<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[ X ] Quarterly Report, Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended June 28, 1996, or
[ ] Transition Report, Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period _____ to _____
Commission File Number 0-22914
------------------------------
UNION SWITCH & SIGNAL INC.
(Exact name of registrant as specified in its charter)
------------------------
Delaware 25-1579001
- ---------------------------------------- -----------------------------------
(State of Incorporation) (IRS Employer Identification Number)
1901 Main Street, Suite 1150
Columbia, South Carolina 29201
- ---------------------------------------- -----------------------------------
(Address of principal executive offices) (Zip Code)
(803) 929-1200
--------------
(Registrant's telephone no., including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $0.01 par value 9,737,500
----------------------------- -----------------
Class Outstanding as of
July 31, 1996
2
<PAGE> 2
UNION SWITCH & SIGNAL INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 28, 1996
INDEX
<TABLE>
<CAPTION>
PART I.FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements
<S> <C>
Consolidated Balance Sheet as of June 28, 1996 and
December 31, 1995 ......................................... 1
Consolidated Statement of Operations and Accumulated
Earnings for the three and six month periods ended
June 28, 1996 and June 30, 1995 ........................... 2
Consolidated Statement of Cash Flows for the six month
periods ended June 28, 1996 and June 30, 1995 ............. 3
Notes to Consolidated Financial Statements.................. 4-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 7-10
PART II.OTHER INFORMATION
Item 1. Legal Proceedings ....................................... 11
Item 4. Submission of Matters to a Vote of Security Holders...... 11
Item 6. Exhibits and Reports on Form 8-K ........................ 12
Signatures ....................................................... 13
Index to Exhibits ................................................ 14-16
</TABLE>
<PAGE> 3
UNION SWITCH & SIGNAL INC.
CONSOLIDATED BALANCE SHEET
($ IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
June 28, December 31,
1996 1995
Assets (unaudited) (audited)
----------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents ......................................................... $ 1,103 $ 2,873
Receivables - net ................................................................. 19,091 29,641
Inventory (Note 3) .......................................................... 26,519 24,807
Costs and estimated earnings in excess of billings
on uncompleted contracts (Note 4) ....................................... 57,092 51,409
Prepaid expenses and other current assets .................................... 3,035 4,814
----------- ---------
Total current assets ................................................. 106,840 113,544
Contract receivables - retentions .................................................... 14,211 13,624
Property, plant and equipment - net ................................................. 37,581 37,944
Other assets ......................................................................... 3,897 5,249
----------- ---------
Total assets ......................................................... $ 162,529 $ 170,361
=========== =========
Liabilities and Shareholders' Equity
Current liabilities:
Short term borrowings and current
obligations under capital leases (Note 5)................................ $ 14,549 $ 6,040
Accounts payable ............................................................. 10,618 14,833
Accrued liabilities ......................................................... 5,841 7,135
Billings in excess of costs and estimated earnings
on uncompleted contracts (Note 4)........................................ 10,653 15,201
----------- ---------
Total current liabilities ............................................ 41,661 43,209
Accounts payable - retentions ........................................................ 2,127 2,493
Accrued post-retirement benefits ..................................................... 2,479 2,359
Long-term borrowings and obligations under capital leases (Note 6).................... 46,924 52,128
----------- ---------
Total liabilities .................................................... 93,191 100,189
=========== =========
Shareholders' equity:
Preferred stock, $.01 par value, authorized 1,000,000
shares, no shares issued and outstanding................................. 0 0
Common stock, $.01 par value, authorized 30,000,000
shares, issued and outstanding 9,737,500 ................................ 97 97
Additional paid-in capital ................................................... 59,302 59,302
Accumulated earnings ........................................................ 9,939 10,773
----------- ---------
Total shareholders' equity ........................................... 69,338 70,172
Commitments and contingencies ....................................................... 0 0
----------- ---------
Total liabilities and shareholders' equity ........................... $ 162,529 $ 170,361
=========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
1
<PAGE> 4
UNION SWITCH & SIGNAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
AND ACCUMULATED EARNINGS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months ended Six Months ended
------------------ ----------------
June 28, June 30, June 28, June 30,
1996 1995 1996 1995
(unaudited) (unaudited) (unaudited) (unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue ........................................................... $ 38,387 $ 47,489 $ 78,166 $ 90,150
Cost of revenue ................................................... 30,973 36,104 64,071 68,718
---------- ---------- ---------- ----------
Gross profit .............................................. 7,414 11,385 14,095 21,432
Operating expenses:
Selling, general and administrative .......................... 5,626 5,861 10,187 11,496
Research and development - net ............................... 1,348 2,195 2,983 3,811
---------- ---------- ---------- ----------
Operating expenses ........................................ 6,974 8,056 13,170 15,307
---------- ---------- ---------- ----------
Operating income .......................................... 440 3,329 925 6,125
Interest expense .................................................. 1,141 952 2,159 1,571
---------- ---------- ---------- ----------
Income (loss) before income taxes ......................... (701) 2,377 (1,234) 4,554
Provision for income taxes ....................................... (233) 898 (400) 1,794
---------- ---------- ---------- ----------
Net income (loss) ........................................ (468) 1,479 (834) 2,760
Accumulated earnings beginning of period ......................... 10,407 8,430 10,773 7,149
---------- ---------- ---------- ----------
Accumulated earnings, end of period .............................. $ 9,939 $ 9,909 $ 9,939 $ 9,909
---------- ---------- ---------- ----------
Earnings (loss) per share of common stock :
Net income (loss) ........................................ $ (0.05) $ 0.15 $ (0.09) $ 0.28
---------- ---------- ---------- ----------
Weighted average number of common shares outstanding .............. 9,737,500 9,737,500 9,737,500 9,737,500
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated state
2
<PAGE> 5
UNION SWITCH & SIGNAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months ended
----------------
June 28, June 30,
1996 1995
(unaudited) (unaudited)
----------- -----------
<S> <C> <C>
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net income (loss) ......................................................... $ (834) $ 2,760
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization ........................................ 2,780 2,720
Changes in:
Receivables .......................................................... 10,550 (3,114)
Inventory ............................................................ (1,712) (938)
Other assets ......................................................... 2,022 127
Accounts payable ..................................................... (4,215) (1,264)
Accrued liabilities .................................................. (947) (76)
Contracts - net (a) .................................................. (11,184) (11,615)
--------- ---------
Net cash used in operating activities ............................. (3,540) (11,400)
Cash flows from investing activities:
Capital expenditures (1,535) (15,715)
Net assets purchased ................................................ 0 (2,890)
--------- ---------
Net cash used in investing activities ............................. (1,535) (18,605)
Cash flows from financing activities:
Net proceeds from short term borrowings ............................ 8,524 15,067
Proceeds from long term borrowings ................................. 5,000 8,500
Payments on long term borrowings ................................... (10,000) 0
Payments on capital leases ........................................... (219) (25)
--------- ---------
Net cash provided by financing activities ......................... 3,305 23,542
Net decrease in cash and cash equivalents ......................................... (1,770) (6,463)
Cash and cash equivalents at beginning of period .................................. 2,873 8,573
--------- ---------
Cash and cash equivalents at end of period ........................................ $ 1,103 $ 2,110
--------- ---------
Interest paid during period ....................................................... $ 2,235 $ 1,206
--------- ---------
Income taxes paid (refund received) during period ................................. $ (948) $ 2,523
--------- ---------
</TABLE>
(a) Contract accounting includes costs and estimated earnings in excess of
billings, contract receivables - retentions, billings in excess of costs
and estimated earnings on uncompleted contracts and accounts payable -
retentions.
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 6
UNION SWITCH & SIGNAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 28, 1996
(Unaudited)
($ in thousands, except per share amounts)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Union Switch &
Signal Inc. (the "Company") include all adjustments which are, in the opinion
of management, necessary for a fair statement of the operating results for the
three and six month periods ended June 28, 1996 and June 30, 1995. The
consolidated financial statements for the three and six month periods include
only normal recurring adjustments. These consolidated financial statements
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission and therefore do not include all information and footnotes
necessary for a fair presentation of financial position, results of operations
and changes in cash flows in conformity with generally accepted accounting
principles. The information contained in this Form 10-Q should be read in
conjunction with Management's Discussion and Analysis and the financial
statements as well as the notes thereto contained in the Company's 1995 Annual
Report.
NOTE 2 - RELATED-PARTY TRANSACTIONS
The Company is periodically involved in providing certain products and services
to affiliated entities and in purchasing certain products and services from
affiliated entities. During the six months period ended June 28, 1996, the
Company provided to Ansaldo Trasporti S.p.A. certain advisory and consulting
services which were reflected as a reduction of operating expense of $699.
The Company relies on affiliated entities for certain financial and management
services. Such services include guaranteeing a $200,000 surety bond facility
(of which $53,728 was utilized at June 28, 1996) and a $5,000 standby letter
of credit facility (of which $3,521 was utilized at June 28, 1996). Fees are
paid to Ansaldo Trasporti S.p.A. (ATR) and/or Finmeccanica S.p.A. for these
services provided. Said fees are equal to 1.0% per annum on the aggregate
principal amount of credit enhanced and 0.50% per annum of any surety bond or
letter of credit for which ATR and/or Finmeccanica provides an indemnity. For
the six-month period ended June 28, 1996 such fee was $154. Management expects
these services to continue to be provided by affiliates, to the extent
required, through at least 1997.
NOTE 3 - INVENTORY
Components of inventory at June 28, 1996 were as follows:
June 28, 1996
-------------
Raw materials ............................. $15,008
Work-in-process ........................... 6,970
Finished components ....................... 4,541
-------
$26,519
=======
4
<PAGE> 7
UNION SWITCH & SIGNAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 28, 1996
(Unaudited)
($ In thousands, except per share amounts)
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Components of cost and estimated earnings on uncompleted contracts
at June 28, 1996 were as follows:
<TABLE>
<CAPTION>
June 28, 1996
-------------
<S> <C>
Costs incurred on uncompleted contracts ...................................... $406,824
Estimated earnings 73,319
--------
480,143
Less - Billings to date and advances on contracts ............................ 433,704
--------
$ 46,439
========
The net amount above is included in the consolidated balance sheet under
the following captions:
June 28, 1996
-------------
Costs and estimated earnings in excess
of billings on uncompleted contracts.......................................... $ 57,092
Billings in excess of costs and estimated earnings
on uncompleted contracts ..................................................... (10,653)
--------
$ 46,439
========
NOTE 5 - SHORT TERM BORROWINGS AND CAPITAL LEASES
Short term borrowings consisted of the following at June 28, 1996:
Borrowings (unsecured) under various lines of credit expiring
within one year with interest payable at least quarterly. The interest rates
in effect at June 28, 1996 were from 6.0% to 6.2%.............................. $ 11,325
Borrowings (unsecured) in Australia by Union Switch & Signal Pty. Ltd.
under a revolving credit facility expiring October 1, 1996, with interest payable
quarterly. The interest rate in effect at June 28, 1996 was 7.0%.............. 2,847
Current portion of obligations under capital leases. ............................. 377
--------
Total short term borrowings and current portion of obligations
under capital leases .......................................................... $ 14,549
========
</TABLE>
5
<PAGE> 8
UNION SWITCH & SIGNAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 28, 1996
(Unaudited)
($ in thousands, except per share amounts)
NOTE 6 - LONG TERM BORROWINGS AND CAPITAL LEASES
Long term borrowings consisted of the following at June 28, 1996:
<TABLE>
<S> <C>
Borrowings (unsecured) under revolving credit facility expiring
May 28, 1998, with interest payable quarterly. The interest rate
in effect at June 28, 1996 was 6.7%.. ............................................. $10,000
Senior Notes (unsecured) due 2004, with a
fixed interest rate of 8%. ........................................................ 30,000
Long term obligations under capital leases. ....................................... 6,924
-------
Total long term borrowings and long term portion of obligations
under capital leases ........................................................... $46,924
=======
</TABLE>
The Company has a three-year revolving credit facility in the amount of
$35,000 which is used to fund working capital needs as well as provide
commercial and stand-by letters of credit and which will expire on May 28,
1998. At June 28, 1996, $10,000 in borrowings and $10,347 in letters of
credit were utilized. In addition, on September 29, 1994, the Company issued
senior, unsecured promissory notes to various lenders in the total amount of
$30,000 at an 8% fixed rate with a ten year term and principal payments
beginning in 1998.
As of March 29, 1996, Union Switch & Signal Inc. was in violation of certain
financial covenants associated with its Senior Notes (the Fixed Charge
Coverage Ratio) and its Revolving Credit Facility (Funded Debt Coverage Ratio,
Fixed Charge Coverage Ratio, and Interest Coverage Ratio). These violations
constitute Events of Default under the loan agreements associated with these
borrowings. The Company remains current in all interest and principal
payments due. The lenders have waived their rights to an acceleration of
principal payments granted to them under their loan agreements with the
Company. The Company expects that it will be in compliance with these
covenants by year end.
The Company maintains a $100,000 surety bonding facility ($10,566 outstanding
at June 28, 1996) in addition to a $200,000 surety bonding facility provided
by Finmeccanica (see Note 2).
6
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
($ in thousands except per share amounts)
OVERVIEW
Union Switch & Signal's business strategy emphasizes the design,
engineering, production, distribution and after-sale service of integrated
railway signaling, automation and control systems and related component
products that provide a variety of train control and operations management
capabilities.
Unless otherwise indicated, all figures set forth below are for the three
and six month periods ended June 28, 1996 compared to the three and six month
periods ended June 30, 1995.
Net income (loss) for the second quarter of 1996 decreased to ($468) or
($0.05) cents per share from $1,479 or $0.15 cents per share for the
comparable period last year. This decrease is due to a decrease in gross
profit of $3,971 and an increase in interest of $189, partially offset by
reductions in operating expense of $1,082 and income taxes of $1,131.
Net income (loss) for the six months of 1996 decreased to ($834) or
($0.09) cents per share from $2,760 or $0.28 cents per share for the
comparable period last year. This decrease is due to a decrease in gross
profit of $7,337 and an increase in interest of $588, partially offset by
reductions in operating expense of $2,137 and income taxes of $2,194.
BACKLOG
The Company's backlog at June 28, 1996 was $127,300, a decrease from the
December 31, 1995 year end backlog of approximately $144,700. Orders for
second quarter 1996 were $25,078 as compared to $42,269 for the second quarter
of 1995. Orders for the six months ended June 30, 1996 were $60,769 as
compared to $92,556 for the six months ended June 30, 1995.
Recent and proposed consolidations and mergers among U. S. Class 1
railroads have had a continuing adverse affect on customer orders, revenue and
gross profit. In addition, longer than anticipated lead times in the transit
and international markets and increased domestic competition have resulted in
lower backlog.
NET REVENUE
Net revenue decreased 19.2% to $38,387 for the second quarter of 1996
from $47,489 in the comparable period of 1995. Net revenue decreased 13.3% to
$78,166 for the first six months of 1996 from $90,150 in the comparable period
of 1995. The decreases in the second quarter and first six months of 1996
resulted from lower volume in Wayside Control Products Division shipments, and
lower volume in system engineering in the Transportation Control Systems
Division. The Transportation Control System Division's revenue for the six
months ended June 28, 1996 includes
7
<PAGE> 10
$1,906 from the Australian operation which is not comparable to the first six
months of 1995 because the Australian operation was acquired at the end of
March, 1995.
Revenue by product line was as follows:
<TABLE>
<CAPTION>
Six Months Ended Product Line % Change
June 28, 1996 June 30, 1995 1996-95
------------- ------------- --------
<S> <C> <C> <C>
$ 53,977 $ 58,575 Transportation Control Systems (7.8)
21,792 28,856 Wayside Control Products (24.5)
2,397 2,719 Vehicle Control Systems (11.8)
--------- ---------
(13.3)
$ 78,166 $ 90,150 Total Revenue
</TABLE>
GROSS PROFIT
Gross profit fluctuates as a result of production volume and the mix
between industry sector and geographical location. The following table sets
forth gross profit in thousands of dollars and as a percentage of total
revenue, and the percent of change from year to year:
<TABLE>
<CAPTION>
Six Months Ended % Change
June 28, 1996 June 30, 1995 1996-95
------------- ------------- --------
<S> <C> <C> <C>
$ 78,166 $ 90,150 Total Revenue (13.3)
65,071 68,718 Cost of Revenue (6.8)
-------- --------
$ 14,095 $ 21,432 Gross Profit (34.2)
18.0% 23.8% Gross Profit as a % of Total Revenue
</TABLE>
Gross profit for the second quarter of 1996 decreased to $7,414 or 19.3%
of revenue from $11,385 or 24.0% of revenue for the comparable period in 1995.
Gross profit for the first six months of 1996 decreased to $14,095 or 18.0%
of revenue from $21,432 or 23.8% of revenue for the comparable period in 1995.
The decreases in gross profit between the second quarter of 1996 and the
second quarter of 1995 and between the first six months of 1996 and 1995,
resulted from lower revenue in the Wayside Control Products and the
Transportation Control Systems Divisions as well as lower gross profit rates
on existing contracts in the Transportation Control Systems Division.
8
<PAGE> 11
OPERATING EXPENSES
The following table sets forth certain consolidated expense items in
thousands of dollars for the periods indicated and the percentage change from
year to year:
<TABLE>
<CAPTION>
Six Months Ended Expense Items % Change
June 28, 1996 June 30, 1995 1996-95
------------- ------------- -------
<S> <C> <C> <C>
$ 10,187 $ 11,496 Selling, general and administrative (11.4)
2,983 3,811 Research and development - net (21.7)
-------- --------
$ 13,170 $ 15,307 Total operating expenses (14.0)
</TABLE>
Selling, general and administrative expense decreased to $5,626 for the
second quarter of 1996 from $5,861 for the comparable period in 1995, but
increased as a percent of revenue to 14.7% for the second quarter of 1996 from
12.3% for the comparable period in 1995. Net research and development
decreased to $1,348 for the second quarter of 1996 from $2,195 in the second
quarter of 1995. Net research and development decreased as planned as a
percent of revenue to 3.5% for the second quarter of 1996 from 4.6% for the
comparable period in 1995.
Selling, general and administrative expense decreased to $10,187 for the
first six months of 1996 from $11,496 for the comparable period in 1995, but
increased as a percent of revenue to 13.0% for the first half of 1996 from
12.8% in the first half of 1995. This reduction in selling, general and
administrative expense resulted from the elimination of certain one time costs
associated with the move to the Pittsburgh Systems and Research Center, which
were included in the comparable 1995 period, and the invoicing of Ansaldo
Trasporti S.p.A. (ATR) for management services of $390. Net research and
development decreased to $2,983 in the first half of 1996 from $3,811 in the
first half of 1995. Net research and development decreased as planned as a
percent of revenue to 3.8% for the first six months of 1996 from 4.2% for the
first six months of 1995.
FINANCIAL CONDITION
The Company's total assets decreased $7,832 to $162,529 at June 28, 1996
from $170,361 at December 31, 1995. The principal changes for the period were
decreases in receivables of $10,550, cash and cash equivalents of $1,770, and
prepaid assets and other current assets of $460, which were partially offset
by an increase in cost and estimated earnings in excess of billings on
uncompleted contracts of $5,683 and an increase in inventory of $1,712. The
decrease in receivables of $10,550 is the result of improved cash receipts in
the first six months of 1996. In spite of these cash receipts, cash and cash
equivalents decreased over the period by $1,770, which is due to use of $3,540
of cash in operating activities, an increase in total borrowing of $3,305, and
spending of $1,535 on new capital equipment.
Costs in excess of billings on uncompleted contracts were $57,092 as of
June 28, 1996 as compared to $51,409 as of December 31, 1995. Billings in
excess of costs and estimated earnings on uncompleted contracts were $10,653
as of June 28, 1996 compared to $15,201 as of December 31, 1995. The net
change reflects an industry-wide trend toward longer term contracts with
invoicing and
9
<PAGE> 12
payment terms based on delivery or installation of material as opposed to
milestones for engineering or manufacturing.
Capital expenditures decreased to $892 for the quarter ended ended June
28, 1996 from $13,915 for the comparable period in 1995. Capital expenditures
decreased to $1,535 for the six months ended June 28, 1996 from $15,715 for
the six months ended June 30, 1995. The reductions reflect the elimination of
one time 1995 expenditures related to furniture and equipment and partial
prepayment of construction loans for the new Pittsburgh Systems and Research
Center.
The Company's operating activities used cash of $3,540 in the six months
ended June 28, 1996 compared to using cash of $11,400 in the six months ended
June 30, 1995, a reduction of $7,860. This results principally from changes
in receivables which decreased $10,550 in the six months ended June 30, 1996
as compared to an increase of $3,114 in the comparable period of 1995. The
Company's cash flows have historically been subject to fluctuations due to the
cyclical pattern of contract bookings and subsequent contract milestones. The
number, size and timing of contracts awarded will continue to impact future
cash flows.
The Company maintains $35,000 in fully committed revolving credit
facilities with commercial banks. In addition, the Company currently
maintains $44,725 in uncommitted lines of credit on an "as available" basis.
Total unused and available credit was $55,285 at June 28, 1996. The company
has also issued senior, unsecured promissory notes to various lenders in the
total amount of $30,000 at an 8% fixed rate with a ten year term and principal
payments beginning in 1998. Management believes these facilities are
sufficient to meet the Company's foreseeable cash needs.
(See Footnote 6 of the Notes to Consolidated Financial Statements, page 6
hereof, with respect to the Company's compliance with certain loan covenants
as of June 28, 1996.)
10
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Item 3 of the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.
On April 23, 1996, the Company and the City of Chicago entered into a
Settlement and Release Agreement, pursuant to which all claims arising
out of the City of Chicago's Southwest Corridor Project and subject of
the lawsuit filed in federal district court in Chicago on January 11,
1993, have been settled. Upon dismissal of the lawsuit and completion
of certain administrative matters, the City of Chicago will pay to the
Company $3.3 million, which amount is believed to be sufficient to
satisfy subcontractor claims and the amount which on account of this
contract is included as a portion of costs and estimated earnings in
excess of billings on uncompleted contracts in the Company's
Consolidated Balance Sheet as of December 31, 1995.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of the Company was
held on April 18, 1996 and continued on May 9, 1996.
(b) At the meeting, the following matters were submitted
to a vote of the shareholders of the Company:
(1) the election of the following nominees as directors of
the Company. The vote with respect to each nominee was
as follows:
<TABLE>
<CAPTION>
Nominee For Withheld
------- --- --------
<S> <C> <C>
W. Alessandrini 8,389,368 15,237
S. Brandi 8,389,168 15,437
A. de Benedictis 8,189,168 215,437
L. Cravarolo 8,389,168 15,437
E. Riddett 8,389,093 15,512
A. Rosania 8,389,368 15,237
J. Smith III 8,189,043 215,562
G. Tedeschini 8,389,368 15,237
</TABLE>
(2) a recommendation of the Board of Directors that the
shareholders ratify the selection of the firm
of Price Waterhouse LLP as independent accountants to
audit the books, records and accounts of the Company
for the year 1996. The vote was as follows:
For Against Abstain
--- ------- -------
8,399,180 2,000 3,425
11
<PAGE> 14
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required in connection with this quarterly
report on Form 10-Q are listed in the Exhibit Index following
the signature page. Certain of such exhibits, which have
heretofore been filed with the Securities and Exchange
Commission and which are designated by reference to their
exhibit numbers in prior filings are incorporated herein as
exhibits by such reference and made a part hereof.
(b) No reports on Form 8-K were filed during the quarter
ended June 28, 1996.
12
<PAGE> 15
SIGNATURE
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.
UNION SWITCH & SIGNAL INC.
Date: August 1, 1996 By: /s/ Walter Alessandrini
------------------------------
President, Chief Executive Officer
Date: August 1, 1996 By: /s/ Joseph A. Kirby
------------------------------
Vice President and Chief Financial
Officer (principal financial and
accounting officer)
13
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NUMBERS
- ----------- ----------- ------------
<S> <C> <C>
3.1 Restated Certificate of Incorporation of the *
Registrant, incorporated by reference to Exhibit 3.1 of the
Registrant's Registration No. 33-69226
3.2 Bylaws of the Registrant incorporated by reference to Exhibit 3.2 *
of the Registrant's Registration No. 33-69226
4.1 Specimen Certificate of Registrant's Common Stock, incorporated *
by reference to Exhibit 4.1 of the Registrant''s Registration No. 33-69226
4.2 Specimen Certificate of Registrant's Preferred Stock, incorporated *
by reference to Exhibit 4.2 of the Registrant's Registration No. 33-69226
4.3 Note Purchase Agreements between the Registrant and Connecticut *
General Life Insurance Company, CIGNA Property and Casualty
Insurance Company and Insurance Company of North America, all
dated September 29, 1994, incorporated by reference to Exhibit 4.3 of the
Registrant's Quarterly Report on Form 10Q for the period ended September
30, 1994
10.1 Registration Rights Agreement, dated as of November 24, 1993, *
between the Registrant, ATR and Finmeccanica incorporated by reference to
Exhibit 10.1 of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993
10.2 Preemptive Rights Agreement dated as of November 24, 1993, *
between the Registrant, ATR and Finmeccanica incorporated by reference to
Exhibit 10.2 of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993
10.3 Union Switch & Signal Inc. Performance Unit Plan incorporated *
by reference to Exhibit 10.3 of the Registrant's Registration No. 33-69226
10.4 Union Switch & Signal Inc. Executive Variable Compensation Plan *
incorporated by reference to Exhibit 10.4 of the Registrant's
Registration No. 33-69226
10.5 Union Switch & Signal Inc. 1993 Long-Term Stock Incentive Plan *
incorporated by reference to Exhibit 10.5 of the Registrant's
Registration No. 33-69226
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NUMBERS
- ----------- -----------
<S> <C> <C>
10.6 Union Switch & Signal Inc. Retirement/Savings Plan Effective *
August 1, 1988 incorporated by reference to Exhibit 10.6 of the
Registrant's Registration No. 33-69226
a. Amendment No. 1 to the Union Switch & Signal Inc. *
Retirement/Savings Plan effective January 1, 1995
incorporated by reference to Exhibit 10.6a of the
Registrant's Quarterly Report on Form 10Q for the
period ended September 29, 1995
b. Amendment No. 2 to the Union Switch & Signal Inc. *
Retirement/Savings Plan effective January 1, 1995
incorporated by reference to Exhibit 10.6b of the
Registrant's Quarterly Report on Form 10Q for the
period ended September 29, 1995
10.7 Development Agreement dated as of September 14, 1993 between *
Regional Industrial Development Corporation of Southwestern
Pennsylvania, Urban Redevelopment Authority of Pittsburgh and
Union Switch & Signal Inc. relating to the Pittsburgh Technology
Center Project (without exhibits) incorporated by reference to Exhibit
10.9 to the Registrant's Registration No. 33-69226
10.8 Lease dated September 14, 1993 between Regional Industrial *
Development Corporation of Southwestern Pennsylvania and the Registrant
incorporated by reference to Exhibit 10.10 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993
10.9 Bonding Support Agreement dated as of January 1, 1993 among *
Finmeccanica, ATR and the Registrant incorporated by reference to
Exhibit 10.10 of the Registrant's Registration No. 33-69226
10.10 Credit Support Agreement dated as of January 1, 1993 among *
Finmeccanica, ATR and the Registrant incorporated by reference to
Exhibit 10.11 of the Registrant's Registration No. 33-69226
10.11 Services Agreement dated as of January 1, 1993 between ATR *
and the Registrant incorporated by reference to Exhibit 10.12 of the
Registrant's Registration No. 33-69226
</TABLE>
15
<PAGE> 18
<TABLE>
<S> <C> <C>
10.12 Loan Agreement dated November 30, 1993 between Regional *
Industrial Development Corporation of Southwestern Pennsylvania and the
Pennsylvania Industrial Development Authority incorporated by
reference to Exhibit 10.16 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993
10.13 Consent, Subordination and Assumption Agreement dated *
November 30, 1993 among the Registrant, Regional Industrial Development
Corporation of Southwestern Pennsylvania and the Pennsylvania Industrial
Development Authority incorporated by reference to Exhibit 10.17
of the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993
10.14 Management Services Agreement dated November 1, 1995 between the *
Registrant and Ansaldo Trasporti S.p.A. incorporated by reference to
Exhibit 10.14 of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
a. Renewal No. 1, dated March 1, 1996, of the 17-22
Management Services Agreement dated
November 1, 1995 between the Registrant and
Ansaldo Trasporti, S.p.A.
b. Renewal No. 2, dated June 14, 1996, of 23-28
the Management Services Agreement dated
November 1, 1996 between the Registrant
and Ansaldo Trasporti, S.p.A.
27.1 Financial Data Schedule 29
</TABLE>
* Previously filed; incorporated herein by reference
16
<PAGE> 1
EXHIBIT 10.14a
MANAGEMENT SERVICES AGREEMENT
This management services agreement (the "Agreement") is made the first day
of March, 1996 by and between Union Switch & Signal Inc., a Delaware
corporation having offices at 1901 Main Street, Columbia, South Carolina
(hereinafter referred to as "US&S"), and Ansaldo Trasporti, S.p.A., a
corporation having offices at Via Argine, 425, 80147 Naples, Italy (hereinafter
referred to as "ATR").
WHEREAS US&S has for many years operated successfully a business involving
the design, manufacture, sale and installation of railway signalling and
automation equipment and systems.
WHEREAS, US&S has developed, accumulated and possesses unique know-how,
expertise and skills with respect to the successful operation of such a
business.
WHEREAS, ATR desires to obtain the assistance of US&S in the operation of
ATR's Signalling Business Unit which consists of similar signalling businesses
in Italy, Ireland and Sweden and in the management of ATR's interest in a
similar signalling business in France.
WHEREAS, US&S is willing to provide such assistance in accordance with the
terms of this Agreement.
NOW THEREFORE intending to be bound legally, the parties agree as follows:
1.0 Management Services
At the request of ATR, and to the extent then available within the
organization maintained by US&S, US&S shall furnish to ATR's Signalling
Business Unit advice and assistance with respect to general management and
organization, marketing, finance and control, manufacturing and administration,
all as more particularly described in Exhibit A, attached and incorporated by
reference. US&S shall use its best judgment, in consultation with ATR, to
determine the methods by which it shall provide such advice and assistance.
2.0 Fee
2.1 In consideration of the furnishing of the services described in paragraph 1
hereof, ATR shall pay to US&S the following:
(a) One Hundred Fifty Thousand U.S. Dollars ($150,000); and,
(b) the out-of-pocket expenses incurred by US&S in furnishing
said services, such as travel, living, etc.
17
<PAGE> 2
2.2 The amount set forth in subparagraph 2.1 hereof shall be paid in U.S.
dollars within thirty (30) days after receipt of invoice.
3.0 Release and Indemnification
3.1 Neither US&S nor any of its directors, officers, employees or agents shall
be liable to ATR or to any other Person (as used in this Agreement, "Person"
shall include a natural person, corporation, partnership, joint venture,
unincorporated association, trust or government or department or agency
thereof) in any way in connection with this Agreement or the services provided
hereunder unless it is determined by a final nonreviewable judgment of a United
States court that US&S or such director, officer, employee or agent has engaged
in willful misconduct or a knowing violation of law in connection with this
Agreement or the services provided hereunder, and in no event shall the
cumulative aggregate liability of US&S and its directors, officers, employees
and agents to ATR and to all other persons for all claims arising in connection
with this Agreement and the services provided hereunder exceed the amount of
fees paid by ATR to US&S pursuant to subparagraph 2.1(a) hereof.
3.2 ATR shall indemnify and hold harmless US&S and each of its directors,
officers, employees and agents (each, an "Indemnified Person") from and against
any and all claims, damages, losses, liabilities, expenses and actions incurred
by such Indemnified Person (including, but not limited to, all attorney's fees
and other expenses incurred in investigating, defending, settling, compromising
or paying any such claim, damage, loss, liability, expense or action) that
arise in connection with this Agreement or the services provided hereunder
except to the extent that such Indemnified Person is determined by a final
nonreviewable judgment of a United States court to be liable to ATR pursuant to
paragraph 3.1 hereof.
4.0 Term
This Agreement shall enter into force as of the date set forth on page one
hereof and, unless the term hereof is extended by the express written agreement
of the parties, as approved by the Audit Committee of the US&S Board of
Directors, shall continue until June 13, 1996; provided, however, that
notwithstanding the foregoing, this Agreement shall be subject to the right of
the Audit Committee of the Board of Directors of US&S to terminate same upon 30
days notice if such Audit Committee shall determine that the continued
provision of services by US&S hereunder is no longer appropriate or in the best
interests of US&S.
-2-
18
<PAGE> 3
5.0 Miscellaneous
5.1 Amendment and Modification. Subject to applicable law, this Agreement may
be amended, modified or supplemented only by a written agreement executed by a
duly authorized officer of US&S and a duly authorized officer of ATR.
5.2 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of a party hereto to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by a duly authorized
officer of that party, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or an estoppel with respect to, any subsequent failure
to comply with such obligation, covenant, agreement or condition.
5.4 Notices. All notices and other communications required or permitted to be
given hereunder shall be in writing and shall be given to the parties at the
following addresses or at such other address for a party as shall be specified
by like notice, provided that notice of a change of address shall be effective
only upon receipt thereof;
(a) if to US&S, to
Union Switch & Signal Inc.
1901 Main Street, Suite 1150
Columbia, South Carolina 29201
ATTN: J. Kirby
Facsimile No. (803) 929 1219
(b) if to ATR, to
Ansaldo Trasporti, S.p.A.
Via Argine, 425
80147 Naples, Italy
ATTN: Dott. Bruno Tufari
Facsimile No. 39 81 565 0693
Except as otherwise provided in this Agreement, notice shall be effective
(i) when delivered, if delivered personally or to a person of discretion
employed in the office of the intended recipient or (ii) when sent, if sent by
overnight courier or facsimile transmission or mailed by registered or
certified mail (return receipt requested), postage prepaid.
-3-
19
<PAGE> 4
5.5 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either
party without the prior written consent of the other party.
5.6 Governing Law. This Agreement shall be governed by the laws of the State
of South Carolina (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters, including,
without limitation, matters of validity, construction, effect, performance and
remedies.
5.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
5.8 Interpretation. The headings contained in this Agreement are solely for
the purpose of reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of this Agreement.
The use of the singular herein shall be deemed to be or include the plural (and
vice versa), wherever appropriate.
5.9 Entire Agreement. This Agreement, including Exhibit A hereto, embodies the
entire agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement. There are no restrictions,
promises, representations, warranties, covenants or undertakings other than
those expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
transactions.
5.10 Severability. Any provision of this Agreement that is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives.
UNION SWITCH & SIGNAL INC.
By: /s/ Walter Alessandrini
-------------------------------
ANSALDO TRASPORTI, S.p.A.
By: /s/ Luciano Cravarolo
-------------------------------
-4-
20
<PAGE> 5
EXHIBIT A
The management services to be provided to ATR by US&S include, but are not
limited to, advice and assistance concerning policies, practices and procedures
relative to:
A. Management and Organization
(1) the development and implementation of planning concepts and
techniques to provide a means for establishing proper direction for
the enterprise in the future;
(2) the appraisal of the economic soundness of the various
segments of the enterprise and of their respective methods of
operation, and the establishment of standards and guidelines for
measuring results;
(3) the establishment of both short-range and long-range
objectives for the enterprise and the promulgation of policies and
plans for attaining such objectives;
(4) the performance of organization studies and audits and the
development of plans of organization based on such studies and
audits;
(5) the evaluation of organizational structure and the appraisal
of the effectiveness of management relationship;
(6) the appraisal of managerial performance and the establishment
of executive recruitment, placement and development;
(7) the development of position specifications and
recommendations as to compensation levels and methods of
compensation;
(8) the organization of training sessions and the provisions of
instructions for personnel; and
(9) the planning and arranging of meetings between personnel and
the enterprise and their counterparts in other enterprises, and
visits of such personnel to other enterprises to observe and discuss
methods of management, organization and administration.
B. Marketing
(1) the development of objectives, strategies and policies for
marketing the products of the enterprise;
(2) the analysis of the marketing organization and evaluation of
its effectiveness;
21
<PAGE> 6
(3) the development and implementation of programs concerning
market research, selling and sales administration, advertising and
sales promotion, product planning, after-sales service, distribution
methods, recruitment, selection and training of sales personnel,
sales forecasting, budget and expense controls; and
(4) the obtaining and analysis of information concerning
developments affecting the enterprise.
C. Finance
(1) the analysis of financial requirements;
(2) the development and implementation of methods and techniques
for evaluating proposals for capital expenditures and major expense
items such as new product developments; and
(3) the preparation of reports of financial results;
D. Control
(1) the development of cost reduction programs and methods; the
development of programs for planning manufacturing facilities and
presentations of proposals for such facilities; and
(2) the analysis of factors instrumental in efficient and
profitable manufacturing operations, including plant location,
layout of factory equipment, manufacturing costs, purchasing,
warehousing and inventory.
E. Administration
(1) the development and implementation of practices and procedures
concerning usual and customary support services such as human
resources, quality, legal, etc.
22
<PAGE> 1
EXHIBIT 10.14b
MANAGEMENT SERVICES AGREEMENT
This management services agreement (the "Agreement") is made as of the
14th day of June, 1996 by and between Union Switch & Signal Inc., a Delaware
corporation having offices at 1901 Main Street, Columbia, South Carolina
(hereinafter referred to as "US&S"), and Ansaldo Trasporti, S.p.A., a
corporation having offices at Via Argine, 425, 80147 Naples, Italy (hereinafter
referred to as "ATR").
WHEREAS US&S has for many years operated successfully a business involving
the design, manufacture, sale and installation of railway signalling and
automation equipment and systems.
WHEREAS, US&S has developed, accumulated and possesses unique know-how,
expertise and skills with respect to the successful operation of such a
business.
WHEREAS, ATR desires to obtain the assistance of US&S in the operation of
ATR's Signalling Business Unit which consists of similar signalling businesses
in Italy, Ireland and Sweden and in the management of ATR's interest in a
similar signalling business in France.
WHEREAS, US&S is willing to provide such assistance in accordance with the
terms of this Agreement.
NOW THEREFORE intending to be bound legally, the parties agree as follows:
1.0 Management Services
At the request of ATR, and to the extent then available within the
organization maintained by US&S, US&S shall furnish to ATR's Signalling
Business Unit advice and assistance with respect to general management and
organization, marketing, finance and control, manufacturing and administration,
all as more particularly described in Exhibit A, attached and incorporated by
reference. US&S shall use its best judgment, in consultation with ATR, to
determine the methods by which it shall provide such advice and assistance.
2.0 Fee
2.1 In consideration of the furnishing of the services described in paragraph 1
hereof, ATR shall pay to US&S the following:
(a) Forty-Three Thousand Five Hundred U.S. Dollars ($43,500) per month;
and,
(b) the out-of-pocket expenses incurred by US&S in furnishing
said services, such as travel, living, etc.
23
<PAGE> 2
2.2 The amounts set forth in subparagraph 2.1 hereof shall be paid in U.S.
dollars within thirty (30) days after receipt of invoice.
3.0 Release and Indemnification
3.1 Neither US&S nor any of its directors, officers, employees or agents shall
be liable to ATR or to any other Person (as used in this Agreement, "Person"
shall include a natural person, corporation, partnership, joint venture,
unincorporated association, trust or government or department or agency
thereof) in any way in connection with this Agreement or the services provided
hereunder unless it is determined by a final nonreviewable judgment of a United
States court that US&S or such director, officer, employee or agent has engaged
in willful misconduct or a knowing violation of law in connection with this
Agreement or the services provided hereunder, and in no event shall the
cumulative aggregate liability of US&S and its directors, officers, employees
and agents to ATR and to all other persons for all claims arising in connection
with this Agreement and the services provided hereunder exceed the amount of
fees paid by ATR to US&S pursuant to subparagraph 2.1(a) hereof.
3.2 ATR shall indemnify and hold harmless US&S and each of its directors,
officers, employees and agents (each, an "Indemnified Person") from and against
any and all claims, damages, losses, liabilities, expenses and actions incurred
by such Indemnified Person (including, but not limited to, all attorney's fees
and other expenses incurred in investigating, defending, settling, compromising
or paying any such claim, damage, loss, liability, expense or action) that
arise in connection with this Agreement or the services provided hereunder
except to the extent that such Indemnified Person is determined by a final
nonreviewable judgment of a United States court to be liable to ATR pursuant to
paragraph 3.1 hereof.
4.0 Term
This Agreement shall enter into force as of the date set forth on page one
hereof and, unless the term hereof is extended by the express written agreement
of the parties, as approved by the Audit Committee of the US&S Board of
Directors, shall continue until December 31, 1996 or completion of the proposed
transaction by which the railway signalling operations of US&S and ATR would be
combined, whichever shall occur first; provided, however, that notwithstanding
the foregoing, this Agreement shall be subject to the right of the Audit
Committee of the Board of Directors of US&S to terminate same upon 30 days
notice if such Audit Committee shall determine that the continued provision of
services by US&S hereunder is no longer appropriate or in the best interests of
US&S.
-2-
24
<PAGE> 3
5.0 Miscellaneous
5.1 Amendment and Modification. Subject to applicable law, this Agreement may
be amended, modified or supplemented only by a written agreement executed by a
duly authorized officer of US&S and a duly authorized officer of ATR.
5.2 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of a party hereto to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by a duly authorized
officer of that party, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or an estoppel with respect to, any subsequent failure
to comply with such obligation, covenant, agreement or condition.
5.4 Notices. All notices and other communications required or permitted to be
given hereunder shall be in writing and shall be given to the parties at the
following addresses or at such other address for a party as shall be specified
by like notice, provided that notice of a change of address shall be effective
only upon receipt thereof;
(a) if to US&S, to
Union Switch & Signal Inc.
1901 Main Street, Suite 1150
Columbia, South Carolina 29201
ATTN: J. Kirby
Facsimile No. (803) 929 1219
(b) if to ATR, to
Ansaldo Trasporti, S.p.A.
Via Argine, 425
80147 Naples, Italy
ATTN: Dott. Bruno Tufari
Facsimile No. 39 81 565 0693
Except as otherwise provided in this Agreement, notice shall be effective
(i) when delivered, if delivered personally or to a person of discretion
employed in the office of the intended recipient or (ii) when sent, if sent by
overnight courier or facsimile transmission or mailed by registered or
certified mail (return receipt requested), postage prepaid.
-3-
25
<PAGE> 4
5.5 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either
party without the prior written consent of the other party.
5.6 Governing Law. This Agreement shall be governed by the laws of the State
of South Carolina (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters, including,
without limitation, matters of validity, construction, effect, performance and
remedies.
5.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
5.8 Interpretation. The headings contained in this Agreement are solely for
the purpose of reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of this Agreement.
The use of the singular herein shall be deemed to be or include the plural (and
vice versa), wherever appropriate.
5.9 Entire Agreement. This Agreement, including Exhibit A hereto, embodies the
entire agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement. There are no restrictions,
promises, representations, warranties, covenants or undertakings other than
those expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
transactions.
5.10 Severability. Any provision of this Agreement that is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives.
UNION SWITCH & SIGNAL INC.
By: /s/ Walter Alessandrini
-----------------------------
ANSALDO TRASPORTI, S.p.A.
By: /s/ Luciano Cravarolo
-----------------------------
-4-
26
<PAGE> 5
EXHIBIT A
The management services to be provided to ATR by US&S include, but are not
limited to, advice and assistance concerning policies, practices and procedures
relative to:
A. Management and Organization
(1) the development and implementation of planning concepts and
techniques to provide a means for establishing proper direction for
the enterprise in the future;
(2) the appraisal of the economic soundness of the various
segments of the enterprise and of their respective methods of
operation, and the establishment of standards and guidelines for
measuring results;
(3) the establishment of both short-range and long-range
objectives for the enterprise and the promulgation of policies and
plans for attaining such objectives;
(4) the performance of organization studies and audits and the
development of plans of organization based on such studies and
audits;
(5) the evaluation of organizational structure and the appraisal
of the effectiveness of management relationship;
(6) the appraisal of managerial performance and the establishment
of executive recruitment, placement and development;
(7) the development of position specifications and
recommendations as to compensation levels and methods of
compensation;
(8) the organization of training sessions and the provisions of
instructions for personnel; and
(9) the planning and arranging of meetings between personnel and
the enterprise and their counterparts in other enterprises, and
visits of such personnel to other enterprises to observe and discuss
methods of management, organization and administration.
B. Marketing
(1) the development of objectives, strategies and policies for
marketing the products of the enterprise;
(2) the analysis of the marketing organization and evaluation of
its effectiveness;
(3) the development and implementation of programs concerning
market research, selling and sales administration, advertising and
sales promotion, product planning, after-sales service, distribution
methods, recruitment, selection and training of sales personnel,
sales forecasting, budget and expense controls; and
27
<PAGE> 6
(4) the obtaining and analysis of information concerning
developments affecting the enterprise.
C. Finance
(1) the analysis of financial requirements;
(2) the development and implementation of methods and techniques
for evaluating proposals for capital expenditures and major expense
items such as new product developments; and
(3) the preparation of reports of financial results;
D. Control
(1) the development of cost reduction programs and methods; the
development of programs for planning manufacturing facilities and
presentations of proposals for such facilities; and
(2) the analysis of factors instrumental in efficient and
profitable manufacturing operations, including plant location,
layout of factory equipment, manufacturing costs, purchasing,
warehousing and inventory.
E. Administration
(1) the development and implementation of practices and
procedures concerning usual and customary support services such as
human resources, quality, legal, etc.
28
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF
OPERATIONS AND ACCUMULATED EARNINGS FOR THE SIX MONTHS ENDED JUNE 28, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-28-1996
<CASH> 1,103
<SECURITIES> 0
<RECEIVABLES> 19,091
<ALLOWANCES> 0
<INVENTORY> 26,519
<CURRENT-ASSETS> 106,840
<PP&E> 37,581
<DEPRECIATION> 0
<TOTAL-ASSETS> 162,529
<CURRENT-LIABILITIES> 41,661
<BONDS> 46,924
0
0
<COMMON> 97
<OTHER-SE> 59,302
<TOTAL-LIABILITY-AND-EQUITY> 162,529
<SALES> 78,166
<TOTAL-REVENUES> 78,166
<CGS> 64,071
<TOTAL-COSTS> 64,071
<OTHER-EXPENSES> 13,170
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,159
<INCOME-PRETAX> (1,234)
<INCOME-TAX> (400)
<INCOME-CONTINUING> (834)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (834)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
