<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1995
Commission file number 1-1035
Rockwell International Corporation
(Exact name of registrant as specified in its charter)
Delaware 95-1054708
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2201 Seal Beach Boulevard, Seal Beach, California 90740-8250
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (412) 565-4090
(Office of the Corporate Secretary)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
185,215,891 shares of registrant's Common Stock, $1.00 par value, and
32,031,304 shares of registrant's Class A Common Stock, $1.00 par value, were
outstanding on January 31, 1996.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Page
No.
Condensed Consolidated Balance Sheet--
December 31, 1995 and September 30, 1995............ 2
Statement of Consolidated Income--Three Months
Ended December 31, 1995 and 1994.................... 3
Statement of Consolidated Cash Flows--
Three Months Ended December 31, 1995 and 1994....... 4
Notes to Financial Statements....................... 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................................... 9
Other Financial Information......................... 12
Exhibit 11 - Computation of Earnings Per Share................ 13
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings................................... 14
Item 5. Other Information................................... 14
Item 6. Exhibits and Reports on Form 8-K.................... 14
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ROCKWELL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
December 31 September 30
1995 1995
(Unaudited)
ASSETS (In millions)
Current assets:
Cash........................................... $ 536 $ 655
Receivables.................................... 2,255 2,346
Inventories.................................... 1,955 1,847
Other current assets........................... 565 546
Net assets of discontinued operations.......... 549 569
Total current assets................... 5,860 5,963
Net property...................................... 2,849 2,847
Intangible assets................................. 1,847 1,868
Other assets...................................... 1,471 1,436
TOTAL.................... $12,027 $12,114
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt................................ $ 693 $ 654
Accounts payable - trade....................... 844 1,057
Accrued compensation and benefits.............. 689 729
Advance payments from customers................ 175 246
Accrued income taxes........................... 189 113
Other current liabilities...................... 892 918
Total current liabilities.............. 3,482 3,717
Long-term debt.................................... 1,775 1,775
Accrued retirement benefits....................... 2,524 2,536
Other liabilities................................. 338 304
Total liabilities............. 8,119 8,332
Shareowners' equity:
Preferred stock ............................... 1 1
Common Stock (shares issued - 209.5 million)... 210 210
Class A Common Stock (shares issued:
December 31, 1995, 32.1 million;
September 30, 1995, 32.9 million)............ 32 33
Additional paid-in capital..................... 188 186
Retained earnings.............................. 4,265 4,158
Currency translation........................... (98) (99)
Common Stock in treasury, at cost (shares held:
December 31, 1995, 24.5 million;
September 30, 1995, 25.4 million).......... (690) (707)
Total shareowners' equity..... 3,908 3,782
TOTAL.................... $12,027 $12,114
See Notes to Financial Statements.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
STATEMENT OF CONSOLIDATED INCOME
(Unaudited)
Three Months Ended
December 31
1995 1994
(In millions)
Revenues:
Sales............................................... $3,062 $2,459
Other income........................................ 32 20
Total revenues.................................... 3,094 2,479
Costs and expenses:
Cost of sales....................................... 2,320 1,898
Selling, general and
administrative.................................... 411 302
Interest............................................ 47 22
Total costs and expenses.......................... 2,778 2,222
Income before income taxes ........................... 316 257
Provision for income taxes............................ 123 102
Income from continuing operations..................... 193 155
(Loss)income from discontinued operations, net of tax. (1) 10
Net income............................................ $ 192 $ 165
(In dollars)
Earnings per common share:
Primary............................................
From continuing operations..................... $ .90 $ .72
From discontinued operations................... (.01) .04
Net income per common share.................... $ .89 $ .76
Fully diluted......................................
From continuing operations..................... $ .88 $ .70
From discontinued operations................... (.01) .04
Net income per common share.................... $ .87 $ .74
Cash dividends per common share....................... $ .29 $ .27
(In millions)
Average common shares outstanding:
Primary............................................ 217.0 218.0
Fully diluted...................................... 220.3 221.4
See Notes to Financial Statements.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
Three Months Ended
December 31
1995 1994
(In millions)
OPERATING ACTIVITIES:
Net income........................................... $ 192 $ 165
Adjustments to net income to arrive at
cash provided by operating activities:
Depreciation...................................... 118 105
Amortization of intangible assets................. 27 14
Deferred income taxes............................. 23 27
Net pension income and contributions.............. (8) (20)
Changes in assets and liabilities, excluding
effects of acquisitions and foreign currency
adjustments:
Receivables.................................. 86 168
Inventories.................................. (116) (93)
Net assets of discontinued businesses........ 20 25
Accounts payable - trade..................... (190) (112)
Accrued compensation and benefits............ (38) (25)
Advance payments from customers.............. (69) (54)
Income taxes................................. 78 64
Other assets and liabilities................. (86) (134)
Cash provided by operating activities..... 37 130
INVESTING ACTIVITIES:
Property additions................................... (137) (106)
Acquisition of businesses............................ (1,576)
Proceeds from disposition of property and businesses. 12 12
Cash used for investing activities........ (125) (1,670)
FINANCING ACTIVITIES:
Debt activity:
Increase in short-term borrowings................ 43 544
Increase in long-term debt....................... 545
Payable to Reliance shareholders................. 591
Payments of long-term debt....................... (2) (4)
Net increase in debt........................... 41 1,676
Purchase of treasury stock.......................... (18) (45)
Dividends........................................... (63) (59)
Reissuance of common stock.......................... 9 1
Cash (used for) provided by financing
activities.............................. (31) 1,573
(DECREASE) INCREASE IN CASH.......................... (119) 33
CASH AT BEGINNING OF PERIOD.......................... 655 612
CASH AT END OF PERIOD................................ $ 536 $ 645
Income tax payments were $25 million and $37 million in the three months ended
December 31, 1995 and 1994, respectively.
See Notes to Financial Statements.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of the company the unaudited financial statements contain
all adjustments, consisting solely of adjustments of a normal recurring nature,
necessary to present fairly the financial position, results of operations and
cash flows for the periods presented. These statements should be read in
conjunction with the company's Annual Report for the fiscal year ended
September 30, 1995. The results of operations for the three-month period ended
December 31, 1995 are not necessarily indicative of the results for the full
year.
It is the company's practice at the end of each interim reporting
period to make an estimate of the effective tax rate expected to be
applicable for the full fiscal year. The rate so determined is used in
providing for income taxes on a year-to-date basis.
2. In January 1996, the company announced its plan to sell its Graphic Systems
business segment. The company believes the sale will be completed this fiscal
year and will yield net proceeds in excess of the net assets of the business.
The net assets of the Graphic Systems business at December 31, 1995 and
September 30, 1995 and its net (loss) income for the three month periods ended
December 31, 1995 and 1994 have been presented as discontinued operations. The
revenues of the Graphic Systems business were $115 million and $167 million for
the three months ended December 31, 1995 and 1994, respectively.
3. In fiscal 1995, the company's acquisition of Reliance Electric Company
(Reliance) was accounted for as a purchase as of December 31, 1994 and the
results of operations of Reliance, exclusive of the divested telecommunications
business, were included in the company's statement of consolidated income
commencing January 1, 1995.
The following unaudited pro forma information has been prepared
assuming Reliance had been acquired at the beginning of fiscal 1995. The
pro forma information is presented for information purposes and is not
necessarily indicative of what would have occurred if the acquisition had been
made as of that date. The pro forma information is not intended to be a
projection of future results.
Three Months Ended
December 31, 1994
(In millions, except
per share amounts)
Sales and other income $ 2,975
Net income 165
Earnings per common share:
Primary .76
Fully Diluted .74
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. Receivables are summarized as follows (in millions):
December 31 September 30
1995 1995
Accounts and notes receivable:
Commercial, less allowance for doubtful
accounts (December 31, 1995, $67;
September 30, 1995, $59).............. $1,528 $1,521
United States Government................ 145 142
Unbilled costs and accrued profits,
less related progress payments
(December 31, 1995, $229;
September 30, 1995, $235)............... 582 683
Receivables............................. $2,255 $2,346
5. Inventories are summarized as follows (in millions):
December 31 September 30
1995 1995
Finished goods............................ $ 466 $ 454
Long-term contracts in process............ 294 289
Work in process........................... 848 765
Raw materials, parts and supplies......... 504 488
Total................................... 2,112 1,996
Less allowance to adjust the carrying value
of certain inventories to a last-in,
first-out (LIFO) basis.................. 57 54
Remainder................................. 2,055 1,942
Less related progress payments............ 100 95
Inventories............................. $1,955 $1,847
6. Intangible assets are summarized as follows (in millions):
December 31 September 30
1995 1995
Goodwill................................. $1,316 $1,328
Trademarks, patents, product technology
and other intangibles.................. 531 540
Intangible assets...................... $1,847 $1,868
7. Other assets are summarized as follows (in millions):
December 31 September 30
1995 1995
Prepaid pension costs.................... $1,336 $1,321
Investments and other assets............. 135 115
Other assets........................... $1,471 $1,436<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
8. Short-term debt consisted of the following (in millions):
December 31 September 30
1995 1995
Commercial paper......................... $ 565 $ 535
Short-term bank borrowings,
principally foreign.................... 112 101
Current portion of long-term debt........ 16 18
Short-term debt......................... $ 693 $ 654
9. Other current liabilities are summarized as follows (in millions):
December 31 September 30
1995 1995
Accounts payable - other................... $ 272 $ 297
Accrued product warranties................. 202 196
Accrued taxes other than income taxes...... 73 82
Other...................................... 345 343
Other current liabilities................ $ 892 $ 918
10. Long-term debt consisted of the following (in millions):
December 31 September 30
1995 1995
7-5/8% notes, payable in 1998............ $ 300 $ 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.............. 138 138
7-7/8% notes, payable in 2005............ 200 200
6-5/8% notes, payable in 2005............ 300 300
Other obligations, principally foreign... 53 55
Total.................................. 1,791 1,793
Less current portion..................... 16 18
Long-term debt......................... $1,775 $1,775
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
11. The company's financial instruments include cash, notes receivable,
short- and long-term debt and foreign currency forward exchange contracts. At
December 31, 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 $671 million at December 31, 1995 and $681
million at September 30, 1995. The company does not anticipate any material
adverse effect on its results of operations or financial position relating to
these foreign currency forward exchange contracts.
12. Accrued retirement benefits consisted of the following (in millions):
December 31 September 30
1995 1995
Accrued retirement medical costs......... $2,519 $2,539
Accrued pension costs.................... 204 196
Total.................................. 2,723 2,735
Amount classified as current liability... 199 199
Accrued retirement benefits............ $2,524 $2,536
13. In the quarter ended December 31, 1995, the company purchased .4 million
shares of Common Stock for $18 million. Since the company's Common Stock
repurchase program began in 1984, the company has purchased 114.4 million
shares of Common Stock for $2.6 billion.
14. Various lawsuits, claims and proceedings have been or may be instituted or
asserted against the company relating to the conduct of its business, including
those pertaining to product liability, environmental, safety and health,
employment and government contract matters. Although the outcome of litigation
cannot be predicted with certainty and some lawsuits, claims or proceedings may
be disposed of unfavorably to the company, management believes the disposition
of matters which are pending or asserted will not have a material adverse
effect on the company's financial statements.<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
1996 First Quarter Compared to 1995 First Quarter
The contributions to sales and earnings by business segment of the company for
the first quarter of fiscal 1996 and 1995 are presented below (in millions).
Three Months Ended
December 31
1995 1994
Sales
Electronics
Automation $ 980 $ 572
Avionics 322 288
Semiconductor Systems 286 132
Defense Electronics 199 185
Total Electronics 1,787 1,177
Aerospace
Space Systems 410 441
Aircraft 110 114
Total Aerospace 520 555
Automotive
Heavy Vehicle Systems 431 450
Light Vehicle Systems 324 274
Total Automotive 755 724
Sales of ongoing businesses 3,062 2,456
Divested business 3
Total $ 3,062 $ 2,459
Operating Earnings
Electronics
Automation $ 111 $ 91
Avionics 37 22
Semiconductor Systems 82 14
Defense Electronics 30 37
Total Electronics 260 164
Aerospace 84 86
Automotive 38 49
Operating earnings of ongoing businesses 382 299
Divested business (2)
General corporate - net (19) (18)
Interest expense (47) (22)
Provision for income taxes (123) (102)
Income from continuing operations 193 155
(Loss) income from discontinued operations,
net of tax (1) 10
Net Income $ 192 $ 165<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
Sales for the 1996 first quarter, excluding Graphic Systems, were 25 percent
higher than 1995's first quarter sales. Sales by the Automation business were
up $408 million principally due to $338 million of sales of Reliance Electric
Company (Reliance) which was acquired at the end of last year's first quarter.
Sales by the Semiconductor Systems business more than doubled last year's first
quarter due to very strong demand for its new high speed V.34 modem. Much of
that demand has been fueled by the global surge in the use of the Internet,
with Rockwell's V.34 modems being the Internet access method of choice.
Current year first quarter sales increases were also achieved by the Avionics,
Defense Electronics and Light Vehicle Systems businesses; while lower sales
were recorded by the Aerospace and Heavy Vehicle businesses. In the quarter,
commercial and international sales, excluding Graphic Systems, were up 40
percent from last year's first quarter, and now comprise 75 percent of total
sales compared to 67 percent in the first quarter of 1995.
Earnings per share from continuing operations for the 1996 first quarter
increased 25 percent over last year, marking the twelfth consecutive quarter
the company has achieved double-digit earnings per share growth. Reliance
added one cent per share to the company's first quarter results, after
considering the financing cost of the acquisition and amortization of goodwill
and other intangible assets.
Net income from continuing operations for 1996's first quarter increased
25 percent from 1995's first quarter net income primarily due to substantially
higher earnings by the Semiconductor Systems businesses. The Avionics business
also recorded a substantial earnings increase and Automation continued to post
strong earnings.
Electronics accounted for 58 percent of total sales and 68 percent of operating
earnings. Within Electronics, operating earnings of the Automation business
were up 22 percent from last year's first quarter, principally due to the
inclusion of the results of Reliance. Avionics first quarter earnings were up
68 percent over 1995's first quarter primarily due to higher sales in its
commercial aircraft businesses. Semiconductor Systems earnings were
substantially higher than a year ago principally due to very strong demand for
its new high-speed V.34 modem. Defense Electronics first quarter earnings were
down 19 percent from 1995 due to an unfavorable contract adjustment.
Aerospace earnings continued to be strong, but were slightly below last year's
first quarter due to lower volume. Automotive's earnings were 22 percent below
last year's first quarter due to lower Heavy Vehicle Systems earnings resulting
from severely depressed economic conditions in Brazil and Mexico.
Interest expense for the first three months of 1996 increased due to borrowings
related to the Reliance acquisition.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
FINANCIAL CONDITION
As a result of the continued rapid growth of the Semiconductor Systems
business, the company has accelerated the business' expansion plans and the
company's capital expenditures for fiscal 1996 are now expected to exceed $900
million.
The company expects the net proceeds from the sale of its Graphic Systems
business will exceed the business' net assets of $549 million at
December 31, 1995.
The company is in the process of evaluating the effect of the adoption of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets to Be Disposed Of."
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 Environ-
mental Issues in Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations, on pages 17 - 18 of the company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995. Management
believes that at December 31, 1995 there has been no material change to this
information.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
FINANCIAL CONDITION (CONTINUED)
Other Financial Information
(a) The company's backlog on December 31, 1995 was $11.3 billion compared
to $11.0 billion on December 31, 1994. The backlog includes $5.7 billion of
commercial orders, $2.0 billion of funded government orders and $3.6 billion of
unfunded government orders. The increase in 1996'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. Backlog
by major businesses is as follows (in millions):
December 31 December 31
1995 1994
Electronics
Automation $ 622 $ 585
Avionics 1,277 1,099
Semiconductor Systems 1,143 214
Defense Electronics 1,605 1,318
4,647 3,216
Aerospace
Space Systems 3,539 5,169
Aircraft 2,581 1,976
6,120 7,145
Automotive 582 593
Total Backlog $11,349 $10,954
(b) The composition of the company's sales by customer is as follows (in
millions):
Three Months Ended
December 31
1995 1994
U.S. Commercial $1,263 $ 813
International 1,042 838
U.S. Government:
DOD 415 461
NASA 342 347
Total $3,062 $2,459
<PAGE>
EXHIBIT 11
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
December 31
1995 1994
(In millions, except
per share amounts)
Primary earnings per share:
Income from continuing operations................... $193.6 $155.1
Deduct dividend requirements on preferred stock..... 0.1 0.1
Total primary earnings from continuing operations... $193.5 $155.0
Average number of common shares outstanding during
the period........................................ 217.0 218.0
Primary earnings per share from
continuing operations............................. $ .90 $ .72
Primary earnings per share from discontinued
operations........................................ (.01) .04
Net primary earnings per share...................... $ .89 $ .76
Fully diluted earnings per share:
Income from continuing operations................... $193.6 $155.1
Average number of common shares outstanding during
the period assuming full dilution:
Common stock.................................... 217.0 218.0
Assumed issuance of stock under award plans and
conversion of preferred stock................. 3.3 3.4
Total fully diluted shares.......................... 220.3 221.4
Fully diluted earnings from continuing operations... $ .88 $ .70
Fully diluted earnings per share from discontinued
operations........................................ (.01) .04
Net fully diluted earnings per share................ $ .87 $ .74
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On December 27, 1995, a shareowner, purporting to act derivatively on
behalf of the Company, commenced an action in the Superior Court of the State
of California for the County of Orange against all but one of the Company's
present directors, and the Company as a nominal defendant, alleging principally
breaches of fiduciary duties in failing properly to manage the business of the
Company in a manner to prevent certain alleged violations of applicable federal
and state laws, including environmental laws, by certain named and unnamed
employees or agents of the Company. The action seeks a declaratory judgment,
damages suffered by the Company as a result of the alleged conduct, plaintiffs'
costs and expenses and other proper relief.
Item 5. Other Information
The company's government contract operations are subject to
U.S. Government investigations of business practices and audits of contract
performance and cost classification from which claims have been or may be
asserted against the company. Although such claims are usually resolved
through fact-finding and negotiation, civil, criminal or administrative
proceedings may result and a contractor can be fined, as well as be suspended
or debarred from government contracts. Management believes there are no
claims, audits or investigations currently pending against the company which
will have a material adverse effect on either the company's business or its
financial condition.
The company's financial statements have been prepared on the basis of
reasonable estimates, supported by the opinion of outside legal counsel, of the
revenue expected to be recovered from the company's claims against the
U.S. Government arising out of the government's termination of contracts for
its convenience and certain contractual disputes. While management cannot
reasonably estimate the length of time that will be required to resolve its
claims or whether they will be resolved through negotiation or litigation, it
believes their resolution will not have a material adverse effect on the
company's financial statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11 - Computation of Earnings Per Share
Exhibit 12 - Computation of Ratio of Earnings to
Fixed Charges for the three months ended
December 31, 1995
Exhibit 27 - Financial Data Schedule
Exhibit 99-a - Net income of the company's continuing
operations, exclusive of the Graphic Systems
Business, for each of the five years in the
period ended September 30, 1995<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
Item 6. Exhibits and Reports on Form 8-K (Continued)
Exhibit 99-b - Operating earnings of the company's
Electronics Businesses for each of the
five years in the period ended
September 30, 1995
Exhibit 99-c - Independent Auditors' Consent to incorporation
of certain reports and reference to them in
certain prospectuses with respect to
securities offered under employee plans
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter
ended December 31, 1995.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROCKWELL INTERNATIONAL CORPORATION
(Registrant)
Date February 9, 1996 By L. J. Komatz
L. J. Komatz
Vice President and Controller
(Principal Accounting Officer)
Date February 9, 1996 By W. J. Calise, Jr.
W. J. Calise, Jr.
Senior Vice President,
General Counsel and Secretary
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
INDEX OF EXHIBITS TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995
Page
Exhibit 12 Computation of Ratio of Earnings to Fixed Charges for
the three months ended December 31, 1995 18
Exhibit 99-a Net income of the company's continuing operations,
exclusive of the Graphic Systems Business, for each of
the five years in the period ended September 30, 1995 19
Exhibit 99-b Operating earnings of the company's Electronics Businesses
for each of the five years in the period ended
September 30, 1995 20
Exhibit 99-c Independent Auditors' Consent to incorporation of certain
reports and reference to them in certain prospectuses with
respect to securities offered under employee plans 21
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
THREE MONTHS ENDED DECEMBER 31, 1995
(In millions, except ratios)
EARNINGS AVAILABLE FOR FIXED CHARGES:
Income from continuing operations before income taxes........... $ 316.4
Adjustments:
Undistributed (income) of affiliates.......................... (1.9)
Minority interest in loss of subsidiaries..................... 2.4
316.9
Add fixed charges included in earnings:
Interest expense............................................ 47.0
Interest element of rentals................................. 17.3
Total....................................................... 64.3
Total earnings available for fixed charges..................... $ 381.2
FIXED CHARGES:
Fixed charges included in earnings.............................. $ 64.3
Capitalized interest............................................ .3
Total fixed charges........................................... $ 64.6
RATIO OF EARNINGS TO FIXED CHARGES (1)............................ 5.9
(1) In computing the ratio of earnings to fixed charges, earnings are defined
as income from continuing operations before income taxes adjusted for
minority interest in income or loss of subsidiaries, undistributed
earnings of affiliates and fixed changes exclusive of capitalized
interest. Fixed charges consist of interest on borrowings and that
portion of rentals deemed representative of the interest factor.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1995 CONSOLIDATED BALANCE SHEET, STATEMENT OF CONSOLIDATED
INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 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> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 536
<SECURITIES> 0
<RECEIVABLES> 2255
<ALLOWANCES> 67
<INVENTORY> 1955
<CURRENT-ASSETS> 5860
<PP&E> 2849
<DEPRECIATION> 0
<TOTAL-ASSETS> 12027
<CURRENT-LIABILITIES> 3482
<BONDS> 1775
0
1
<COMMON> 242
<OTHER-SE> 3665
<TOTAL-LIABILITY-AND-EQUITY> 12027
<SALES> 3062
<TOTAL-REVENUES> 3094
<CGS> 2320
<TOTAL-COSTS> 2778
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 316
<INCOME-TAX> 123
<INCOME-CONTINUING> 193
<DISCONTINUED> (1)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 192
<EPS-PRIMARY> .89
<EPS-DILUTED> .87
</TABLE>
ROCKWELL INTERNATIONAL CORPORATION
NET INCOME FROM THE COMPANY'S CONTINUING OPERATIONS
EXCLUSIVE OF THE GRAPHIC SYSTEMS BUSINESS
In January 1996 the company announced its plan to sell its Graphic Systems
business segment. Accordingly, the Graphic Systems business is reported as
discontinued operations as of December 31, 1995. The following sets forth
restated net income from continuing operations of the company, exclusive of the
Graphic Systems business, for each of the five years in the period ended
September 30, 1995 (in millions):
YEAR ENDED SEPTEMBER 30
1995 1994 1993 1992 1991
Income from Continuing Operations $1,164 $ 993 $ 889 $ 759 $ 964
Income Taxes 459 376 336 288 398
Net Income from Continuing Operations 705 617 553 471 566
Discontinued Operations:
Income from Discontinued Operations,
Net of Tax 37 17 9 12 35
Net Income $ 742 $ 634 $ 562 $ 483 $ 601
EXHIBIT 99-b
OPERATING EARNINGS OF THE COMPANY'S ELECTRONICS BUSINESSES
The company has expanded disclosure of its Electronics businesses to disclose
separately operating earnings of its Avionics, Semiconductor Systems and
Defense Electronics businesses. The following sets forth an expanded
presentation of operating earnings of the company's Electronics businesses (in
millions):
YEAR ENDED SEPTEMBER 30
1995 1994 1993 1992 1991
OPERATING EARNINGS
Electronics:
Automation $ 481 $ 265 $ 193 $ 102 $ 96
Avionics 167 162 199 197 261
Semiconductor Systems 115 101 58 40 40
Defense Electronics 158 169 152 150 156
Total Electronics $ 921 $ 697 $ 602 $ 489 $ 553
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Prospectuses dated
February 1, 1996 with respect to the securities covered by Registration
Statement Nos. 2-99494 (as amended through Post-Effective Amendment No. 4
thereto) and 33-32662, each on Form S-8, of our reports dated October 31, 1995,
appearing in, and incorporated by reference in the 1995 Annual Report on Form
10-K of Rockwell International Corporation and to the reference to us under
the heading "Experts" in those Prospectuses.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
February 9, 1996
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