________________________________________________________________________________ ________________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8974 ALLIEDSIGNAL INC. (Exact name of registrant as specified in its charter) <TABLE> <S> <C> DELAWARE 22-2640650 - - ---------------------------------------- --------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 Columbia Road P.O. Box 4000 Morristown, New Jersey 07962-2497 - - ---------------------------------------- --------------------------------------------- (Address of principal executive offices) (Zip Code) </TABLE> Registrant's telephone number, including area code (973)455-2000 Securities registered pursuant to Section 12(b) of the Act: <TABLE> <S> <C> Name of Each Exchange Title of Each Class on Which Registered - - ---------------------------------------- --------------------------------------------- Common Stock, par value $1 per share* New York Stock Exchange Chicago Stock Exchange Pacific Exchange Money Multiplier Notes due 1999-2000 New York Stock Exchange 9 7/8% Debentures due June 1, 2002 New York Stock Exchange 9.20% Debentures due February 15, 2003 New York Stock Exchange Zero Coupon Serial Bonds due 1999-2009 New York Stock Exchange 9 1/2% Debentures due June 1, 2016 New York Stock Exchange </TABLE> - - ------------ * The common stock is also listed for trading on the London stock exchange. Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [x] The aggregate market value of the voting stock held by nonaffiliates of the Registrant was approximately $21.7 billion at January 31, 1999. There were 557,130,797 shares of Common Stock outstanding at January 31, 1999. Documents Incorporated by Reference Part I and II: Annual Report to Shareowners for the Year Ended December 31, 1998. Part III: Proxy Statement for Annual Meeting of Shareowners to be held April 26, 1999. ________________________________________________________________________________ ________________________________________________________________________________
ALLIEDSIGNAL INC. CROSS REFERENCE SHEET <TABLE> <CAPTION> Page(s) in Form 10-K Heading(s) in Annual Report to Shareowners for Annual Item No. Year Ended December 31, 1998 Report - - ------------------------------- ----------------------------------------------------------- ------------ <S> <C> <C> 1. Business Note 23. Segment Financial Data ........................... 41 Note 24. Geographic Areas -- Financial Data................ 42 Management's Discussion and Analysis....................... 19 3. Legal Proceedings Note 20. Commitments and Contingencies..................... 39 5. Market for the Regis- Note 25. Unaudited Quarterly Financial trant's Common Equity Information.............................................. 42 and Related Stock- Selected Financial Data.................................... 18 holder Matters 6. Selected Financial Data Selected Financial Data.................................... 18 7. Management's Management's Discussion and Analysis....................... 19 Discussion and Analysis of Financial Condition and Results of Operations 7A. Quantitative and Management's Discussion and Analysis....................... 19 Qualitative Disclosure About Market Risk 8. Financial Statements and Report of Independent Accountants.......................... 27 Supplementary Data Consolidated Statement of Income........................... 28 Consolidated Balance Sheet................................. 29 Consolidated Statement of Cash Flows....................... 30 Consolidated Statement of Shareowners' Equity.............. 31 Notes to Financial Statements.............................. 32 </TABLE> <TABLE> <CAPTION> Heading(s) in Proxy Statement for Page(s) in Annual Meeting of Shareowners Proxy to be held April 26, 1999 Statement ----------------------------------------------------------- ------------ <S> <C> <C> 10. Directors and Executive Election of Directors; Voting Securities................... * Officers of the Registrant 11. Executive Compensation Election of Directors -- Compensation of Directors; Executive Compensation................................... * 12. Security Ownership of Voting Securities.......................................... * Certain Beneficial Owners and Management </TABLE> - - ------------ * To be included in a definitive Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 1998. 2
NOTE: AlliedSignal Inc. is sometimes referred to in this Report as the Registrant and as the Company, and AlliedSignal Inc. and its consolidated subsidiaries are sometimes referred to as the Company, as the context may require. TABLE OF CONTENTS <TABLE> <CAPTION> ITEM PAGE ---- ---- <S> <C> <C> Part I. 1 Business........................................................................................ 4 2 Properties...................................................................................... 14 3 Legal Proceedings............................................................................... 14 4 Submission of Matters to a Vote of Security Holders............................................. 14 Executive Officers of the Registrant............................................................... 15 Part II. 5 Market for the Registrant's Common Equity and Related Stockholder Matters....................... 16 6 Selected Financial Data......................................................................... 16 7 Management's Discussion and Analysis of Financial Condition and Results of Operations........... 17 7A Quantitative and Qualitative Disclosure About Market Risk....................................... 17 8 Financial Statements and Supplementary Data..................................................... 17 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............ 17 Part III. 10 Directors and Executive Officers of the Registrant............................................. 17(a) 11 Executive Compensation......................................................................... 17(a) 12 Security Ownership of Certain Beneficial Owners and Management................................. 18(a) 13 Certain Relationships and Related Transactions................................................. 18 Part IV. 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K................................ 18 Signatures.................................................................................................... 19 </TABLE> - - ------------ (a) These items are omitted since the Registrant will file with the Securities and Exchange Commission a definitive Proxy Statement pursuant to Regulation 14A involving the election of directors not later than 120 days after December 31, 1998. Certain other information relating to the Executive Officers of the Registrant appears at pages 15 and 16 of this Report. 3
PART I. ITEM 1. BUSINESS AlliedSignal Inc. (with its consolidated subsidiaries referred to in this Report as the Company) was organized in the State of Delaware in 1985. The Company is the successor to Allied Corporation, which was organized in the State of New York in 1920. MAJOR BUSINESSES AlliedSignal Inc. is an advanced technology and manufacturing company serving customers worldwide with aerospace and automotive products, chemicals, fibers, plastics and advanced materials. The Company's operations are conducted by eleven strategic business units, which have been aggregated under five reportable segments: Aerospace Systems, Specialty Chemicals & Electronic Solutions, Turbine Technologies, Performance Polymers and Transportation Products. Following is a description of the Company's strategic business units: <TABLE> <CAPTION> STRATEGIC BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS - - -------------------- --------------------------- ----------------------- -------------------------- ------------------ <S> <C> <C> <C> <C> AEROSPACE SYSTEMS Aerospace Environmental control Air conditioning Commercial, regional Barber Colman Equipment systems systems and general Hamilton Standard Systems Bleed air control aviation aircraft Liebherr systems Military aircraft Parker Hannifin Cabin pressure systems Spacecraft Sundstrand Environmental and TAT thermal control for spacecraft Smoke detection systems Repair, overhaul and spare parts ------------------------------------------------------------------------------------------------------ Engine systems and Electronic and Commercial air transport, Chandler-Evans accessories hydromechanical regional and general Hamilton Standard fuel controls aviation Lockheed Martin Engine start systems Military aircraft Lucas Pressure transducers Parker Repair, overhaul and spare parts ------------------------------------------------------------------------------------------------------ Power management and Electric, hydraulic and Commercial, military, Auxilec generation systems pneumatic power regional and general B.F. Goodrich generation systems aviation aircraft Hella Exterior and Ground vehicles Lucas interior lighting Parker Bertea systems Smiths Power distribution and Sundstrand power management Teleflex systems Pumps, starters, converters, controls, electrical actuation for flight surfaces Repair, overhaul and spare parts ------------------------------------------------------------------------------------------------------ Aircraft landing systems Wheels and brakes Commercial and Aircraft Braking Friction products military aircraft Systems Brake control systems Dunlop Wheel and brake B.F. Goodrich overhaul services Messier-Bugatti Aircraft landing Messier-Dowty systems integration - - --------------------------------------------------------------------------------------------------------------------------- </TABLE> 4
<TABLE> <CAPTION> STRATEGIC BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS - - -------------------- --------------------------- ------------------------- -------------------------- ------------------ <S> <C> <C> <C> <C> Electronic & Avionics systems Flight safety systems: Commercial, business Century Avionics Systems Enhanced Ground and general aviation Garmin Proximity Warning aircraft B.F. Goodrich Systems (EGPWS) Government aviation Honeywell Traffic Alert and Litton Collision Avoidance Lockheed Martin Systems (TCAS) Narco Windshear detection Rockwell/Collins systems and weather Sextant radar Smiths Flight data and cockpit S-tec voice recorders Trimble/Terra Communication and Universal navigation systems: Flight management systems Data management and aircraft performance monitoring systems Air-to-ground telephones Global positioning systems Automatic flight control systems Navigation systems Identification systems Integrated systems Vehicle management systems Cockpit display systems ------------------------------------------------------------------------------------------------------ Automatic test systems Computer-controlled U.S. Government and GDE Systems automatic test systems international logistics Honeywell Functional testers and centers Litton ancillaries Military aviation Lockheed Martin Portable test and Northrop Grumman diagnostic systems Advanced battery analyzer/charger ------------------------------------------------------------------------------------------------------ Inertial sensor Inertial sensor systems Military and Astronautics- for guidance, commercial vehicles Kearfott stabilization, Commercial spacecraft Ball navigation and launch vehicles BEI and control Energy utility boring GEC Gyroscopes, Transportation Honeywell accelerometers, Missiles Litton inertial measurement Munitions Rockwell/Collins units and thermal switches ------------------------------------------------------------------------------------------------------ Radar systems Aircraft precision Global and U.S. airspace Hughes landing agencies Motorola Ground surveillance Military aviation Raytheon Target detection devices Military missiles Rockwell Thomson-CSF - - --------------------------------------------------------------------------------------------------------------------------- Aerospace Management and technical Maintenance/operation of U.S. and foreign Computer Sciences Marketing, services space systems and government space and Dyncorp Sales & Service(1) facilities communications services Lockheed Martin Systems engineering, Commercial space ground Raytheon integration and segment systems and SAIC information technology services services ------------------------------------------------------------------------------------------------------ Aircraft hardware Consumable hardware, Commercial and military Wesco Aircraft distribution including fasteners, aviation and space Tristar Aerospace bearings, bolts and programs M&M Aerospace o-rings Aviall Adhesives, sealants, W.S. Wilson lubricants, cleaners Jamaica Bearings and paints Value-added services, repair and overhaul kitting and point-of-use replenishment - - --------------------------------------------------------------------------------------------------------------------------- </TABLE> (1) Aerospace-related businesses have organized their marketing, sales, service, technical support, repair and overhaul and distribution capabilities into this business unit. 5
<TABLE> <CAPTION> STRATEGIC BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS - - -------------------- --------------------------- ------------------------- -------------------------- ------------------ <S> <C> <C> <C> <C> SPECIALTY CHEMICALS & ELECTRONIC SOLUTIONS Specialty Chemicals Fluorocarbons Genetron'r' refrigerants, Refrigeration Atochem aerosol and Air conditioning DuPont insulation foam blowing Polyurethane foam ICI agents Precision cleaning Genesolv'r' solvents Optical Oxyfume sterilant gases Metalworking Hospitals Medical equipment manufacturers ------------------------------------------------------------------------------------------------------ Hydrofluoric acid (HF) Anhydrous and aqueous Fluorocarbons Ashland hydrofluoric acid Steel Atochem Oil refining DuPont Chemical intermediates Hashimoto Merck Norfluor Quimaco Fluor ------------------------------------------------------------------------------------------------------ Fluorine specialties Sulfur hexafluoride (SF6) Electric utilities Air Products Iodine pentafluoride Magnesium Asahi Glass (IF5) Gear manufacturers Atochem Antimony pentafluoride Ausimont (SbF5) Kanto Denko Kogyo Solvay Fluor ------------------------------------------------------------------------------------------------------ Nuclear services UF6 conversion services Nuclear fuel British Nuclear Electric utilities Fuels Cameco (Canada) Cogema (France) Tennex (Russia) ------------------------------------------------------------------------------------------------------ Pharmaceutical and Active pharmaceutical Agrichemicals Cambrex agricultural chemicals ingredients Pharmaceuticals DSM Oxime-based fine Lonza chemicals Zeneca Fluoroaromatics Bromoaromatics ------------------------------------------------------------------------------------------------------ High purity chemicals Ultra high purity HF Semiconductors LaPorte Solvents Merck Inorganic acids Olin High purity solvents ------------------------------------------------------------------------------------------------------ Industrial specialties Hydrofluoric acid (HF) Diverse by product type Varies by product Imaging HF derivatives line Luminescence and Fluoroaromatics plastic additives Photodyes Chemical processing Phosphors Materials and Catalysts surface treatment Oxime silanes Sealants ------------------------------------------------------------------------------------------------------ Specialty waxes Polyethylene waxes Coatings BASF Petroleum waxes and Inks Clariant blends Candles Eastman Tire/Rubber Exxon Personal care IGI Packaging Leuna Schumann-Sasol ------------------------------------------------------------------------------------------------------ Specialty additives Polyethylene waxes PVC Eastman Petroleum waxes and Plastics Geon blends Henkel PVC lubricant systems Plastic additives ------------------------------------------------------------------------------------------------------ UOP (joint venture) Processes Petroleum, ABB Lummus Catalysts petrochemical, gas Criterion Molecular sieves processing and IFP (France) Adsorbents chemical industries Mobil Design of process Procatalyse plants and equipment (France) Customer catalyst Stone & Webster manufacturing Zeochem - - --------------------------------------------------------------------------------------------------------------------------- </TABLE> 6
<TABLE> <CAPTION> STRATEGIC BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS - - -------------------- --------------------------- ------------------------- -------------------------- ------------------ <S> <C> <C> <C> <C> Electronic Materials Multilayer circuitry Laminates Military ADI/Isola materials Prepregs Telecommunications Nanya Copper foil Automotive Nelco Computers Polyclad Consumer electronics ------------------------------------------------------------------------------------------------------ Copper-clad rigid Laminates Military ADI/Isola laminates for circuitry Telecommunications General Electric Automotive Nanya Computers Nelco Consumer electronics Polyclad ------------------------------------------------------------------------------------------------------ Advanced Spin-on dielectrics Semiconductors Dow Corning microelectronic for semiconductor Microelectronics Applied Materials materials manufacturing Tokyo-Ohka ------------------------------------------------------------------------------------------------------ Equipment for semiconductor Electron beam Semiconductor and Fusion Systems and curing equipment thin film head Asyst related electronics Mini clean room manufacturing manufacturing environments Seimconductor and related electronics manufacturing ------------------------------------------------------------------------------------------------------ Engineering design services Printed circuit board Semiconductor N/A MultiChip fabricators manufacturing ------------------------------------------------------------------------------------------------------ Amorphous metals Amorphous metal ribbons Electrical distribution Allegheny-Ludlum and components transformers Steel High frequency electronics Armco Steel Metal joining Kawasaki Steel Theft deterrent systems Nippon Steel - - --------------------------------------------------------------------------------------------------------------------------- TURBINE TECHNOLOGIES Engines Turbine propulsion TFE731 turbofan Business, regional Pratt & Whitney engines TPE331 turboprop and military trainer Canada TFE1042 turbofan aircraft Rolls-Royce/ F124 turbofan Commercial and military Allison Engine LF502 turbofan helicopters Company LF507 turbofan Military vehicles Turbomeca CFE738 turbofan Commercial and military T53, T55 turboshaft marine craft LT101 turboshaft T800 turboshaft TF40 turboshaft AGT1500 turboshaft Repair, overhaul and spare parts ------------------------------------------------------------------------------------------------------ Auxiliary power units Airborne auxiliary Commercial and Pratt & Whitney (APUs) power units military aircraft Canada Jet fuel starters Ground power Sundstrand Power Secondary power Systems systems Ground power units Repair, overhaul and spare parts ------------------------------------------------------------------------------------------------------ Industrial power ASE 8 turboshaft Ground based Solar ASE 40/50 utilities, industrial Rolls-Royce/ turboshaft or mechanical Allison Engine ASE 120 turboshaft drives Company European Gas Turbines - - --------------------------------------------------------------------------------------------------------------------------- </TABLE> 7
<TABLE> <CAPTION> STRATEGIC BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS - - -------------------- --------------------------- ------------------------- -------------------------- ------------------ <S> <C> <C> <C> <C> Turbocharging Charge-air systems Turbochargers Passenger car, truck Aisin Seiki Systems Thermal systems Charge-air coolers and off-highway Behr/McCord Aluminum radiators original equipment GE/Elliott Aluminum cooling manufacturers (OEMs) General Motors modules Engine manufacturers Hitachi Superchargers Aftermarket distributors Holset Remanufactured components and dealers IHI KKK Mitsubishi/MHI Modine Schwitzer Valeo Williams International ------------------------------------------------------------------------------------------------------ Power generation Turbogenerators Users of electricity Capstone Turbine Electric Utilities - - --------------------------------------------------------------------------------------------------------------------------- PERFORMANCE POLYMERS Polymers Carpet fibers Nylon filament and Commercial, residential BASF staple yarns and specialty carpet DuPont Bulk continuous markets Solutia filament Rhodia Nylon polymer ------------------------------------------------------------------------------------------------------ Performance fibers Industrial nylon and Passenger car and truck Akra polyester yarns tires Akzo Extended-chain Passenger car and light BASF polyethylene composites truck seatbelts and DSM Fine denier nylon yarns airbags DuPont Broad woven fabrics Hoechst/Celanese Ropes and mechanical Hyosung rubber goods Kolon Luggage Nylstar Sports gear Rhodia Bullet resistant vests, helmets and heavy armor Cut-resistant industrial gloves Sailcloth ------------------------------------------------------------------------------------------------------ Engineering plastics Thermoplastic nylon Food and pharmaceutical BASF Thermoplastic alloys and packaging Bayer blends Housings (e.g., electric DuPont Post-consumer recycled hand tools, chain saws) Hoechst/Celanese PET resins Automotive components Monsanto Recycled nylon resins Office furniture Electrical and electronics ------------------------------------------------------------------------------------------------------ Specialty films Cast nylon Food DuPont of Canada Biaxially oriented nylon Pharmaceuticals Kolon film Packaging and industrial Rexam Custom Fluoropolymer film applications Toyobo ------------------------------------------------------------------------------------------------------ Chemical intermediates Caprolactam Nylon for fibers, BASF Ammonium sulfate engineered resins and DSM Hydroxylamine film DuPont Cyclohexanol Fertilizer ingredients Enichem Cyclohexanone Specialty chemicals Solutia Adipic acid Vitamins Rhodia Ube - - --------------------------------------------------------------------------------------------------------------------------- </TABLE> 8
<TABLE> <CAPTION> STRATEGIC BUSINESS UNITS PRODUCT CLASSES MAJOR PRODUCTS/SERVICES MAJOR CUSTOMERS/USES KEY COMPETITORS - - -------------------- --------------------------- ------------------------- -------------------------- ------------------ <S> <C> <C> <C> <C> TRANSPORTATION PRODUCTS Consumer Products Aftermarket Oil, air, fuel, Automotive and heavy AC Delco/Delphi/GM Group filters, electronic transmission and vehicle aftermarket ArmorAll/STP/Clorox components and car care coolant filters channels and original Autoglym products PCV valves equipment service Baldwin Spark plugs (OES) Bosch Wire and cable Mass merchandisers Champion Labs Antifreeze/coolant Champion/Cooper Ind. Ice-fighter products Cummings Diesel Windshield washer fluids Donaldson Waxes, washes and Gold Eagle specialty cleaners Gonher Havoline/Texaco Labinal Mac Quair Mann & Hummel NGK Peak Pennzoil/Quaker State Purolator/Arvin Ind Pyroil/Valvoline Turtle Wax Various Prival Label Wix/Dana Zerex/Valvoline - - --------------------------------------------------------------------------------------------------------------------------- Friction Materials Friction materials Disc brake pads Automotive and heavy Akebono Aftermarket brake hard Drum brake linings vehicle OEMs, OES, brake BBA Group parts Brake blocks manufacturers and Dana Disc and drum brake aftermarket channels Delphi components Mass merchandisers Federal-Mogul Brake hydraulic Installers ITT/Galfer components Railway and commercial/ JBI Brake fluid military aircraft OEMs Nisshinbo Aircraft brake linings and brake manufacturers Pagid Railway linings Sumitomo - - --------------------------------------------------------------------------------------------------------------------------- Truck Brake Air brake systems Anti-lock brake systems On-highway medium and Eaton Systems (ABS) heavy truck, Midland-Haldex (joint venture) Air disc brakes bus and trailer OEMs Meritor Air compressors Off-highway equipment WABCO Air valves OEMs Air dryers Aftermarket distributors Actuators and dealers/OES Truck electronics Competitive remanufactured products - - --------------------------------------------------------------------------------------------------------------------------- </TABLE> RECENT DEVELOPMENTS Activity in Aerospace Systems included the acquisition, in January 1998, of substantially all the assets of Banner Aerospace, distributors of FAA-certified aircraft hardware, for common stock valued at approximately $350 million. The acquired operations have annual sales of about $250 million, principally to commercial air transport and general aviation customers. In June 1998, the Company acquired a controlling interest in the Normalair-Garrett Ltd environmental controls joint venture. The acquired operations have annual sales of approximately $240 million. Several smaller acquisitions were also completed. In the first quarter of 1998, the Company sold its underwater detection systems business to L-3 Communications Corporation for approximately $70 million in cash and, in September 1998, the Company sold its communications systems business to Raytheon Company for approximately $60 million in cash. The divested businesses had annual sales of about $190 million. Aerospace Systems also strengthened its leadership in flight safety products by winning several major contracts for its new FAA-approved Enhanced Ground Proximity Warning System which gives pilots advance warning time of a collision with terrain. In June 1998, the Company acquired Pharmaceutical Fine Chemicals S.A. (PFC) of Lugano, Switzerland, for approximately $390 million, including assumed liabilities, as part of the Specialty Chemicals & Electronic Solutions segment. PFC manufactures and distributes active and intermediate 9
pharmaceutical chemicals and had sales of about $110 million in 1997. Several other smaller acquisitions were also completed during the year. In April 1998, the European laminates business of Electronic Materials was sold. Turbine Technologies began development of the AS900, its first new turbofan engine platform in more than 20 years, for the rapidly growing general and regional aviation market. It is scheduled for FAA certification in the first quarter of 2001. Turbocharging Systems is entering the small-scale power generation business to serve a growing demand for low cost, highly reliable and efficient independent power units. International distribution alliances for the power systems were formed in 1998. Initial product shipments are scheduled for mid-1999. Performance Polymers formed a joint venture with DSM Chemicals North America to construct and operate an $80 million recycling facility to convert nylon carpet into caprolactam, the raw material used in carpeting and automobile parts. Performance Polymers exited its European carpet fibers business and a portion of the North American textile business in 1998. Performance Polymers also sold its phenol facility to Sun Company, Inc. in 1998, and as part of the sale the Company retained a phenol supply arrangement for its nylon business. In Transportation Products, Truck Brake Systems and its partner, Knorr-Bremse AG, established a joint venture company with Robert Bosch GmbH (Bosch) combining their European commercial heavy-duty brake systems businesses. Bosch contributed its commercial vehicle brake product division to the European joint venture, in exchange for a 20% interest in the joint venture. The Company will also have a 20% ownership interest in the European joint venture. Knorr-Bremse, AlliedSignal's joint venture partner since 1993, will have the remaining 60% interest. In June 1998, the Company sold its interest in its automotive catalyst business to a unit of General Motors Corporation for approximately $50 million in cash. This business had annual sales of about $250 million. In 1998, the Company was unsuccessful in its $10 billion unsolicited offer for AMP Incorporated (AMP), a manufacturer of electrical connection devices. In connection with this transaction, the Company acquired approximately a 9% interest in AMP for $890 million. The fair market value of the investment at December 31, 1998 was $1,041 million. In January 1999, the Company announced that it will commence realignment of its aerospace businesses in the first quarter to strengthen their market and customer focus, simplify the business structure and reduce costs. U.S. GOVERNMENT SALES Sales to the U.S. Government (primarily aerospace-related), acting through its various departments and agencies and through prime contractors, amounted to $1,891 million for 1998 and $1,851 million for 1997, which includes sales to the U.S. Department of Defense (DoD) of $1,366 million in 1998 and $1,338 million in 1997. Approximately 58% and 59% of sales to the U.S. Government in 1998 and 1997, respectively, were made under fixed-price contracts in which the Company agrees to perform a contract for a fixed price, retaining any benefits of cost savings and absorbing any cost overruns. The Company is affected by U.S. Government budget restraints for defense and space programs. After years of decline, U.S. defense spending increased slightly in 1998 and is expected to increase over the next several years. In addition to normal business risks, companies engaged in supplying military and other equipment to the U.S. Government are subject to unusual risks, including dependence on Congressional appropriations and administrative allotment of funds, changes in governmental procurement legislation and regulations and other policies that may reflect military and political developments, significant changes in contract scheduling, complexity of designs and the rapidity with which they become obsolete, necessity for constant design improvements, intense competition for U.S. Government business necessitating increases in time and investment for design and development, difficulty of forecasting costs and schedules when bidding on developmental and highly sophisticated technical work and other factors characteristic of the industry. Changes are customary over the life of U.S. Government contracts, particularly development contracts, and generally result in adjustments of contract prices. 10
The Company, like other government contractors, is subject to government investigations of business practices and compliance with government procurement regulations. Although such regulations provide that a contractor may be suspended or debarred from government contracts under certain circumstances, and the outcome of pending government investigations cannot be predicted with certainty, management is not currently aware of any such investigations that it expects, individually or in the aggregate, will have a material adverse effect on the Company. In addition, the Company has a proactive business compliance program designed to ensure compliance and sound business practices. BACKLOG Orders for certain aerospace-related products sold to general and commercial aviation customers mainly consist of relatively short-term and frequently renewed commitments. Government procurement agencies generally issue contracts covering relatively long periods of time. Total backlog (principally for aerospace-related products and services) for both government and commercial contracts was $5,012 million at December 31, 1998 and $5,087 million at December 31, 1997 of which U.S. and foreign government orders were $1,511 million and $1,908 million for the respective years. The Company anticipates that approximately $3,553 million of the total 1998 backlog will be filled during 1999. Backlog information may not be an accurate indicator of future sales. Government contracts and, in general, subcontracts thereunder are terminable, in whole or in part, for default or for convenience by the government or the higher level contractor if deemed in their best interest. Upon termination for convenience, the contractor is normally entitled to reimbursement for allowable costs and to an allowance for profit. However, if the contract is terminated because of the contractor's default, the contractor may not recover all of its costs and may be liable for any excess costs incurred by the government in procuring undelivered items from another source. In addition to the right of the government to terminate, government contracts are conditioned upon the continuing availability of Congressional appropriations. Congress usually appropriates funds on a fiscal-year basis even though contract performance may extend over many years. Consequently, at the outset of a program, the prime contract is usually partially funded and additional funds are normally only appropriated to the contract by Congress in future years. Fixed-price subcontracts are normally fully funded, but are subject to convenience termination if the prime contract is not funded. SEGMENT FINANCIAL DATA Note 23 (Segment Financial Data) of Notes to Financial Statements in the Company's 1998 Annual Report to shareowners is incorporated herein by reference. DOMESTIC AND FOREIGN FINANCIAL DATA Note 24 (Geographic Areas -- Financial Data) of Notes to Financial Statements in the Company's 1998 Annual Report to shareowners is incorporated herein by reference. COMPETITION The Company encounters substantial competition, in each of its product areas, from businesses producing the same or similar products and businesses producing different products designed for the same uses. Such competition is expected to continue in all geographic markets. Depending on the particular market involved, the Company's businesses compete on a variety of factors, such as price, quality, delivery, customer service, performance, product innovation and product recognition. Other competitive factors for certain products include breadth of product line, research and development efforts and technical and managerial capability. While the Company's competitive position varies among its products, the Company believes it is a significant factor in each of its major product classes. Certain products and services of the Company are sold in competition with those of a large number of other companies, some of which have substantial financial resources and significant technological capabilities. Other products compete with independent suppliers or with the captive 11
component divisions of the vehicle manufacturers. Still other businesses are aligned around markets, customers and common technologies. Brand identity, service to customers and quality are important competitive factors in the market and there is considerable price competition. INTERNATIONAL OPERATIONS The Company is engaged in manufacturing, sales and/or research and development mainly in the U.S., Europe, Canada, Asia and Latin America. U.S. exports and foreign manufactured products are significant to the Company's operations. U.S. exports comprised 17% of total Company net sales in both 1998 and 1997. Foreign manufactured products and services, mainly in Europe, were 21% and 22% of total Company net sales in 1998 and 1997, respectively. The Company's international operations, including U.S. exports, are potentially subject to a number of unique risks and limitations, including: fluctuations in currency value; exchange control regulations; wage and price controls; employment regulations; foreign investment laws; import and trade restrictions, including embargoes; and governmental instability. Approximately 25% of total sales of aerospace-related products and services were exports of U.S. manufactured products and systems, performance of services such as aircraft repair and overhaul, and licensing activities. Exports were principally made to Europe, Asia and Canada. The principal manufacturing facilities outside of the U.S. are in Europe and Canada. Foreign manufactured products comprised 11% of total sales of aerospace-related products and services. Exports of U.S. manufactured automotive products comprised 5% of total sales of automotive products. The principal manufacturing facilities outside the U.S. are in Europe, with less significant operations in Asia, Latin America and Canada. Foreign manufactured products accounted for 47% of total sales of automotive products. Approximately 13% of total sales of chemicals, fibers, plastics and advanced materials were exports of U.S. manufactured products. Exports were principally made to Asia, Europe, Latin America and Canada. The principal manufacturing facilities outside the U.S. are in Europe, with less significant operations in Asia and Canada. Foreign manufactured products comprised 19% of total sales of chemicals, fibers, plastics and advanced materials. RAW MATERIALS The principal raw materials used to produce the Company's products include: aerospace products -- carbon fiber; electronic, optical and mechanical component parts and assemblies; electronic and electromechanical devices and metallic products; automotive products -- castings, forgings, steel and bar stock, copper, aluminum, platinum and titanium and chemicals, fibers, plastics and advanced materials -- cumene, natural gas, sulfur, terephthalic acid, ethylene and ethylene glycol, fluorspar, HF, carbon tetrachloride, chloroform, nylon resins, fiberglass, copper foil, platinum, rhodium, polyester chips, lubricating oil by-products and butylrubber. The Company is producing virtually all of its HF and nylon resin requirements. The principal raw materials used in the Company's operations are generally readily available. Major requirements for key raw materials and fuels are typically purchased pursuant to multi-year contracts. The Company is not dependent on any one supplier for a material amount of its raw material or fuel requirements. However, the Company is highly dependent on its suppliers and subcontractors in order to meet commitments to its customers. In addition, many major components and product equipment items are procured or subcontracted on a sole-source basis with a number of domestic and foreign companies. The Company maintains a qualification and performance surveillance process to control risk associated with such reliance on third parties. The Company believes that sources of supply for raw materials and components are generally adequate, although, temporary shortages may occur from time to time. PATENTS AND TRADEMARKS The Company owns approximately 9,000 patents or patent applications and is licensed under other patents covering certain of its products and processes. It believes that, in the aggregate, the rights under such patents and licenses are generally important to its operations, but does not consider 12
that any patent or patent license agreement or group of them related to a specific process or product is of material importance in relation to the Company's total business. The Company also has registered trademarks for a number of its products. Some of the more significant trademarks include: AiResearch, Anso, Autolite, Bendix, Bendix/King, Capron, Fram, Garrett, Genetron, Holts, Prestone and Redex. RESEARCH AND DEVELOPMENT The Company's research activities are directed toward the discovery and development of new products and processes, improvements in existing products and processes, and the development of new uses of existing products. Research and development expense totaled $394, $349 and $345 million in 1998, 1997 and 1996, respectively. Customer-sponsored (principally the U.S. Government) research and development activities amounted to an additional $418, $527 and $536 million in 1998, 1997 and 1996, respectively. ENVIRONMENT The Company is subject to various federal, state and local requirements regulating the discharge of materials into the environment or otherwise relating to the protection of the environment. It is the Company's policy to comply with these requirements and the Company believes that, as a general matter, its policies, practices and procedures are properly designed to prevent unreasonable risk of environmental damage, and of resulting financial liability, in connection with its business. Some risk of environmental damage is, however, inherent in certain operations and products of the Company, as it is with other companies engaged in similar businesses. The Company is and has been engaged in the handling, manufacture, use or disposal of many substances classified as hazardous or toxic by one or more regulatory agencies. The Company believes that, as a general matter, its handling, manufacture, use and disposal of such substances are in accord with environmental laws and regulations. It is possible, however, that future knowledge or other developments, such as improved capability to detect substances in the environment or increasingly strict environmental laws and standards and enforcement policies thereunder, could bring into question the Company's handling, manufacture, use or disposal of such substances. Among other environmental requirements, the Company is subject to the federal superfund law, and similar state laws, under which the Company has been designated as a potentially responsible party that may be liable for cleanup costs associated with various hazardous waste sites, some of which are on the U.S. Environmental Protection Agency's superfund priority list. Although, under some court interpretations of these laws, there is a possibility that a responsible party might have to bear more than its proportional share of the cleanup costs if it is unable to obtain appropriate contribution from other responsible parties, the Company has not had to bear significantly more than its proportional share in multi-party situations taken as a whole. Capital expenditures for environmental control facilities at existing operations were $52 million in 1998. The Company estimates that during each of the years 1999 and 2000 such capital expenditures will be in the $60 to $65 million range. In addition to capital expenditures, the Company has incurred and will continue to incur operating costs in connection with such facilities. Reference is made to Management's Discussion and Analysis at page 22 of the Company's 1998 Annual Report to shareowners, incorporated herein by reference, for further information regarding environmental matters. EMPLOYEES The Company had an aggregate of 70,400 employees at December 31, 1998. Approximately 49,900 were located in the United States, and, of these employees, about 23% were unionized employees represented by various local or national unions. 13
ITEM 2. PROPERTIES The Company has approximately 340 locations consisting of plants, research laboratories, sales offices and other facilities. The plants are generally located to serve large marketing areas and to provide accessibility to raw materials and labor pools. The properties are generally maintained in good operating condition. Utilization of these plants may vary with government spending and other business conditions; however, no major operating facility is significantly idle. The facilities, together with planned expansions, are expected to meet the Company's needs for the foreseeable future. The Company owns or leases warehouses, railroad cars, barges, automobiles, trucks, airplanes and materials handling and data processing equipment. It also leases space for administrative and sales staffs. The Company's headquarters and administrative complex is located at Morris Township, New Jersey. The principal plants, which are owned in fee unless otherwise indicated, are as follows: AEROSPACE SYSTEMS <TABLE> <S> <C> <C> Anniston, AL Olathe, KS (leased) Mississauga, Ontario Tempe, AZ Columbia, MD Canada Torrance, CA (partially Teterboro, NJ Yeovil, Somerset leased) Rocky Mount, NC United Kingdom Tucson, AZ Urbana, OH South Bend, IN Redmond, WA </TABLE> SPECIALTY CHEMICALS & ELECTRONIC SOLUTIONS <TABLE> <S> <C> <C> Baton Rouge, LA Orange, TX Seelze, Germany Geismar, LA </TABLE> TURBINE TECHNOLOGIES <TABLE> <S> <C> <C> Phoenix, AZ (4 plants, Torrance, CA Singapore 1 owned, 3 partially Thaon-Les-Vosges, France Skelmersdale, leased) Raunheim, Germany United Kingdom </TABLE> PERFORMANCE POLYMERS <TABLE> <S> <C> <C> Moncure, NC Chesterfield, VA Longlaville, France Pottsville, PA Churchill, VA Rudolstadt, Germany Columbia, SC Hopewell, VA Sparta, TN </TABLE> TRANSPORTATION PRODUCTS <TABLE> <S> <C> <C> Huntington, IN Greenville, OH Glinde, Germany Fostoria, OH </TABLE> ITEM 3. LEGAL PROCEEDINGS The first four paragraphs of Note 20 (Commitments and Contingencies) of Notes to Financial Statements at page 39 of the Company's 1998 Annual Report to shareowners are incorporated herein by reference. The Indiana Department of Environmental Management issued a Notice of Violation (NOV) to the Company on August 18, 1997 alleging, principally, that the Company had failed to obtain certain air emissions permits required for the construction and operation of various equipment at its South Bend, Indiana plant. The Company could be subject to monetary sanctions which may exceed $100,000. Management does not believe that any such monetary sanctions, if imposed, will have a material adverse effect on the consolidated results of operations or financial position of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable 14
EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the Registrant, listed as follows, are elected annually in April. There are no family relationships among them. <TABLE> <CAPTION> NAME, AGE, DATE FIRST ELECTED AN OFFICER BUSINESS EXPERIENCE - - ------------------------------- ---------------------------------------------------------------------------- <S> <C> Lawrence A. Bossidy (a), 63 Chairman of the Board since January 1992. Chief Executive Officer of the 1991 Company since July 1991. Frederic M. Poses (a), 56 President and Chief Operating Officer since June 1998. Vice Chairman from 1988 October 1997 to May 1998. Executive Vice President and President, AlliedSignal Engineered Materials from April 1988 to September 1997. Larry E. Kittelberger, 50 Senior Vice President and Chief Information Officer since February 1999. 1996 Vice President and Chief Information Officer from August 1995 to January 1999. Corporate Chairman -- Information Officer Leadership Committee of Tenneco Inc. (diversified industrial concern) from June 1989 to July 1995. Peter M. Kreindler, 53 Senior Vice President, General Counsel and Secretary since December 1994. 1992 Senior Vice President and General Counsel from March 1992 to November 1994. Donald J. Redlinger, 54 Senior Vice President -- Human Resources and Communications since February 1991 1995. Senior Vice President -- Human Resources from January 1991 to January 1995. Richard F. Wallman, 47 Senior Vice President and Chief Financial Officer since March 1995. Vice 1995 President and Controller of International Business Machines Corp. (IBM) from April 1994 to February 1995. General Assistant Controller of IBM from October 1993 to March 1994. William J. Amelio, 41 President -- Turbocharging Systems since April 1997. Vice President, 1998 Re-Engineering and Information Systems of IBM Personal Computer Company from 1996 to 1997. Vice President, Operations, IBM Personal Computer Company from 1994 to 1995. David E. Berges, 49 President -- Consumer Products Group since January 1998. President, 1998 Bendix/Jurid unit of Friction Materials from November 1997 to December 1997. Vice President and General Manager, Engine Systems and Accessories unit of Aerospace Equipment Systems from July 1994 to October 1997. Mark H. Breedlove, 42 President -- Friction Materials since October 1998. President, 1998 Bendix/Jurid unit of Friction Materials from February 1998 to September 1998. President, Asia Operations, Automotive from June 1996 to January 1998. President, Braking Systems -- Asia, from July 1995 to May 1996. Vice President, Product Management, Braking Systems -- Americas from August 1994 to June 1995. Vice President, Finance, Braking Systems North America from June 1993 to July 1994. Gary A. Cappeline, 49 President -- Specialty Chemicals since December 1998. Group Vice President, 1998 Pigments and Additives, Engelhard Corporation (chemical manufacturer) from January 1997 to November 1998; Group Vice President, Specialty Chemicals of Ashland Chemical from January 1993 to December 1996. </TABLE> - - ------------ (a) Also a director. (list continued on next page) 15
(list continued from previous page) <TABLE> <CAPTION> NAME, AGE, DATE FIRST ELECTED AN OFFICER BUSINESS EXPERIENCE - - ------------------------------- ---------------------------------------------------------------------------- <S> <C> Karen K. Clegg, 50 President -- Federal Manufacturing & Technologies (FM&T) since May 1995. 1998 Vice President of FM&T from February 1995 to April 1995. Vice President, Field Services and New Markets, AlliedSignal Technical Services Corporation from January 1994 to January 1995. Robert D. Johnson, 51 President -- Aerospace Marketing, Sales and Service since January 1999. 1998 President -- Electronic & Avionics Systems from October 1997 to December 1998. Vice President and General Manager, Aerospace Services from 1994 to 1997. Group Vice President, Manufacturing and Services of AAR Corp. from 1993 to 1994. Steven R. Loranger, 47 President -- Engines since July 1997. President -- Truck Brake Systems from 1998 February 1995 to June 1997. Vice President, Air Transport unit of Engines from May 1993 to January 1995. Jeffrey I. Sinclair, 49 President -- Truck Brake Systems since October 1997. Vice President, Global 1998 Sales and Marketing, Friction Materials from September 1996 to September 1997. Principal of A.T. Kearney (management consulting company) from September 1995 to August 1996. President of St. James Group (marketing consulting company) from March 1991 to August 1995. David N. Weidman, 43 President -- Polymers since March 1998. President -- Fluorine Products unit 1998 of Specialty Chemicals from May 1995 to February 1998. Vice President and General Manager, Performance Additives unit of Specialty Chemicals from May 1994 to April 1995. Vice President and General Manager of American Cyanamid's Fibers business from 1990 to 1994. Geoffrey Wild, 42 President -- Electronic Materials since February 1997. President of 1998 Electronic Materials of Johnson Matthey plc from August 1992 to January 1997. </TABLE> PART II. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market and dividend information for the Registrant's common stock is contained in Note 25 (Unaudited Quarterly Financial Information) of Notes to Financial Statements at page 42 of the Company's 1998 Annual Report to shareowners, and such information is incorporated herein by reference. The number of record holders of the Registrant's common stock is contained in the statement 'Selected Financial Data' at page 18 of the Company's 1998 Annual Report to shareowners, and such information is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA The information included under the captions 'For the Year' and 'At Year-End' in the statement 'Selected Financial Data' at page 18 of the Company's 1998 Annual Report to shareowners is incorporated herein by reference. 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 'Management's Discussion and Analysis' on pages 19 through 27 of the Company's 1998 Annual Report to shareowners is incorporated herein by reference. This Report contains, or incorporates by reference, certain statements that may be deemed 'forward-looking statements' within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that the Company or management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by management of the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. The forward-looking statements included in this Report are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Information relating to market risk is included under the caption 'Financial Instruments' in 'Management's Discussion and Analysis' on pages 22 and 23 of the Company's 1998 Annual Report to shareowners, and such information is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's consolidated financial statements, together with the report thereon of PricewaterhouseCoopers LLP dated February 1, 1999 appearing on pages 27 through 42 of the Company's 1998 Annual Report to shareowners, are incorporated herein by reference. With the exception of the aforementioned information and the information incorporated by reference in Items 1, 3, 5, 6, 7 and 7A, the 1998 Annual Report to shareowners is not to be deemed filed as part of this Form 10-K Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information relating to directors of the Registrant, as well as information relating to compliance with Section 16(a) of the Securities Exchange Act of 1934, will be contained in a definitive Proxy Statement involving the election of directors which the Registrant will file with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after December 31, 1998, and such information is incorporated herein by reference. Certain other information relating to Executive Officers of the Registrant appears at pages 15 and 16 of this Form 10-K Annual Report. ITEM 11. EXECUTIVE COMPENSATION Information relating to executive compensation is contained in the Proxy Statement referred to above in 'Item 10. Directors and Executive Officers of the Registrant,' and such information is incorporated herein by reference. 17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information relating to security ownership of certain beneficial owners and management is contained in the Proxy Statement referred to above in 'Item 10. Directors and Executive Officers of the Registrant,' and such information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not Applicable PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K <TABLE> <CAPTION> PAGE IN ANNUAL REPORT TO SHAREOWNERS ---------------- <S> <C> (a)(1.) Index to Consolidated Financial Statements: Incorporated by reference to the 1998 Annual Report to shareowners: Report of Independent Accountants.................................................... 27 Consolidated Statement of Income for the years ended December 31, 1998, 1997 and 1996................................................................................ 28 Consolidated Balance Sheet at December 31, 1998 and 1997............................. 29 Consolidated Statement of Cash Flows for the years ended December 31, 1998, 1997 and 1996................................................................................ 30 Consolidated Statement of Shareowners' Equity for the years ended December 31, 1998, 1997 and 1996....................................................................... 31 Notes to Financial Statements........................................................ 32 </TABLE> (a)(2.) Consolidated Financial Statement Schedules The two financial statement schedules applicable to the Company have been omitted because of the absence of the conditions under which they are required. (a)(3.) Exhibits See the Exhibit Index to this Form 10-K Annual Report. The following exhibits listed on the Exhibit Index are filed with this Form 10-K Annual Report: <TABLE> <CAPTION> EXHIBIT NO. DESCRIPTION - - ----------- ----------------------------------------------------------------------------------------- <C> <S> 13 Pages 18 through 42 (except for the data included under the captions 'Financial Statistics' on page 18) of the Company's 1998 Annual Report to shareowners 21 Subsidiaries of the Registrant 23 Consent of Independent Accountants 24 Powers of Attorney 27 Financial Data Schedule </TABLE> (b) Reports on Form 8-K During the three months ended December 31, 1998, a report on Form 8-K was filed on October 21, 1998 disclosing certain earnings data, updated Year 2000 information and certain new credit facilities. 18
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. AlliedSignal Inc. March 4, 1999 By: /s/ RICHARD J. DIEMER, JR. --------------------------------- Richard J. Diemer, Jr. Vice President and Controller Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated: <TABLE> <CAPTION> NAME NAME ---- ----- <S> <C> * * - - ------------------------------------------------------ ------------------------------------------------------ Lawrence A. Bossidy Russell E. Palmer Chairman of the Board and Chief Executive Director Officer and Director * * - - ------------------------------------------------------ ------------------------------------------------------ Frederic M. Poses Ivan G. Seidenberg Director Director * * - - ------------------------------------------------------ ------------------------------------------------------ Hans W. Becherer Andrew C. Sigler Director Director * - - ------------------------------------------------------ ------------------------------------------------------ Marshall N. Carter John R. Stafford Director Director (Joined Board of Directors March 1, 1999) * * - - ------------------------------------------------------ ------------------------------------------------------ Ann M. Fudge Thomas P. Stafford Director Director * * - - ------------------------------------------------------ ------------------------------------------------------ Paul X. Kelley Robert C. Winters Director Director * * - - ------------------------------------------------------ ------------------------------------------------------ Robert P. Luciano Henry T. Yang Director Director * /s/ RICHARD J. DIEMER, JR. - - ------------------------------------------------------ ------------------------------------------------------ Robert B. Palmer Richard J. Diemer, Jr. Director Vice President and Controller (Principal Accounting Officer) /s/ RICHARD F. WALLMAN - - ------------------------------------------------------ Richard F. Wallman Senior Vice President and Chief Financial Officer (Principal Financial Officer) *By: /s/ RICHARD F. WALLMAN ------------------------------------------------- (Richard F. Wallman Attorney-in-fact) </TABLE> March 4, 1999 19
EXHIBIT INDEX <TABLE> <CAPTION> EXHIBIT NO. DESCRIPTION - - ----------- --------------------------------------------------------------------------------------------- <C> <S> 2 Omitted (Inapplicable) 3(i) Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3(i) to the Company's Form 10-Q for the quarter ended March 31, 1997) 3(ii) By-laws of the Company, as amended (incorporated by reference to Exhibit 3(ii) to the Company's Form 10-Q for the quarter ended March 31, 1996) 4 The Company is a party to several long-term debt instruments under which, in each case, the total amount of securities authorized does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, the Company agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request. 9 Omitted (Inapplicable) 10.1 Master Support Agreement, dated February 26, 1986, as amended and restated January 27, 1987, as further amended July 1, 1987 and as again amended and restated December 7, 1988, by and among the Company, Wheelabrator Technologies Inc., certain subsidiaries of Wheelabrator Technologies Inc., The Henley Group, Inc. and Henley Newco Inc. (incorporated by reference to Exhibit 10.1 to the Company's Form 10-K for the year ended December 31, 1988) 10.2* Deferred Compensation Plan for Non-Employee Directors of AlliedSignal Inc., as amended (incorporated by reference to Exhibit 10.2 to the Company's Form 10-K for the year ended December 31, 1996) 10.3* Stock Plan for Non-Employee Directors of AlliedSignal Inc., as amended (incorporated by reference to Exhibit C to the Company's Proxy Statement, dated March 10, 1994, filed pursuant to Rule 14a-6 of the Securities Exchange Act of 1934) 10.4* 1985 Stock Plan for Employees of Allied-Signal Inc. and its Subsidiaries, as amended (incorporated by reference to Exhibit 19.3 to the Company's Form 10-Q for the quarter ended September 30, 1991) 10.5* AlliedSignal Inc. Incentive Compensation Plan for Executive Employees, as amended (incorporated by reference to Exhibit B to the Company's Proxy Statement, dated March 10, 1994, filed pursuant to Rule 14a-6 of the Securities Exchange Act of 1934) 10.6* Supplemental Non-Qualified Savings Plan for Highly Compensated Employees of AlliedSignal Inc. and its Subsidiaries, as amended (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended March 31, 1995) 10.7* AlliedSignal Inc. Severance Plan for Senior Executives, as amended (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q for the quarter ended March 31, 1994) 10.8* Salary Deferral Plan for Selected Employees of AlliedSignal Inc. and its Affiliates, as amended (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q for the quarter ended March 31, 1995) 10.9* 1993 Stock Plan for Employees of AlliedSignal Inc. and its Affiliates (incorporated by reference to Exhibit A to the Company's Proxy Statement, dated March 10, 1994, filed pursuant to Rule 14a-6 of the Securities Exchange Act of 1934) </TABLE>
<TABLE> <CAPTION> EXHIBIT NO. DESCRIPTION - - ----------- --------------------------------------------------------------------------------------------- <C> <S> 10.10* Amended and restated Agreement, dated May 6, 1994, as amended May 12, 1997 between the Company and Lawrence A. Bossidy (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q for the quarter ended June 30, 1994 and to Exhibit 10.15 to the Company's Form 10-Q for the quarter ended June 30, 1997) 10.11 Five-Year Credit Agreement dated as of June 30, 1995 as amended by and between AlliedSignal Inc., a Delaware corporation, the banks, financial institutions and other institutional lenders listed on the signature pages thereof (the 'Lenders'), Citibank, N.A., as agent, and ABN Amro Bank N.V. and Morgan Guaranty Trust Company of New York, as co-agents, for the Lenders (incorporated by reference to Exhibit 10.1 to the Company's Forms 10-Q for the quarters ended June 30, 1995 and June 30, 1996 and to Exhibit 10.13 to the Company's Form 10-Q for the quarter ended June 30, 1997) 10.12 364 Day Backstop Credit Agreement dated as of October 9, 1998 by and among AlliedSignal Inc., Bank of America NT&SA, Citibank, N.A., as Agent, Banque Nationale de Paris, Barclays Bank PLC, Citibank, N.A., Deutsche Bank AG and Morgan Guaranty Trust Company of New York, as Lenders, and Citibank, N.A., as Agent (incorporated by reference to Exhibit 99.1 to the Company's Form 8-K filed October 21, 1998) 10.13* AlliedSignal Inc. Supplemental Pension Plan, as amended (incorporated by reference to Exhibit 10.13 to the Company's Form 10-K for the year ended December 31, 1997) 11 Omitted (Inapplicable) 12 Omitted (Inapplicable) 13 Pages 18 through 42 (except for the data included under the captions 'Financial Statistics' on page 18) of the Company's 1998 Annual Report to shareowners (filed herewith) 16 Omitted (Inapplicable) 18 Omitted (Inapplicable) 21 Subsidiaries of the Registrant (filed herewith) 22 Omitted (Inapplicable) 23 Consent of Independent Accountants (filed herewith) 24 Powers of Attorney (filed herewith) 27 Financial Data Schedule (filed herewith) 28 Omitted (Inapplicable) 99 Omitted (Inapplicable) </TABLE> - - ------------ The Exhibits identified above with an asterisk(*) are management contracts or compensatory plans or arrangements. STATEMENT OF DIFFERENCES ------------------------ The registered trademark symbol shall be expressed as.................. 'r'