be subject to
(i) all applicable laws, rules and regulations and such approvals by any
governmental agencies as may be required, including, without limitation,
compliance with the Securities Act of 1933, as amended, and (ii) the condition
that such shares shall have been duly listed on the New York Stock Exchange.
[10]12. AMENDMENT AND TERMINATION OF THE PLAN.
The Plan may be amended by the Board in any respect, provided that, without
shareowner approval, no amendment shall (i) materially increase the maximum
number of shares of Common Stock available for delivery under the Plan (other
than adjustments pursuant to Section [8]10 hereof), (ii) materially increase the
benefits accruing to participants under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan, and provided,
further, that Section 6 of the Plan may not be amended more than once every six
months except to comport with the changes in the Internal Revenue Code of 1986,
as amended, the Employee Retirement Income Security Act of 1974, as amended, or
the regulations under either thereof. The Plan may also be terminated at any
time by the Board.
[11]13. MISCELLANEOUS.
(a) Nothing contained in this Plan shall be deemed to confer upon any person
any right to continue as a director of or to be associated in any other way with
Rockwell.
(b) To the extent that Federal laws do not otherwise control, the Plan and all
determinations made and actions taken pursuant hereto shall be governed by the
law of the State of Delaware.
B-3
<PAGE> 1
EXHIBIT 10-j-2
ROCKWELL INTERNATIONAL CORPORATION
RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS
ON DECEMBER 6, 1995 RESCINDING THE COMPANY'S
RETIREMENT POLICY FOR NON-EMPLOYEE DIRECTORS
RESOLVED, that effective upon approval of the Directors Plan by the
shareowners as hereinabove provided, the first one of the resolutions
heretofore adopted by the Board of Directors on November 2, 1994 entitled
"Directors Retirement Policy" be, and it hereby is, rescinded except to the
extent that it shall apply to Directors who on this date have attained at least
age 67 and to former Directors who prior to this date have retired and entered
into consulting agreements contemplated by that resolution.
<PAGE> 1
ROCKWELL INTERNATIONAL CORPORATION
ANNUAL INCENTIVE COMPENSATION PLAN FOR
SENIOR EXECUTIVE OFFICERS
1. PURPOSES.
The purposes of the Annual Executive Compensation Plan for Senior Executive
Officers (the Plan) are to provide a reward and an incentive to the
Corporation's Senior Executive Officers who have contributed and in the future
are likely to contribute to the success of the Corporation, to enhance the
Corporation's ability to attract and retain outstanding persons to serve as its
Senior Executive Officers and to preserve for the Corporation the benefit of
federal income tax deductions with respect to annual incentive compensation paid
to Senior Executive Officers.
2. DEFINITIONS.
(a) Applicable Net Earnings. For any fiscal year, the net income before
provision for domestic and foreign taxes based on income of the Corporation,
determined in accordance with generally accepted accounting principles. Amounts
charged or credited to the Incentive Fund under the ICP shall not be included in
determining Applicable Net Earnings.
(b) Board of Directors. The Board of Directors of Rockwell.
(c) Committee. The Compensation and Management Development Committee
designated by the Board of Directors from among its members who are not eligible
to receive an award under the Plan.
(d) Corporation. Rockwell and its consolidated subsidiaries.
(e) Covered Employees Performance Fund. An incentive compensation fund for
each fiscal year in which the Plan is applicable from which awards may be made
under the Plan, which shall be equal to 1% of the Applicable Net Earnings for
that fiscal year.
(f) ICP. The Corporation's Incentive Compensation Plan.
(g) Rockwell. Rockwell International Corporation.
(h) Senior Executive Officers. Rockwell's chief executive officer on the last
day of each fiscal year and four other executive officers (as defined in Rule
3b-7 under the Securities Exchange Act of 1934, as amended) which the Committee
shall designate on or before the last day of that fiscal year. No member of the
Corporation's Board of Directors who is not also an employee of the Corporation
shall be eligible to participate in the Plan.
3. DETERMINATION OF APPLICABLE NET EARNINGS AND COVERED EMPLOYEES PERFORMANCE
FUND; ALLOCATION OF POTENTIAL AWARDS.
(a) After the end of each fiscal year, the independent certified public
accountants who audit the Corporation's accounts shall compute the Applicable
Net Earnings and the amount of the Covered Employees Performance Fund for that
fiscal year. Those computations shall be reported to the Board of Directors and
the Committee.
(b) There shall be allocated from the Covered Employees Performance Fund for
each fiscal year potential awards to each of the Senior Executive Officers equal
to the following respective percentages of the Covered Employees Performance
Fund for that fiscal year:
Chief Executive Officer-35%;
President and Chief Operating Officer-20%;
Other Senior Executive Officers-15%;
4. AWARDS.
(a) After the computations, reports and allocations prescribed under Section
3(a) have been made, the Committee shall determine, in its discretion, the
amounts, if any, allocated to the Senior Executive Officers pursuant to Section
3(b) to be awarded from the Covered Employees Performance Fund for that fiscal
year; and the form, terms and conditions of awards, including whether and to
what extent awards shall be paid in installments.
(b) Without limiting the generality of Section 4(a) the Committee may, in its
sole discretion,
A-1
<PAGE> 2
reduce the amount of any award made to any Senior Executive Officer from the
potential award allocated to that Officer under Section 3(b), taking into
account such factors as it deems relevant, including, without limitation: (i)
the Applicable Net Income; (ii) other significant financial or strategic
achievements during the year; (iii) its subjective assessment of each Senior
Executive Officer's overall performance for the year; and (iv) information about
compensation practices at other peer group companies for the purpose of
evaluating competitive compensation levels so that the Committee may determine
that the amount of the annual incentive award is within the targeted competitive
compensation range of the Corporation's executive compensation program. The
Committee shall determine the amount of any reduction in a Senior Executive
Officer's award on the basis of the foregoing and other factors it deems
relevant and shall not be required to establish any allocation or weighting
formula with respect to the factors it considers. In no event shall any Senior
Executive Officer's award under the Plan exceed the amount of the Covered
Employees Performance Fund allocated to a potential award to that Senior
Executive Officer.
(c) The Committee shall have no obligation to disburse the full amount of the
Covered Employees Performance Fund for any fiscal year. Amounts allocated but
not actually awarded to a Senior Executive Officer may not be re-allocated to
other Senior Executive Officers or utilized for awards in respect of other
years.
(d) Not more than 10% of the aggregate awards made for any fiscal year under
the ICP and this Plan shall be awarded to any one person nor more than 50% to
the ten persons receiving the highest awards under the ICP and this Plan.
(e) The Corporation shall promptly notify each person to whom an award has
been made and pay the award in accordance with the determinations of the
Committee.
(f) A cash award may be made with respect to a Senior Executive Officer who
has died. Any such award shall be paid to the legal representative or
representatives of the estate of such Officer.
(g) No person who is eligible for an award under the Plan for any fiscal year
of the Corporation shall be eligible for an award under the ICP or any other
management incentive compensation plan of any of the Corporation's businesses
for that fiscal year.
5. FINALITY OF DETERMINATIONS.
The Committee shall have the power to administer and interpret the Plan. All
determinations, interpretations and actions of the Committee and all actions of
the Board of Directors under or in connection with the Plan shall be final,
conclusive and binding upon all concerned.
6. AMENDMENT OF THE PLAN.
The Board of Directors and the Committee shall each have the power, in its
sole discretion, to amend, suspend or terminate the Plan at any time, except
that:
(a) No such action shall adversely affect rights under an award already made,
without the consent of the person affected; and
(b) Without approval of the shareowners of Rockwell, neither the Board of
Directors nor the Committee shall (1) so modify the method of determining the
Covered Employees Performance Fund as to increase materially the maximum amount
that may be allocated to it or (2) after the first 90 days of any fiscal year,
amend the plan in a manner that would, directly or indirectly: (i) change the
method of calculating the amount allocated to the Covered Employees Performance
Fund for that year; (ii) increase the maximum award payable to any Senior
Executive Officer for that year; or (iii) remove the amendment restriction set
forth in this sentence with respect to that year.
A-2
<PAGE> 3
7. MISCELLANEOUS.
(a) The Corporation shall bear all expenses and costs in connection with the
operation of the Plan.
(b) The Corporation, the Board of Directors, the Committee and the officers of
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 the Corporation's accounts.
8. EFFECTIVE DATE.
Upon approval by the shareowners of Rockwell, the Plan shall become effective
as of October 1, 1995.
A-3
<PAGE> 1
EXHIBIT 10-l-1
ROCKWELL INTERNATIONAL CORPORATION
RESTRICTED STOCK AGREEMENT
To: D. H. Davis, Jr.
In accordance with a determination of the Compensation and Management
Development Committee (the Committee) of the Board of Directors of Rockwell
International Corporation (Rockwell) applying the Corporation's policy, as set
forth in resolutions adopted by the Committee on July 6, 1994 entitled
"Compensation Deferral," as modified by resolutions adopted by the Committee
today entitled "Modify Section 162(m) Policy and Approve Form of Restricted
Stock" (the Section 162(m) Policy), 14,166 shares (Restricted Shares) of Common
Stock of Rockwell have been granted to you as Restricted Stock in payment of
the aggregate amount of $734,861.25, which is the excess over the sum of the
limitation of Section 162(m)(1) of the Internal Revenue Code, as amended, and
the Relocation Payments (as defined in the Section 162(m) Policy) of the base
salary, incentive awards and other compensation constituting "applicable
employee remuneration" for purposes of such Section 162(m) due you that has
been deferred pursuant to the Section 162(m) Policy.
These Restricted Shares have been granted to you today upon the
following terms and conditions:
1. Earnings of Restricted Shares
-----------------------------
(a) If (i) you shall continue as an employee of the Corporation
until the January 1 immediately following your attainment of age 62 or
such later age (not more than age 67) to which the Committee shall from
time to time have requested, prior to your attainment of age 62 (or
such later age as to which it shall have previously requested), that
you remain in service as an employee of the Corporation; or (ii) you
shall die or suffer a disability that shall continue for a continuous
period of at least six months prior to your attainment of age 62 (or
the later age prescribed pursuant to the preceding clause (a)(i)); or
(iii) a "change of control" (as defined for purposes of Article III,
Section 15(l)(1) of the Corporation's By-Laws) shall have occurred;
then you shall be deemed to have fully earned all the Restricted Shares
subject to this agreement.
(b) If your employment by the Corporation terminates prior to
the January 1 immediately following your attainment of age 62 (or the
later age prescribed pursuant to clause (a)(i) of this paragraph), you
shall be deemed not to have earned any of the Restricted Shares and
shall have no further rights with respect thereto unless the Board of
Directors or the Committee shall determine, in its sole discretion,
that your earlier retirement from service with the Corporation is in
the best interests of the Corporation.
<PAGE> 2
2. Retention of Certificates for Restricted Shares
-----------------------------------------------
Certificates for the Restricted Shares and any dividends or
distributions thereon or in respect thereof that may be paid in
additional shares of Common Stock, other securities of the Corporation
or securities of another entity (Stock Dividends) shall be delivered to
and held by the Corporation until you shall have earned the Restricted
Shares in accordance with the provisions of paragraph 1. To facilitate
implementation of the provisions of this agreement, you undertake to
sign and deposit with the Corporation's Office of the Secretary a Stock
Transfer Power in the form of Attachment 1 hereto with respect to the
Restricted Shares and any stock Dividends thereon.
3. Dividends and Voting Rights
---------------------------
Notwithstanding the retention by the Corporation of
certificates for the Restricted Shares and any Stock Dividends, you
shall be entitled to receive any dividends that may be paid in cash on,
and to vote, the Restricted Shares and any Stock Dividends held by the
Corporation in accordance with paragraph 2, unless and until such
shares have been forfeited in accordance with paragraph 5.
4. Delivery of Earned Restricted Shares
------------------------------------
As promptly as practicable after you shall have been deemed to
have earned the Restricted Shares in accordance with paragraph 1, the
Corporation shall deliver to you (or in the event of your death, to
your estate or any person who acquires your interest in the Restricted
Shares by bequest or inheritance) the Restricted Shares, together with
any Stock Dividends then held by the Corporation.
5. Forfeiture of Unearned Restricted Shares
----------------------------------------
Notwithstanding any other provision of this agreement, (a) if
you shall make an effective election pursuant to Section 83(b) of the
Internal Revenue Code, as amended, with respect to the Restricted
Shares or any Stock Dividends; or (b) if at any time it shall become
impossible for you to earn any of the Restricted Shares in accordance
with this agreement, all the Restricted Shares, together with any Stock
Dividends, then being held by the Corporation in accordance with
paragraph 2 shall be forfeited, and you shall have no further rights of
any kind or nature with respect thereto. Upon any such forfeiture, the
Restricted Shares, together with any Stock Dividends, shall be
transferred to Rockwell.
6. Transferability
---------------
This grant is not transferable by you otherwise than by will or by the
laws of descent and distribution, and the Restricted Shares, and any
Stock Dividends shall be deliverable, during your lifetime, only to you.
-2-
<PAGE> 3
7. Withholding
-----------
The Corporation shall have the right, in connection with the
delivery of the Restricted Shares and any Stock Dividends subject to
this agreement, (i) to deduct from any payment otherwise due by the
Corporation to you or any other person receiving delivery of the
Restricted Shares and any Stock Dividends an amount equal to the taxes
required to be withheld by law with respect to such delivery, (ii) to
require you or any other person receiving such delivery to pay to it an
amount sufficient to provide for any such taxes so required to be
withheld or (iii) to sell such number of the Restricted Shares and any
Stock Dividends as may be necessary so that the net proceeds of such
sale shall be an amount sufficient to provide for any such taxes so
required to be withheld.
8. Applicable Law
--------------
This agreement and the Corporation's obligation to deliver
Restricted Shares and any Stock Dividends hereunder shall be governed
by and construed and enforced in accordance with the laws of Delaware
and the Federal law of the United States.
ROCKWELL INTERNATIONAL CORPORATION
By: /s/ C. H. Harff
---------------------------------------
C. H. Harff
Senior Vice President & Special Counsel
Attachment 1 - Stock Transfer Power
Dated: December 6, 1995
Agreed to this 6th day of December, 1995
/s/ D. H. Davis, Jr.
- ------------------------------
D. H. Davis, Jr.
Address: 4 Cherry Hills
Newport Beach, CA 92660
Social Security No.: ###-##-####
-3-
<PAGE> 4
Attachment I
STOCK TRANSFER POWER SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, I, Don H. Davis, Jr., hereby sell, assign and
transfer unto Rockwell International Corporation (i) the __________ shares (the
Shares) of the Common Stock of Rockwell International Corporation (Rockwell)
standing in my name on the books of Rockwell represented by Certificate
No. ____________ herewith, granted to me on December 6, 1995, as Restricted
Stock as deferred payment of certain compensation earned during the
Corporation's fiscal year ended September 30, 1995, and (ii) any additional
shares of Rockwell's Common Stock, other securities issued by Rockwell or
securities of another entity (Stock Dividends) distributed, paid or payable
on or in respect of the Shares and Stock Dividends during the period the
Shares and Stock Dividends are held by Rockwell pursuant to a certain
Restricted Stock Agreement dated December 6, 1995 with respect to the Shares;
and I do hereby irrevocably constitute and appoint _________________________,
attorney with full power of substitution in the premises to transfer the
Shares on the books of Rockwell.
Dated: December 6, 1995
____________________________
(Signature)
WITNESS:
____________________________ ____________________________
(Signature)
<PAGE> 1
EXHIBIT 11
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
FOR THE FIVE YEARS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
--------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Income before change in accounting................. $742.2 $634.1 $561.9 $483.0 $600.5
Deduct dividend requirements on preferred stock.... 0.2 0.3 0.3 0.3 0.3
------ ------ ------ ------ ------
Total primary earnings before change
in accounting............................ $742.0 $633.8 $561.6 $482.7 $600.2
====== ====== ====== ====== ======
Average number of common shares outstanding during
the year......................................... 217.2 220.5 219.8 223.6 233.7
====== ====== ====== ====== ======
Primary earnings per share before change in
accounting....................................... $ 3.42 $ 2.87 $ 2.55 $ 2.16 $ 2.57
Cumulative effect of change in accounting for
retirement medical benefits...................... (6.78)*
------ ------ ------ ------ ------
Net primary earnings (loss) per share.............. $ 3.42 $ 2.87 $ 2.55 $(4.62) $ 2.57
====== ====== ====== ====== ======
FULLY DILUTED EARNINGS PER SHARE:
Income before change in accounting................. $742.2 $634.1 $561.9 $483.0 $600.5
====== ====== ====== ====== ======
Average number of common shares outstanding during
the year:
Common stock..................................... 217.2 220.5 219.8 223.6 233.7
Assumed issuance of stock under award plans and
conversion of preferred stock and convertible
debentures.................................... 3.9 4.0 4.5 2.5 3.1
------ ------ ------ ------ ------
Total shares, assuming full dilution........ 221.1 224.5 224.3 226.1 236.8
====== ====== ====== ====== ======
Fully diluted earnings per share before change
in accounting.................................... $ 3.36 $ 2.82 $ 2.51 $ 2.14 $ 2.54
Cumulative effect of change in accounting for
retirement medical benefits...................... (6.70)*
------ ------ ------ ------ ------
Net fully diluted earnings (loss) per share........ $ 3.36 $ 2.82 $ 2.51 $(4.56) $ 2.54
====== ====== ====== ====== ======
<FN>
- ---------------
* The per share amounts pertaining to the cumulative effect of change in
accounting in 1992 were computed using average outstanding shares for the
second quarter, which approximate full year 1992 average outstanding shares.
</TABLE>
<PAGE> 1
EXHIBIT 12
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
YEAR ENDED SEPTEMBER 30, 1995
(IN MILLIONS, EXCEPT RATIOS)
<TABLE>
<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................... $ 1,226.4 $ (51.3) $49.9(3) $1,225.0
Adjustments:
Undistributed (income) of affiliates...... (6.9) (6.9)
Minority interest in loss of
subsidiaries............................ 8.4 8.4
--------- ------- ----- --------
1,227.9 (51.3) 49.9 1,226.5
Add fixed charges included in earnings:
Interest expense........................ 169.9 6.0 21.0 196.9
Interest element of rentals............. 66.5 2.5 69.0
--------- ------- ----- --------
Total................................... 236.4 8.5 21.0 265.9
Total earnings available for fixed
charges................................. $ 1,464.3 $ (42.8) $70.9 $1,492.4
========= ======= ===== ========
FIXED CHARGES:
Fixed charges included in earnings........... $ 236.4 $ 8.5 $21.0 $ 265.9
Capitalized interest......................... 10.6 10.6
--------- ------- ----- --------
Total fixed charges....................... $ 247.0 $ 8.5 $21.0 $ 276.5
========= ======= ===== ========
RATIO OF EARNINGS TO FIXED CHARGES(4).......... 5.9 5.4
========== ========
(1) The Rockwell information presented includes Reliance for the nine months
ended September 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-b-1):
(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 (10.6)
(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 relating to 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 $ 49.9
=======
(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 capitalized interest. Fixed charges consist of
interest on borrowings and that portion of rentals deemed representative
of the interest factor.
</TABLE>
<PAGE> 1
EXHIBIT 13
REPORT OF MANAGEMENT
AND INDEPENDENT ACCOUNTANTS
Management's Responsibility
For Financial Reporting
The consolidated financial statements of Rockwell International Corporation
have been prepared by management which is responsible for their integrity and
objectivity. These statements have been prepared in conformity with generally
accepted accounting principles and, where appropriate, reflect estimates based
on judgments of management.
The company's system of internal controls is designed to provide reasonable
assurance that company assets are safeguarded from loss or unauthorized use or
disposition, and that transactions are executed in accordance with management's
authorization and properly recorded to permit the preparation of financial
statements in accordance with generally accepted accounting principles. This
system is augmented by careful selection and training of qualified personnel,
proper division of responsibilities, the dissemination of written policies and
procedures, and an internal audit program to monitor its effectiveness.
The financial statements have been audited by Deloitte & Touche LLP,
independent certified public accountants, whose report appears on this page.
The board of directors, through its audit committee consisting of six outside
directors, oversees management's financial reporting responsibilities and
programs for ethical business conduct. As part of these responsibilities, the
audit committee meets regularly with representatives of management, the
independent accountants, and the company's general auditor. The independent
accountants and the company's general auditor have full and free access to the
audit committee and meet with the committee both with and without the presence
of management.
/s/ Donald R. Beall
--------------------------
Donald R. Beall
Chairman of the Board and
Chief Executive Officer
/s/ W. Michael Barnes
--------------------------
W. Michael Barnes
Senior Vice President
Finance & Planning and
Chief Financial Officer
Report of Independent Certified
Public Accountants
TO THE DIRECTORS AND SHAREOWNERS
OF ROCKWELL INTERNATIONAL CORPORATION:
We have audited the accompanying consolidated balance sheet of Rockwell
International Corporation and subsidiaries as of September 30, 1995 and 1994,
and the related consolidated statements of income, shareowners' equity, and
cash flows for each of the three years in the period ended September 30, 1995.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Rockwell International Corporation
and subsidiaries at September 30, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1995 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
------------------------
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
October 31, 1995
<PAGE> 2
STATEMENT OF ROCKWELL INTERNATIONAL CORPORATION
CONSOLIDATED INCOME
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30 1995 1994 1993
==============================================================================================
<S> <C> <C> <C> <C>
Revenues Sales $12,981 $11,123 $10,840
Other income 118 82 81
--------------------------------------------------------------------------
Total revenues 13,099 11,205 10,921
- ----------------------------------------------------------------------------------------------
COSTS AND Cost of sales 9,997 8,675 8,539
EXPENSES Selling, general, and administrative 1,706 1,412 1,374
Interest 170 97 104
--------------------------------------------------------------------------
Total costs and expenses 11,873 10,184 10,017
- ----------------------------------------------------------------------------------------------
Income before income taxes 1,226 1,021 904
Provision for income taxes 484 387 342
- ----------------------------------------------------------------------------------------------
NET INCOME $ 742 $ 634 $ 562
==============================================================================================
EARNINGS PER Primary $ 3.42 $ 2.87 $ 2.55
COMMON SHARE Fully diluted $ 3.36 $ 2.82 $ 2.51
==============================================================================================
AVERAGE COMMON Primary 217.2 220.5 219.8
SHARES OUTSTANDING Fully diluted 221.1 224.5 224.3
==============================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 3
CONSOLIDATED BALANCE SHEET ROCKWELL INTERNATIONAL CORPORATION
(IN MILLIONS)
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
===================================================================================================================
<S> <C> <C> <C>
ASSETS CURRENT ASSETS
Cash (includes time deposits and certificates of deposit:
1995, $451 million; 1994, $487 million) $ 665 $ 628
Receivables 2,510 2,267
Inventories 2,071 1,533
Other current assets 559 500
--------------------------------------------------------------------------------------------------
Total current assets 5,805 4,928
--------------------------------------------------------------------------------------------------
PROPERTY
Land 159 117
Land and leasehold improvements 158 155
Buildings 1,645 1,379
Machinery and equipment 3,427 2,950
Office and data processing equipment 1,207 1,224
Construction in progress 334 335
--------------------------------------------------------------------------------------------------
Total 6,930 6,160
Less accumulated depreciation 3,904 3,777
--------------------------------------------------------------------------------------------------
Net property 3,026 2,383
--------------------------------------------------------------------------------------------------
INTANGIBLE ASSETS 2,016 777
--------------------------------------------------------------------------------------------------
OTHER ASSETS 1,658 1,773
--------------------------------------------------------------------------------------------------
TOTAL $12,505 $9,861
==================================================================================================
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES AND CURRENT LIABILITIES
SHAREOWNERS' Short-term debt $ 655 $ 160
EQUITY Accounts payable - trade 1,138 977
Accrued compensation and benefits 754 669
Advance payments from customers 400 295
Accrued income taxes 130 137
Other current liabilities 1,034 782
--------------------------------------------------------------------------------------------------
Total current liabilities 4,111 3,020
--------------------------------------------------------------------------------------------------
LONG-TERM DEBT 1,776 831
--------------------------------------------------------------------------------------------------
ACCRUED RETIREMENT BENEFITS 2,546 2,453
--------------------------------------------------------------------------------------------------
OTHER LIABILITIES 290 201
--------------------------------------------------------------------------------------------------
SHAREOWNERS' EQUITY
Preferred stock (liquidation value - $5.4 million) 1 1
Common Stock (shares issued - 209.5 million) 210 210
Class A Common Stock (shares issued: 1995, 32.9 million; 1994, 36.9 million) 33 37
Additional paid-in capital 186 174
Retained earnings 4,158 3,762
Currency translation and pension adjustments (99) (97)
Common Stock in treasury, at cost
(shares held: 1995, 25.4 million; 1994, 27.8 million) (707) (731)
--------------------------------------------------------------------------------------------------
Total shareowners' equity 3,782 3,356
--------------------------------------------------------------------------------------------------
TOTAL $12,505 $9,861
===================================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 4
STATEMENT OF ROCKWELL INTERNATIONAL CORPORATION
CONSOLIDATED CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30 1995 1994 1993
==============================================================================================
<S> <C> <C> <C> <C>
OPERATING Net income $ 742 $ 634 $ 562
ACTIVITIES Adjustments to net income to arrive at cash
provided by operating activities:
Depreciation 470 436 432
Amortization of intangible assets 101 58 59
Deferred income taxes 78 44 (1)
Net pension income and contributions (83) (123) (121)
Changes in assets and liabilities,
excluding effects of acquisitions,
divestitures, and foreign currency
adjustments:
Receivables (74) (29) 98
Inventories (191) (89) 12
Accounts payable - trade 73 99 (4)
Accrued compensation and benefits (8) (43) 32
Advance payments from customers 78 (81) (49)
Income taxes (60) 68 12
Other assets and liabilities (5) (54) (102)
---------------------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES 1,121 920 930
- ----------------------------------------------------------------------------------------------
INVESTING Property additions (685) (568) (433)
ACTIVITIES Acquisition of Reliance (net of cash acquired and
$475 million proceeds from sale of its
telecommunications business) (1,066)
Other acquisitions of businesses
(net of cash acquired) (121) (20) (118)
Proceeds from the disposition of property
and businesses 38 104 30
---------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (1,834) (484) (521)
- ----------------------------------------------------------------------------------------------
FINANCING Increase (decrease) in short-term borrowings 290 (29) (15)
ACTIVITIES Payments of long-term debt (45) (232) (13)
Long-term borrowings 827 22 2
---------------------------------------------------------------------------------
Net increase (decrease) in debt 1,072 (239) (26)
Purchase of treasury stock (137) (155) (65)
Dividends (235) (225) (211)
Reissuance of common stock 50 38 63
---------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 750 (581) (239)
- ----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH 37 (145) 170
CASH AT BEGINNING OF YEAR 628 773 603
---------------------------------------------------------------------------------
CASH AT END OF YEAR $ 665 $ 628 $ 773
==============================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 5
STATEMENT OF CONSOLIDATED ROCKWELL INTERNATIONAL CORPORATION
SHAREOWNERS' EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30 1995 1994 1993
==============================================================================================
<S> <C> <C> <C>
PREFERRED STOCK (No shares issued during periods) $ 1 $ 1 $ 1
- ----------------------------------------------------------------------------------------------
COMMON STOCK (No shares issued during periods) 210 210 210
- ----------------------------------------------------------------------------------------------
CLASS A Beginning balance 37 42 47
COMMON STOCK Conversions into Common Stock (4) (5) (5)
---------------------------------------------------------------------------
Ending balance 33 37 42
- ----------------------------------------------------------------------------------------------
ADDITIONAL Beginning balance 174 164 145
PAID-IN CAPITAL Exercise of stock options 12 10 19
---------------------------------------------------------------------------
Ending balance 186 174 164
- ----------------------------------------------------------------------------------------------
RETAINED EARNINGS Beginning balance 3,762 3,472 3,261
Net income 742 634 562
Cash dividends:
Common (per share: 1995, $1.08;
1994, $1.02; 1993, $.96)
Preferred (per share: Series A - $4.75,
Series B - $1.35) (235) (225) (211)
Treasury stock reissuances (111) (119) (140)
---------------------------------------------------------------------------
Ending balance 4,158 3,762 3,472
- ----------------------------------------------------------------------------------------------
CURRENCY Beginning balance (97) (197) (17)
TRANSLATION AND Currency translation (2) 20 (114)
PENSION Pension adjustment 80 (66)
ADJUSTMENTS ---------------------------------------------------------------------------
Ending balance (99) (97) (197)
- ----------------------------------------------------------------------------------------------
TREASURY STOCK Beginning balance (731) (736) (869)
Purchases (137) (155) (65)
Reissuances, principally Class A
Common Stock conversions 161 160 198
---------------------------------------------------------------------------
Ending balance (707) (731) (736)
---------------------------------------------------------------------------
TOTAL SHAREOWNERS' EQUITY $3,782 $3,356 $ 2,956
==============================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS ROCKWELL INTERNATIONAL CORPORATION
1. Financial Statement Presentation
Significant accounting policies are set forth in capital letters as an
integral part of the notes to financial statements to which the policies
relate. Certain prior year amounts have been reclassified to conform with
current year presentation.
2. Acquisition of Businesses
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 $311 million of short-term borrowings, $800 million of
long-term debt, and the $475 million of proceeds from the August 1995 sale of
Reliance's telecommunications business. The company's results of operations do
not include the results of Reliance's telecommunications business or the
interest expense related to the short-term borrowings that were repaid with the
sale proceeds.
The acquisition of Reliance was accounted for as a purchase as of December 31,
1994 and the results of operations of Reliance have been included since that
date. The purchase price exceeded the fair value of net assets acquired by $880
million, which is recognized as goodwill and is being amortized over 40 years.
The following unaudited pro forma information has been prepared assuming
Reliance had been acquired and its telecommunications business had been sold as
of the beginning of the periods presented. The pro forma information is
presented for information purposes only and is not necessarily indicative of
what would have occurred if the acquisition had been made as of those dates. In
addition, the pro forma information is not intended to be a projection of
future results and does not reflect synergies expected to result from the
integration of Reliance and the company's Automation business.
PRO FORMA INFORMATION (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30 1995 1994
=============================================================
<S> <C> <C>
Sales and other income $13,428 $12,443
- -------------------------------------------------------------
Net income 742 600
- -------------------------------------------------------------
Earnings per common share:
Primary 3.42 2.72
Fully diluted 3.36 2.67
=============================================================
</TABLE>
The company also acquired several other businesses at a net cost of $121
million. The results of operations of these businesses were not material in
relation to the company's consolidated results of operations.
3. Receivables
Receivables are summarized as follows (in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
=============================================================
<S> <C> <C>
Accounts and notes receivable:
Commercial, less allowance for
doubtful accounts (1995, $83;
1994, $68) $1,673 $1,364
United States Government 142 128
Unbilled costs and accrued profits,
less related progress payments
(1995, $235; 1994, $387) 695 775
- -------------------------------------------------------------
Receivables $2,510 $2,267
=============================================================
</TABLE>
Unbilled costs and accrued profits consist principally of revenues
recognized on United States Government contracts under the
percentage-of-completion (cost-to-cost) method of accounting (see Note 14).
Unbilled costs and accrued profits, less related progress payments, are billed
in accordance with applicable contract terms. Unbilled costs and accrued
profits include $205 million relating to claims subject to negotiation or
settlement with customers. These claims include amounts which are not expected
to be received within one year.
4. Inventories
Inventories are summarized as follows (in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
=============================================================
<S> <C> <C>
Finished goods $ 520 $ 355
Long-term contracts in process 289 300
Work in process 880 620
Raw materials, parts, and supplies 553 473
- -------------------------------------------------------------
Total 2,242 1,748
Less allowance to adjust the carrying
value of certain inventories (1995,
$917; 1994, $557) to a LIFO basis 76 68
- -------------------------------------------------------------
Remainder 2,166 1,680
Less related progress payments 95 147
- -------------------------------------------------------------
Inventories $2,071 $1,533
=============================================================
</TABLE>
INVENTORIES ARE STATED AT THE LOWER OF COST (USING LIFO, FIFO, OR AVERAGE
METHODS) OR MARKET (DETERMINED ON THE BASIS OF ESTIMATED REALIZABLE VALUES),
LESS RELATED PROGRESS PAYMENTS RECEIVED. Pursuant to contract provisions the
United States Government has title to, or a security interest in, certain
inventories as a result of progress payments.
<PAGE> 7
Long-term contracts in process consist of inventoried costs principally
relating to fixed-price-type contracts with the United States Government. SUCH
INVENTORIED COSTS INCLUDE DIRECT COSTS OF MANUFACTURING, ENGINEERING AND
TOOLING, AND ALLOCABLE OVERHEAD COSTS INCLUDING GENERAL AND ADMINISTRATIVE
EXPENSES ALLOWABLE IN ACCORDANCE WITH UNITED STATES GOVERNMENT CONTRACT COST
PRINCIPLES. IN ACCORDANCE WITH INDUSTRY PRACTICE, SUCH INVENTORIED COSTS
INCLUDE AMOUNTS WHICH ARE NOT EXPECTED TO BE REALIZED WITHIN ONE YEAR.
General and administrative expenses related to United States Government
contracts incurred and charged to inventoried costs were $471 million, $479
million, and $520 million in 1995, 1994, and 1993, respectively. General and
administrative expenses remaining in inventoried costs before consideration of
progress payments were estimated at $72 million and $76 million at September
30, 1995 and 1994, respectively.
Inventories do not include any material amounts of unamortized tooling,
learning curve, and other deferred costs, or claims or other similar items
subject to uncertainty concerning their realization.
5. Property and Depreciation
PROPERTY IS STATED AT COST. DEPRECIATION OF PROPERTY IS PROVIDED BASED ON
ESTIMATED USEFUL LIVES GENERALLY USING ACCELERATED AND STRAIGHT-LINE METHODS.
SIGNIFICANT RENEWALS AND BETTERMENTS ARE CAPITALIZED AND REPLACED UNITS ARE
WRITTEN OFF. MAINTENANCE AND REPAIRS, AS WELL AS RENEWALS OF MINOR AMOUNT, ARE
CHARGED TO EXPENSE. Maintenance and repairs were $244 million in 1995, $229
million in 1994, and $219 million in 1993.
6. Intangible Assets
Intangible assets are summarized as follows (in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
============================================================================
<S> <C> <C>
Goodwill, less accumulated amortization
(1995, $223; 1994, $174) $1,476 $589
Trademarks, patents, product technology,
and other intangibles, less accumulated
amortization (1995, $372; 1994, $349) 540 188
- ----------------------------------------------------------------------------
Intangible assets $2,016 $777
============================================================================
</TABLE>
GOODWILL REPRESENTS THE EXCESS OF THE COST OF PURCHASED BUSINESSES OVER THE
FAIR VALUE OF THEIR NET ASSETS AT DATE OF ACQUISITION AND GENERALLY IS BEING
AMORTIZED BY THE STRAIGHT-LINE METHOD OVER PERIODS RANGING FROM 10 TO 40 YEARS.
TRADEMARKS, PATENTS, PRODUCT TECHNOLOGY, AND OTHER INTANGIBLES ARE BEING
AMORTIZED ON A STRAIGHT-LINE BASIS OVER THEIR ESTIMATED USEFUL LIVES, GENERALLY
RANGING FROM 5 TO 40 YEARS.
The increases in goodwill and trademarks, patents, product technology, and
other intangibles are primarily due to the acquisition of Reliance.
Management has reviewed the realizability of goodwill and other intangible
assets based on an evaluation of remaining useful lives, cash flows, and
profitability projections and has determined that there is no impairment at
September 30, 1995.
7. Other Assets
Other assets are summarized as follows (in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
============================================================================
<S> <C> <C>
Prepaid pension costs (see Note 18) $1,325 $1,215
Net deferred income taxes (see Note 19) 13 300
Customer finance receivables 188 137
Investments and other assets 132 121
- ----------------------------------------------------------------------------
Other assets $1,658 $1,773
============================================================================
</TABLE>
The reduction in net deferred income taxes results principally from the
deferred tax liabilities recorded in connection with the fair value adjustments
of Reliance.
Customer finance receivables are collateralized installment notes held by the
company's finance subsidiary.
8. Short-term Debt
Short-term debt consisted of the following (in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
============================================================================
<S> <C> <C>
Commercial paper $535 $ 40
Short-term bank borrowings,
principally foreign 101 105
Current portion of long-term debt 19 15
- ----------------------------------------------------------------------------
Short-term debt $655 $160
============================================================================
</TABLE>
Weighted average interest rates on short-term borrowings:
<TABLE>
<CAPTION>
1995 1994
============================================================================
<S> <C> <C>
Commercial paper 5.8% 4.9%
Other short-term debt (principally foreign) 4.7% 4.9%
============================================================================
</TABLE>
The increase in short-term commercial paper borrowings is primarily due to the
Reliance acquisition. At September 30, 1995, the company had $2.5 billion of
unsecured credit facilities with various banks to support commercial paper
borrowings. There were no significant commitment fees or compensating balance
requirements under these facilities. The company reduced the credit facilities
by $1.0 billion in November 1995.
Short-term credit facilities available to foreign subsidiaries amounted to
$521 million at September 30, 1995 and consisted of arrangements for which
there are no significant commitment fees.
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS
9. Other Current Liabilities
Other current liabilities are summarized as follows
(in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
============================================================================
<S> <C> <C>
Accounts payable - other $ 312 $227
Accrued product warranties 237 217
Accrued taxes other than income taxes 85 82
Other 400 256
- ----------------------------------------------------------------------------
Other current liabilities $1,034 $782
============================================================================
</TABLE>
10. Long-term Debt
Long-term debt consisted of the following (in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
============================================================================
<S> <C> <C>
7 5/8% notes, payable in 1998 $ 300
8 7/8% notes, payable in 1999 300 $300
8 3/8% notes, payable in 2001 200 200
6 3/4% notes, payable in 2002 300 300
6.8% notes, payable in 2003 138
7 7/8% notes, payable in 2005 200
6 5/8% notes, payable in 2005 300
Other obligations, principally foreign 57 46
- ----------------------------------------------------------------------------
Total 1,795 846
Less current portion 19 15
- ----------------------------------------------------------------------------
Long-term debt $1,776 $831
============================================================================
</TABLE>
In 1995, the company issued the 7 5/8% notes, the 7 7/8% notes, and
the 6 5/8% notes in connection with the Reliance acquisition. The 6.8% notes
represent long-term debt of Reliance existing at the date of acquisition.
Interest payments on short- and long-term borrowings were $154 million
in 1995, $98 million in 1994, and $110 million in 1993. At September 30, 1995
aggregate maturities of long-term debt during the five years ending
September 30, 2000 were as follows (in millions): 1996, $19; 1997, $18; 1998,
$305; 1999, $305; and 2000, $3.
11. Financial Instruments
The company's financial instruments include cash, notes receivable, short- and
long-term debt, and foreign currency forward exchange contracts. At September
30, 1995, the carrying values of the company's financial instruments
approximated their fair values based on current market prices and rates.
It is the policy of the company not to enter into derivative financial
instruments for speculative purposes. The company does enter into foreign
currency forward exchange contracts to protect itself from adverse currency
rate fluctuations on foreign currency commitments entered into in the ordinary
course of business. These commitments are generally for terms of less than one
year. The foreign currency forward exchange contracts are executed with
creditworthy banks and are denominated in currencies of major industrial
countries. The notional amount of outstanding foreign currency forward exchange
contracts aggregated $681 million and $415 million at September 30, 1995 and
1994, respectively. 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.
12. Capital Stock
The authorized stock of the company consists of 600 million shares of Common
Stock and 200 million shares of Class A Common Stock, each with a $1 par value,
and 12 million shares of preferred stock without par value. The Class A Common
Stock is substantially identical to the Common Stock except that each share of
Class A Common Stock entitles the holder to ten votes on all matters on which
holders of Common Stock are entitled to vote, is not transferable except in
certain limited circumstances, and is convertible at any time into Common Stock
on a share-for-share basis. At September 30, 1995, 28 million shares of common
stock were reserved for various employee incentive plans and conversions of
preferred stock.
The Series A and B preferred stocks are stated in the accompanying financial
statements at the aggregate par value of the number of shares of common stock
into which such preferred stocks are convertible. Each share of Series A
Preferred Stock is convertible (subject to adjustment under certain conditions)
into 9.8985 shares each of Common Stock and Class A Common Stock. Each share of
Series B Preferred Stock is convertible (subject to adjustment under certain
conditions) into 3.6 shares each of Common Stock and Class A Common Stock. The
company may redeem Series A and Series B preferred stocks at $100 and $36 per
share, respectively. The aggregate liquidation value of all shares of
<PAGE> 9
preferred stock that may be issued in series from time to time cannot at any
time exceed $650 million.
Changes in outstanding common shares are summarized as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
Beginning balance 218.6 221.0 220.3
Treasury stock purchases (3.5) (4.1) (2.3)
Other, principally stock
option exercises 1.9 1.7 3.0
- -------------------------------------------------------
Ending balance 217.0 218.6 221.0
=======================================================
</TABLE>
Outstanding common stock at September 30, 1995 consisted of 184.1 million
shares of Common Stock and 32.9 million shares of Class A Common Stock. There
were also outstanding at September 30, 1995, 25,347 shares of Series A
Preferred Stock and 79,716 shares of Series B Preferred Stock.
13. Employee Stock Options
Options to purchase common stock of the company have been granted under various
incentive plans to officers and other key employees at prices equal to or above
the fair market value of such stock on the dates the options were granted. The
plans provide that the option price for certain options granted under the plans
may be paid in cash, the company's common stock, or a combination thereof. The
options have vesting periods which range from 1 to 3 years.
Information relative to employee stock options is as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
Number of shares
under option:
Outstanding at
beginning of year 10,336 9,676 9,659
Granted 1,776 2,157 2,781
Exercised (1,713) (1,401) (2,647)
Expired (36) (96) (117)
- -------------------------------------------------------
Outstanding at end
of year 10,363 10,336 9,676
=======================================================
Exercisable at end
of year 8,601 8,222 6,915
=======================================================
</TABLE>
The ranges of exercise prices per share for options outstanding are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994 1993
=======================================================
<S> <C> <C> <C>
High $46.75 $41.88 $31.50
Low $16.75 $16.75 $13.13
=======================================================
</TABLE>
Options outstanding and exercisable at September 30, 1995 included 356,981
related to Class A Common shares. Shares available for future grant or payment
under various incentive plans were 16.3 million at September 30, 1995.
Outstanding options expire at various dates from December 4, 1995 to July 10,
2005. None of the incentive plans presently permit options to be granted after
September 30, 2005.
14. Contract Sales
SALES UNDER FIXED-PRICE CONTRACTS ARE GENERALLY RECORDED UPON DELIVERY. SALES
UNDER ALL COST-TYPE AND CERTAIN FIXED-PRICE-TYPE CONTRACTS REQUIRING
PERFORMANCE OVER SEVERAL PERIODS ARE ACCOUNTED FOR UNDER THE
PERCENTAGE-OF-COMPLETION (COST-TO-COST) METHOD OF ACCOUNTING.
EXPECTED PROFITS OR LOSSES ON CONTRACTS ARE BASED ON THE COMPANY'S ESTIMATES OF
TOTAL SALES VALUES AND COSTS AT COMPLETION. THESE ESTIMATES ARE REVIEWED AND
REVISED PERIODICALLY THROUGHOUT THE LIVES OF THE CONTRACTS, AND ADJUSTMENTS
RESULTING FROM SUCH REVISIONS ARE RECORDED IN THE PERIODS IN WHICH THE
REVISIONS ARE MADE. IN CERTAIN CASES THE ESTIMATED SALES VALUES INCLUDE AMOUNTS
EXPECTED TO BE REALIZED FROM CONTRACT ADJUSTMENTS OR CLAIMS SUBJECT TO
NEGOTIATIONS OR LEGAL PROCEEDINGS. LOSSES ON CONTRACTS ARE RECORDED IN FULL AS
THEY ARE IDENTIFIED.
Sales under United States Government contracts accounted for 28 percent of
total sales in 1995, 35 percent in 1994, and 39 percent in 1993. United States
Government sales by contract type were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
Cost 71% 68% 65%
Firm-fixed-price 25 25 27
Fixed-price-incentive 4 7 8
- -------------------------------------------------------
Total 100% 100% 100%
=======================================================
</TABLE>
The major portion of work performed for the United States Government is under
contracts that contain cost or performance incentives or both. These
incentives provide for increases in fees or profits for surpassing stated
targets or other criteria, or for decreases in fees or profits for failure to
achieve such targets or other criteria. PERFORMANCE INCENTIVES, FOR WHICH A
REASONABLE PREDICTION OF ACCOMPLISHMENT CANNOT BE MADE IN ADVANCE, ARE INCLUDED
IN SALES AT THE TIME THERE IS SUFFICIENT INFORMATION TO RELATE ACTUAL
PERFORMANCE TO TARGETS OR OTHER CRITERIA.
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
15. Rental and Lease Information
The company leases certain facilities and equipment under operating leases,
many of which contain renewal options and escalation clauses. Total rental
expense on operating leases (net of immaterial income from sublease rentals)
was $138 million, $120 million, and $118 million in 1995, 1994, and 1993,
respectively. Contingent rentals under operating leases were not significant.
Minimum future rental commitments under operating leases having noncancelable
lease terms in excess of one year aggregated $330 million as of September 30,
1995 and are payable as follows (in millions): 1996, $74; 1997, $58; 1998, $46;
1999, $37; 2000, $31; and after 2000,$84.
16. Research and Development Costs
The company performs research and development under both company-initiated
programs and contracts with others, primarily the United States Government.
Company-initiated programs include research and development for commercial
products and independent research and development and bid and proposal work
related to government products or services. A large portion of the cost
incurred for independent research and development and bid and proposal work is
recoverable through overhead cost allowances on government contracts. Research
and development costs are comprised of the following (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
Company-initiated $ 649 $ 595 $ 587
Government-funded 1,059 1,010 1,014
- -------------------------------------------------------
Total research and
development costs $1,708 $1,605 $1,601
=======================================================
</TABLE>
17. Retirement Medical Plans
The company has retirement medical plans which cover most of its United States
employees and provide for the payment of medical costs of eligible employees
and dependents upon retirement.
The components of retirement medical expense are as
follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
Service cost - benefits
attributed to service
during the period $ 15 $ 18 $ 20
Interest accrued on
accumulated retirement
medical obligation 170 160 187
Amortization of plan
amendments and net
actuarial gains (57) (56) (29)
- -------------------------------------------------------
Retirement medical expense $128 $122 $178
=======================================================
</TABLE>
The company's retirement medical obligation consisted of the following (in
millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
======================================================
<S> <C> <C>
Accumulated retirement medical
obligation:
Retirees $1,833 $1,656
Employees eligible to retire 184 151
Employees not eligible to retire 277 243
- ------------------------------------------------------
Total 2,294 2,050
Unamortized amounts:
Plan amendments 311 359
Net actuarial (losses) gains:
Discount rate (284) (137)
Health care trend rates 456 435
Demographics (228) (200)
- ------------------------------------------------------
Recorded liability $2,549 $2,507
- ------------------------------------------------------
Assumptions used
(June 30 measurement date):
Discount rate 7.5% 8.25%
Health care cost trend rates 8.5%* 8.5%*
======================================================
<FN>
* Decreasing to 5.5% after 2015.
</TABLE>
The unamortized amounts for plan amendments will be recognized over the next 3
to 12 years and, accordingly, reduce retirement medical expense. Net actuarial
losses and gains will be considered in the determination of retirement medical
expense in the future.
Changing the health care cost trend rates by one percentage point would change
the accumulated retirement medical obligation at September 30, 1995 by
approximately $175 million and would change retirement medical expense by
approximately $15 million.
<PAGE> 11
18. Retirement Pension Plans
The company has pension plans which cover most of its employees and provide for
monthly pension payments to eligible employees upon retirement. Pension
benefits for salaried employees generally are based on years of credited
service and average earnings. Pension benefits for hourly employees generally
are based on specified benefit amounts and years of service.
Net pension income consisted of the following (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
Service cost-benefits
earned during the year $(124) $(128) $(112)
Interest accrued on pro-
jected benefit obligation (597) (557) (553)
Assumed return on
plan assets 704 669 638
Initial net asset
amortization 137 137 137
Prior service cost
amortization (32) (25) (35)
Net actuarial loss
amortization (25) (70) (19)
- -------------------------------------------------------
Net pension income $ 63 $ 26 $ 56
=======================================================
</TABLE>
Upon adoption of the current pension accounting standard in 1987 the fair value
of pension plan assets exceeded projected pension benefit liabilities by $1.7
billion. This initial net asset is being amortized as pension income over 13
years through 1999.
Pension plan assets are primarily equity securities, United States Government
obligations, and other fixed income investments whose values are subject to
fluctuations of the securities market. The actual return on plan assets was
$1,391 million, $128 million, and $935 million in 1995, 1994, and 1993,
respectively. Differences between these actual returns and the related assumed
returns on plan assets are deferred and considered in the determination of net
pension income or expense in future periods.
In 1994, the company merged its 33 qualified defined benefit pension plans in
the United States into one pension plan. The following table reconciles the
funded status of the company's overfunded pension plans to amounts included in
the accompanying balance sheet (in millions):
<TABLE>
<CAPTION>
1995 1994
=======================================================
<S> <C> <C>
Accumulated benefit obligation,
principally vested $7,474 $6,721
Effects of projected compensation
increases 529 460
- -------------------------------------------------------
Projected benefit obligation 8,003 7,181
Fair value of plan assets 8,653 7,795
- -------------------------------------------------------
Plan assets in excess of
projected benefit obligation 650 614
Items not yet recognized in the
balance sheet:
Net actuarial (gains) losses:
Asset return (213) 474
Discount rate 983 385
Demographics 345 304
Prior service cost 80 96
Remaining initial net asset (520) (658)
- -------------------------------------------------------
Prepaid pension costs at
September 30 (see Note 7) $1,325 $1,215
- -------------------------------------------------------
Assumptions used (June 30
measurement date):
Discount rate 7.5% 8.25%
Compensation increase rate 4.5% 4.5%
Long-term rate of return on
plan assets 9.0% 9.0%
=======================================================
</TABLE>
Although the company has no intention of doing so, should it terminate its
qualified defined benefit pension plan, the United States Government is
entitled to an equitable share of any assets remaining after providing for plan
obligations.
The company also sponsors certain defined contribution savings plans for
eligible employees. Expense related to these plans was $86 million, $88
million, and $89 million for 1995, 1994, and 1993, respectively.
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
19. Income Taxes
The components of the provision for income taxes are as follows (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
Current:
United States $260 $219 $240
Foreign 86 76 54
State and local 60 48 49
- -------------------------------------------------------
Total current 406 343 343
- -------------------------------------------------------
Deferred:
United States 54 46 (18)
Foreign 13 (7) 13
State and local 11 5 4
- -------------------------------------------------------
Total deferred 78 44 (1)
- -------------------------------------------------------
Provision for income taxes $484 $387 $342
=======================================================
</TABLE>
Net deferred income tax benefits included in Other Current Assets in the
accompanying balance sheet consist of the tax effects of temporary differences
related to the following (in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
=======================================================
<S> <C> <C>
Accrued compensation and benefits $155 $146
Accrued product warranties 92 85
Other - net 56 58
- -------------------------------------------------------
Current deferred income taxes $303 $289
=======================================================
</TABLE>
Net deferred income tax benefits included in long-term Other Assets in the
accompanying balance sheet consist of the tax effects of temporary differences
related to the following (in millions):
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
=======================================================
<S> <C> <C>
Accrued retirement medical costs $ 914 $ 901
Pension costs (471) (470)
Property (244) (159)
Intangible assets (116) 39
Loss carryforwards 74 44
Foreign tax credit carryforwards 57 53
Other - net (77) (16)
- -------------------------------------------------------
Subtotal 137 392
- -------------------------------------------------------
Valuation allowance (124) (92)
- -------------------------------------------------------
Long-term deferred income taxes
(see Note 7) $ 13 $ 300
=======================================================
</TABLE>
Management believes it is more likely than not that current and long-term tax
assets will be realized through the reduction of future taxable income.
Significant factors considered by management in its determination of the
probability of the realization of the deferred tax assets included: (a) the
historical operating results of the company ($2.5 billion of United States
income before income taxes over the past three years), (b) expectations of
future earnings, and (c) the extended period of time over which the retirement
medical liability will be paid. The valuation allowance represents the amount
of tax benefits related to net operating loss and foreign tax credit
carryforwards that has not yet been recognized. The carryforward period for net
operating losses expires between 1996 and 2003, except for $30 million which do
not expire. The carryforward period for foreign tax credits expires between
1996 and 2000.
The consolidated effective tax rate was different from the United States
statutory rate for the reasons set forth below:
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 35.0%
State and local income taxes 3.7 3.4 3.9
Foreign income taxes 2.5 2.0 3.1
Non-deductible goodwill 1.4 0.5 0.6
Utilization of foreign loss
carryforwards (1.4) (1.1) (1.3)
Tax credits (1.3) (1.9) (1.9)
Deferred income tax
rate changes (1.9)
Other (0.4) - 0.3
- -------------------------------------------------------
Effective tax rate 39.5% 37.9% 37.8%
=======================================================
</TABLE>
The income tax provisions were calculated based upon the following components
of income before income taxes (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
United States income $ 948 $ 811 $742
Foreign income 278 210 162
- -------------------------------------------------------
Total $1,226 $1,021 $904
=======================================================
</TABLE>
No provision has been made for United States, state, or additional foreign
income taxes related to approximately $700 million of undistributed earnings of
foreign subsidiaries which have been or are intended to be permanently
reinvested.
Income tax payments were $448 million in 1995, $299 million in 1994, and $340
million in 1993. The company's United States income tax returns for the years
1989 through 1991 are currently under examination. Management believes that
adequate provision for income taxes has been made for all years through 1995.
<PAGE> 13
20. Earnings Per Common Share
Primary earnings per share of common stock, after recognition of the Series A
and B preferred stock dividend requirements, are based on the weighted average
number of common shares outstanding during each year. The computation does not
include a negligible dilutive effect of stock options.
Fully diluted earnings per share of common stock are based on the assumption
that all preferred stocks were converted at the beginning of the year and all
dilutive stock options were exercised at the beginning of the year or at date
of grant, if later. The computation assumes the elimination of preferred
dividends.
21. Contingent Liabilities
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.
22. Business Segment Information
The company's business segments are engaged in research, development, and
manufacture of diversified products
as follows:
ELECTRONICS:
AUTOMATION - industrial automation equipment and systems.
OTHER ELECTRONICS BUSINESSES - avionics products and systems and related
communications technologies primarily used in commercial and military aircraft
(Avionics); semiconductor-based subsystems including fax and data modems,
global positioning system receiver engines, and gallium arsenide devices
(Semiconductor Systems); and defense electronics systems and products for
precision guidance and control, for tactical weapons, and for command,
control, communications, and intelligence (Defense Electronics).
AEROSPACE - manned and unmanned space systems, rocket engines, advanced
space-based surveillance systems, high-energy laser and other directed-energy
programs, and space electric power (Space Systems); and military aircraft and
modifications and military and commercial aircraft structural components
(Aircraft).
AUTOMOTIVE - components and systems for heavy- and medium-duty trucks, buses,
trailers, and heavy-duty off-highway vehicles (Heavy Vehicle Systems); and
components and systems for light trucks and passenger cars (Light Vehicle
Systems).
GRAPHIC SYSTEMS - high-speed printing presses and related graphic arts
equipment.
Divested businesses include the sales, operating results, and gains or losses
on the disposition of significant businesses and product lines. Divested
businesses include the Semiconductor Systems Local Area Networking product
line in 1995, the Automotive Plastics business in 1994, the Flame Safeguard
Controls product line in 1992, and the Network Transmission Systems business
and Steel Castings product line in 1991. Sales and operating earnings by
business segment are included in the table on page 29. The following tables
provide additional segment information for 1995, 1994, and 1993 (in millions).
ASSET INFORMATION BY SEGMENT
<TABLE>
<CAPTION>
PROVISION FOR DEPRECIATION
IDENTIFIABLE ASSETS AND AMORTIZATION CAPITAL EXPENDITURES
------------------------- ------------------------- ------------------------
Business Segment 1995 1994 1993 1995 1994 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electronics:
Automation $ 4,277 $1,817 $1,699 $192 $121 $116 $237 $120 $ 96
Avionics/Semiconductor
Systems/Defense 2,339 1,990 1,822 143 123 120 256 222 124
- ------------------------------------------------------------------------------------------------------------
Total Electronics 6,616 3,807 3,521 335 244 236 493 342 220
Aerospace 2,142 2,042 1,975 79 82 85 44 66 81
Automotive 1,473 1,372 1,236 97 93 92 119 102 100
Graphic Systems 917 898 937 30 30 31 12 12 13
- ------------------------------------------------------------------------------------------------------------
Business segment totals 11,148 8,119 7,669 541 449 444 668 522 414
Corporate 1,350 1,712 1,893 25 36 36 16 36 12
Divested businesses 7 30 133 5 9 11 1 10 7
- ------------------------------------------------------------------------------------------------------------
Total $12,505 $9,861 $9,695 $571 $494 $491 $685 $568 $433
============================================================================================================
</TABLE>
AUTOMATION ASSETS FOR 1995 INCLUDE $1,234 MILLION OF INTANGIBLE ASSETS AND
GOODWILL RELATED TO THE ACQUISTION OF RELIANCE. AUTOMATION PROVISION FOR
DEPRECIATION AND AMORTIZATION FOR 1995 INCLUDES $27 MILLION RELATED TO THE
AMORTIZATION OF RELIANCE INTANGIBLE ASSETS AND GOODWILL. CORPORATE INDENTIFIABLE
ASSETS INCLUDE CASH AND NET DEFERRED INCOME TAX ASSETS.
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
22. Business Segment Information (continued)
SALES, EARNINGS AND ASSETS BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS
---------------------------------------------------
SALES EARNINGS SEGMENTS CORPORATE
------------------------- ------------------------ ------------------------- -----------------------
Geographic Area 1995 1994 1993 1995 1994 1993 1995 1994 1993 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $10,266 $ 8,728 $ 8,620 $1,286 $1,004 $ 939 $ 8,734 $6,220 $5,999 $ 698 $1,078 $1,325
Canada 593 455 369 70 84 54 245 210 175 419 380 322
Europe 2,059 1,649 1,499 154 92 66 1,395 1,213 1,194 149 154 127
Asia-Pacific 518 455 467 22 9 24 520 294 243 73 96 103
Latin America 428 352 285 28 25 38 261 212 191 11 4 16
Eliminations (894) (706) (603)
- -----------------------------------------------------------------------------------------------------------------------------
Total $12,970 $10,933 $10,637 $1,560 $1,214 $1,121 $11,155 $8,149 $7,802 $1,350 $1,712 $1,893
=============================================================================================================================
</TABLE>
SALES AND EARNINGS EXCLUDE DIVESTED BUSINESSES. UNITED STATES SALES INCLUDE
EXPORT SALES TO CUSTOMERS AND INTERNATIONAL SUBSIDIARIES OF $1,635 MILLION IN
1995, $1,280 MILLION IN 1994 AND $1,171 MILLION IN 1993.
The only customer which accounted for 10% or more of consolidated sales is the
United States Government and its agencies. Such sales by business segment are
as follows (in millions):
SALES TO UNITED STATES GOVERNMENT
<TABLE>
<CAPTION>
1995 1994 1993
=====================================================
<S> <C> <C> <C>
Aerospace $2,247 $2,439 $2,734
Electronics 1,308 1,329 1,414
Other business segments 78 143 117
- -----------------------------------------------------
Total $3,633 $3,911 $4,265
=====================================================
</TABLE>
Included in sales to the United States Government are the following major
programs (in millions):
<TABLE>
<CAPTION>
1995 1994 1993
=====================================================
<S> <C> <C> <C>
Space Shuttle $1,145 $1,295 $1,380
Space Station 325 329 372
B-1B 230 268 269
- -----------------------------------------------------
Total $1,700 $1,892 $2,021
=====================================================
</TABLE>
23. Quarterly Financial Information (Unaudited)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 FISCAL QUARTERS 1994 FISCAL QUARTERS
------------------------------------------------ -----------------------------------------------
FIRST SECOND THIRD FOURTH 1995 First Second Third Fourth 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $2,623 $3,361 $3,452 $3,545 $12,981 $2,601 $2,762 $2,872 $2,888 $11,123
Cost of sales 2,031 2,572 2,661 2,733 9,997 2,028 2,158 2,218 2,271 8,675
Net income 165 191 197 189 742 149 155 165 165 634
Per share:
Primary .76 .88 .90 .88 3.42 .68 .70 .74 .75 2.87
Fully diluted .74 .87 .88 .87 3.36 .66 .69 .73 .74 2.82
==============================================================================================================================
</TABLE>
<PAGE> 15
SELECTED FINANCIAL DATA ROCKWELL INTERNATIONAL CORPORATION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
=====================================================================================================================
SUMMARY OF OPERATIONS
Sales of ongoing businesses $12,970 $10,933 $10,637 $10,728 $11,282
Cost of sales 9,997 8,675 8,539 8,810 9,189
Selling, general, and administrative expenses 1,706 1,412 1,374 1,332 1,371
Operating earnings of ongoing businesses 1,560 1,214 1,121 945 1,144
Net income 742 634 562 483* 601
Earnings per common share:
Primary 3.42 2.87 2.55 2.16* 2.57
Fully diluted 3.36 2.82 2.51 2.14* 2.54
Cash dividends 235 225 211 206 202
Per common share 1.08 1.02 .96 .92 .86
Average common shares outstanding (in millions) 217 221 220 224 234
- ---------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT SEPTEMBER 30
Current assets $ 5,805 $ 4,928 $ 4,946 $ 4,839 $ 4,823
Current liabilities 4,111 3,020 2,946 3,112 3,322
Working capital 1,694 1,908 2,000 1,727 1,501
Ratio of current assets to current liabilities 1.41 1.63 1.68 1.55 1.45
Property--net 3,026 2,383 2,326 2,375 2,461
Total assets 12,505 9,861 9,695 9,731 9,376
Long-term debt 1,776 831 1,028 1,035 740
Ratio of total debt to shareowners' equity .64 .30 .40 .43 .24
Shareowners' equity 3,782 3,356 2,956 2,778 4,224
Per common share 17.40 15.32 13.35 12.58 18.48
- ---------------------------------------------------------------------------------------------------------------------
OTHER STATISTICAL DATA
Backlog at September 30 $11,756 $10,751 $13,135 $14,564 $16,468
Payrolls and fringe benefits 4,417 4,189 4,285 4,470 4,786
Depreciation expense 470 436 432 454 498
Capital expenditures 685 568 433 386 484
Number of employees at September 30 82,671 71,891 77,028 78,685 87,004
=====================================================================================================================
<FN>
*EXCLUDES THE ONE-TIME CHARGE RELATED TO THE CHANGE IN ACCOUNTING FOR RETIREMENT MEDICAL BENEFITS. INCLUDING THE EFFECT OF
THIS ACCOUNTING CHANGE THE COMPANY HAD A NET LOSS FOR 1992 OF $1,036 MILLION, OR $4.62 PER SHARE.
</TABLE>
<PAGE> 1
EXHIBIT 21
ROCKWELL INTERNATIONAL CORPORATION
LIST OF SUBSIDIARIES OF THE COMPANY
AS OF NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
SECURITIES OWNED BY
-------------------------
NAME AND JURISDICTION REGISTRANT SUBSIDIARY
--------------------- ---------- ----------
<S> <C> <C>
Allen-Bradley Company, Inc. (Wisconsin)................................ 100%
Reliance Electric Company (Delaware)................................... 100%
Rockwell-Collins International, Inc. (Texas)........................... 100%
Rockwell Graphic Systems, Inc. (Delaware).............................. 100%
Rockwell International Finance Corporation (Delaware).................. 100%
Rockwell Light Vehicle Systems--France, a societe anonyme (France)... 100%
Rockwell Participacoes Ltda. (Brazil)................................ 100%
Rockwell International GmbH (Germany)................................ 100%
Rockwell International of Canada Ltd. (Canada)....................... 100%
Rockwell Limited (Delaware).......................................... 100%
Sprecher + Schuh A.G. (Switzerland).................................. 100%
</TABLE>
Listed above are certain consolidated subsidiaries included in the
consolidated financial statements of the Company. Unlisted subsidiaries,
considered in the aggregate, do not constitute a significant subsidiary.
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-61723 on Form S-3 and Registration Statement Nos. 2-99494 (as amended through
Post-Effective Amendment No. 4 thereto), 33-27122, 33-32662, 33-62917, 33-63777
and 33-64497, all on Form S-8, of our reports dated October 31, 1995 appearing
in and incorporated by reference in the Annual Report on Form 10-K of Rockwell
International Corporation for the year ended September 30, 1995 and to the
reference to us under the heading "Experts" in the Prospectuses, which are part
of the Registration Statements.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
December 21, 1995
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
I, the undersigned Director and/or Officer of Rockwell International
Corporation, a Delaware corporation (the Company), hereby constitute WILLIAM J.
CALISE, JR., EDWARD T. MOEN, II and PETER R. KOLYER, and each of them singly,
my true and lawful attorneys with full power to them and each of them to sign
for me, and in my name and in the capacity or capacities indicated below, (1)
the Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1995; (2) Registration Statements and any and all amendents thereto (including
supplements and post-effective amendments) for the purpose of registering under
the Securities Act of 1933, as amended, (a) additional securities to be sold
pursuant to (i) the Company's Savings Plan, as amended; (ii) the Company's
Savings Plan for Certain Represented Hourly Employees, as amended; (iii) the
Company's Retirement Savings Plan for Certain Employees; and (iv) the Reliance
Electric Company (Reliance) Savings and Investment Plan, as amended; and (b)
securities to be sold pursuant to (i) the Allen-Bradley Company Savings and
Investment Plan for Salaried Employees, as amended; (ii) the Allen-Bradley
Company Savings and Investment Plan for Non-Represented Hourly Employees, as
amended; (iii) the Allen-Bradley Company Savings and Investment Plan for
Represented Hourly Employees, as amended; and (v) the Company's Directors Stock
Plan, as amended; and (3) any and all amendments (including supplements and
post-effective amendments to (a) the Registration Statement on Form S-3
(Registration Statement No. 33-61723) registering additional debt securities of
the Company in an aggregate principal amount of up to $300,000,000; (b) the
Registration Statement on Form S-8 (Registration Statement No. 33-63777)
registering securities to be sold under the Company's 1995 Long-Term Incentives
Plan; (c) the Registration Statement on Form S-8 (Registration Statement No.
33-32662) registering securities to be sold pursuant to the Company's Savings
Plan, as amended; (d) the Registration Statement on Form S-8 (Registration
Statement No. 2-99494) registering securities to be sold pursuant to the
Company's Savings Plan for Certain Represented Hourly Employees, as amended;
(e) the Registration Statement on Form S-8 (Registration Statement No.
33-64497) registering securities to be sold pursuant to the Company's
Retirement Savings Plan for Certain Employees; and (f) the Registration
Statement on Form S-8 (Registration Statement No. 33-62917) registering
securities to be sold pursuant to the Reliance Savings and Investment Plan,
as amended.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ DONALD R. BEALL Chairman of the Board and December 6, 1995
- ---------------------------------- Chief Executive Officer
(Donald R. Beall) (principal executive officer)
and Director
/s/ DON H. DAVIS, JR. Director December 6, 1995
- ----------------------------------
(Don H. Davis, Jr.)
/s/ LEW ALLEN, JR. Director December 6, 1995
- ----------------------------------
(Lew Allen, Jr.)
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
/s/ RICHARD M. BRESSLER Director December 6, 1995
- ----------------------------------
(Richard M. Bressler)
/s/ JOHN J. CREEDON Director December 6, 1995
- ----------------------------------
(John J. Creedon)
/s/ ROBIN CHANDLER DUKE Director December 6, 1995
- ----------------------------------
(Robin Chandler Duke)
/s/ JUDITH L. ESTRIN Director December 6, 1995
- ----------------------------------
(Judith L. Estrin)
/s/ WILLIAM H. GRAY, III Director December 6, 1995
- ----------------------------------
(William H. Gray, III)
/s/ JAMES CLAYBURN LA FORCE, JR. Director December 6, 1995
- ----------------------------------
(James Clayburn La Force, Jr.)
/s/ WILLIAM T. MCCORMICK, JR. Director December 6, 1995
- ----------------------------------
(William T. McCormick, Jr.)
/s/ JOHN D. NICHOLS Director December 6, 1995
- ----------------------------------
(John D. Nichols)
/s/ BRUCE M. ROCKWELL Director December 6, 1995
- ----------------------------------
(Bruce M. Rockwell)
/s/ WILLIAM S. SNEATH Director December 6, 1995
- ----------------------------------
(William S. Sneath)
/s/ JOSEPH F. TOOT, JR. Director December 6, 1995
- ----------------------------------
(Joseph F. Toot, Jr.)
/s/ W. M. BARNES Senior Vice President, December 6, 1995
- ---------------------------------- Finance & Planning and
(W. M. Barnes) Chief Financial Officer
(principal financial officer)
/s/ LAWRENCE J. KOMATZ Vice President and Controller December 6, 1995
- ---------------------------------- (principal financial officer)
(Lawrence J. Komatz)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1995 CONSOLIDATED BALANCE SHEET, STATEMENT OF CONSOLIDATED INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 1995 AND NOTES TO FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 665
<SECURITIES> 0
<RECEIVABLES> 2,510
<ALLOWANCES> 83
<INVENTORY> 2,071
<CURRENT-ASSETS> 5,805
<PP&E> 6,930
<DEPRECIATION> 3,904
<TOTAL-ASSETS> 12,505
<CURRENT-LIABILITIES> 4,111
<BONDS> 1,776
<COMMON> 243
0
1
<OTHER-SE> 3,538
<TOTAL-LIABILITY-AND-EQUITY> 12,505
<SALES> 12,981
<TOTAL-REVENUES> 13,099
<CGS> 9,997
<TOTAL-COSTS> 11,703
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 170
<INCOME-PRETAX> 1,226
<INCOME-TAX> 484
<INCOME-CONTINUING> 742
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 742
<EPS-PRIMARY> 3.42
<EPS-DILUTED> 3.36
</TABLE>
<PAGE> 1
PN004 Exhibit 99-a-1
EIN 95-105-4708
Effective Date 1/1/95
ROCKWELL INTERNATIONAL CORPORATION
SAVINGS PLAN
(Amended and Restated as of
January 1, 1995)
<PAGE> 2
ROCKWELL INTERNATIONAL CORPORATION
SAVINGS PLAN
TABLE OF CONTENTS
<TABLE>
<S> <C>
PREAMBLE............................................................................. 1
ARTICLE I DEFINITIONS ............................................................... 2
1.010 "Accounts" ............................................................... 2
1.020 "Administrative Committee" ............................................... 2
1.030 "Affiliated Company" ..................................................... 2
1.035 "Average Contribution Percentage" ........................................ 2
1.040 "Average Deferral Percentage" ............................................ 2
1.045 "Base Compensation" ...................................................... 3
1.050 "Beneficiary" ............................................................ 3
1.055 "Board of Directors" ..................................................... 3
1.060 "Class A Stock" .......................................................... 3
1.070 "Class A Unit" ........................................................... 3
1.075 "Code" ................................................................... 3
1.080 "Common Stock" ........................................................... 3
1.085 "Common Unit" ............................................................ 4
1.090 "Company" ................................................................ 4
1.100 "Company Contributions" .................................................. 4
1.110 "Company Contributions Account" .......................................... 4
1.120 "Compensation Deduction Account" ......................................... 4
1.130 "Compensation Deduction Contributions" ................................... 4
1.140 "Compensation Deferral Account" .......................................... 4
1.150 "Compensation Deferral Contributions" .................................... 4
1.155 "Continuous Employment" .................................................. 4
1.160 "Deduction Contributions" ................................................ 4
1.163 "Deduction Limitation Percentage" ........................................ 4
1.165 "Deferral Contributions" ................................................. 5
1.168 "Deferral Limitation Percentage" ......................................... 5
1.170 "Diversified Fund" ....................................................... 5
1.175 "Divested Component" ..................................................... 6
1.180 "Effective Date" ......................................................... 6
1.190 "Eligible Employee" ...................................................... 6
1.195 "Eligible Retirement Plan" ............................................... 6
1.200 "Employee" ............................................................... 6
1.210 "ERISA" .................................................................. 6
1.220 "Fixed Income Fund" ...................................................... 6
1.230 "Guaranteed Return Fund" ................................................. 6
1.232 "Highly Compensated Participants" ........................................ 7
1.235 "Intermediate Term Bond Fund" ............................................ 7
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
1.240 "Investment Funds" ....................................................... 7
1.245 "Investment Manager" ..................................................... 7
1.250 "Investment Manager Account" ............................................. 7
1.260 "Layoff" ................................................................. 7
1.270 "Maternity or Paternity Leave" ........................................... 7
1.280 "Named Fiduciary" ........................................................ 7
1.290 "Participant" ............................................................ 7
1.300 "Plan" ................................................................... 7
1.310 "Plan Administrator" ..................................................... 7
1.320 "Plan Committee" ......................................................... 7
1.330 "Plan Year" .............................................................. 8
1.340 "Retiree"................................................................. 8
1.345 "Retirement" ............................................................. 8
1.350 "Stock Fund A" ........................................................... 8
1.360 "Stock Fund B" ........................................................... 8
1.370 "Supplemental Deduction Account" ......................................... 8
1.380 "Supplemental Deduction Contributions" ................................... 8
1.390 "Supplemental Deferral Account" .......................................... 8
1.400 "Supplemental Deferral Contributions" .................................... 8
1.405 "Tender Offer" ........................................................... 8
1.410 "Transfer Contributions" ................................................. 8
1.420 "Trust Agreement" ........................................................ 8
1.430 "Trust Fund" ............................................................. 9
1.440 "Trustee" ................................................................ 9
1.450 "Unit" ................................................................... 9
1.460 "Valuation Date" ......................................................... 9
ARTICLE II PARTICIPATION ............................................................ 10
2.010 Effective Dates .......................................................... 10
2.020 Contribution Election or Authorization ................................... 10
2.025 Transfer Contributions ................................................... 12
2.030 Limitations on Employee Contributions .................................... 13
2.040 Changes in Rate of Employee Contributions ................................ 16
2.050 Changes Between Deduction and Deferral Contributions ..................... 16
2.060 Changes in Investment Elections .......................................... 16
2.070 Transfer of Investments .................................................. 16
ARTICLE III COMPANY CONTRIBUTIONS ................................................... 19
3.010 Matching Amounts ......................................................... 19
3.020 Application of Forfeitures ............................................... 19
ARTICLE IV MAINTENANCE AND VALUATION OF ACCOUNTS .................................... 20
4.010 Participant's Accounts ................................................... 20
4.020 Crediting of Units to Accounts ........................................... 20
4.030 Unit Valuations .......................................................... 21
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
4.040 Balance of Participant's Accounts......................................... 21
4.050 Statements of Participants ............................................... 22
ARTICLE V BENEFITS PAYABLE UPON TERMINATING EMPLOYMENT .............................. 23
5.010 Vesting .................................................................. 23
5.020 Retirement, Death, Layoff, Etc ........................................... 24
5.025 Form of Distributions to Participants .................................... 26
5.030 Employees of Divested Components ......................................... 27
5.040 Termination of Employment for Other Reasons .............................. 27
5.050 Participant's Consent to Distribution of Benefits ........................ 29
5.055 Transfer of Distribution Directly to Eligible Retirement Plan ............ 30
5.060 Valuation Dates For Domestic Relations Orders ............................ 30
ARTICLE VI IN-SERVICE WITHDRAWALS, TRANSFERS AND LOANS .............................. 31
6.010 Withdrawals from Accounts by Participants under Age 59-1/2 ............... 31
6.020 Withdrawal from Accounts by Participants Over Age 59-1/2 ................. 32
6.030 Forfeitures and Limitation on Withdrawals ................................ 33
6.040 Allocation of Withdrawals Among Investment and Stock Funds ............... 34
6.050 Hardship Withdrawals from Deferral Accounts .............................. 35
6.060 Transfers to Certain Affiliated Company Plans ............................ 37
6.070 Loans .................................................................... 37
6.080 Transfer of Distribution or Withdrawal to Eligible Retirement Plan ....... 38
ARTICLE VII [RESERVED] .............................................................. 38
ARTICLE VIII SUSPENSION OF SAVINGS AND CONTRIBUTIONS ................................ 39
8.010 Voluntary Suspension ..................................................... 39
8.020 Involuntary Suspension ................................................... 39
8.030 General Provisions Applicable to Suspensions ............................. 39
ARTICLE IX DESIGNATION OF AND PAYMENT TO A BENEFICIARY .............................. 40
9.010 Designation of a Beneficiary ............................................. 40
9.020 Payment to a Beneficiary ................................................. 40
ARTICLE X TRUST AGREEMENT ........................................................... 41
10.010 Establishment of Trust Fund .............................................. 41
10.020 Investments .............................................................. 41
10.030 Duty of Trustee as to Stock in Stock Fund A and Stock Fund B ............. 43
10.040 Form of Trust Agreement .................................................. 44
10.050 Rights in the Trust Fund ................................................. 45
10.060 Taxes, Fees and Expenses of the Trustee .................................. 45
ARTICLE XI ADMINISTRATION ........................................................... 46
11.010 General Administration ................................................... 46
11.020 Plan Committee ........................................................... 46
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
11.030 Plan Committee Records ................................................... 46
11.040 Funding Policy ........................................................... 46
11.050 Allocation and Delegation of Duties Under Plan ........................... 46
11.060 Plan Committee Powers .................................................... 46
11.070 Plan Administrator ....................................................... 47
11.080 Reliance Upon Documents and Opinions ..................................... 47
11.090 Requirement of Proof ..................................................... 48
11.100 Limitation on Liability .................................................. 48
11.110 Indemnification .......................................................... 48
11.120 Multiple Fiduciary Capacity .............................................. 48
11.130 Mailing and Lapse of Payments ............................................ 48
11.140 Non-Alienation............................................................ 49
11.150 Addresses ................................................................ 49
11.160 Notices and Communications ............................................... 49
11.170 Company Rights ........................................................... 50
11.180 Payments on Behalf of Incompetent Participants or Beneficiaries .......... 50
ARTICLE XII PARTICIPANT'S CLAIMS .................................................... 51
12.010 Requirement to File Claim ................................................ 51
12.020 Appeal of Denied Claim ................................................... 51
ARTICLE XIII AMENDMENT, MERGERS, TERMINATION, ETC. .................................. 52
13.010 Amendment ................................................................ 52
13.020 Transfer of Assets and Liabilities ....................................... 52
13.030 Merger Restriction ....................................................... 52
13.040 Suspension of Contributions .............................................. 52
13.050 Discontinuance of Contributions .......................................... 53
13.060 Termination .............................................................. 53
ARTICLE XIV STATUTORY LIMITATIONS ................................................... 54
14.010 Annual Limits of Participants' Account Increases ......................... 54
14.020 Limits as to Combined Plans .............................................. 54
14.030 Combining Similar Plans .................................................. 55
14.040 Adjustment to Deferral Contributions ..................................... 55
ARTICLE XV MISCELLANEOUS ............................................................ 56
15.010 Benefits Payable only from Trust Fund .................................... 56
15.020 Requirement for Release .................................................. 56
15.030 Transfers of Stock ....................................................... 56
15.040 Qualification of the Plan ................................................ 56
15.050 Interpretation ........................................................... 56
ARTICLE XVI TENDER OFFERS: PLAN ADMINISTRATION ...................................... 57
16.010 Applicability ............................................................ 57
16.020 Additional Definitions ................................................... 57
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C>
16.030 Establishment and Investment of Sub Fund A and Sub Fund B ................ 57
16.040 Maintenance and Valuation of Sub Fund A and Sub Fund B ................... 58
16.050 Benefits Payable from Sub Funds at Termination of Employment ............. 60
16.060 Distributions from the Plan under Section 6.010 .......................... 61
16.070 Withdrawals from Deduction Accounts under Section 6.030 .................. 62
16.080 Withdrawals from Deferral Accounts under Section 6.030 ................... 63
ARTICLE XVII TOP HEAVY PROVISIONS ................................................... 64
17.010 Definitions .............................................................. 64
17.020 Application of this Article .............................................. 65
17.030 Adjustment of Limitation on Annual Benefit ............................... 66
APPENDIX A Retirement Plans Governing Crediting of Continuous Employment .......... A-1
APPENDIX B Procedures, Terms and Conditions of Loans ............................... B-1
</TABLE>
-v-
<PAGE> 7
ROCKWELL INTERNATIONAL CORPORATION
SAVINGS PLAN
(amended and restated as of January 1, 1995)
PREAMBLE
THE PLAN AND EFFECTIVE DATE.
The Plan hereinafter described constitutes a savings plan for certain employees
on the salary and weekly payrolls of the Company. The Effective Date of the
Plan is March 1, 1966. The Plan as restated herein is effective January 1,
1995. The provisions of the Plan as in effect from time to time prior to
January 1, 1995, apply to the related periods prior to such date for all
purposes, except as specifically provided in the Plan.
<PAGE> 8
ARTICLE I DEFINITIONS
1.010 "ACCOUNTS" means the Participant's Company Contributions
Account, Compensation Deferral Account, Compensation Deduction Account,
Supplemental Deferral Account and Supplemental Deduction Account, as
applicable.
1.020 "ADMINISTRATIVE COMMITTEE" means the committee appointed by
the Plan Committee and assigned power and authority under Sections 2.030 and
6.040.
1.030 "AFFILIATED COMPANY" means Rockwell International Corporation
and:
(a) any corporation incorporated under the laws of one of the
United States of America of which Rockwell International
Corporation, a Delaware corporation, 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, of which Rockwell International Corporation owns,
directly or indirectly, eighty percent (80%) or more of the
voting power or eighty percent (80%) or more of the total value
(all within the meaning of section 414(c) of the Code); and
(c) any other company deemed to be an Affiliated Company by the
Board of Directors of Rockwell International Corporation.
1.035 "AVERAGE CONTRIBUTION PERCENTAGE" for each group of
Participants with contribution elections under Sections 2.020(a)(ii) and
(b)(ii), shall in each case be the average of the percentages, calculated
separately for each Participant in such group, which percentage, for any Plan
Year, is equal to the sum of (a) and (b), divided by (c):
(a) the amount the Participant has elected to contribute pursuant
to Sections 2.020(a)(ii) and (b)(ii);
(b) the amount of Company Contributions payable to the
Participant's Company Contributions Account in respect of his
elections under Section 2.020(a);
(c) the Participant's compensation (as such term is defined in
section 414(s) of the Code) for that Plan Year.
1.040 "AVERAGE DEFERRAL PERCENTAGE" for each group of Participants
with deferral elections under Sections 2.020(a)(i) and (b)(i) shall be the
average of the percentages, calculated separately for each Participant in such
group, of the compensation (as such term is defined in section 414(s) of the
Code) that the Participant has elected to defer for the Plan Year pursuant to
Sections 2.020(a)(i) and (b)(i).
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<PAGE> 9
1.045 "BASE COMPENSATION" means the Participant's compensation, not
in excess of One Hundred and Fifty Thousand Dollars ($150,000) or such larger
sum as may be established pursuant to section 401(a)(17) of the Code, in any
calendar year, including lump sum merit awards scheduled to be paid after
September 30, 1995, any amount which would be paid to the Participant absent an
election under Section 2.020(a) or an election to make elective employer
contributions pursuant to a qualified cash or deferred arrangement under a
cafeteria plan meeting the requirements of section 125 of the Code. Base
Compensation shall not include compensation for overtime, extended workweek
compensation, night work or other premium pay, bonuses, any form of extra,
contingent or supplementary compensation (including, but not limited to, lump
sum payments for unused vacation) or compensation on the hourly payroll.
1.050 "BENEFICIARY" means the one or more persons or trusts
designated by a Participant pursuant to Article IX of the Plan; provided,
however, that, in the case of a Participant who has been married for a one (1)
year period and who dies prior to complete distribution of his Accounts
pursuant to Article V or VI of the Plan, the Beneficiary shall be deemed to be
the Participant's spouse regardless of any contrary designation, unless the
Participant has filed with the Plan Administrator a written designation of a
person or persons other than such spouse as Beneficiary or Beneficiaries. Such
written designation must be accompanied by a written consent of the
Participant's spouse or it is established to the satisfaction of the Plan
Administrator that such consent cannot be obtained because there is no spouse
or the spouse cannot be located or because of other circumstances permitted
under section 417(a)(2) of the Code. Such written consent (which must be
witnessed by a notary public who is not an Employee) shall be on a form
furnished to the Participant by the Plan Administrator and shall acknowledge
the effect of such consent. In the event the Participant has a new spouse to
whom he has been married for a one (1) year period, the designation of the
prior spouse shall be void and the new spouse shall be deemed to be the
Participant's Beneficiary, unless the Participant makes a written designation
of a person or persons other than the new spouse.
1.055 "BOARD OF DIRECTORS" means the Board of Directors of Rockwell
International Corporation; provided, however, that any action hereunder of the
Board of Directors under Section 1.030, 1.090, 1.190, 2.020 and 3.020 may be
taken by any officer or officers of Rockwell International Corporation
authorized by the Board of Directors.
1.060 "CLASS A STOCK" means the Class A Common Stock of Rockwell
International Corporation.
1.070 "CLASS A UNIT" means a Unit of Stock Fund A or Stock Fund B
attributable to Class A Stock.
1.075 "CODE" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.080 "COMMON STOCK" means the common stock, other than the Class A
Stock, of Rockwell International Corporation.
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Sav. Pln. '95
<PAGE> 10
1.085 "COMMON UNIT" means a Unit of Stock Fund A or Stock Fund B
attributable to Common Stock.
1.090 "COMPANY" means Rockwell International Corporation and any
other entity to which the Board of Directors has extended this Plan.
1.100 "COMPANY CONTRIBUTIONS" means the contributions made by the
Company to the Trust Fund pursuant to the terms of Article III, including
forfeitures treated as Company Contributions under that Article.
1.110 "COMPANY CONTRIBUTIONS ACCOUNT" means the Account with respect
to a Participant which is comprised of Company Contributions, adjusted by gains
or losses related thereto.
1.120 "COMPENSATION DEDUCTION ACCOUNT" means the Account with
respect to a Participant which is comprised of Compensation Deduction
Contributions, adjusted by gains or losses related thereto.
1.130 "COMPENSATION DEDUCTION CONTRIBUTIONS" means the amounts
contributed by Participants to the Plan through payroll deductions pursuant to
Section 2.020(a)(ii).
1.140 "COMPENSATION DEFERRAL ACCOUNT" means the Account with respect
to a Participant which is comprised of Compensation Deferral Contributions,
adjusted by gains or losses related thereto.
1.150 "COMPENSATION DEFERRAL CONTRIBUTIONS" means the amounts
contributed to the Plan on behalf of Participants pursuant to Participants'
elections under Section 2.020(a)(i).
1.155 "CONTINUOUS EMPLOYMENT" means a Participant's "Vesting
Service" under any of the sub-Plans of the Rockwell Retirement Plan for
Eligible Employees (the "Rockwell Retirement Plan") listed in Appendix A in
which he participates at the time his Continuous Employment for purposes of
this Plan is determined. If at the time of such determination the Participant
is not a participant in any of the listed sub-Plans to the Rockwell Retirement
Plan, the Participant's Continuous Employment will equal the Vesting Service he
would have had under the sub-Plan known as the Rockwell International
Corporation Retirement Income Plan for Certain Salaried Employees (sub-Plan No.
003), if he had been a participant in that sub-Plan from his original date of
hire as an Employee.
1.160 "DEDUCTION CONTRIBUTIONS" means, as applicable, Compensation
Deduction Contributions and/or Supplemental Deduction Contributions.
1.163 "DEDUCTION LIMITATION PERCENTAGE" means the maximum
contribution percentage in each Plan Year for the group of Highly Compensated
Participants and shall be that percentage amount which does not exceed the
greater of:
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Sav. Pln. '95
<PAGE> 11
(a) the Average Contribution Percentage for all Participants other
than Highly Compensated Participants multiplied by one and
twenty-five hundredths (1.25); or
(b) the lesser of
(i) an amount which does not exceed the Average
Contribution Percentage for all Participants other than
Highly Compensated Participants by more than two (2)
percentage points, or
(ii) the Average Contribution Percentage for all
Participants other than Highly Compensated Participants
multiplied by two (2).
If a Highly Compensated Participant is a participant in any other plan
established or maintained by an Affiliated Company pursuant to which elective
deferrals under a cash or deferred arrangement or matching contributions, both
as defined in section 401(m)(4) of the Code, or employee contributions, are
made, such other plan shall be deemed to be a part of this Plan for the purpose
of determining the Deduction Limitation Percentage with respect to that
Participant.
1.165 "DEFERRAL CONTRIBUTIONS" means, as applicable, Compensation
Deferral Contributions and/or Supplemental Deferral Contributions.
1.168 "DEFERRAL LIMITATION PERCENTAGE" means the maximum deferral
percentage in each Plan Year for the group of Highly Compensated Participants
and shall be that percentage amount which does not exceed the greater of:
(a) the Average Deferral Percentage for all Participants other than
Highly Compensated Participants multiplied by one and twenty-
five hundredths (1.25); or
(b) the lesser of
(i) an amount which does not exceed the Average Deferral
Percentage for all Participants other than Highly
Compensated Participants by more than two (2)
percentage points, or
(ii) the Average Deferral Percentage for all Participants
other than Highly Compensated Participants multiplied
by two (2).
If any Highly Compensated Participant is a participant in any other cash or
deferred arrangement within the meaning of section 401(k) of the Code
established or maintained by an Affiliated Company, for the purpose of
determining the Deferral Limitation Percentage with respect to such Highly
Compensated Participant such other cash or deferred arrangement shall be deemed
to be a part of this Plan.
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<PAGE> 12
1.170 "DIVERSIFIED FUND" means the fund established by the Trustee
pursuant to Section 10.020(a)(i).
1.175 "DIVESTED COMPONENT" means a component of the Company or of an
Affiliated Company which ceases to be a component of the Company or of an
Affiliated Company, by reason of its divestiture or any action incident
thereto.
1.180 "EFFECTIVE DATE" means March 1, 1966.
1.190 "ELIGIBLE EMPLOYEE" means any Employee (including any officer)
employed on a salary or weekly payroll of an Affiliated Company, or on the
salary or weekly payroll of a division, plant, office or location of an
Affiliated Company, to which the benefits of the Plan have been extended by the
Board of Directors. Eligible Employee shall not include any director of the
Company not otherwise so employed, nor any person not otherwise so employed who
is compensated by special fees or pursuant to a special contract or
arrangement, or on a commission basis, nor any person covered by a collective
bargaining agreement which does not provide for participation in the Plan.
1.195 "ELIGIBLE RETIREMENT PLAN" means:
(a) an individual retirement account described in section 408(a) of
the Code,
(b) an individual retirement annuity described in section 408(b) of
the Code,
(c) an annuity plan described in section 403(a) of the Code, or
(d) a qualified plan (which is a defined contribution plan)
described in section 401(a) of the Code,
which accepts an individual's eligible rollover distributions; provided,
however, that in the case of an eligible rollover distribution to a
Participant's surviving Spouse, only an individual retirement account or
individual retirement annuity described in (a) and (b) above shall be deemed to
be an Eligible Retirement Plan.
1.200 "EMPLOYEE" means any person who is employed by the Company or
by an Affiliated Company, including an Eligible Employee. "Employee" shall, to
the extent permitted by section 406 of the Code, be deemed to include any
United States citizen regularly employed by a foreign subsidiary or affiliate
of the Company.
1.210 "ERISA" means the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
1.220 "FIXED INCOME FUND" means the fund established by the Trustee
pursuant to Section 10.020(a)(ii).
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Sav. Pln. '95
<PAGE> 13
1.230 "GUARANTEED RETURN FUND" means the fund established by the
Trustee pursuant to Section 10.020(a)(iv).
1.232 "HIGHLY COMPENSATED PARTICIPANTS" means those Participants who
are "highly compensated employees" within the meaning of section 414(q) of the
Code. The Plan Administrator may determine those Employees who are "highly
compensated employees" for purposes of this Section 1.232 in any manner
permitted by said section 414(q).
1.235 "INTERMEDIATE TERM BOND FUND" means the fund established by
the Trustee pursuant to Section 10.020(a)(iii).
1.240 "INVESTMENT FUNDS" means the Diversified Fund, the Fixed
Income Fund, the Guaranteed Return Fund, the Intermediate Term Bond Fund and
Stock Fund B.
1.245 "INVESTMENT MANAGER" means the one or more investment managers
within the meaning of ERISA section 3(38) appointed pursuant to Section
10.020(b)(i).
1.250 "INVESTMENT MANAGER ACCOUNT" means the one or more investment
manager accounts established pursuant to Section 10.020(b)(i) of the Plan.
1.260 "LAYOFF" means an involuntary severance of employment, other
than a discharge for cause.
1.270 "MATERNITY OR PATERNITY LEAVE" means any period of absence by
reason of the pregnancy of the Participant, the birth of a child of the
Participant, the placement of a child with the Participant in connection with
the adoption of such child by the Participant, or the caring for such child for
a period beginning immediately following such birth or placement; provided,
however, that the Participant shall have complied with the Company's request to
furnish the Plan Administrator such timely information as may be reasonably
required to establish that the absence is for such reason and the number of
days for which there was such an absence.
1.280 "NAMED FIDUCIARY" means the Plan Committee, the Plan
Administrator, the Administrative Committee, the Trustee(s) and any Investment
Manager(s).
1.290 "PARTICIPANT" means a person who has elected to participate in
the Plan in accordance with Article II; provided, however, that such term shall
include a person who no longer has an effective election under Article II only
so long as he retains a vested interest in an Account under the Plan.
1.300 "PLAN" means the Rockwell International Corporation Savings
Plan, as it may be amended from time to time.
1.310 "PLAN ADMINISTRATOR" means the person from time to time so
designated by name or corporate office by the Board of Directors.
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Sav. Pln. '95
<PAGE> 14
1.320 "PLAN COMMITTEE" means the Rockwell International Corporation
Employee Benefit Plan Committee.
1.330 "PLAN YEAR" means each twelve-month period ending on the last
day of September.
1.340 "RETIREE" means a Participant who has entered Retirement
status pursuant to a retirement plan of the Company or any Affiliated Company,
excluding, for purposes of the election available to such a Retiree under
Section 2.050(b)(iii), any former Employee who terminated employment with the
Company or Affiliated Company as a deferred vested Participant and who later
attained Retirement age under the retirement plan.
1.345 "RETIREMENT" means retirement of a Participant pursuant to a
retirement plan of the Company or any Affiliated Company.
1.350 "STOCK FUND A" means the fund established by the Trustee
pursuant to Section 10.020(a)(v).
1.360 "STOCK FUND B" means the fund established by the Trustee
pursuant to Section 10.020(a)(vi).
1.370 "SUPPLEMENTAL DEDUCTION ACCOUNT" means the Account with
respect to a Participant which is comprised of Supplemental Deduction
Contributions, as adjusted by gains or losses related thereto.
1.380 "SUPPLEMENTAL DEDUCTION CONTRIBUTIONS" means the amounts
contributed by Participants to the Plan through payroll deductions pursuant to
Section 2.020(b)(ii).
1.390 "SUPPLEMENTAL DEFERRAL ACCOUNT" means the Account with respect
to a Participant which is comprised of Supplemental Deferral Contributions, as
adjusted by gains or losses related thereto.
1.400 "SUPPLEMENTAL DEFERRAL CONTRIBUTIONS" means the amounts
contributed by Participants to the Plan on behalf of Participants pursuant to
Participants' elections under Section 2.020(b)(i).
1.405 "TENDER OFFER" means any tender offer for, or request or
invitation for tenders of, the Common Stock and/or Class A Stock subject to
section 14(d)(1) of the Securities Exchange Act of 1934, as amended, or any
regulation thereunder, except for any such tender offer or request or
invitation for tenders made by the Company or any Affiliated Company.
1.410 "TRANSFER CONTRIBUTIONS" means the amounts described in
Section 2.025 which are transferred to a Participant's Account pursuant to the
terms of the said Section.
1.420 "TRUST AGREEMENT" means the trust agreement established
pursuant to Section 10.010 of this Plan.
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<PAGE> 15
1.430 "TRUST FUND" means the fund, including the earnings thereon,
held by the Trustee for all contributions made by Participants and the Company
pursuant to the Plan. The Trust Fund shall be divided into a Diversified Fund,
Fixed Income Fund, Guaranteed Return Fund, Intermediate Term Bond Fund, Stock
Fund A and Stock Fund B.
1.440 "TRUSTEE" means the trustee or trustees of the trust described
in Article X of this Plan.
1.450 "UNIT" means the unit of measurement of a Participant's
interest in the Trust Fund. Where appropriate, "Units" includes Common Units
and Class A Units.
1.460 "VALUATION DATE" means the last business day of each month or
such other business day as the Plan Committee may determine.
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Sav. Pln. '95
<PAGE> 16
ARTICLE II PARTICIPATION
2.010 EFFECTIVE DATES.
(a) An election by an Eligible Employee to contribute to the Plan
which was in effect on April 1, 1984, or which has subsequently
become effective under Section 2.010(b)(i), shall remain in
effect except as provided in Section 2.010(c).
(b) With respect to contributions to be made under the Plan on and
after October 1, 1987, except as provided in Section 2.010(c),
(i) an Eligible Employee who has first become an Employee
prior to October 1, 1987, may elect to participate in
the Plan if he has completed at least twenty-six (26)
weeks of employment with an Affiliated Company.
(ii) an Eligible Employee who has first become an Employee
on or after October 1, 1987, may elect to participate
in the Plan if he has completed at least fifty-two (52)
weeks of employment with an Affiliated Company.
(iii) an election to participate shall be made with at least
fifteen (15) days notice to the Company and shall
become effective on the first payroll payment date
following the expiration of the notice period.
(c) No contributions shall be made by, or with respect to, any
Participant after any of the following events until such
Participant again makes an election that is effective under
subsection (b):
(i) the Participant ceases to be an Employee;
(ii) the Participant receives a distribution under Section
5.020, 5.030 or 5.040; or
(iii) the Participant voluntarily elects to have
contributions suspended under Section 8.010.
(d) No contributions shall be made by, or with respect to, any
Participant during any period of suspension of contributions
described in Section 8.010 or Section 8.020.
2.020 CONTRIBUTION ELECTION OR AUTHORIZATION.
(a) An Eligible Employee who has notified the Company of his
election to become a Participant shall also:
(i) elect to defer receipt of an amount equal to 1%, 2%,
3%, 4%, 5%, 6%, 7% or 8% of Base Compensation, which
amount shall be contributed as a
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Sav. Pln. '95
<PAGE> 17
Compensation Deferral Contribution to the Participant's
Compensation Deferral Account; or
(ii) authorize to be deducted from his Base Compensation, as
paid, an amount equal to 1%, 2%, 3%, 4%, 5%, 6%, 7% or
8% of his Base Compensation, which amount shall be
contributed as a Compensation Deduction Contribution to
the Participant's Compensation Deduction Account.
(b) In addition to the elections and authorizations described in
(a) above, the Participant may:
(i) if he has elected to defer receipt of 8% of his Base
Compensation pursuant to subsection (a)(i) of this
Section, elect to defer receipt of an amount equal to
an additional 1%, 2% or 3% of his Base Compensation as
a Supplemental Deferral Contribution to a Supplemental
Deferral Account (provided, however, that if the
Participant is a Highly Compensated Participant, such
deferral shall be limited to an additional 1% or 2% of
his Base Compensation); or
(ii) if he has authorized deduction of 8% of his Base
Compensation pursuant to subsection (a)(ii) of this
Section, authorize the further deduction of an amount
equal to an additional 1%, 2% or 3% of his Base
Compensation as a Supplemental Deduction Contribution
to a Supplemental Deduction Account (provided, however,
that if the Participant is a Highly Compensated
Participant, such deduction shall be limited to an
additional 1% or 2% of his Base Compensation).
(c) In addition to the elections and authorizations set forth in
(a) and (b), the Participant shall elect, as provided in
Section 2.060, in which Investment Funds his Compensation
Deferral Contributions (including Supplemental Deferral
Contributions), Compensation Deduction Contributions (including
Supplemental Deduction Contributions) or Transfer Contributions
are to be invested. Such investments shall be elected by the
Participant among the Investment Funds in increments of five
percent (5%), with the total of the elected percentage
increments equalling one hundred percent (100%).
(d) The Board of Directors, in extending the benefits of the Plan
to a component of an Affiliated Company may place such
limitations as it deems appropriate on the amount of
Compensation Deferral Contributions, Supplemental Deferral
Contributions, Compensation Deduction Contributions, and/or
Supplemental Deduction Contributions which may be made with
respect to or by a Participant employed by such component.
Compensation Deduction Contributions and
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<PAGE> 18
Supplemental Deduction Contributions under this Section shall
be made only by payroll deductions unless, under exceptional
circumstances, another method of contributions is approved by
the Plan Committee.
2.025 TRANSFER CONTRIBUTIONS. Transfers to this Plan of a
Participant's interest in another individual account plan shall be permitted in
the situations and pursuant to the requirements set forth below:
(a) A Participant who is presently an Eligible Employee but who
formerly, though an Employee, was not an Eligible Employee may
elect (by providing the Plan Administrator with notice thereof)
to have the entire amount credited to the said Participant's
account in any qualified individual account plan of
Allen-Bradley Company or in the Reliance Electric Company
Savings and Investment Plan transferred to this Plan; provided,
however, that such a transfer shall not be permitted unless
and until the Plan Administrator has determined that the
amount to be transferred from the said qualified individual
account plan is not subject (or is no longer subject) to any
provisions or limitations attributable to it under the said
qualified individual account plan which are inconsistent with
the provisions of this Plan.
(b) With the prior consent of the Plan Administrator, which consent
may be given only in connection with the Company's acquisition
of the stock or assets of another business organization and the
extension of this Plan to that business organization, the
account balances of persons who were participants in an
individual account plan which was sponsored by the acquired
organization, but who have become Eligible Employees, may be
transferred to this Plan. Such transferred account balances
(which shall be entirely in cash or, if the said balances
consist in whole or in part of participant loans from the
transferring plan, in cash and in kind), shall constitute
Transfer Contributions and shall not constitute Deferral or
Deduction Contributions under Section 2.020.
(c) Transfer Contributions shall be credited to the Participant's
Account as follows:
(i) that portion of such balance attributable to employer
contributions made pursuant to deferral elections under
section 401(k) of the Code shall be credited to the
Participant's Compensation Deferral Account;
(ii) that portion of such balance attributable to employer
contributions other than those described in paragraph
(i) above shall be credited to the Participant's
Compensation Deferral Account, but the Participant's
tax basis under the Code in such contributions shall be
the same as his tax basis under the individual account
plan from which such contributions are transferred or
distributed; and
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Sav. Pln. '95
<PAGE> 19
(iii) that portion of such balance attributable to employee
contributions made on an after-tax basis, shall be
credited to the Participant's Compensation Deduction
Account.
(d) No Company Contributions will be made under Article III with
respect to the Transfer Contributions described in this Section
2.025.
2.030 LIMITATIONS ON EMPLOYEE CONTRIBUTIONS.
(a) The aggregate amount, with respect to a Participant, in any
calendar year of:
(i) Compensation Deferral and Supplemental Deferral
Contributions to the Plan,
(ii) all elective deferrals under any other cash or deferred
arrangement as defined in section 402(g) of the Code,
and
(iii) all elective employer contributions to any simplified
employee pension as defined in and pursuant to sections
408(k)(1) and (6), respectively, of the Code,
may not exceed Seven Thousand Dollars ($7,000) or such larger
sum as may be established pursuant to section 402(g)(5) of the
Code.
(b) Prior to the beginning of, and periodically during, each Plan
Year the Administrative Committee shall test:
(i) deferral elections under Sections 2.020(a)(i) and
(b)(i), in order to determine whether the Average
Deferral Percentage for Highly Compensated Participants
exceeds the Deferral Limitation Percentage; and
(ii) deduction elections under Sections 2.020(a)(ii) and
(b)(ii), as well as Company Contributions under Section
3.010, in order to determine whether the Average
Contribution Percentage for Highly Compensated
Participants exceeds the Deduction Limitation
Percentage.
(c) If the Administrative Committee determines that Compensation
and Supplemental Deferral Contributions made for any Plan Year
on behalf of the Highly Compensated Participants would (if not
reduced) cause the Average Deferral Percentage of such
Employees to exceed the Deferral Limitation Percentage, it
shall report such determination, through the Plan
Administrator, to the Plan Committee. In such event, the Plan
Committee shall first reduce any
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Sav. Pln. '95
<PAGE> 20
Supplemental Deferral Contributions and then Compensation
Deferral Contributions elected by the Highly Compensated
Participants, so that the Deferral Limitation Percentage is
not exceeded for the Plan Year. Such reduction shall be
effective as of the first payroll payment date in the month
following such determination and shall be made as set forth
below:
(i) First, Highly Compensated Participants electing
Supplemental Deferral Contributions in an amount equal
to 2% of Base Compensation shall have their elections
reduced to 1% of Base Compensation. If, following the
said reductions, the Deferral Limitation Percentage is
still exceeded, Highly Compensated Participants
electing Supplemental Deferral Contributions in an
amount equal to 1% of Base Compensation (including any
Highly Compensated Participants whose elections were
reduced under the terms of the preceding sentence)
shall have their elections reduced to 0%.
(ii) Second, if, following the reductions described in
paragraph (i), the Deferral Limitation Percentage is
still exceeded, Highly Compensated Participants
electing Compensation Deferral Contributions in an
amount equal to 8% of Base Compensation shall have
their elections reduced to 7%. If, following the
reductions described in the preceding sentence, the
Deferral Limitation Percentage is still exceeded,
Highly Compensated Participants electing Compensation
Deferral Contributions in an amount equal to 7% of Base
Compensation (including any Highly Compensated
Participants whose elections were reduced under the
terms of the preceding sentence) shall have their
elections reduced to 6%. The process set forth in this
paragraph (ii) shall continue until the Average
Deferral Percentage for the Highly Compensated
Participants does not exceed the Deferral Limitation
Percentage.
(iii) To the extent permitted under subsection (d) below, the
amount representing the additional amount of Base
Compensation which would have been contributed as
Supplemental Deferral or Compensation Deferral
Contributions on behalf of the Participant shall be
contributed by the Participant to the Plan, as
appropriate, as Supplemental Deduction or Compensation
Deduction Contributions. In addition, to the extent
permitted by regulation, the Plan Committee may during
or following a Plan Year cause Supplemental Deferral
and Compensation Deferral Contributions made on behalf
of Highly Compensated Participants to be
recharacterized (on a uniform and non-discriminatory
basis) as Supplemental Deduction or Compensation
Deduction Contributions to the extent necessary to
prevent the Average Deferral Percentage for the said
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Sav. Pln. '95
<PAGE> 21
Participants for any Plan Year from exceeding the
Deferral Limitation Percentage.
(d) If the Administrative Committee determines that Compensation
and Supplemental Deduction Contributions made for any Plan Year
by the Highly Compensated Participants would (if not reduced)
cause the Average Contribution Percentage of such Employees to
exceed the Deduction Limitation Percentage, the Administrative
Committee shall report such determination, through the Plan
Administrator, to the Plan Committee. In such event, the Plan
Committee shall first reduce any Supplemental Deduction
Contributions and then the Compensation Deduction Contributions
elected by the Highly Compensated Participants, so that the
Deduction Limitation Percentage is not exceeded for the Plan
Year. Such reduction shall be effective as of the first payroll
payment date in the month following such determination and
shall be made as set forth below:
(i) First, Highly Compensated Participants electing
Supplemental Deduction Contributions in an amount equal
to 2% of Base Compensation shall have their elections
reduced to 1%. If, following the said reductions, the
Deduction Limitation Percentage is still exceeded,
Highly Compensated Participants electing Supplemental
Deduction Contributions in an amount equal to 1% of
Base Compensation (including any Highly Compensated
Participants whose elections were reduced under the
terms of the preceding sentence) shall have their
elections reduced to 0%.
(ii) Second, if, following the reductions described in
paragraph (i), the Deduction Limitation Percentage is
still exceeded, Highly Compensated Participants
electing Compensation Deduction Contributions in an
amount equal to 8% of Base Compensation shall have
their elections reduced to 7%. If, following the
reductions described in the preceding sentence, the
Deduction Limitation Percentage is still exceeded,
Highly Compensated Participants electing Compensation
Deduction Contributions in an amount equal to 7% of
Base Compensation (including any Highly Compensated
Participants whose elections were reduced under the
terms of the preceding sentence) shall have their
elections reduced to 6%.
The process set forth in this paragraph (ii) shall
continue until the Average Contribution Percentage for
the Highly Compensated Participants does not exceed the
Deduction Limitation Percentage.
(e) Reductions in Supplemental Deferral, Compensation Deferral,
Supplemental Deduction and Compensation Deduction Contributions
made under subsections (c) and/or (d) shall remain in effect
for the remainder of the Plan Year, unless the Administrative
Committee determines that changed circumstances permit an
increase in any or all such Contributions. If the
Administrative Committee makes such a determination, the Plan
Committee shall
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Sav. Pln. '95
<PAGE> 22
determine the amount by which such Contributions shall be
increased for the balance of the Plan Year.
(f) If it shall be determined as a result of tests of contribution
elections pursuant to subsection (c) that there shall be
"excess aggregate contributions" (as defined in and determined
pursuant to section 401(m)(6) of the Code) in any Plan Year,
such excess aggregate contributions and all income allocable
thereto shall be distributed, or, if forfeitable, forfeited, in
the manner and within the time required by the said section
401(m)(6).
(g) The Plan shall comply with the limitation on multiple use of
the alternative limitation as described in section
1.401(m)-(2)(b) of the Treasury Regulations under Code section
401(m).
2.040 CHANGES IN RATE OF EMPLOYEE CONTRIBUTIONS. A Participant may
from time to time change the rate of his Compensation Deduction Contribution,
Supplemental Deduction Contribution, Compensation Deferral Contribution or
Supplemental Deferral Contribution. Such change shall be effective as soon as
is reasonably possible after his election, but, in general, no later than the
first payroll payment date following the expiration of fifteen (15) days
subsequent to his election.
2.050 CHANGES BETWEEN DEDUCTION AND DEFERRAL CONTRIBUTIONS.
(a) A Participant who has an authorization in effect to make
Compensation or Supplemental Deduction Contributions may revoke
such authorization and at the same time elect to commence
Compensation or Supplemental Deferral Contributions. Such
revocation and election shall be effective as soon as is
reasonably possible after his election, but, in general, no
later than the first payroll payment date following the
expiration of fifteen (15) days subsequent to his election.
(b) A Participant who has elected to have Compensation or
Supplemental Deferral Contributions made on his behalf may
revoke such election and at the same time authorize
Compensation or Supplemental Deduction Contributions to
commence effective with the first payroll payment date in April
or October of any year by giving the Company prior notice
thereof.
2.060 CHANGES IN INVESTMENT ELECTIONS. A Participant may make an
Investment Fund election or change any previous Investment Fund election he has
made under Section 2.020(d) regarding his Deferral Contributions and Deduction
Contributions. Such election or change of election may be made by the
Participant once per calendar year quarter and shall be effective as of the
last business day of the month in which the election or change of election is
made.
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2.070 TRANSFER OF INVESTMENTS.
(a) A Participant may elect once in each calendar year quarter, by
giving the Company notice of such election, to have the whole
or portions of the value of Units in one or more of the
Investment Funds (other than Stock Fund B and the Guaranteed
Return Fund), which Units are attributable to his Deferral,
Deduction and Transfer Contributions under Section 2.020,
transferred into, and then converted to Units of, one or more
of the other Investment Funds (including Stock Fund B, but
excluding the Guaranteed Return Fund). The Unit transfers and
conversions described in the preceding sentence shall be
effected on the first day of the calendar month immediately
succeeding the month in which elected by the Participant and
shall be in increments of 5% of the value of the Participant's
Units in the transferring Fund(s).
(b) In addition to the elections available under subsection (a),
the following elections shall be available to eligible
Participants:
(i) A Participant who has not attained age fifty-five (55)
may elect once in each calendar year, by giving the
Company notice of such election, to have ten percent
(10%) of the total value of all Units (or 100% of such
total value, if $25.00 or less) in Stock Fund B, which
are attributable to the Participant's Deferral,
Deduction and/or Transfer Contributions, transferred,
in increments of five percent (5%), into any one or
more of the Investment Funds, other than the Guaranteed
Return Fund.
(ii) A Participant who has attained age fifty-five (55), but
not age sixty-five (65), may elect once in each
calendar year, by giving the Company notice of such
election, to have fifty percent (50%) of the total
value of all Units (or 100% of such total value, if
$25.00 or less) in Stock Fund B, which are attributable
to the Participant's Deferral, Deduction and/or
Transfer Contributions, transferred, in increments of
five percent (5%), into any one or more of the
Investment Funds, other than the Guaranteed Return
Fund; provided, however, that the Participant may not
make an election under this paragraph (ii) during the
same calendar year in which an election has been made
under paragraph (i).
(iii) A Participant who is still an Employee and has attained
age sixty-five (65) or a Retiree who has elected
deferred distribution pursuant to Section 5.020(b) may
elect once each calendar year quarter to have the total
value or a portion (in 5% increments) of the total
value of all Units in Stock Funds A and B, which are
attributable, respectively, to (1) Company
Contributions and (2) Deferral, Deduction and/or
Transfer Contributions transferred, in increments of
five percent (5%), into any one or more of the
Investment Funds, other than the Guaranteed Return
Fund. If, as a result of an election made pursuant to
this paragraph (iii), one hundred
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Sav. Pln. '95
<PAGE> 24
percent (100%) of the Participant's interest in Stock
Fund A has been transferred to other Investment Funds,
all subsequent Company Contributions, if any, made to
the Participant's Company Contributions Account after
the effective date of the said election shall be made
in cash and shall be invested in the same manner as are
the investments described in Section 2.020(d). If less
than one hundred percent (100%) of the Participant's
interest in Stock Fund A has been so transferred, such
Company Contributions shall continue to be made in the
manner described in Section 3.010(b).
(c) The effective date of an election under this Section 2.070
shall be, and the value of all Units elected to be converted
hereunder shall be determined as of, the first Valuation Date
following the date on which such election is received by the
Company. Such conversion shall be effected by the conversion
of such Units into cash and the transfer of such cash to the
designated Fund. Such transfer shall be effected by the
Trustee on or before the Valuation Date in the second month
succeeding the month in which the election was received.
(d) All elections under this Section shall be irrevocable and shall
not affect the Participant's right to exercise any other
election provided by the Plan.
(e) Upon making an election under subsection (a) or (b)(i), (ii) or
(iii)(2), the Participant shall also either confirm or change
his election under Section 2.020(d) with respect to future
Compensation and Supplemental Deferral or Compensation and
Supplemental Deduction Contributions, effective as of the
effective date of the election to convert.
(f) A Participant with Units in the Guaranteed Return Fund may
elect prior to the Valuation Date upon which any contract under
the Guaranteed Return Fund or any interest guarantee period
under any such contract expires, to transfer and convert all or
a portion of his interest under such contract to Units in the
Diversified Fund, Stock Fund B, the Intermediate Term Bond Fund
and/or the Fixed Income Fund or to reinvest all or a portion of
his interest in the Guaranteed Return Fund contract currently
offered at that time. Such conversion or reinvestment shall be
effected in increments of 5%, but totalling 100% of his
interest and shall be based upon the value of Units in the
respective Funds as of the later of the date of such expiration
or the Valuation Date immediately preceding the transfer of
funds. The interest under a Guaranteed Return Fund contract of
a Participant who does not make an election under this
subsection (f) shall be invested in the Guaranteed Return Fund
contract currently offered at that time.
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<PAGE> 25
ARTICLE III COMPANY CONTRIBUTIONS
3.010 MATCHING AMOUNTS.
(a) The Company shall contribute to the Trust Fund an amount equal
to seventy-five percent (75%) of Compensation Deferral
Contributions and Compensation Deduction Contributions. No
Company Contributions shall be made with respect to
Supplemental Deduction, Supplemental Deferral or Transfer
Contributions.
(b) Except as provided in Section 2.070(b)(iii), contributions by
the Company may, at the option of the Board of Directors, be in
the form of Common Stock, cash or any combination
thereof. The Company's Common Stock shall be valued at the
closing price reflected on the New York Stock
Exchange--Composite Transactions listing on the Valuation Date
immediately preceding the date on which the contribution is
made.
(c) The Company shall notify the Plan Administrator no later than
fifteen (15) days in advance, if the form of contributions to
be made for any month will be changed from that of the
immediately preceding month.
3.020 APPLICATION OF FORFEITURES. Amounts which have been forfeited
in accordance with the provisions of Article V and VI of this Plan shall be
applied to reduce subsequent Company Contributions required hereunder. If the
Plan should be terminated, any amount not previously so applied shall be
credited ratably to the Accounts of all Participants in proportion to the
amounts of Company Contributions credited to their respective Accounts during
the most recent Plan Year.
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<PAGE> 26
ARTICLE IV MAINTENANCE AND VALUATION OF ACCOUNTS
4.010 PARTICIPANT'S ACCOUNTS. Separate Compensation Deferral,
Supplemental Deferral, Compensation Deduction and Supplemental Deduction
Accounts shall be established and maintained by the Trustee (or by such other
person or persons as the Plan Committee shall designate) to represent all
amounts (if any), adjusted for gains or losses thereon, which have been
contributed by or on behalf of a Participant as Compensation, Transfer and
Supplemental Deduction Contributions and Compensation and Supplemental Deferral
Contributions. In addition, the Trustee (or by such other person or persons as
the Plan Committee shall designate) shall establish and maintain a Company
Contributions Account to represent the value of Company Contributions, as
adjusted for gains or losses. Such separate Accounts shall contain sufficient
information to permit a determination of the dollar balance of such
Participant's Accounts at any time, in accordance with the Unit valuation
procedures described in Section 4.020 through 4.040. Such separate Accounts
shall also contain sufficient information to permit, with respect to Stock Fund
A and Stock Fund B, a determination of the number of Common Units and Class A
Units, respectively, in such Participant's Account.
4.020 CREDITING OF UNITS TO ACCOUNTS.
(a) The interest of each Participant in the Investment Funds and in
Stock Fund A (including that part of the Diversified Fund or
the Fixed Income Fund resulting from Company Contributions)
shall be represented by Units allocated to his Accounts. The
value of each Unit shall be One Dollar ($1.00) for the
contributions deposited on behalf of each Participant prior to
the first Valuation Date following the effective date of the
particular Investment Fund.
(b) Each contribution on behalf of a Participant to, or payment
made to a Participant from, an Investment Fund or Stock Fund A
shall result in a credit or charge to the Account representing
his interest in the said Fund or contract under his Company
Contributions Account, Compensation Deferral Account,
Supplemental Deferral Account, Compensation Deduction Account
and Supplemental Deduction Account, as applicable, and shall be
equal to the number of Units contributed or paid as the case
may be.
(c) (i) Effective as of February 23, 1987, the Plan
Administrator shall cause to be determined the number
of Units allocated to each Participant's Account in
Stock Fund A on such date. Effective as of the date
distribution shall be made to the Trustee of Class A
Stock in payment of the stock dividend to holders of
Common Stock of record on February 23, 1987, all
existing Units of Stock Fund A shall be reclassified as
Common Units, and there shall be allocated to each
Participant's Account in Stock Fund A the number of new
Class A Units equal to the number of Common Units
previously determined to have been allocated to such
Account as of February 23, 1987. Such Class A Units
shall be valued in the manner provided in Section 4.030
except that, for the purposes of Articles V and VI,
they shall be initially valued as if
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Sav. Pln. '95
<PAGE> 27
such dividend of Class A Stock had been distributed and
allocated to each Participant's Account in Stock Fund
A on the Valuation Date described in the applicable
Section of Article V or VI.
(ii) Effective as of October 1, 1988, the Plan Administrator
shall cause to be determined the number of shares of
Common Stock and the number of shares of Class A Stock
allocated to each Participant's Account in Stock Fund B
on such date and the closing price of Common Stock as
reflected on the New York Stock Exchange--Composite
Transactions listing on September 30, 1988. The dollar
value of the shares of Common Stock and Class A Stock
allocated to each Participant's Account shall be
converted into Common Units and Class A Units,
respectively.
(iii) Dividends on Common Stock held in Stock Fund A and
Stock Fund B shall result in an appropriate increase in
the Unit values of the said Funds.
(iv) Dividends on Class A Stock held in Stock Fund A and
Stock Fund B shall not result in an increase in Unit
values of the said Funds, but shall result rather in
the value of such dividends being applied to an
appropriate increase in the number of Units held in the
said Funds.
4.030 UNIT VALUATIONS. Except as otherwise provided in Section
4.020, as of each Valuation Date, an amount equal to the fair market value of
all property in the Funds (other than dividends received which are attributable
to whole shares of Common Stock or Class A Stock which were or are to be
transferred to Participants subsequent to the record date for such dividend) or
under a contract, in the case of the Guaranteed Return Fund, shall be
determined by the Trustee in such manner and on such basis as it shall deem
appropriate; provided, however, that Class A Stock shall be deemed to have the
same value per share as Common Stock. Such amount shall be divided by the
total number of Units credited to all the Participants in the Fund or under the
contract concerned on the particular Valuation Date, thereby establishing a new
Unit value. With respect to each Fund, each contribution or other payment
thereto or payment therefrom after such Valuation Date and prior to or on the
next Valuation Date shall be converted to Units (in the cases of Stock Fund A
and Stock Fund B, to Common Units and/or Class A Units to the extent
appropriate) by dividing such new Unit value into the amount of such
contribution or payment, and the individual Account of each affected
Participant representing his interest in the Fund or contract under his Company
Contributions Account, Compensation Deferral Account, Supplemental Deferral
Account, Compensation Deduction Account and Supplemental Deduction Account, as
applicable, shall be credited or charged, as the case may be, with the portion
of the number of Units so attributable to such Participant. The value of each
contract under the Guaranteed Return Fund shall be equal to the principal
amount held in such Fund plus accrued interest.
4.040 BALANCE OF PARTICIPANT'S ACCOUNTS. As of any specified date,
the dollar balance of the Accounts of each Participant representing the
interest of each Participant in each Fund or contract under his Company
Contributions Account, Compensation Deferral Account,
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<PAGE> 28
Supplemental Deferral Account, Compensation Deduction Account and Supplemental
Deduction Account, as applicable, shall be determined by multiplying the number
of Units in his current balance by the Unit value as of the last preceding
Valuation Date in accordance with the foregoing and adding to the resulting
dollar balance the amount of contributions made with respect to such Account
since the last valuation date for which Units have not yet been credited. Only
those contributions actually received by the Trustee will be considered in
making valuations and determining Account balances.
4.050 STATEMENTS OF PARTICIPANTS. After the end of each calendar
year or more frequently as the Plan Administrator shall determine, the Plan
Administrator (or if the Plan Administrator shall so determine, the Trustee)
shall forward by mail to each Participant a statement, in such form as the Plan
Administrator shall determine, setting forth pertinent information relative to
each Participant's Accounts. Such statement shall, for all purposes, be deemed
to have been accepted as correct unless the Plan Administrator (or the Trustee,
as the case may be) is notified to the contrary by mail within sixty (60) days
of the mailing thereof to the Participant.
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<PAGE> 29
ARTICLE V BENEFITS PAYABLE UPON TERMINATING EMPLOYMENT
5.010 VESTING.
(a) Each Participant shall at all times be fully vested in his
Compensation Deferral Account, Supplemental Deferral Account,
Compensation Deduction Account and Supplemental Deduction
Account. Each Participant who is an Employee and has at least
five (5) years of Continuous Employment shall be fully vested
in his Company Contributions Account. For the purposes of the
preceding sentence, any Participant who has forfeited Units in
his Company Contributions Account under Articles V or VI prior
to October 1, 1988, or prior to completing five (5) years of
Continuous Employment shall not have a vested right to such
forfeited Units until such Units shall have been restored
pursuant to the provisions of Section 5.040 or 6.030. Any
Participant who had less than five (5) years of Continuous
Employment as of October 1, 1988, shall be fully vested in the
Units in his Company Contributions Account resulting from
Company Contributions made for all months prior to October,
1988, but, except as otherwise provided in the Plan, shall not
become vested in any Units attributable to Company
Contributions for months subsequent to that date until he has
accumulated five (5) years of Continuous Employment.
(b) For the purposes of the preceding subsection, an Employee who:
(i) terminates employment with all Affiliated Companies at
any time after October 1, 1985,
(ii) does not receive a distribution under Article V and
retains a vested interest in his Company Contributions
Account, and
(iii) is subsequently reemployed by an Affiliated Company at
any time following his termination of employment
shall be credited with his period of Continuous Employment with
all Affiliated Companies prior to such termination of
employment, but only for the purpose of determining whether he
has a vested right under Section 5.010(a)(i) to that portion of
his Company Contributions Account attributable to Company
Contributions made during his period of reemployment.
(c) No Units in a Participant's Company Contributions Account shall
vest subsequent to the Participant's termination of employment,
except as provided in Section 5.040(b).
(d) If a Participant who is an Employee attains age sixty-five
(65), all of the Units in his Accounts which are attributable
to Company Contributions shall be fully vested.
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<PAGE> 30
5.020 RETIREMENT, DEATH, LAYOFF, ETC.
(a) Upon a Participant's:
(i) Retirement,
(ii) death,
(iii) Layoff,
(iv) termination of employment because of inability to meet
Company medical standards,
(v) termination of employment in order to enter the Armed
Forces of the United States or to accept employment
with the Government of the United States,
(vi) disability which has continued for a period of at least
six (6) months,
all of the Units in the Participant's Company Contributions
Account shall become fully vested and nonforfeitable.
(b) Subject to the provisions of Section 5.050:
(i) As soon as is practicable after the occurrence of an
event described subsection (a), but not later than
sixty (60) days after the end of the Plan Year in which
the event shall have occurred, a Participant or
Beneficiary, in the case of death, shall receive all
amounts described in paragraph (ii). In the case,
however, of Retirement, a Participant who would
otherwise receive a distribution pursuant to the
preceding sentence may nevertheless elect at any time
prior to the effective date of the Retirement to remain
in the Plan without any further contributions and may
elect to defer the Retirement distribution to a later
date, which date shall not be later than April 1 of the
calendar year following the calendar year in which the
Participant attains age seventy and one-half (70-1/2).
Distributions to such Participants shall be made
pursuant to the terms of Section 5.025 of this Article.
(ii) The amounts which a Participant or Beneficiary (in the
case of the Participant's death) shall receive under
paragraph (ii) shall be as follows:
(1) With respect to Investment Funds other than
Stock Fund A and Stock Fund B, the Participant
shall receive the full dollar balance of his
Accounts in such Funds. Such balance shall be
determined
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<PAGE> 31
in the manner provided by Section 4.040, by
reference to the value of Units in such
Participant's Accounts on the Valuation Date
coinciding with or immediately preceding:
(A) the date of the Participant's
Retirement, Layoff or termination; or
(B) in the case of the Participant's death
or disability, the date all
documentation necessary to effect
distribution from the Plan is received
by the Plan Administrator.
(2) With respect to Stock Fund A and Stock Fund B,
the dollar balances in such Participant
Accounts in such Funds as of the Valuation Date
coinciding with or immediately preceding
(A) such Retirement, Layoff, or termination,
or
(B) in the case of the Participant's death
or disability, the date all
documentation necessary to effect
distribution from the Plan shall have
been received by the Plan Administrator,
(such balances to be determined in the manner
provided by Section 4.040 separately by
reference to the Common Units and any Class A
Units in the Participant's Account on such
Valuation Date and the respective Unit values
on such Valuation Date) shall be applied to
Common Stock, to the extent attributable to
Common Units, and Class A Stock, to the extent
attributable to Class A Units. The Participant
shall receive shares of Common Stock equal in
number to the maximum number of whole shares of
Common Stock which could be purchased at the
closing price of Common Stock as reflected on
the New York Stock Exchange -- Composite
Transactions listing on such Valuation Date
(or, in the event such Valuation Date falls on
a date on which for any reason there are no
trades of such stock reflected on such listing,
the last trading day preceding such Valuation
Date) with the portion of such dollar balance
attributable to the Common Units in his
Account, and shares of Class A Stock equal in
number to the maximum number of whole shares of
Common Stock which could be purchased at such
closing price with the portion, if any, of such
dollar balance attributable to Class A Units,
in his Account. The Participant shall be paid
in cash the dollar amounts remaining in his
Accounts in Stock Fund A and Stock Fund B after
reduction of each such Account by the value,
based on such closing price, of the whole
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<PAGE> 32
shares previously described. In addition, the
Participant shall be paid in cash the amount of
any cash dividends received since such
Valuation Date attributable to the number of
whole shares of Common Stock and Class A Stock
distributed to him as described in this
subparagraph (2) and the dollar value of any
contributions to Stock Fund A and Stock Fund B
in respect of such Participant between such
Valuation Date and the date of such Retirement,
death, Layoff or termination.
(c) Notwithstanding the provisions of subsections (a) and (b), if a
Participant attains age seventy and one-half (70-1/2) while
still an Employee, distribution to the Participant of the
amounts described in subsection (b)(ii) of this Section 5.020
shall be made or commence to be made pursuant to the provisions
of Section 5.025 not later than April 1 of the calendar year
following the calendar year in which the Participant attains
age seventy and one-half (70-1/2).
5.025 FORM OF DISTRIBUTIONS TO PARTICIPANTS.
(a) Any Participant who is eligible for and wishes to receive a
Retirement distribution under Section 5.020(b) shall make an
election concerning the form of distribution and shall provide
such election to the Plan Administrator prior to Retirement.
(i) The form of distributions elected hereunder shall be
with reference to the amounts described in subsection
(a)(iii) of Section 5.020 and shall be either:
(1) a lump sum payment, or
(2) ten (10) or fewer annual installment payments,
such installment payments to be equal to the
value of the Participant's Accounts as of the
Valuation Date immediately preceding
distribution, divided by the number of
installments remaining at the time of each
payment. The initial installment payment shall
be made as soon as is practicable after the
effective date of the Participant's election,
with subsequent payments during the elected
installment payment period to be made as of the
annual anniversary date of the said initial
installment payment.
(ii) Notwithstanding the above, in the event that no
election concerning the form of Retirement distribution
has been received by the Plan Administrator from a
Retiree by the end of the calendar year in which the
Retiree has attained age seventy and one-half (70-1/2),
the said Retirement distribution shall be in the form
of lump sum payment.
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<PAGE> 33
(iii) If a Retiree who had previously elected and commenced
receipt of installment payments pursuant to paragraph
(i)(2) returns to employment with the Company or an
Affiliated Company (other than as a member of the
Company's flexible work force), such installment
payments shall be suspended until the Retiree's
subsequent Retirement, at which time he shall be
permitted again to make the election described therein,
subject to the provisions of this Section 5.025.
(b) A Participant who is still an Employee and has attained age
seventy and one-half (70-1/2) and is, therefore, required to
commence distribution pursuant to the terms of Section
5.020(c), shall receive or commence to receive the value of his
Accounts no later than April 1 of the calendar year following
the calendar year in which the Participant has attained the
said age. Distributions under this subsection (b) shall be
over the period of the Participant's life expectancy (pursuant
to the terms of Section 401(a)(9) of the Code). Upon the
Participant's subsequent Retirement, the Participant shall be
entitled to make the election provided for in the preceding
subsection (a) with respect to the balance of the Participant's
account at that time.
(c) A Participant who had previously elected the form of
distribution described in subsection (a)(ii) or who had
commenced receiving payments from his Accounts over his life
expectancy under subsection (b) shall be permitted to revoke
such election at a later date, in the case of the distribution
under subsection (a)(i), and, in either case, accelerate
receipt of the distribution by electing distribution of the
remaining Account balances in a lump sum payment.
5.030 EMPLOYEES OF DIVESTED COMPONENTS.
(a) Subject to the provisions of Section 5.050, any Participant who
is employed by a Divested Component immediately prior to its
divestiture and who does not continue employment with the
Divested Component shall have his Accounts distributed to him
by the Trustee in the manner provided in Sections 5.020 and
5.025.
(b) Any Participant who immediately prior to its divestiture is
employed by a Divested Component and who continues employment
with the Divested Component, shall become fully vested in all
of the Units in his Company Contributions Account. Subject to
the provisions of Section 5.050, the Accounts of such
Participant shall be distributable in the manner provided in
Sections 5.020 and 5.025 or transferred by the Trustee to the
trustee or other funding agent of any appropriate plan
established or otherwise maintained by the acquiror of the said
Divested Component in such a manner as to ensure that no
portion of the Accounts of any Participant transferred
hereunder shall be subject to forfeiture.
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<PAGE> 34
5.040 TERMINATION OF EMPLOYMENT FOR OTHER REASONS.
(a) Subject to the provisions of Section 5.050, if a Participant's
employment is terminated for any reason other than those set
forth in Sections 5.020, 5.030 and 8.020(a), the Participant
shall receive the following as soon as practicable:
(i) With respect to the Investment Funds (other than Stock
Fund B), the full dollar balance of his Accounts in
such Funds. Such balance shall be determined, in the
manner provided in Section 4.040, by reference to the
Units in such Participant Accounts on the date of such
termination and the value of each Unit on the Valuation
Date coinciding with or immediately preceding such
date.
(ii) With respect to Stock Fund B the dollar balance or
balances in such Participant's Accounts in such Fund,
and with respect to Stock Fund A the vested portion of
the dollar balance or balances in such Participant's
Accounts in such Fund, both as of the Valuation Date
immediately preceding such termination (such balance or
balances to be determined in the manner provided by
Section 4.040 separately by reference to the Common
Units and any Class A Units in such Participant's
Account on such Valuation Date and the value of each
such Unit on such Valuation Date) shall each be applied
to Common Stock to the extent attributable to Common
Units and Class A Stock to the extent attributable to
Class A Units. With respect to each such fund, the
Participant shall receive shares of Common Stock equal
in number to the maximum number of whole shares of
Common Stock which could be purchased at the closing
price of Common Stock as reflected on the New York
Stock Exchange -- Composite Transactions listing on
such Valuation Date (or, in the event such Valuation
Date falls on a date on which for any reason there are
no trades of such stock reflected on such listing, the
last trading day preceding such Valuation Date) with
such dollar balance (in the case of Stock Fund A, the
vested portion of such dollar balance) attributable to
the Common Units in his Account in such fund, and
shares of Class A Stock equal in number to the maximum
number of whole shares of Common Stock which could be
purchased at such closing price with the portion, if
any, of such dollar balance (in the case of Stock Fund
A, the vested portion, if any, of such dollar balance)
attributable to Class A Units in his Account in such
fund. The Participant shall be paid in cash the dollar
amount remaining in his Account in Stock Fund B and in
the vested portion of his Account in Stock Fund A after
reduction by the value, based on such closing price, of
the whole shares previously described. In addition,
the Participant shall be paid in cash the amount of any
cash dividends received since such Valuation Date
attributable to the number of whole shares of Common
Stock and Class A Stock distributed to him as described
in this paragraph (ii).
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<PAGE> 35
(b) If a Participant with less than five (5) years of Continuous
Employment receives a distribution pursuant to subsection (a),
the non-vested portion of the Participant's Company
Contributions Account shall be forfeited at the time such
distribution is made. If the Participant is reemployed as an
Employee prior to the end of five (5) years after the date on
which his termination of employment shall have occurred and if
the Participant shall make a cash repayment to the Plan of the
amounts which were distributed from his Compensation Deduction
and Compensation Deferral Accounts on or prior to the end of
the sixtieth (60th) month after the date of his reemployment,
there shall be restored to the Participant's Company
Contributions Account a dollar amount equal to the previously
forfeited non-vested portion of the dollar balance of his
Company Contributions Account in Stock Fund A (determined, in
the manner set forth in Section 4.040, by reference to the
Units in such Account and the value of each such Unit on such
Valuation Date). The amount of such repayment (which such
amount shall not reflect interest) shall be credited to his
Compensation Deduction Account and shall be allocated to the
Investment Funds (including any contract accounts under the
Guaranteed Return Fund) in the same proportion that the
Participant's Deduction and Deferral Contributions under the
Plan are then currently being made to the Investment Funds.
The non-vested portion of the Participant's Company
Contributions Account restored pursuant to this subsection (b)
shall vest as provided in Section 5.010.
(c) If a Participant with less than five (5) years of Continuous
Employment becomes eligible to receive a distribution under
subsection (a) but fails to provide consent to such
distribution as required by Section 5.050, the non-vested
portions of the Participant's Company Contributions Account
shall be forfeited at the conclusion of the five (5) year
period following the date on which his termination of
employment shall have occurred, unless the Participant shall be
reemployed as an Employee prior to the conclusion of the said
five (5) year period.
(d) For the purposes of this Section, in the case of an Employee
who is absent from work by reason of a Maternity or Paternity
Leave, the five (5) year period following termination of
employment described above in subsections (b) and (c) shall not
be deemed to have commenced until the earlier of the date on
which he terminates employment by reason of his retirement,
death, voluntary quit or discharge or the second annual
anniversary date of the commencement of his Maternity or
Paternity Leave.
(e) Notwithstanding the provisions of Section 5.040(b), if an
Employee terminated employment with all Affiliated Companies on
or after October 1, 1985, and was reemployed by an Affiliated
Company prior to October 1, 1986, any Units of his Company
Contributions Account forfeited under Section 5.040 of the Plan
as then in effect shall be restored in the manner provided in
Section 5.040(b) regardless of whether the Employee shall have
made the cash repayment required by the said Section.
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Sav. Pln. '95
<PAGE> 36
5.050 PARTICIPANT'S CONSENT TO DISTRIBUTION OF BENEFITS.
Notwithstanding any other provisions of the Plan, if the aggregate value of the
vested portion of a Participant's Accounts is in excess of Three Thousand Five
Hundred Dollars ($3,500) and the Participant has not attained age seventy and
one-half (70-1/2) at the time distribution of benefits under the Plan would
otherwise be made, no distribution of benefits under the Plan shall be made,
unless the Plan Administrator shall first have obtained the Participant's
written consent thereto. In the event such written consent is not so obtained,
the vested portion of the Participant's Accounts shall be retained by the Plan
and shall be maintained and valued in accordance with Article IV. Distribution
of the Participant's Accounts pursuant to this Section shall be made following
the date on which the Participant's written consent to such distribution is
obtained by the Plan Administrator or, if earlier, the date on which the
Participant attains age seventy and one-half (70-1/2) or dies, in the same
manner as if the Participant had terminated employment on such date. If the
Participant is reemployed as an Employee prior to the date on which such
written consent is received by the Plan Administrator, the Participant shall
not have any further right to receive a distribution of benefits as a result of
his prior termination of employment. Under no circumstances shall a Participant
have any right to withdraw any portion of the balance of his Accounts under
Article VI prior to the date of distribution of benefits.
5.055 TRANSFER OF DISTRIBUTION DIRECTLY TO ELIGIBLE RETIREMENT PLAN.
If a Participant, a Participant's spouse entitled to distribution pursuant to
Article IX, in the case of a Participant's death, or a former spouse entitled
to distribution pursuant to Section 11.140 shall so request in writing, the
Plan Administrator shall cause all or a portion of the amounts (including
shares of Common and Class A Stock) with respect to which the Participant would
be taxable under section 402 of the Code to be transferred from the Trustee
directly to the custodian of an Eligible Retirement Plan specified by the
Participant. Such request shall be made, in the case of a Participant, at the
time his consent to such distribution shall be given to the Plan Administrator
pursuant to Section 5.050, or at such later date as the Plan Administrator
shall permit, or, in the case of the Participant's spouse or former spouse, at
such time as the Plan Administrator shall determine. Prior to effecting such
transfer the Plan Administrator shall require evidence reasonably satisfactory
to him that the entity to which such transfer is to be made is in fact an
Eligible Retirement Plan and that such Eligible Retirement Plan may receive the
distribution in the forms required under this Article V.
5.060 VALUATION DATES FOR DOMESTIC RELATIONS ORDERS.
Notwithstanding any other provision of this Article V or of Article VI, in the
event that the Plan Administrator shall determine that a distribution or a
withdrawal of a Participant's Account pursuant to this Article V or Article VI
has been delayed as a result of a pending or threatened domestic relations
order, the Valuation Date immediately preceding the date on which such
withdrawal or distribution is approved by the Plan Administrator pursuant to
such order shall be substituted for the Valuation Date which would otherwise be
applicable to such withdrawal or distribution.
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<PAGE> 37
ARTICLE VI IN-SERVICE WITHDRAWALS, TRANSFERS AND LOANS
6.010 WITHDRAWALS FROM ACCOUNTS BY PARTICIPANTS UNDER AGE 59-1/2.
(a) Subject to Sections 6.040 and 6.050, a Participant who has not
yet attained age fifty-nine and one-half (59-1/2) may elect
while still employed to withdraw certain amounts from his
Accounts. As soon as practicable after the Company's receipt
of such an election, there shall be paid or transferred to such
Participant cash and, if applicable, stock from his Accounts in
the following order:
(i) first, from that portion of his Compensation Deduction
Account, which is attributable to Compensation
Deduction Contributions made prior to January 1, 1987;
(ii) second, from his Supplemental Deduction Account;
(iii) third, from that portion of his Compensation Deduction
Account, which is attributable to Compensation
Deduction Contributions made after December 31, 1986;
(iv) fourth, from that portion (if vested) of his Company
Contributions Account, which is attributable to
Compensation Deduction Contributions;
(v) fifth, from his Supplemental Deferral Account; and
(vi) sixth, from his Compensation Deferral Account.
(b) Withdrawals pursuant to paragraph (iii) of subsection (a) shall
be subject to the suspension provisions of Section 8.020(d) and
to the forfeiture provisions and withdrawal limitations of
Section 6.030.
(c) A Participant shall be permitted to withdraw from his
Supplemental and Compensation Deferral Accounts, as described
in paragraphs (v) and (vi) of subsection (a), only upon
providing adequate evidence of a hardship, as provided in
Section 6.050 and such a hardship withdrawal shall be governed
by the provisions of that Section.
(d) The portion of the Employee's Company Contributions Account
which is attributable to Compensation Deferral Contributions
shall not be available for withdrawal prior to the Employee's
attainment of age fifty-nine and one-half (59-1/2).
(e) In determining withdrawal amounts, the value of available Units
in the Participant's Accounts shall be determined as of the
Valuation Date coinciding with or immediately preceding the
date of the election.
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<PAGE> 38
6.020 WITHDRAWAL FROM ACCOUNTS BY PARTICIPANTS OVER AGE 59-1/2.
(a) A Participant who has attained age fifty-nine and one-half
(59-1/2) while still employed by the Company may elect to
withdraw any or all vested amounts from his Accounts. A
Participant making such an election shall receive the amount of
cash or, if applicable, stock to be withdrawn from his Accounts
in the following order:
(i) first, from that portion of his Compensation Deduction
Account, which is attributable to Compensation
Deduction Contributions made prior to January 1, 1987;
(ii) second, from his Supplemental Deduction Account;
(iii) third, from that portion of his Compensation Deduction
Account, which is attributable to Compensation
Deduction Contributions made after December 31, 1986;
(iv) fourth, from his Supplemental Deferral Account;
(v) fifth, from his Compensation Deferral Account;
(vi) sixth, from that portion (if vested) of his Company
Contributions Account, which is attributable to
Compensation Deduction Contributions; and
(vii) seventh, from that portion (if vested) of his Company
Contributions Account, which is attributable to
Compensation Deferral Contributions.
(b) Withdrawals under paragraph (iii) of subsection (a)
shall be subject to the forfeiture provisions of Section 6.030,
if the Units in the Employee's Company Contributions Account
are not fully vested pursuant to the provisions of Section
5.010.
(c) Withdrawals pursuant to this Section 6.020 shall not be subject
to the suspension provisions of Section 8.020(d) or to the
withdrawal limitations of Section 6.030(d).
(d) In determining the distribution amounts, the value of available
Units in the Participant's Accounts shall be determined as of
the Valuation Date coinciding with or immediately preceding the
date of the election.
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Sav. Pln. '95
<PAGE> 39
6.030 FORFEITURES AND LIMITATION ON WITHDRAWALS.
(a) When applicable, any non-vested portion of a Participant's
Company Contributions Account associated with a withdrawal from
his Compensation Deduction Account shall be forfeited at the
time of such withdrawal.
(i) The forfeitable Units, if any, of a Participant's
Company Contributions Account which are attributable to
Compensation Deduction Contributions shall be
determined by multiplying the dollar balance of the
Participant's Company Contributions Account by a
fraction, the numerator of which is equal to the dollar
value of the Compensation Deduction Contributions which
were withdrawn by the Participant and the denominator
of which is the total dollar value of the Participant's
Compensation Deduction Account (both such dollar values
to be determined as of the last Valuation Date
preceding the date of withdrawal).
(ii) An Employee who has suffered a forfeiture described in
this subsection (a) may elect to restore his interest
in the Plan by making a cash repayment to the Plan in
the amount and in the manner described in subsections
(b) and (c).
(b) In order to restore a forfeiture described in subsection (a), a
repayment of the amount withdrawn by the Employee from his
Compensation Deduction Account must be made within sixty (60)
months after such withdrawal. For purposes of this subsection
(b), the amount distributed to an Employee means the sum of the
cash distributed to such Employee plus the dollar value of the
Common Stock and any Class A Stock distributed to such
Employee, determined at the closing price for Common Stock as
reflected on the New York Stock Exchange -- Composite
Transactions listing on the Valuation Date applicable to the
distribution or withdrawal (or if such Valuation Date falls on
a date on which, for any reason, there are no trades of such
stock reflected on such listing, the last trading day preceding
such Valuation Date). Such amount shall not be increased to
reflect interest.
(c) As soon as practicable after an Employee makes a repayment
described in subsection (b), there shall be credited to the
Employee's Company Contributions Account the dollar amount of
any amounts forfeited as a result of the withdrawals. The
amount repaid under this subsection (c) shall be credited to
the Employee's Compensation Deduction Account or, if
applicable, his Compensation Deferral Account and shall be
allocated to the Investment Funds (including any contract
accounts under the Guaranteed Return Fund) in the same
proportion that the Participant's Deduction and Deferral
Contributions under the Plan are then currently being made to
the Investment Funds. The previously forfeited amount which is
credited under this subsection shall subsequently vest as
provided in Section 5.010.
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Sav. Pln. '95
<PAGE> 40
(d) Withdrawals shall be in a minimum amount of $100. An Employee
who has not yet attained age fifty-nine and one-half (59-1/2)
may not make a request for a partial withdrawal within
twenty-six (26) weeks of any prior request for a partial
withdrawal; provided, however, that this limitation upon the
ability of such Employee to make a partial withdrawal
(including hardship withdrawals pursuant to the provisions of
Section 6.050) within twenty-six (26) weeks of any prior
request for a partial withdrawal shall be waived by the Plan
Administrator for the six-month period immediately following
any due declaration by the President of the United States under
applicable federal law that a particular occurrence or
situation constitutes a national disaster condition, if such
partial withdrawal is requested for a reason associated with
financial need of the Employee resulting from the effects of
the said condition.
6.040 ALLOCATION OF WITHDRAWALS AMONG INVESTMENT AND STOCK FUNDS.
(a) Withdrawals pursuant to Sections 6.010 and 6.020 shall be taken
from the Employee's Accounts in the Investment Funds in a pro
rata fashion, based upon the relative size of the said
Accounts. Any withdrawal from an Employee's Accounts in the
Guaranteed Return Fund shall be taken in reverse sequence by
withdrawing amounts from the Fund's Account's in the contracts
on a last-in first-out basis.
(b) Notwithstanding the above subsection (a), an Employee may elect
to have any such withdrawal taken:
(i) first from the Employee's Account in Stock Fund B, with
any additional withdrawal amount to be taken on a pro
rata basis from the Employee's Accounts in the
remaining Investment Funds; or
(ii) first on a pro rata basis from the Investment Funds
other than Stock Fund B, with any additional withdrawal
amount to then be taken from the Employee's Account in
Stock Fund B.
(c) In the course of any withdrawal from Stock Fund B pursuant to
the pro rata withdrawal provisions of subsection (a) or the
alternative withdrawal methods of subsection (b), such
withdrawal from Stock Fund B shall be carried out first from
Common Units and then, when the Common Units have been
exhausted, from Class A Units in that Fund.
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Sav. Pln. '95
<PAGE> 41
6.050 HARDSHIP WITHDRAWALS FROM DEFERRAL ACCOUNTS. Subject to any
restrictions the Plan Committee may establish pursuant to
Section 6.070:
(a) an Employee who has not attained age fifty-nine and one-half
(59-1/2) may request approval of the Administrative Committee
to withdraw some or all of the Units of his Compensation
Deferral Account and his Supplemental Deferral Account, if the
Employee demonstrates that the withdrawal is required as a
result of a hardship and for payment of any federal, state or
local income taxes and penalties reasonably anticipated to
result from such withdrawal.
(i) For the purposes of this subsection (a) the term
"hardship" shall mean an immediate and heavy financial
need of the Employee for which the amount required is
not reasonably available to the Employee from other
sources and which arises for one of the following
reasons:
(1) the purchase (excluding mortgage payments) or
construction of a principal residence for the
Employee, or to prevent eviction from, or
foreclosure on the mortgage on, the Employee's
principal residence;
(2) the incurring of obligations for
(A) tuition, related educational fees and
room and board expenses for
post-secondary education for the
Employee, his spouse or one or more of
his children or other dependents (as
defined in section 152 of the Code) to
be incurred during the twelve (12) month
period immediately following the date of
his request for distribution; or
(B) expenses not covered by insurance which
either have been previously incurred by
the Employee for, or are necessary in
order for the Employee to obtain,
medical care (as described in section
213(d) of the Code) for himself, his
spouse or one or more of his dependents
(as defined in section 152 of the Code);
(3) any other reason which is permitted under
section 401(k)(2)(B)(i)(IV) of the Code and is
approved by the Administrative Committee.
(ii) Any determination of the existence of hardship, the
reasonable availability to the Employee of funds from
other sources and the amount to be withdrawn on account
of such hardship shall be made by the Administrative
Committee on the basis of all relevant facts and
- 35 -
Sav. Pln. '95
<PAGE> 42
circumstances and in accordance with the foregoing
rules, as applied in a uniform and nondiscriminatory
manner. In making such determination, the
Administrative Committee may, if it is reasonable to do
so in the light of all relevant and known facts and
circumstances, rely on the Employee's representation
that the hardship cannot be relieved:
(1) through reimbursement or compensation by
insurance or otherwise;
(2) by reasonable liquidation of the Employee's
assets, to the extent that such liquidation
would not itself cause an immediate and heavy
financial need;
(3) by suspension of Compensation Deferral or
Compensation Deduction Contributions; or
(4) by other distributions (other than hardship
distributions) or loans (which meet the
requirements of section 72(p) of the Code) from
the Plan and any other plan maintained by an
Affiliated Company or by any former employer or
by borrowing from commercial sources at
reasonable commercial rates.
(b) Withdrawals pursuant to subsection (a) shall not result in the
forfeiture of a Participant's interest in his Company
Contributions Account.
(c) Withdrawals pursuant to subsection (a) shall be taken from the
Participant's Investment Fund Accounts, as elected by the
Participant, either:
(i) first from his Account in Stock Fund B, with any
additional withdrawal amount to be taken on a pro rata
basis from the Employee's Accounts in the remaining
Investment Funds; or
(ii) first on a pro rata basis from the Investment Funds
other than Stock Fund B, with any additional withdrawal
amount to then be taken from his Account in Stock Fund
B.
Any withdrawal from the Participant's Accounts in the
Guaranteed Return Fund shall be taken in reverse sequence by
withdrawing amounts from the Fund's Account's in the contracts
on a last-in first-out basis.
(d) Withdrawals (including those from Stock Fund B) shall be in
cash and for a minimum amount of $100. An Employee may not
make a request for partial withdrawal within twenty-six (26)
weeks of any prior request for partial withdrawal; provided,
however, that this limitation upon the ability of an Employee
to make a partial withdrawal (including hardship withdrawals
pursuant to the provisions of subsection (a) of this Section)
within twenty-six (26) weeks of any prior request for a partial
withdrawal shall be waived by the Plan
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Sav. Pln. '95
<PAGE> 43
Administrator for the six-month period immediately following
any due declaration by the President of the United States
under applicable federal law that a particular occurrence or
situation constitutes a national disaster condition, if such
partial withdrawal is requested for a reason associated with
financial need of the Employee resulting from the effects of
the said condition.
6.060 TRANSFERS TO CERTAIN AFFILIATED COMPANY PLANS. A Participant
who though remaining an Employee is no longer an Eligible Employee may, if the
said Participant's continuing employment with the Company is in a salaried
position with the Allen-Bradley Company or the Reliance Electric Company, elect
(by providing the Plan Administrator with notice thereof) to have the entire
amount credited to the said Participant's account in this Plan transferred to
any qualified individual account plan of Allen-Bradley Company or the Reliance
Electric Company Savings and Investment Plan, as the case may be; provided,
however, that such transferred amount shall consist of and be limited to:
(a) cash, in the case of amounts attributle to the Participant's
interest in Investment Funds other than Stock Fund B;
(b) Common Stock (which shall include Common Stock issued on
conversion of Class A Stock) in the case of amounts
attributable to the Participant's interest, if any, in Stock
Fund B and in Stock Fund A; and
(c) in the case of a Participant to whom a loan has been made
pursuant to Section 6.070, the Participant's loan.
6.070 LOANS. The Plan Committee shall establish, and may from time
to time modify, procedures pursuant to which any Employee or other "party in
interest" (as defined in ERISA section 3(14)) may apply for and receive a loan
from the Plan in an amount not exceeding the least of (a), (b), (c) or (d):
(a) the aggregate of the balances in the borrower's Compensation
Deferral, Supplemental Deferral, Compensation Deduction and
Supplemental Deduction Accounts;
(b) an amount which, when combined with all outstanding loans to
the borrower from all other plans of all Affiliated Companies,
equals Fifty Thousand Dollars ($50,000), reduced by the excess,
if any, of
(i) the highest outstanding and unpaid balances of all
prior loans to the borrower from the Plan and such
other plans during the twelve (12) month period
immediately preceding the date on which such loan is
made, over
(ii) the outstanding balance of any loan to the borrower
from the Plan or such other plans on the date on which
the loan is made;
(c) one-half (1/2) of the aggregate of the fully vested and
nonforfeitable interests in the balances of the borrower's
Accounts; or
(d) such amount, not exceeding the amounts described in (a) through
(c) above, as the Plan Committee shall determine.
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Sav. Pln. '95
<PAGE> 44
In addition to the above limitation, no such Employee or other party
in interest shall be permitted to have more than a single loan
outstanding from this Plan and all other plans sponsored by the
Company and Affiliated Companies at any one time.
All such loans shall be made available to all eligible Employees and
other parties in interest on a reasonably equivalent and
non-discriminatory basis and shall be governed by the provisions of
Appendix B, as such Appendix is from time to time constituted,
pursuant to determination of the Plan Administrator.
6.080 TRANSFER OF DISTRIBUTION OR WITHDRAWAL TO ELIGIBLE RETIREMENT
PLAN. If a Participant entitled to a distribution under Article V or an
in-service withdrawal under this Article VI, shall so request in writing at the
time his election to receive such distribution or withdrawal is made or at such
later date as the Plan Administrator may permit, the Plan Administrator shall
cause all or a portion of the amounts (including shares of Common and Class A
Stock) with respect to which the Participant would be taxable under section 402
of the Code to be transferred from the Trustee directly to the custodian of an
Eligible Retirement Plan specified by the Participant. Prior to effecting such
transfer the Plan Administrator shall require evidence reasonably satisfactory
to him that the entity to which such transfer is to be made is in fact an
Eligible Retirement Plan and that such Eligible Retirement Plan may receive the
distribution in the forms required under this Article VI.
ARTICLE VII [RESERVED]
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Sav. Pln. '95
<PAGE> 45
ARTICLE VIII SUSPENSION OF SAVINGS AND CONTRIBUTIONS
8.010 VOLUNTARY SUSPENSION.
(a) A Participant may at any time elect to have contributions
suspended until further notice. Suspension shall become
effective not later than the first payroll payment date
following the expiration of the fifteen (15) days period
thereafter.
(b) Subject to Section 2.010, a Participant who has elected to have
contributions suspended, may elect to have contributions
resumed, effective no later than the first payroll payment date
following the expiration of the fifteen (15) days period
thereafter.
8.020 INVOLUNTARY SUSPENSION. A Participant's Compensation and
Supplemental Deferral Contributions and/or Compensation and Supplemental
Deduction Contributions shall be involuntarily suspended whenever:
(a) no payment of Base Compensation is made by the Company to the
Participant or, in the case of a Deduction Contribution, the
amount payable after all applicable withholdings and deductions
required by law or the Company is less than the applicable
Deduction Contribution;
(b) payroll deduction for Compensation Deduction Contributions
under the Plan would be contrary to law;
(c) the Participant is not an Eligible Employee of an Affiliated
Company or of a component of the Company to which the benefits
of the Plan have been extended; or
(d) the Participant receives a distribution under Section
6.010(a)(iv) of Company Contributions Account Units which are
attributable to his Compensation Deduction Contributions;
provided, however, that the previously suspended Contributions
shall automatically resume following the completion of the
twenty-six (26) week period beginning on the date of such
distribution.
8.030 GENERAL PROVISIONS APPLICABLE TO SUSPENSIONS. Suspensions of
a Participant's Deferral or Deduction Contributions, whether voluntary or
involuntary, shall not affect his benefit and withdrawal rights under Articles
V and VI of the Plan, but Company contributions on his behalf shall be
similarly suspended. A Participant may not make up suspended Deferral or
Deduction Contributions.
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Sav. Pln. '95
<PAGE> 46
ARTICLE IX DESIGNATION OF AND PAYMENT TO A BENEFICIARY
9.010 DESIGNATION OF A BENEFICIARY. Subject to the provisions of
Section 1.050:
(a) If a Participant dies, payment of the benefits provided under
this Plan shall be made to such person or persons as he has
designated as his Beneficiary to receive such benefits in the
event of his death.
(b) A Participant may change his designation of Beneficiary at any
time by filing with the Plan Administrator (or such other
person as is designated by the Plan Administrator) a request
for such change. Such change shall become effective only upon
receipt of the request by the Plan Administrator (or such other
person as is designated by the Plan Administrator) but upon
such receipt the change shall relate back to and take effect as
of the date the Participant signed such request; provided,
however, that neither the Company, the Trustee, the Plan
Committee, the Plan Administrator, any other named or unnamed
fiduciary, nor the Trust Fund shall be liable for any payment
made to the Beneficiary designated before receipt of such
request.
(c) If no designation is effective pursuant to this Article or if
the Plan Administrator or Trustee shall have any doubt as to
the right of any Beneficiary or if the Beneficiary shall
predecease the Participant, the amount of such benefits may be
paid to the estate of the Participant, in which event neither
the Company, the Trustee, the Plan Committee, the Plan
Administrator, any other named or unnamed fiduciary, nor the
Trust Fund shall be liable to anyone with respect to such
payment.
9.020 PAYMENT TO A BENEFICIARY. Upon receipt by the Plan
Administrator (or another person designated by him) of evidence satisfactory to
such person of the death of a Participant and of the identity and existence at
the time of such death of the Beneficiary, the Plan Administrator shall direct
the Trustee to pay the Participant's Accounts to such Beneficiary.
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Sav. Pln. '95
<PAGE> 47
ARTICLE X TRUST AGREEMENT
10.010 ESTABLISHMENT OF TRUST FUND. The property resulting from
contributions made on behalf of all Participants, including contributions made
by the Company, shall be held in a Trust Fund by a corporate Trustee or
Trustees selected by the Plan Committee pursuant to a Trust Agreement entered
into between such Trustee and the Plan Committee. References in the Plan to
Trustee shall be deemed to be applicable with equal force to co-Trustees or
successor Trustees who may be so designated.
10.020 INVESTMENTS.
(a) The Trustee shall establish:
(i) a Diversified Fund, which shall be invested in stocks,
convertible bonds and other corporate securities (other
than securities issued by the Company), as well as in
cash equivalents and other miscellaneous securities;
(ii) a Fixed Income Fund, which shall be invested in debt
instruments (other than debt instruments issued by the
Company) with maturity dates of three years or less,
which such instruments shall include treasury bills,
treasury notes, treasury bonds, federal agency
obligations, other instruments of government debt,
bankers' acceptances and bank certificates of deposit;
(iii) an Intermediate Term Bond Fund, which shall be invested
in debt instruments with a combined average maturity of
five years or less, which such instruments shall
include treasury bills, treasury notes, treasury bonds,
federal agency obligations and other instruments of
government debt;
(iv) a Guaranteed Return Fund consisting of the Trust Fund's
interest in contracts issued by one or more insurance
companies, which contracts:
(1) guarantee the principal and interest thereon
for a specified period of time, and
(2) accrue such guaranteed interest on a monthly
basis;
(v) Stock Fund A, which shall consist of all cash, the
Company's Common Stock and Class A Stock, and the
proceeds and income therefrom, attributable to Company
Contributions;
(vi) Stock Fund B, which shall consist of all cash, the
Company's Common Stock, Class A Stock and the proceeds
and income on such cash and
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Sav. Pln. '95
<PAGE> 48
Stock attributable to contributions made by or on
behalf of Participants under the Plan and designated
as contributions to Stock Fund B.
(b) The Trust Agreement will provide the following:
(i) The Plan Committee may from time to time direct the
segregation of all or a portion of the Investment
Funds, other than the Guaranteed Return Fund and Stock
Fund B and shall appoint Investment Managers with
respect to the portions of the Investment Funds so
segregated. Any Investment Manager so appointed shall
have full discretion to direct the Trustee with respect
to the acquisition, retention, management and
disposition of the assets from time to time comprising
the Investment Manager's Account.
(ii) The Trustee shall pay all cash in the Guaranteed Return
Fund to the one or more insurance companies described
in paragraph (iv) of Section 10.020(a), subject to the
terms of the contracts described in such paragraph.
(iii) The Trustee shall use all cash in Stock Fund A and
Stock Fund B only to purchase Common Stock. Any Class
A Stock received by the Trustee as a Company
contribution or as a stock dividend or other
distribution on shares of Common Stock or Class A Stock
in Stock Fund A or Stock Fund B shall be retained as
such except to the extent necessary to make cash
payments from such fund as provided in the Plan.
Rights, options, or warrants offered to purchase Common
Stock or Class A Stock shall be exercised by the
Trustee in his discretion but only to the extent that
there is cash available in Stock Fund A and Stock Fund
B for investment. To the extent they are not
exercised, the same shall be sold on the open market.
Rights, options, or warrants to purchase securities of
Rockwell International Corporation or its subsidiaries
or affiliates other than Common Stock or Class A Stock
shall be sold by the Trustee on the open market.
(iv) In making all investments pursuant to this Plan, the
Trustee and the Investment Manager shall:
(1) not be bound by any law or any court doctrine
of any state or jurisdiction limiting trust
investments, except as otherwise provided by
ERISA;
(2) give consideration to the cash requirements of
the Plan;
(3) not cause the Plan to engage in any transaction
constituting a prohibited transaction under
section 406 of ERISA.
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10.030 DUTY OF TRUSTEE AS TO STOCK IN STOCK FUND A AND STOCK FUND B.
(a) Except as otherwise provided in this Section 10.030, the duty
with respect to the voting, retention, and tendering of Common
Stock and Class A Stock held in Stock Fund A or Stock Fund B
shall be solely that of the Trustee, to be exercised solely in
the Trustee's discretion.
(b) With respect to any matter as to which a vote of the
outstanding shares of Common Stock or Class A Stock is
solicited:
(i) the Trustee shall solicit the direction in writing of
each Participant, as to the manner in which voting
rights of the Participant's vested and non-vested
shares of Common Stock or Class A Stock held in or
credited to Stock Fund A or Stock Fund B as of the
record date fixed for determining the holders of Common
Stock or Class A Stock entitled to vote on such matter
are to be exercised with respect to such matter, and
the Trustee shall exercise the voting rights of such
shares with respect to such matter in accordance with
the last-dated timely written direction, if any, of
such Participant; and
(ii) the Trustee, in its sole discretion, shall exercise
voting rights of shares of Common Stock or Class A
Stock held in Stock Fund A or Stock Fund B as to which
no timely direction has been received pursuant to
paragraph (i).
(c) In the event of any Tender Offer (as defined in Section 1.405):
(i) the Trustee shall solicit the direction in writing of
each Participant, as to the tendering or depositing of
any vested or non-vested shares of Common Stock or
Class A Stock held, any shares of Common Stock issuable
on conversion of Class A Stock held, in Stock Fund A or
Stock Fund B as of the Tender Date with respect to such
Participant or have been credited as of such Tender
Date to the Accounts in Stock Fund B of such
Participant, and, except as limited by subsection (d)
hereof, the Trustee shall tender or deposit such shares
pursuant to any such Tender Offer in accordance with
the last dated timely written direction, if any, of
such Participant;
(ii) the Trustee shall, in its sole discretion, shall have
the duty, except as limited by subsection (d) hereof,
with respect to the retention, tendering or depositing
of shares of Common Stock or Class A Stock held, and
any
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<PAGE> 50
shares of Common Stock issuable on conversion of
Class A Stock held, in Stock Fund A or Stock Fund B as
to which no timely direction in writing has been
received pursuant to paragraph (i);
(d) Shares of Common Stock or Class A Stock held, and any shares of
Common Stock issuable on conversion of Class A Stock held, in
Stock Fund A or Stock Fund B shall not be tendered or deposited
by the Trustee pursuant to any such Tender Offer until the
earlier of:
(i) immediately preceding the scheduled expiration of the
Tender Offer pursuant to which such shares are to be
tendered or deposited, or
(ii) immediately preceding the expiration of the period
during which such shares of Common Stock (including
shares of Common Stock issuable on conversion of Class
A Stock) or Class A Stock will be taken up and paid for
on a pro rata basis pursuant to such Tender Offer, or
(iii) the expiration of 30 days from the date of the
Trustee's solicitation of Participants' written
direction pursuant to subsection (c)(i).
(e) The duty with respect to the withdrawing of, or other exercise
of any right to withdraw, shares of Common Stock held, and any
shares of Common Stock issuable on conversion of Class A Stock
held, in Stock Fund A or Stock Fund B which have been tendered
or deposited pursuant to any such Tender Offer shall be solely
that of the Trustee, provided that the Trustee may solicit the
direction in writing of each Participant with respect to whom
any such shares of Common Stock (including shares of Common
Stock issued on conversion of Class A Stock) or Class A Stock
have been tendered or deposited pursuant to any such Tender
Offer as to the withdrawing of, or other exercise of any right
to withdraw, such shares of Common Stock (including shares of
Common Stock issued on conversion of Class A Stock) or Class A
Stock, and if such solicitation is made, the Trustee shall act
in accordance with the last dated timely written direction, if
any, of each such Participant.
As used herein, the term 'Tender Date' means the date on which
the Trustee tenders or deposits any shares of the Common Stock
(including shares of Common Stock issued on conversion of Class
A Stock) or Class A Stock either representing the vested or
non-vested interest of such Participant in Stock Fund A or
credited to the Accounts in Stock Fund B of such Participant.
10.040 FORM OF TRUST AGREEMENT. The Trust Agreement shall be in such
form and contain such provisions as the Plan Committee may deem appropriate
(consistent with the provisions of Section 10.020, Section 10.030 and Section
16.030) The Trust Agreement shall be deemed to form a part of this Plan, and
all rights and benefits that may accrue to any
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<PAGE> 51
person under this Plan shall be subject to all the terms and provisions of the
Trust Agreement. The Trust Agreement may authorize the Trustee to invest all
or part of the assets held by him in a collective trust for investment purposes
and deposit amounts held in any of the funds comprising the Trust Fund in an
interest bearing account in a bank or similar financial institution (including
without limitation the commercial banking department of the Trustee) on a
temporary basis pending either: (a) investment of such amounts or (b)
distribution of funds to Plan Participants.
10.050 RIGHTS IN THE TRUST FUND. Nothing in the Plan or in the Trust
Agreement shall be deemed to confer any legal or equitable right or interest in
the Trust Fund in favor of any Participant, Beneficiary or other person, except
to the extent expressly provided in the Plan.
10.060 TAXES, FEES AND EXPENSES OF THE TRUSTEE.
(a) The reasonable fees and expenses of the Trustee (including the
reasonable expenses of the Trustee's counsel), any Investment
Manager and any investment advisor shall be paid from the Trust
Fund and shall constitute a charge on the Trust Fund until so
paid; provided, however, that in no event shall the Trust Fund
nor the Company (unless the Company is specifically so directed
by resolution of the Company's Board of Directors) pay any such
Trustee, Investment Manager or investment advisors fees or
expenses:
(i) for preparation or prosecution of any action against
the Company, the Plan, any member of the Plan Committee
or the Plan Administrator, or
(ii) for the defense or settlement of, or the satisfaction
of a judgment related to, any proceeding arising either
out of any alleged misfeasance or nonfeasance in any
person's performance of duties with respect to the Plan
or out of any alleged wrongful act against the Plan.
There shall be included in the reasonable expenses payable from
the Trust Fund any direct internal costs (which may include
reimbursement of compensation of Company Employees) associated
with Plan operations and administration, the payment of which
shall be in conformity with the requirements of Title I of
ERISA. Neither the Plan Administrator nor the members of the
Plan Committee shall be compensated from the Plan but may be
compensated by the Company for services rendered on behalf of
the Plan.
(b) Brokerage fees, commissions, stock transfer taxes and other
charges and expenses incurred in connection with transactions
relating to the acquisition or disposition of property for or
of the Trust Fund, or distributions therefrom, shall be paid
from the Trust Fund. Taxes, if any, payable by the Trustee on
the assets at any time held in the Trust Fund or on the income
thereof shall be paid from the Trust Fund.
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ARTICLE XI ADMINISTRATION
11.010 GENERAL ADMINISTRATION. Authority to control and manage the
operation and administration of the Plan shall be vested in the Plan Committee
except to the extent that:
(a) the Plan Administrator or the Administrative Committee is
allocated any such authority under the Plan;
(b) any Trustee or Investment Manager hereunder may, pursuant to
Article X, be granted exclusive authority and discretion to
manage and control all or any portion of the assets of the
Plan;
(c) the Plan Committee, the Plan Administrator, the Administrative
Committee, the Trustee(s) and the Investment Manager(s) shall
constitute ERISA Named Fiduciaries of the Plan.
11.020 PLAN COMMITTEE. The Board of Directors shall, from time to
time, determine the size of the Plan Committee and appoint its individual
members. The Plan Committee shall act, with or without a meeting, in a manner
consistent with the rules and regulations adopted pursuant to Section
11.060(d).
11.030 PLAN COMMITTEE RECORDS. The Plan Committee shall keep such
records and data as it shall deem appropriate and it shall from time to time
file with the Board of Directors such reports as the latter may request. It
shall be a function of the Plan Committee to keep records of the assets of the
Trust Fund, based upon reports furnished by the Trustee, and the evaluations
placed thereon by the Committee shall be final and conclusive.
11.040 FUNDING POLICY. The Plan Committee shall be responsible for
determining a funding policy of the Plan consistent with the objectives for the
Investment Funds and shall from time to time advise the Trustee and the
Investment Manager of such policy.
11.050 ALLOCATION AND DELEGATION OF DUTIES UNDER PLAN. The Plan
Committee, the Plan Administrator and the Administrative Committee shall each
have the following powers and authorities:
(a) to designate agents to carry out responsibilities relating to
the Plan, other than fiduciary responsibilities; and
(b) to employ such legal, consultant, medical, accounting, clerical
and other assistance as it may deem appropriate in carrying out
the provisions of this Plan including one or more persons to
render advice with regard to any responsibility any Named
Fiduciary or any other fiduciary may have under the Plan.
11.060 PLAN COMMITTEE POWERS. In addition to any powers and
authority conferred on the Plan Committee elsewhere in the Plan or by law, the
Plan Committee shall have the following powers and authority:
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(a) to allocate fiduciary responsibilities, other than trustee
responsibilities (responsibilities under the Trust Agreement to
manage or control the Plan assets) to one or more members of
the Plan Committee or to the Plan Administrator and to
designate one or more persons (other than the Trustee or
Investment Manager) to carry out such fiduciary
responsibilities;
(b) to appoint one or more Investment Managers or investment
advisors (who need not be Investment Managers and who shall
not have authority to manage, acquire, or dispose of Plan
assets).
(c) to determine the manner in which the assets of this Plan, or
any part thereof, shall be disbursed by the Trustee, except as
relates to the making and retention of investments; and
(d) to establish rules and regulations from time to time for the
conduct of the Plan Committee's business and for the
administration and effectuation of its responsibilities under
the Plan.
11.070 PLAN ADMINISTRATOR. In addition to any powers and authority
conferred on the Plan Administrator elsewhere in the Plan, the Plan
Administrator shall have the following powers and authority:
(a) to administer, interpret, construe and apply this Plan and to
decide all questions which may arise or which may be raised by
any Employee, Participant, Beneficiary, or other person
whatsoever, and the actions or decisions of the Plan
Administrator in regard thereto, or in regard to anything or
matter otherwise within his discretion, shall be conclusive and
binding on all Employees, Participants, Beneficiaries, and
other persons whatsoever;
(b) to designate one or more persons, other than the Trustee or the
Investment Manager, to carry out fiduciary responsibilities
(other than trustee responsibilities);
(c) to establish rules and regulations from time to time for the
administration and effectuation of his responsibilities under
the Plan.
The Plan Administrator shall have such other responsibility as is designated by
ERISA as the responsibility of the administrator of the Plan and shall have
such other power and authority as is necessary to fulfill his responsibilities
under ERISA or under the Plan.
11.080 RELIANCE UPON DOCUMENTS AND OPINIONS. The members of the Plan
Committee and the Administrative Committee, the Plan Administrator, the Board
of Directors and the Company shall be entitled to rely upon any tables,
valuations, computations, estimates, certificates and reports furnished by any
consultants or consulting firms, opinions furnished by legal counsel and
reports furnished by the Trustee. The members of the Plan Committee, the
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<PAGE> 54
Plan Administrator, the Board of Directors and the Company shall be fully
protected and shall not be liable in any manner whatsoever, except as otherwise
specifically provided by law, for anything done or action taken or suffered in
reliance upon any such consultant, Trustee or counsel. Any and all such things
done or such actions taken or suffered by the Plan Committee, the Plan
Administrator, the Board of Directors and the Company shall be conclusive and
binding on all Employees, Participants, Beneficiaries, and other persons
whatsoever except as otherwise specifically provided by law. The Plan
Committee and the Plan Administrator may, but are not required to, rely upon
all records of the Company with respect to any matter or thing whatsoever, and
to the extent they rely thereon, such records shall be conclusive with respect
to all Employees, Participants, and Beneficiaries.
11.090 REQUIREMENT OF PROOF. The Plan Committee, the Plan
Administrator, the Administrative Committee, the Board of Directors or the
Company may require satisfactory proof of any matter under this Plan from or
with respect to any Employee, Participant, or Beneficiary, and no such person
shall acquire any rights or be entitled to receive any benefits under this Plan
until such proof shall be furnished as so required.
11.100 LIMITATION ON LIABILITY.
(a) Except as provided in Part 4 of Title 1 of ERISA, no person
shall be subject to any liability with respect to his duties
under the Plan, unless he acts fraudulently or in bad faith.
(b) No person shall be liable for any breach of fiduciary
responsibility resulting from the act or omission of any other
fiduciary or any person to whom fiduciary responsibilities have
been allocated or delegated, except as provided in ERISA
section 405(a) and 405(c)(2)(A) or (B). No action or
responsibility shall be deemed to be a fiduciary action or
responsibility except to the extent required by ERISA.
11.110 INDEMNIFICATION. To the extent permitted by law, the Company
shall indemnify the Board of Directors, the Plan Administrator, each member of
the Plan Committee, each member of the Administrative Committee and any other
employee of the Company with duties under the Plan against expenses (including
any amount paid in settlement) reasonably incurred by him in connection with
any claims against him by reason of his conduct (except for his willful
misconduct) in the performance of his duties under the Plan.
11.120 MULTIPLE FIDUCIARY CAPACITY. Any person or group of persons
may serve in more than one fiduciary capacity with respect to the Plan.
11.130 MAILING AND LAPSE OF PAYMENTS. All payments under the Plan
shall be delivered in person or mailed to the last address of the Participant
(or, in the case of the death of the Participant, to that of any other person
entitled to such payments under the terms of the Plan) furnished pursuant to
Section 11.150 below. If the Plan Administrator cannot, by making a reasonably
diligent attempt by mail, locate either the Participant or his Beneficiary, as
the case may be, for a period of seven years, such Participant or Beneficiary
shall be
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<PAGE> 55
presumed dead. If payment cannot be made alternately to the estate of either
and no surviving spouse, child, grandchild, parent, brother or sister of the
Participant or his Beneficiary are known to the Plan Administrator or the
Trustee or, if known, cannot with reasonable diligence be located, the amount
payable shall be retained by the Trustee until the amount can be distributed
pursuant to the provisions of this Plan or of applicable law.
11.140 NON-ALIENATION.
(a) Except as provided in subsection (b), no right or benefit
provided for in the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance (including garnishment, attachment, execution or
levy of any kind or charge) and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge
the same shall be void.
(b) The non-alienation rule of subsection (a) shall not apply to
the creation, assignment, or recognition of a right to any
benefit payable with respect to a Participant pursuant to:
(i) a levy for federal income tax issued against the
Participant by the Internal Revenue Service; or
(ii) a domestic relations order, which the Plan
Administrator determines is a qualified domestic
relations order under section 414(p) of the Code and
which requires that the order's alternate payee (as
defined in the said Code section) will be paid in a
lump sum as soon as is practicable following the
order's issuance.
11.150 ADDRESSES. Each Participant shall be responsible for
furnishing the Plan Administrator with his current address and the correct
current name and address of his Beneficiary.
11.160 NOTICES AND COMMUNICATIONS.
(a) All communications from Participants shall be in the manner
from time to time prescribed by the Plan Administrator and
shall be addressed or communicated (including telephonic
communications) to such entity or Company office as may be
designated by the Plan Administrator, and shall be deemed to
have been given to the Company when received by such entity or
Company office.
(b) Each communication directed to a Participant or Beneficiary
shall be in writing and may be delivered in person or by mail,
in which latter event it shall be deemed to have been delivered
and received by him when so deposited in the United States Mail
with postage prepaid addressed to the Participant or
Beneficiary at his last address of record with the office
designated by the Plan Administrator.
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11.170 COMPANY RIGHTS. The Company's rights to discipline or
discharge Employees or to exercise its rights as to incidents and tenure of
employment shall not be affected in any manner by reason of the existence of
the Trust Agreement or the Plan, or any action taken under them.
11.180 PAYMENTS ON BEHALF OF INCOMPETENT PARTICIPANTS OR
BENEFICIARIES. In the event that the Plan Administrator or his designee shall
find that any Participant or Beneficiary to whom a benefit is payable under the
terms of this Plan is unable to care for his affairs because of illness or
accident, is otherwise mentally or physically incompetent, or unable to give a
valid receipt, the Plan Administrator may cause the payment becoming due to
such Participant or Beneficiary to be paid to another person for his benefit
without responsibility on the part of the Plan Administrator, the Plan
Committee, the Administrative Committee, the Company, or the Trustee, to follow
the application of such payment. Any such payment shall be a payment for the
account of the Participant or Beneficiary and shall operate as a complete
discharge of all liability therefor under this Plan of the Trustee, the
Company, the Plan Administrator, the Administrative Committee, and the Plan
Committee.
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ARTICLE XII PARTICIPANT'S CLAIMS
12.010 REQUIREMENT TO FILE CLAIM. A Participant wishing a
distribution or withdrawal from the Plan must present a claim, in such manner
and pursuant to such procedure established by the Plan Administrator, with the
person or entity designated by the Plan Administrator. A claimant who fails to
comply with the manner and procedure designated by the Plan Administrator shall
be deemed not to have made such claim. The person or entity designated by the
Plan Administrator shall approve or deny in writing within thirty (30) days any
claim which has been so presented.
12.020 APPEAL OF DENIED CLAIM.
(a) A Participant whose claim has been denied as set forth in
Section 12.010 may appeal the denial to the Plan Administrator
by filing a written appeal within sixty (60) days of the date
of the denial.
(b) The Participant or his representative shall, for the purpose of
preparation of such appeal, have the right to inspect any
document (including computerized records) relied upon by the
Plan Administrator's representative in denying the claim.
(c) The Plan Administrator or his delegate shall make a final, full
and fair review of any such decision which is appealed. A
decision which is not appealed within the time herein provided
shall be final and conclusive as to any matter which was
presented to the person making such decision.
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ARTICLE XIII AMENDMENT, MERGERS, TERMINATION, ETC.
13.010 AMENDMENT. The Board of Directors may, at any time and from
time to time, amend this Plan in whole or in part. However, except as provided
in Section 15.040 below, no amendment shall be made the effect of which would
be:
(a) to cause any contributions paid to the Trustee to be used for
or diverted to purposes other than providing benefits to the
Participants and their Beneficiaries, and defraying reasonable
expenses of administering the Plan, prior to satisfaction of
all liabilities with respect to Participants and their
Beneficiaries;
(b) to have any retroactive effect so as to deprive any Participant
or Beneficiary of any benefit to which he would be entitled
under this Plan if his employment were terminated immediately
before such amendment; or
(c) to increase the responsibilities or liabilities of any Trustee
or Investment Manager without its written consent.
13.020 TRANSFER OF ASSETS AND LIABILITIES. The Plan Committee at any
time may, in its sole discretion without the consent of the Participant or his
representative, cause the Trustee to segregate part of the assets of the Trust
Fund into one or more separate trust funds and designate a group of
Participants whose benefits shall be provided solely from each such segregated
fund. The Board of Directors may, in its sole discretion without the consent
of any Participant or his representative, establish a separate plan to cover
any such group of Participants. The initial terms and conditions of any such
plan shall be identical to the extent such terms and conditions affect the
rights of Participants under the Plan. Amendment to the Plan shall not be
necessary to carry out the provisions of this Section 13.020. Any such
transfer of assets and liabilities to another plan shall be expressly
conditioned on the qualification of such plan and trust under section 401(a)
and section 501(a) of the Code.
13.030 MERGER RESTRICTION. Notwithstanding any other provision in
this Plan, the Plan shall not in whole or in part merge or consolidate with, or
transfer its assets or liabilities to any other plan unless each affected
Participant in this Plan would (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation, or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation, or transfer (if the Plan had then
terminated).
13.040 SUSPENSION OF CONTRIBUTIONS. The Company may, without
amendment of the Plan and without the consent of any Participant or
representative of any Participant, suspend contributions to the Plan as to all
or certain Participants by action of the Board of Directors. In any event, the
Company will suspend contributions at any time when the amount of any
contribution by it would be in excess of the earnings, including retained
earnings, of the Company. Upon a suspension, the Plan Committee may, in its
sole discretion permit the Trust Fund to continue to be held by the Trustee, or
may segregate one or more parts of the Trust Fund, as provided in Section
13.020.
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13.050 DISCONTINUANCE OF CONTRIBUTIONS. The Company may, by action
of the Board of Directors, without amendment of the Plan and without the
consent of any Participant or representative of any Participant, discontinue
such contributions to the Plan as to all or certain Participants. Upon such
discontinuance the Plan Committee may in its sole discretion segregate one or
more parts of the Trust Fund, as provided in Section 13.020.
13.060 TERMINATION. The Plan Committee may terminate or partially
terminate the Plan at any time. Upon such termination or partial termination
of the Plan, or upon a complete discontinuance of contributions pursuant to
Section 13.050 the Accounts of each affected Participant shall become
nonforfeitable, and for this purpose the Company shall contribute to the
Company Contributions Accounts of all Employees who:
(a) have forfeited Units in such Accounts under Articles V and VI
within five (5) years prior to such termination, and,
(b) but for such forfeitures, would have been vested in such
forfeited Units under Section 5.010 on the date of termination
of the Plan,
amounts sufficient to restore such forfeitures in the same manner as such
forfeitures could have been restored by such persons under applicable
provisions of the said Articles V and VI. In the event of termination or
partial termination the Plan Committee may, without the consent of any
Participant or other person, (i) permit the Trustee to retain all or part of
the Trust Fund or (ii) distribute all or part of the Trust Fund to the
Participants or their spouses or Beneficiaries.
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ARTICLE XIV STATUTORY LIMITATIONS
14.010 ANNUAL LIMITS OF PARTICIPANTS' ACCOUNT INCREASES.
(a) This Article XIV is intended to conform the Plan to the
requirements of section 415 of the Code, and the regulations
issued thereunder; and shall be administered and interpreted in
accordance with such requirements and regulations; and
notwithstanding any provision of this Plan to the contrary, no
amount shall be credited to any Participant's Account which is
in excess of the limitation imposed by said section 415, as
from time to time amended or replaced.
(b) The amount allocated in each calendar year to any Participant
under the combination of defined contribution plans of all
Affiliated Companies cannot exceed the lesser of $30,000 (or
such larger amount as may be established under section
415(d)(1)(B) of the Code to reflect an increase in the cost of
living) or 25% of the Participant's total compensation. For
purposes of this limitation, the amount allocated shall be
deemed to be comprised of:
(i) Company Contributions, Compensation Deferral
Contributions and Supplemental Deferral Contributions
with respect to the Participant; and
(ii) forfeitures; and
(iii) for all calendar years ending on or prior to December
31, 1986, the lesser of:
(1) one half of the Participant's Compensation
Deduction Contributions; or
(2) the Participant's Compensation Deduction
Contributions in excess of 6% of his total
compensation from the Company or an Affiliated
Company; and
(iv) for each calendar year commencing on or after January
1, 1987, the Participant's Compensation Deduction
Contributions; and
(v) for each calendar year commencing on or after January
1, 1993, the Participant's Compensation Deduction and
Supplemental Deduction Contributions.
14.020 LIMITS AS TO COMBINED PLANS. In the case of a Participant who
also is a participant in a defined benefit pension plan which is or was
maintained by the Company or an Affiliated Company and to which section 415 of
the Code applies, the limitation set forth herein shall be further adjusted in
compliance with section 415(e) of the Code. In making
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such adjustment, the maximum benefit allowable shall be paid hereunder before
applying the limitations on the defined benefit plan.
14.030 COMBINING SIMILAR PLANS. For purposes of this Article, all
defined contribution plans which are required to be aggregated under section
414(b) of the Code shall be so aggregated and the limitation set forth herein
shall be applied to the total amounts allocated under all such plans.
14.040 ADJUSTMENT TO DEFERRAL CONTRIBUTIONS. To the extent the
Compensation Deferral and Supplemental Deferral Contributions elected by a
Participant under Sections 2.020(a)(i) and (b)(i) would, if made, cause the
total amount allocated to a Participant in any calendar year to exceed the
limitations set forth in this Article, such amount shall be paid as
compensation to the Participant and shall be contributed to the Plan by the
Participant as Compensation Deduction and Supplemental Deduction Contributions
to the full extent permitted under this Article and Section 2.030.
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ARTICLE XV MISCELLANEOUS
15.010 BENEFITS PAYABLE ONLY FROM TRUST FUND. All benefits payable
hereunder shall be provided solely from the trust, and the Company assumes no
responsibility for the acts of the Trustee, except as provided in the Trust
Agreement.
15.020 REQUIREMENT FOR RELEASE. Any payment to any Participant or a
Participant's present, future or former spouse or Beneficiary in accordance
with the provisions of this Plan shall, to the extent thereof, be in full
satisfaction of all claims against the Trustee and the Company, and the Trustee
may require such Participant or Beneficiary, as a condition precedent to such
payment to execute a receipt and release to such effect.
15.030 TRANSFERS OF STOCK. Transfers of Common Stock and Class A
Stock from the Trustee pursuant to Article V or VI shall be made as soon as
practicable, but neither the Company, any Named Fiduciary nor the Trustee shall
have any responsibility for any decrease in the value of such stock between the
Valuation Date used for determination of the number of shares to which the
Participant is entitled and the date of transfer by the transfer agent, nor,
except as provided in Articles V and VI, shall the Participant receive any
dividends, rights, options or warrants on such stock other than those payable
to stockholders of record as of a date on or after the date of transfer.
15.040 QUALIFICATION OF THE PLAN. The Company intends to preserve
the qualification with and approval by the Internal Revenue Service of the Plan
as a plan, Company Contributions to which are deductible by the Company for
federal income tax purposes. Continuation of the Plan is contingent upon and
subject to retaining such approval of the Commissioner of Internal Revenue as
the Company may find necessary to establish the continued deductibility for
income tax purposes of the Company Contributions under the Plan. Any
modification or amendment of the Plan or the Trust Agreement may be made
retroactively by the Company, if necessary or appropriate, to qualify or
maintain the Plan and the Trust as a plan and trust meeting the requirements of
applicable sections of the Code and of other federal and state laws, as now in
effect or hereafter amended or enacted.
15.050 INTERPRETATION. The masculine gender shall include the
feminine and the singular shall include the plural unless the context clearly
indicates otherwise.
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ARTICLE XVI TENDER OFFERS: PLAN ADMINISTRATION
16.010 APPLICABILITY. The provisions of this Article XVI shall take
effect only as of the date of the first tender or deposit by the Trustee of any
share of Common Stock (including any share of Common Stock issued on conversion
of Class A Stock) or Class A Stock pursuant to any Tender Offer (as herein
defined) in accordance with the Trust Agreement, and shall remain in effect
thereafter unless and until (a) each share of Common Stock (including any share
of Common Stock issued on conversion of Class A Stock) and Class A Stock held
in Stock Fund A or Stock Fund B which has been tendered or deposited in
accordance with the Trust Agreement, pursuant to such Tender Offer or any
subsequent Tender Offer commenced while the provisions of this Article XVI are
in effect has been effectively withdrawn by or otherwise returned to the
Trustee and (b) the certificate representing each share is in the possession of
the Trustee. As used in this Article XVI, the term "Tender Offer" means any
tender offer for, or request or invitation for tenders of, the Common Stock
and/or Class A Stock subject to section 14(d)(1) of the Securities Exchange Act
of 1934, as amended, or any regulation thereunder, except for any such tender
offer or request or invitation for tenders made by the Company or any
Affiliated Company.
16.020 ADDITIONAL DEFINITIONS. While the provisions of this Article
XVI are in effect:
(a) the term "Sub Fund A" shall mean the fund established by the
Trustee pursuant to Section 16.030(a)(i); and
(b) the term "Sub Fund B" shall mean the fund established by the
Trustee pursuant to Section 16.030(a)(ii).
16.030 ESTABLISHMENT AND INVESTMENT OF SUB FUND A AND SUB FUND B.
While the provisions of this Article XVI are in effect:
(a) The Trustee shall establish:
(i) A Sub Fund A consisting of any cash, securities or
other consideration received by the Trustee as payment
for shares of Common Stock (including any shares of
Common Stock issued on conversion of Class A Stock) or
Class A Stock previously held in Stock Fund A which
were tendered or deposited in accordance with the Trust
Agreement, all property purchased therewith and the
proceeds and income therefrom; and
(ii) A Sub Fund B consisting of any cash, securities or
other consideration received by the Trustee as payment
for shares of Common Stock (including any shares of
Common Stock issued on conversion of Class A Stock) or
Class A Stock previously held in Stock Fund B which
were tendered or deposited in accordance with the Trust
Agreement, all property purchased therewith and the
proceeds and income therefrom.
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(b) The Trustee shall use all cash in Sub Fund A and Sub Fund B
only to purchase the kinds of instruments of debt with maturity
of not more than three years in which the Trustee and any
Investment Manager may invest and reinvest the principal and
income of the Fixed Income Fund and shall so invest and
reinvest the principal thereof and income thereon. Dividends,
income and other distributions received on, and proceeds from
the sale or other disposition of, any securities or other
consideration held by the Trustee for Participants in Sub Fund
A or Sub Fund B pursuant to a tender or deposit of shares of
Common Stock (including any shares of Common Stock issued on
conversion of Class A Stock) or Class A Stock in accordance
with the Trust Agreement, shall be similarly invested and
reinvested.
(c) The funding policy of the Plan determined by the Plan Committee
pursuant to Section 11.040 shall be consistent with the
objectives for Sub Fund A and Sub Fund B.
16.040 MAINTENANCE AND VALUATION OF SUB FUND A AND SUB FUND B. While
the provisions of this Article XVI are in effect:
(a) A separate Account representing each Participant's interest in
Sub Fund A and Sub Fund B under the Participant's Company
Contributions Account, Compensation Deferral Account,
Compensation Deduction, Supplemental Deferral Account or
Supplemental Deduction Account, as applicable, shall be
maintained. Such separate Accounts shall contain sufficient
information to permit with respect to Sub Fund A and Sub Fund B
a determination of the dollar balance of such Participant's
Accounts at any time in accordance with the Unit valuation
described in subsections (b), (c) and (d) hereof. Such
separate Accounts shall contain sufficient information to
permit such other determinations as may be required to carry
out the provisions of this Plan.
(b) The interest of each Participant in Sub Fund A and Sub Fund B
shall be represented by Units allocated to his Accounts. The
initial value of each Unit to be allocated to his Accounts in
respect of amounts held by the Trustee in Sub Fund A or Sub
Fund B shall be One Dollar ($1.00), and Units shall be credited
to each Participant on such basis for amounts received by the
Trustee on his behalf prior to the first Valuation Date
following the first receipt by the Trustee of cash, securities
or other consideration for shares of Common Stock (including
any shares of Common Stock issued on conversion of Class A
Stock) or Class A Stock previously representing his interest in
Stock Fund A which were tendered or deposited in accordance
with the Trust Agreement, in the case of Sub Fund A, and the
first Valuation Date following the first receipt by the Trustee
of cash, securities or other consideration for shares of Common
Stock (including any shares of Common Stock issued on
conversion of Class A Stock) or Class A Stock previously held
in his Accounts in Stock Fund B which were tendered or
deposited in accordance with the Trust Agreement, in the case
of Sub Fund B. Each receipt on behalf of a Participant of
cash, securities or other
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<PAGE> 65
consideration for shares of Common Stock (including any shares
of Common Stock issued on conversion of Class A Stock) or Class
A Stock previously representing his interest in Stock Fund A
which were tendered or deposited in accordance with the Trust
Agreement, or each payment to a Participant from Sub Fund A,
and each receipt on behalf of a Participant by the Trustee of
cash, securities or other consideration for shares of Common
Stock (including any shares of Common Stock issued on
conversion of Class A Stock) or Class A Stock previously held
in his Accounts in Stock Fund B which were tendered or
deposited in accordance with the Trust Agreement, or each
payment to a Participant from Sub Fund B, shall result in a
credit or charge to the affected Account of the Participant
equal to the number of Units received or paid as the case may
be.
(c) As of the Valuation Date immediately following the first
deposit into Sub Fund A or Sub Fund B, as the case may be, and
as of each succeeding Valuation Date, an amount equal to the
fair market value of all property in each such Sub Fund shall
be determined by the Trustee in such manner and on such basis
as it shall deem appropriate. Such amount shall be divided by
the total number of Units credited to all Participants in each
such Sub Fund, thereby establishing a new Unit Value. With
respect to each such Sub Fund, each receipt therein or payment
therefrom after such Valuation Date shall be converted to Units
by dividing such new Unit value into the amount of such receipt
or payment and the affected Account of the Participant shall be
credited or charged, as the case may be, with the portion of
the number of Units so computed properly attributable to such
Participant.
(d) As of any specified date, the dollar balance of the individual
Accounts of each Participant in Sub Fund A and Sub Fund B shall
be determined in the same manner as under Section 4.040 (but
using for such determination amounts received by the Trustee in
respect of Sub Fund A and Sub Fund B in lieu of contributions).
(e) The Participant's Account in Stock Fund A shall be reduced as
of each date on which the Trustee receives cash, securities or
other consideration for shares of Common Stock (including any
shares of Common Stock issued on conversion of Class A Stock)
or Class A Stock previously representing some or all of his
interest in Stock Fund A which were tendered or deposited in
accordance with the Trust Agreement, by the number of Units
which bears the same relation to the number of Units credited
to such Account immediately prior to the tender or deposit of
such shares as the portion of his interest in Stock Fund A in
respect of which such shares were tendered bore to his entire
interest in Stock Fund A immediately prior to the tender or
deposit of such shares.
(f) The Participant's Accounts in Stock Fund B shall be reduced as
of each date on which the Trustee receives cash, securities or
other consideration for shares of Common Stock (including any
shares of Common Stock issued on conversion of
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<PAGE> 66
Class A Stock) or Class A Stock previously held in such
Accounts which were tendered and deposited in accordance with
the Trust Agreement, by the number of such shares which were
so tendered or deposited.
16.050 BENEFITS PAYABLE FROM SUB FUNDS AT TERMINATION OF EMPLOYMENT.
While the provisions of this Article XVI are in effect:
(a) For purposes of Section 5.010, each Unit representing a
Participant's interest in Sub Fund A that results from the
crediting to the Participant's Account in Sub Fund A of cash,
securities or other consideration received by the Trustee
pursuant to the tender or deposit in accordance with the Trust
Agreement, of shares of Common Stock (including any shares of
Common Stock issued on conversion of Class A Stock) or Class A
Stock previously representing his interest in Stock Fund A
shall be deemed attributable to Company Contributions made on
the Participant's behalf which resulted in the credit to his
Account in Stock Fund A of a Unit in respect of such interest.
(b) For purposes of Section 5.020(a):
(i) The full dollar balance of the Participant's accounts
in Sub Fund A and Sub Fund B shall be deemed to be
described in paragraph (iii) thereof, and such balance
shall be deemed to be an amount that the Participant
(or his Beneficiary in the case of death) shall receive
under paragraph (i) thereof. Such balance shall be
determined, in the manner provided by Section
16.040(d), by reference to the Units in each such
account on the date of the Participant's termination of
employment for any reason set forth in Section
5.020(a), and the value of each Unit on the Valuation
Date coinciding with or immediately preceding such
date.
(ii) The amounts set forth in subparagraphs (1) and (2) of
paragraph (iii) of Section 5.020(a) shall be amounts
that the Participant (or his Beneficiary in the case of
death, shall receive under paragraph (i) thereof;
provided, however, that no share of Common Stock
(including any share of Common Stock issued on
conversion of Class A Stock) or Class A Stock
representing a Participant's interest in Stock Fund A
or held in such Participant's Accounts in Stock Fund B
which, as of the date of such Participant's termination
of employment for any reason set forth in Section
5.020(a), has been tendered or deposited in accordance
with the Trust Agreement, shall be transferred to such
Participant (or his Beneficiary in the case of death)
pursuant to paragraph (i) of Section 5.020(a) unless
and until such share has been effectively withdrawn by
or otherwise returned to the Trustee and the
certificate representing such share is in the
possession of the Trustee; and provided,
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further, however, that there shall be paid or
transferred to such Participant (or his Beneficiary in
the case of death) any and all cash, securities or
other consideration received by the Trustee for whole
shares of Common Stock (including any shares of Common
Stock issued on conversion of Class A Stock) or Class
A Stock previously representing such Participant's
interest in Stock Fund A or held in such Participant's
Accounts in Stock Fund B as of the Valuation Date
immediately preceding the date of such termination and
which were tendered or deposited in accordance with the
Trust Agreement, as soon as practicable after the
receipt of such cash, securities or other consideration
by the Trustee.
(c) If the Participant's employment is terminated for any reason
other than those reasons set forth in Sections 5.020 or 5.030,
the Participant shall receive as soon as practicable:
(i) The vested portion of the dollar balance of his account
in Sub Fund A and the full dollar balance of his
Accounts in Sub Fund B. Such balances shall be
determined, in the manner provided in Section
16.040(d), by reference to the Units in each such
Account on the date of such termination and the value
of each Unit on the Valuation Date coinciding with or
immediately preceding such date.
(ii) The amounts set forth in paragraphs (i) through (iv) of
Section 5.040(a); provided, however, that no share of
Common Stock (including any share of Common Stock
issued on conversion of Class A Stock) or Class A Stock
representing such Participant's vested interest in
Stock Fund A or held in such Participant's Accounts in
Stock Fund B which, as of the date of such termination,
has been tendered or deposited in accordance with the
Trust Agreement, shall be transferred to such
Participant after the date of such termination unless
and until such share has been effectively withdrawn by
or otherwise returned to the Trustee and the
certificate representing such share is in the
possession of the Trustee; and provided further,
however, that there shall be paid or transferred to
such Participant any and all cash, securities or other
consideration received by the Trustee for whole shares
of Common Stock (including any shares of Common Stock
issued on conversion of Class A Stock) or Class A Stock
previously representing such Participant's vested
interest in Stock Fund A or held in such Participant's
Accounts in Stock Fund B as of the Valuation Date
immediately preceding the date of such termination and
which were tendered or deposited in accordance with the
Trust Agreement, as soon as practicable after the
receipt of such cash, securities or other consideration
by the Trustee.
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16.060 DISTRIBUTIONS FROM THE PLAN UNDER SECTION 6.010. While the
provisions of this Article XVI are in effect:
(a) The amount paid or transferred to a Participant who elects a
distribution in accordance with Section 6.010 shall be
determined in the same manner as under Section 16.050(c)
(except that the date of receipt of the election shall be used
for such determination in lieu of the date of termination and
except that the Participant's Compensation Deferral Account and
the related portion of his Company Contributions Account, if
any, shall not be distributable).
(b) As soon as practicable after an Employee makes a repayment
described in Section 6.030, there shall be credited to the
Employee's Company Contributions Account a dollar amount as set
forth in Section 6.030(c)). To the extent that the dollar
amount to be credited to his Company Contributions Account
relates to shares of Common Stock (including any shares of
Common Stock issued on conversion of Class A Stock) or Class A
Stock previously representing his interest in Stock Fund A for
which the Trustee received cash, securities or other
consideration pursuant to the tender or deposit thereof in
accordance with the Trust Agreement, such dollar amount shall
be allocated to Sub Fund A. At the same time, the Employee's
Compensation Deduction Account shall be credited with a dollar
amount, and such amount shall be allocated to the funds and any
accounts under the Guaranteed Return Fund, as set forth in
Section 6.030(c); provided, however, that, if the Participant
makes a repayment in respect of shares of Common Stock
(including any shares of Common Stock issued on conversion of
Class A Stock) or Class A Stock previously held in his
Compensation Deduction Account in Stock Fund B for which the
Trustee received cash, securities or other consideration
pursuant to the tender or deposit thereof in accordance with
the Trust Agreement, a dollar amount equal to the amount of
such repayment shall be allocated to the Participant's
Compensation Deduction Account in Sub Fund B. The amounts
credited under this subsection (b) shall vest, and, for
purposes of this subsection (b), the balance of the
Participant's Company Contributions Account shall be
determined, as set forth in the penultimate and last sentences
of Section 6.030(d).
16.070 WITHDRAWALS FROM DEDUCTION ACCOUNTS UNDER SECTION 6.030.
While the provisions of this Article XVI are in effect:
(a) For purposes of Section 6.030(c), withdrawals pursuant to this
subsection (a) shall be taken from the Employee's Accounts in
the Investment Funds in a pro rata fashion, based upon the
relative size of the said Accounts. Any withdrawal from his
Accounts in the Guaranteed Return Fund shall be taken in
reverse sequence by first exhausting his Accounts in the most
recent contracts under such Fund. An Employee may, however,
elect to have any such withdrawal taken first from his Account
in Stock Fund B (first from his Common Units and then, when his
Common Units have been exhausted, from his Class A Units in
such Fund), with any additional withdrawal amount to be taken
from his Accounts in the remaining Investment Funds.
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<PAGE> 69
(b) For purposes of subsection (c) of Section 6.030, as soon as
practicable after a Participant makes a repayment described in
such subsection, there shall be credited to the Participant's
Company Contributions Account a dollar amount as set forth in
the first sentence of such subsection immediately following
paragraph (iv) thereof. To the extent that the dollar amount
to be credited to his Company Contributions Account relates to
shares of Common Stock (including any shares of Common Stock
issued on conversion of Class A Stock) or Class A Stock
previously representing his interest in Stock Fund A for which
the Trustee received cash, securities or other consideration
pursuant to the tender or deposit thereof in accordance with
the Trust Agreement, such dollar amount shall be allocated to
Sub Fund A. At the same time, the Participant's Compensation
Deduction Account shall be credited with a dollar amount equal
to the amount repaid by the Participant to such Account, and
such amount shall be used to purchase Units and shall be
allocated to the funds and any accounts under the Guaranteed
Return Fund, as set forth therein; provided, however, that, if
the Participant makes a repayment in respect of shares of
Common Stock or Class A Stock previously held in his
Compensation Deduction Account in Stock Fund B as to which a
withdrawal election was made and for which the Trustee received
cash, securities or other consideration pursuant to the tender
or deposit thereof in accordance with the Trust Agreement, a
dollar amount equal to the amount of such repayment shall be
allocated to the Participant's Compensation Deduction Account
in Sub Fund B. The amounts credited under this subsection (b)
shall vest as set forth in the last sentence of Section
6.030(c).
(c) Partial withdrawals pursuant to Section 6.030(d) shall be in a
minimum amount of $100 with respect to Sub Fund B.
16.080 WITHDRAWALS FROM DEFERRAL ACCOUNTS UNDER SECTION 6.030. While
the provisions of this Article XVI are in effect, For purposes of Section
6.030, withdrawals, in minimum amounts of $100 shall be taken from the
Employee's Accounts in the Investment Funds in a pro rata fashion, based upon
the relative size of the said Accounts. Any withdrawal from his Accounts in
the Guaranteed Return Fund shall be taken in reverse sequence by first
exhausting his Accounts in the most recent contracts under such Fund. An
Employee may, however, elect to have any such withdrawal taken first from his
Account in Stock Fund B (first from his Common Units and then, when his Common
Units have been exhausted, from his Class A Units in such Fund), with any
additional withdrawal amount to be taken from his Accounts in the remaining
Investment Funds.
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ARTICLE XVII TOP HEAVY PROVISIONS
17.010 DEFINITIONS. For purposes of this Article, the following special
definitions shall apply:
(a) "TOP HEAVY PLAN" shall mean a qualified retirement plan,
including this Plan if applicable, which is included in, or
which constitutes, an Aggregation Group under which, as of the
Determination Date, the sum of the present values of accrued
benefits for all Key Employees under all defined benefit plans
in the Aggregation Group and the aggregate of all accounts of
Key Employees under all defined contribution plans in the
Aggregation Group exceeds sixty percent (60%) of the sum of the
present values of accrued benefits under all such defined
benefit plans and of all accounts under all such defined
contribution plans for all participants under such plans.
(b) "KEY EMPLOYEE" shall mean each Employee or former Employee who
has, at any time during the five (5) year period ending on the
Determination Date, performed services for an Affiliated
Company and who is, at any time during the plan year ending on
the Determination Date, or was, during any one of the four plan
years preceding the plan year ending on the Determination Date,
any one or more of the following:
(i) An officer of the Company having annual compensation
greater than fifty percent (50%) of the amount in
effect under Code section 415(b)(1)(A) for any plan
year;
(ii) One of the ten (10) persons having annual compensation
from all Affiliated Companies greater than the
limitation in effect under Code section 415(c)(1)(A)
and owning (or considered as owning within the meaning
of Code section 318, as modified by Code section
416(i)(B)(iii)), the largest interests in the Company;
(iii) Any person owning (or considered as owning within the
meaning of Code section 318, as modified by Code
section 416(i)(B)(iii)), more than five percent (5%) of
the outstanding stock of the Company (or stock having
more than five percent (5%) of the total combined
voting power of all stock of the Company) (a "5 Percent
Owner"); or
(iv) Any person who has annual compensation of more than one
hundred fifty thousand dollars ($150,000) and would be
described in subsection (3) above, if "one percent
(1%)" was substituted for "five percent (5%)".
For purposes of determining whether a person is an officer in
paragraph (i) above, in no event will more than fifty (50)
Employees or, if less than fifty (50)
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<PAGE> 71
Employees, the greater of three (3) Employees or ten percent
(10%) of all Employees, be considered Key Employees solely by
reason of officer status. In addition, persons who are merely
nominal officers will not be treated as officers solely by
reason of their titles.
(c) "DETERMINATION DATE" shall mean the last day of the immediately
preceding plan year or, in the case of the first plan year of
any plan, the last day of such plan year.
(d) "EMPLOYEE" shall mean not only an Employee as defined in
Article I, but shall also include any beneficiary of such
Employee.
(e) "AGGREGATION GROUP" shall mean a group of plans (including this
Plan) maintained by one or more Affiliated Companies in which a
Key Employee is a participant or which is combined with this
Plan in order to meet the coverage and nondiscrimination
requirements of Code sections 410 and 401(a)(4). The
Aggregation Group shall also include those plans other than
this Plan which need not be aggregated with this Plan to meet
Code Requirements, but which are selected by the Company to be
part of a selective Aggregation Group which shall include this
Plan if the Aggregation Group would continue to meet the
requirements of Code sections 401(a)(4) and 410 with such plans
being taken into account.
(f) "NON-KEY EMPLOYEE" shall mean any employee who is not a Key
Employee. Non-Key Employee shall also mean an employee who is
a former Key Employee.
17.020 APPLICATION OF THIS ARTICLE. In the event that this Plan is
or becomes a Top Heavy Plan, the following special provisions shall become
applicable to this Plan and shall supersede the comparable provisions contained
elsewhere in this Plan.
(a) MINIMUM CONTRIBUTION. The Plan, where aggregated with each
other defined contribution plan in the Aggregation Group in
which a Key Employee is a participant, shall provide a minimum
allocation to the account of each Participant who is not a Key
Employee for each plan year to which these rules apply equal to
the lesser of:
(i) four percent (4%) of such Participant's compensation
(subject to the provisions of Section 17.030), or
(ii) the highest percentage of contribution made for the
plan year to a Participant who is a Key Employee for
such plan year.
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<PAGE> 72
(b) VESTING. A Participant's nonforfeitable right to his Company
Contributions Account shall be not less than the amount
determined pursuant to the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Interest
------------------------ ---------------
<S> <C>
Less than two 0%
Two but less than three 20%
Three but less than four 40%
Four but less than five 60%
Five or more 100%
</TABLE>
If the Plan ceases to be a Top Heavy Plan the vesting schedule
set forth in Section 5.010(a) shall again become applicable;
provided that a Participant's nonforfeitable right to his
Company Contributions Account shall not be less than his
nonforfeitable right to the balance of his Company
Contributions Account immediately before the Plan ceased to be
a Top Heavy Plan; and provided further that any Participant who
at the time the Plan ceased to be a Top Heavy Plan had been an
Employee on the last day of at least three (3) plan years
following his becoming an Employee shall be permitted
irrevocably to elect to remain under the vesting schedule set
forth in this subsection (b) in lieu of the vesting schedule
set forth in Section 5.010(a).
(c) MAXIMUM COMPENSATION. For any plan year in which the Plan is a
Top Heavy Plan, only the first two hundred thousand dollars
($200,000) of each Participant's annual compensation will be
taken into account for purposes of determining benefits under
the Plan, provided that such dollar amount shall be
automatically adjusted as prescribed by the Secretary of the
Treasury.
17.030 ADJUSTMENT OF LIMITATION ON ANNUAL BENEFIT. If for any plan
year the Plan becomes "super top heavy" (i.e., by substituting "90%" for "60%"
in Section 17.010(a)), the percentage described in Section 18.020(a)(i) shall
be changed to three percent (3%), and Section 14.020 shall be applied in
accordance with the requirements of Code section 416(h)(1) (i.e., by
substituting "90%" for "60%" in Section 17.010(a)).
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APPENDIX A
RETIREMENT PLANS GOVERNING CREDITING OF CONTINUOUS EMPLOYMENT
1. Rockwell International Corporation Retirement Income Plan for Certain
Salaried Employees.
2. Rockwell International Corporation Retirement Income Plan For Salaried
Employees in Certain Units of the General Industries Operations.
3. Rockwell International Corporation Retirement Income Plan for Certain
Salaried Employees of the General Industries Operations.
4. Rockwell International Corporation Salaried Employees' Retirement Plan
- Electronics Operations.
5. Rockwell International Corporation Retirement Plan for Eligible
Employees on the Salary and Weekly Payrolls of Electronics Operations,
North American Aircraft Operations and North American Space
Operations.
6. Maine Electronics Inc. Salary Payroll Retirement Plan.
7. Rockwell Telecommunications, Inc. (formerly Wescom) Retirement Plan
for Exempt Salaried Employees.
8. Retirement Plan for Hourly-Rated Employees of the Sulphur Springs,
Texas Plant.
9. Asheville Employees Retirement Savings Plan, Truck Axle Division.
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Sav. Pln. '95
<PAGE> 74
APPENDIX B
PROCEDURES, TERMS AND CONDITIONS OF LOANS
ELIGIBILITY FOR LOANS. The individuals eligible to obtain loans from the Plan
("Borrowers") are limited to:
(1) Employees, and
(2) non-Employees who are "parties in interest" (as defined in
section 3(14) of ERISA)
who have Plan Account balances. An Employee who wishes to obtain a loan must
be employed on an active payroll of an Affiliated Company at the time of the
loan application. A party in interest who is not an Employee will be eligible
to obtain a loan only if an agreement can be provided by the party's current
employer to deduct and remit the required loan repayments to the Savings Plan.
LIMITATION ON NUMBER AND MINIMUM AMOUNT OF LOANS. Only one (1) loan to a
Borrower is permitted to be outstanding from all Company sponsored savings
plans at any one time. Any Borrower who has an outstanding loan from the Plan
will be required to repay that loan in full before applying for another loan.
Each loan which is approved must be for a minimum of $1,000.
MAXIMUM AMOUNT OF LOAN. The amount which a Borrower will be permitted to borrow
from the Plan is based on the aggregate value of the Borrower's Accounts,
determined in accordance with Section 4.030 of the Plan, and may not exceed the
least of the amounts described in subsections (a), (b) and (c) of Section 6.070
of the Plan. The maximum amount of any loan will be further limited to ensure
that, after applying the appropriate interest rate and taking into account all
applicable deductions, the resulting periodic repayments will not exceed the
Borrower's net earnings. The deductions referred to in the preceding sentence
include statutory withholdings, deductions for employee benefits and all
pre-tax contributions to the Plan, but exclude credit union, savings bond,
charitable contribution and other similar deductions.
LOAN APPLICATIONS. Loan applications by prospective Borrowers will be made via
telephone to the Plan Administrator or such third party administrator as may be
designated by the Plan Administrator (either of whom is hereafter referred to
as the "Loan Administrator"). The Loan Administrator will then review the
telephonic application and determine eligibility for the loan. If the loan is
approved, the Loan Administrator will prepare and forward to the Borrower a
letter notifying the Borrower of the approval, together with a Truth in Lending
Statement and a check for the loan amount, all in form approved by the Plan
Administrator. The Borrower's endorsement of the loan check will be considered
to be the Borrower's agreement to the terms of the loan. Failure by the
Borrower to endorse the check within thirty (30) days after the date of the
check will be deemed to be a withdrawal by the Borrower of the loan
application.
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<PAGE> 75
SOURCE OF LOAN FUNDS. Each loan will be funded by withdrawing the required
amounts from the Plan Account(s) of the Borrower in the following order:
<TABLE>
<S> <C>
First -- from the Borrower's Supplemental Deferral Account;
Second -- from the Borrower's Compensation Deferral Account;
Third -- from the Borrower's Supplemental Deduction Account; and
Fourth -- from the Borrower's Compensation Deduction Account.
</TABLE>
Subject to the provisions of the following paragraph, the loan amount will be
funded by the Borrower's Investment Funds in the applicable Accounts, in a pro
rata fashion, based upon the relative size of the balance of each such Fund in
the Accounts.
Alternatively, a Borrower may elect to have the loan funded first from the
Borrower's interest in Stock Fund B, with any additional funding to be on a pro
rata basis from the remaining Investment Funds.
Any pro rata loan funding from the Borrower's interest in the Guaranteed Return
Fund will be taken in reverse sequence by accessing the Fund's contracts on a
last-in first-out basis.
Any loan funding from the Borrower's interest in Stock Fund B will be carried
out first from the Borrower's Common Units and then, when the Common Units have
been exhausted, from Class A Units in that Fund. To the extent a loan is made
against the Borrower's Stock Fund B Account, the Borrower will receive cash in
lieu of shares of Common and/or Class A Stock. The Trustee will not be
permitted to sell shares of Common or Class A Stock in order to provide the
cash with which to finance loan applications.
If, at any time, the Trustee does not have sufficient cash on hand to finance
all outstanding loan applications, processing of each application for which
sufficient cash is not available will be deferred until sufficient cash becomes
available to process such loans on a first-come, first-serve basis.
DETERMINATION OF LOAN INTEREST RATE. The interest rate to be charged for loans
will be one percent (1%) over the prime rate, which is defined for this
Appendix as the base rate on corporate loans posted by at least seventy-five
percent (75%) of the largest thirty (30) U.S. banks, as such rate is identified
in the edition of The Wall Street Journal published on the last business day of
the month prior to the approval of a loan.
TERM OF LOANS. Loans will be permitted for terms of 12, 24, 36, 48 or 60
months for loans other than those for the purpose of purchasing a primary
residence, which will be permitted for a term of 120 months.
B-2
Sav. Pln. '95
<PAGE> 76
REPAYMENTS. Loan repayments by Employees will be deducted from the Employee's
pay check each pay period. If a pay check is insufficient to cover the full
amount of the loan repayment, no deduction will be made, and the repayment will
be deducted from the Employee's next pay check. Loan repayment schedules for
Borrowers who are not Employees will be developed on an individual basis, but
will parallel as closely as possible the loan repayment schedules for
Employees.
PREPAYMENTS. The full unpaid balance of a loan may be prepaid at any time by a
Borrower. Partial prepayments in excess of scheduled payroll deductions will
not be accepted. No prepayments will be accepted within twelve (12) months
after the date of the loan, unless the Borrower is an Employee and terminates
employment within such twelve (12) month period.
MISSED PAYMENTS. If any payment is not made, interest will continue to accrue
on such missed payment and subsequent payments will be applied first to accrued
and unpaid interest on the missed payment and then to principal. A notice will
be mailed to the last known address of the Borrower stating that if three (3)
consecutive months of payments are missed, the loan will be considered to be in
default.
TERMINATION OF EMPLOYMENT. If a Borrower who is an Employee terminates
employment or is on an unpaid leave of absence, or if a Borrower who is not an
Employee is no longer able to repay a loan through payroll deductions, the
Borrower may continue to make loan repayments by personal check. Such
repayments to the Plan will be made through the Loan Administrator at an
address to be provided to the Borrower by the Loan Administrator.
DEFAULT. A loan will be considered to be in default after three (3)
consecutive months of payments have been missed during the term of the loan or
when a Borrower revokes a payroll deduction authorization. In the event of
such a default, a distribution of the loan amount, including both unpaid
principal and accrued but unpaid interest, will be deemed to have occurred (as
described in section 1.401(k)-1(d)(6)(ii) of the Treasury Regulations) and an
information return reflecting the tax consequences, if any, to the Borrower
will be issued. Upon the occurrence of an event permitting actual distribution
of the Borrower's Account pursuant to the provisions of Code section 401(k)
(whether distribution of the Borrower's entire Plan Account will actually be
made or will be deferred pursuant to applicable provisions of the Plan), the
unpaid balance of a defaulted loan will be charged off against the Borrower's
Account. If no distribution event has occurred, which would otherwise permit
payment to the Borrower under Code section 401(k), the unpaid balance of the
loan will be retained in the Account until such time as payment would be
permitted under that Code section, at which time the unpaid balance of the
loan, including any accrued and unpaid interest, will be charged off against
the Borrower's Account.
B-3
Sav. Pln. '95
<PAGE> 1
EXHIBIT 99-B-1
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 twelve months ended September 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 ended 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
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 throughout the period presented.
The unaudited 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> 2
EXHIBIT 99-B-1
ROCKWELL INTERNATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED SEPTEMBER 30, 1995
(In millions, except per share amounts)
<TABLE>
<CAPTION>
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........ $ 13,099 $449 $ (120) $13,428
Costs and expenses:
Cost of sales............... 9,997 337 (89) 10,245
Selling, general and
administrative........... 1,706 68 (19) 1,755
Other expense, net.......... 89 (3) $ 11 (4) 7
(90)(5)
Interest.................... 170 6 21 (6) 197
-------- ---- ------ --- --------
Total costs and
expenses............... 11,873 500 (111) (58) 12,204
------- ---- ------ ---- --------
Income before income taxes.... 1,226 (51) (9) 58 1,224
Provision for income taxes.... (484) 5 (3)(7) (482)
-------- ---- ------ ---- --------
Net income.................... $ 742 $(51) $ (4) $ 55 $ 742
======= = ==== ======= ==== ========
Earnings per common share (8):
Primary..................... $ 3.42 $ 3.42
======== =======
Fully diluted............... $ 3.36 $ 3.36
======== =======
Average common shares
outstanding:
Primary..................... 217.2 217.2
======== =======
Fully diluted............... 221.1 221.1
======== =======
<FN>
(1) The Rockwell information presented includes Reliance for the nine months
ended September 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.
</TABLE>
-2-
<PAGE> 1
EXHIBIT 99-c-1
APPROVAL OF AMENDMENTS TO CERTAIN
ROCKWELL INTERNATIONAL CORPORATION
SAVINGS PLANS
----------------------------------------
I, Robert H. Murphy, Senior Vice President, Organization & Human Resources,
Rockwell International Corporation (the "Corporation"), pursuant to authority
of the Board of Directors of the Corporation by resolution dated November 1,
1989, for and on behalf of the Corporation, do hereby approve the following
action:
Effective January 1, 1994, amend the Plans identified hereinafter by adding
language, where appropriate and similar in substance to the following, to
reflect the $150,000.00 compensation maximum required by the Omnibus Budget
Reconciliation Act of 1993:
"Notwithstanding the provisions of this Plan to the contrary, only
compensation described in section 401(a)(17) of the Code, as that
section shall be from time to time set forth, may be considered in
the determination of benefits hereunder."
023 25-1200273 ROCKWELL GRAPHIC SYSTEMS, INC. FIELD SERVICE HOURLY EMPLOYEES
SAVINGS PLAN
085 95-1054708 HOURLY PAYROLL EMPLOYEES LAYOFF BENEFIT & SECURITY PROGRAM-UAW
086 95-1054708 HOURLY PAYROLL EMPLOYEES LAYOFF BENEFIT & SECURITY
PROGRAM-NON-UAW
106 95-1054708 YORK EMPLOYEES RETIREMENT SAVINGS PLAN - TRUCK AXLE DIVISION;
YORK, SOUTH CAROLINA
107 95-1054708 ASHEVILLE EMPLOYEES RETIREMENT SAVINGS PLAN - TRUCK AXLE
DIVISION; ASHEVILLE, NORTH CAROLINA
116 95-1054708 ROCKWELL INTERNATIONAL CORPORATION SAVINGS PLAN FOR CERTAIN
REPRESENTED HOURLY EMPLOYEES
127 95-1054708 ALLENTOWN EMPLOYEES RETIREMENT SAVINGS PLAN - OFF-HIGHWAY
PRODUCTS AND DRIVELINE DIVISION; ALLENTOWN, PENNSYLVANIA
131 95-1054708 ROCKWELL SAVINGS PLAN FOR CERTAIN ELIGIBLE EMPLOYEES (FORMERLY
KNOWN AS AIR TRANSPORT PLAN)
128 25-1200273 ROCKWELL GRAPHIC SYSTEMS, INC. READING HOURLY EMPLOYEES
RETIREMENT SAVINGS PLAN
129 25-1200273 ROCKWELL GRAPHIC SYSTEMS, INC. CEDAR RAPIDS HOURLY EMPLOYEES
SAVINGS PLAN
014 25-1200273 GRAPHIC SYSTEMS DEFINED CONTRIBUTION TARGET BENEFIT RETIREMENT
PLAN FOR HOURLY-RATED EMPLOYEES OF THE CEDAR RAPIDS,
IOWA PLANT
Dated this 23rd day of December, 1994.
/s/ ROBERT H. MURPHY
--------------------------------------
Robert H. Murphy, Senior Vice President
Organization & Human Resources
