SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1998 Commission file number 1-12383 Rockwell International Corporation (Exact name of registrant as specified in its charter) Delaware 25-1797617 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 600 Anton Boulevard, Suite 700, P.O. Box 5090, Costa Mesa, CA 92628-5090 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (714) 424-4565 (Office of the Corporate Secretary) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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 196,508,777 shares of registrant's Common Stock, $1.00 par value, were outstanding on April 30, 1998.
ROCKWELL INTERNATIONAL CORPORATION INDEX PART I. FINANCIAL INFORMATION: Item 1. Consolidated Financial Statements: Page No. Condensed Consolidated Balance Sheet-- March 31, 1998 and September 30, 1997.......... 2 Consolidated Statement of Income--Three Months and Six Months Ended March 31, 1998 and 1997... 3 Consolidated Statement of Cash Flows-- Six Months Ended March 31, 1998 and 1997....... 4 Notes to Consolidated Financial Statements..... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk.............................. 14 PART II. OTHER INFORMATION: Item 2. Changes in Securities and Use of Proceeds...... 15 Item 4. Submission of Matters to a Vote of Security Holders........................................ 15 Item 5. Other Information.............................. 15 Item 6. Exhibits and Reports on Form 8-K............... 16
PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements ROCKWELL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (In millions) (Unaudited) <TABLE> <CAPTION> March 31 September 30 1998 1997 ASSETS <S> <C> <C> Current assets: Cash........................................... $ 272 $ 283 Receivables (less allowance for doubtful accounts: March 31, 1998, $66; September 30, 1997, $62)..................... 1,274 1,319 Inventories.................................... 1,699 1,526 Deferred income taxes.......................... 249 254 Other current assets........................... 286 302 Total current assets................... 3,780 3,684 Net property...................................... 2,298 2,245 Intangible assets................................. 1,805 1,789 Other assets...................................... 240 253 TOTAL.................... $ 8,123 $ 7,971 LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term debt................................ $ 84 $ 66 Accounts payable............................... 774 840 Accrued compensation and benefits.............. 422 436 Accrued income taxes........................... 43 96 Other current liabilities...................... 530 532 Total current liabilities.............. 1,853 1,970 Long-term debt.................................... 907 156 Accrued retirement benefits....................... 775 795 Other liabilities................................. 231 239 Total liabilities............. 3,766 3,160 Shareowners' equity: Common Stock (shares issued: 216.4)............ 216 216 Additional paid-in capital..................... 917 901 Retained earnings.............................. 4,447 4,409 Currency translation........................... (116) (103) Common Stock in treasury, at cost (shares held: March 31, 1998, 18.9; September 30, 1997, 9.6)..................... (1,107) (612) Total shareowners' equity..... 4,357 4,811 TOTAL.................... $ 8,123 $ 7,971 </TABLE> See Notes to Consolidated Financial Statements.
ROCKWELL INTERNATIONAL CORPORATION CONSOLIDATED STATEMENT OF INCOME (In millions, except per share amounts) (Unaudited) <TABLE> <CAPTION> Three Months Ended Six Months Ended March 31 March 31 1998 1997 1998 1997 <S> <C> <C> <C> <C> Revenues: Sales........................... $ 1,941 $ 1,899 $ 3,920 $ 3,752 Other income.................... 24 20 49 38 Total revenues................ 1,965 1,919 3,969 3,790 Costs and expenses: Cost of sales................... 1,408 1,325 2,810 2,610 Selling, general, and administrative................ 381 339 737 675 Purchased research and development................... - - 103 - Interest........................ 13 6 17 10 Total costs and expenses...... 1,802 1,670 3,667 3,295 Income from continuing operations before income taxes............. 163 249 302 495 Provision for income taxes........ 54 94 104 186 INCOME FROM CONTINUING OPERATIONS...................... 109 155 198 309 Income from discontinued operations...................... - 34 - 59 NET INCOME ....................... $ 109 $ 189 $ 198 $ 368 Basic earnings per share: Continuing operations.......... $ 0.55 $ 0.72 $ 0.98 $ 1.42 Discontinued operations........ - 0.15 - 0.27 Net income..................... $ 0.55 $ 0.87 $ 0.98 $ 1.69 Diluted earnings per share: Continuing operations.......... $ 0.53 $ 0.71 $ 0.96 $ 1.40 Discontinued operations........ - 0.14 - 0.26 Net income..................... $ 0.53 $ 0.85 $ 0.96 $ 1.66 Cash dividends per share.......... $ 0.25 $ 0.29 $ 0.51 $ 0.58 Average outstanding shares Basic.......................... 200.2 216.2 202.6 217.4 Diluted........................ 203.6 219.6 205.9 220.7 </TABLE> See Notes to Consolidated Financial Statements.
ROCKWELL INTERNATIONAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (In millions) (Unaudited) <TABLE> <CAPTION> Six Months Ended March 31 1998 1997 <S> <C> <C> CONTINUING OPERATIONS: Operating Activities Income from continuing operations.................... $ 198 $ 309 Adjustments to income from continuing operations to arrive at cash provided by operating activities: Depreciation..................................... 196 178 Amortization of intangible assets................ 49 45 Deferred income taxes............................ (40) (25) Pension expense, net of contributions............ 18 26 Purchased research and development............... 103 - Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency adjustments: Receivables.................................. 55 (25) Inventories.................................. (136) (27) Accounts payable............................. (63) (93) Accrued income taxes......................... (47) (26) Other assets and liabilities................. (71) 12 Cash Provided by Operating Activities..... 262 374 Investing Activities Property additions................................... (265) (257) Acquisition of businesses (net of cash acquired)..... (158) (23) Proceeds from disposition of property and businesses. 16 565 Cash (Used for) Provided by Investing Activities.................... (407) 285 Financing Activities Increase (decrease) in short-term borrowings......... 24 (61) Increase in long-term debt........................... 750 - Payments of long-term debt........................... - (14) Net increase (decrease) in debt...................... 774 (75) Purchase of treasury stock........................... (595) (342) Cash dividends....................................... (103) (126) Reissuance of common stock........................... 58 33 Cash Provided by (Used for) Financing Activities.................... 134 (510) CASH (USED FOR) PROVIDED BY CONTINUING OPERATIONS.... (11) 149 Cash Used for Discontinued Operations................ - (151) DECREASE IN CASH..................................... (11) (2) CASH AT BEGINNING OF PERIOD.......................... 283 695 CASH AT END OF PERIOD................................ $ 272 $ 693 </TABLE> See Notes to Consolidated Financial Statements.
ROCKWELL INTERNATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. In the opinion of management of Rockwell International Corporation (the company or Rockwell), the unaudited consolidated financial statements contain all adjustments, consisting solely of adjustments of a normal recurring nature, necessary to present fairly the financial position, results of operations, and cash flows for the periods presented. These statements should be read in conjunction with the company's Annual Report on Form 10-K for the fiscal year ended September 30, 1997. The results of operations for the three- and six-month periods ended March 31, 1998 are not necessarily indicative of the results for the full year. Certain prior year amounts have been reclassified to conform with the current presentation. It is the company's practice at the end of each interim reporting period to make an estimate of the effective tax rate expected to be applicable for the full fiscal year. The rate so determined is used in providing for income taxes on a year-to-date basis. The company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share", in the first quarter of fiscal 1998. The adoption of this standard had no effect on the company's financial statements. During the second quarter of 1998, the company adopted American Institute of Certified Public Accountants Statement of Position No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" (SOP 98-1). SOP 98-1 requires the cost of purchased software and certain costs incurred in developing computer software for internal use to be capitalized and amortized over future periods. During the first six months of fiscal 1998, the company capitalized $14 million of such costs that would have been charged to expense under its previous accounting policy. The impact of adopting SOP 98-1 on 1998's first quarter results was immaterial. 2. In December 1997, the company acquired the In-Flight Entertainment (IFE) business of Hughes-Avicom International, Inc., a leading supplier of airborne interactive IFE systems. The acquisition has been accounted for as a purchase as of December 31, 1997, and the company has recorded a charge of $103 million ($63 million after-tax) for purchased research and development. The remaining assets acquired and liabilities assumed have been recorded at estimated fair values determined by the company's management based on information currently available. The results of the IFE business have been included in the consolidated statement of income since its date of acquisition.
ROCKWELL INTERNATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. Discontinued operations includes the Automotive business and the Aerospace and Defense businesses (A&D Business). On September 30, 1997, the company completed the spin-off of its Automotive business into a separate company by distributing all of the issued and outstanding shares of Meritor Automotive, Inc. (Meritor) to the company's shareowners (the Spin-off). On December 6, 1996, the company completed the merger of its former A&D Business with a subsidiary of The Boeing Company (the Reorganization). The following table summarizes the results of discontinued operations for the three- and six-month periods ended March 31, 1997 (in millions): Three Months Ended Six Months Ended March 31, 1997 March 31, 1997 Revenues: Automotive.................. $ 827 $1,594 A&D Business................ - 535 Total..................... $ 827 $2,129 Income before income taxes: Automotive.................. $ 56 $ 100 A&D Business................ - - Total..................... $ 56 $ 100 Net income: Automotive.................. $ 34 $ 59 A&D Business................ - - Total..................... $ 34 $ 59 The earnings of the A&D Business for the first two months of 1997 were entirely offset by expenses relating to the Reorganization. 4. Inventories are summarized as follows (in millions): March 31 September 30 1998 1997 Finished goods............................. $ 471 $ 414 Work in process............................ 774 702 Raw materials, parts, and supplies......... 451 404 Total.................................... 1,696 1,520 Adjustment to the carrying value of certain inventories to a LIFO basis...... 3 6 Inventories.............................. $ 1,699 $ 1,526
ROCKWELL INTERNATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 5. Intangible assets, net of accumulated amortization, are summarized as follows (in millions): March 31 September 30 1998 1997 Goodwill.................................. $ 1,224 $ 1,249 Trademarks, patents, product technology, and other intangibles................... 581 540 Intangible assets....................... $ 1,805 $ 1,789 6. Short-term debt consisted of the following (in millions): March 31 September 30 1998 1997 Short-term foreign bank borrowings....... $ 83 $ 64 Current portion of long-term debt........ 1 2 Short-term debt......................... $ 84 $ 66 At March 31, 1998, the company had $1.5 billion of unsecured credit facilities with various banks which are used primarily to support commercial paper borrowings. There were no significant commitment fees or compensating balance requirements under these facilities. Short-term credit facilities available to foreign subsidiaries amounted to $315 million at March 31, 1998 and consisted of arrangements for which there are no significant commitment fees. 7. Other current liabilities are summarized as follows (in millions): March 31 September 30 1998 1997 Contract reserves and advance payments..... $ 148 $ 146 Accrued product warranties................. 122 113 Accrued taxes other than income taxes...... 52 46 Other...................................... 208 227 Other current liabilities................ $ 530 $ 532
ROCKWELL INTERNATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 8. Long-term debt consisted of the following (in millions): March 31 September 30 1998 1997 6.8% notes, payable in 2003............... $ 150 $ 150 6.15% notes, payable in 2008.............. 350 - 6.70% debentures, payable in 2028......... 250 - 5.20% debentures, payable in 2098......... 200 - Other obligations......................... 18 20 Less unamortized discount................. (60) (12) Total................................... 908 158 Less current portion...................... 1 2 Long-term debt.......................... $ 907 $ 156 In January 1998, the company issued $800 million of aggregate principal amount of long-term notes and debentures in a public offering consisting of the 6.15% 10-year notes issued at par, the 6.70% 30-year debentures issued at par, and the 5.20% 100-year debentures issued at a discount. This debt offering yielded approximately $750 million of proceeds. 9. Accrued retirement benefits consisted of the following (in millions): March 31 September 30 1998 1997 Accrued retirement medical costs........... $ 680 $ 684 Accrued pension costs...................... 149 166 Total.................................... 829 850 Amount classified as current liability..... 54 55 Accrued retirement benefits.............. $ 775 $ 795
ROCKWELL INTERNATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 10. Claims have been asserted against the company for utilizing the intellectual property rights of others in certain of the company's products. The resolution of these matters may result in the negotiation of a license agreement, a settlement or the resolution of such claims through arbitration or litigation. The company accrues the estimated cost of the ultimate resolution of these matters. Management believes that the resolution of these matters will not have a material adverse effect on the company's consolidated financial statements. Various other lawsuits, claims and proceedings have been or may be instituted or asserted against the company relating to the conduct of its business, including those pertaining to product liability, safety and health, environmental, and employment matters. Pursuant to the Reorganization, Rockwell has agreed to indemnify The Boeing Company for certain government contract and environmental matters related to operations of the A&D Business for periods prior to the Reorganization. In connection with the Spin-off, Meritor has agreed to indemnify the company for substantially all contingent liabilities related to the Automotive business. Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims, or proceedings may be disposed of unfavorably to the company, management believes the disposition of matters which are pending or asserted will not have a material adverse effect on the company's consolidated financial statements.
ROCKWELL INTERNATIONAL CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS The contributions to sales and earnings by business segment and the composition of sales of the company for the second quarter and the first six months of fiscal 1998 and 1997 are presented below (in millions). Three Months Ended Six Months Ended March 31 March 31 1998 1997 1998 1997 Sales Automation $ 1,130 $ 1,114 $ 2,269 $ 2,175 Avionics & Communications 496 416 922 790 Semiconductor Systems 315 369 729 787 Total sales $ 1,941 $ 1,899 $ 3,920 $ 3,752 Operating earnings (loss) Automation $ 147 $ 149 $ 291 $ 280 Avionics & Communications 77 57 151 116 Semiconductor Systems (27) 71 16 152 Purchased research and development - - (103) - Operating earnings 197 277 355 548 General corporate - net (21) (22) (36) (43) Interest expense (13) (6) (17) (10) Provision for income taxes (54) (94) (104) (186) INCOME FROM CONTINUING OPERATIONS 109 155 198 309 Income from discontinued operations - 34 - 59 NET INCOME $ 109 $ 189 $ 198 $ 368 Composition of sales U.S. Commercial $ 1,135 $ 1,063 $ 2,260 $ 2,122 International 661 687 1,378 1,365 U.S. Government 145 149 282 265 Total $ 1,941 $ 1,899 $ 3,920 $ 3,752 Purchased research and development relates to the acquisition of an Avionics & Communications business.
ROCKWELL INTERNATIONAL CORPORATION RESULTS OF OPERATIONS (Continued) 1998 Second Quarter Compared to 1997 Second Quarter Sales for the second quarter of 1998 were about the same as 1997's second quarter sales. Avionics & Communications' sales were higher due to strong commercial air transport, business and regional aircraft markets. Semiconductor Systems' sales were lower due to severe pricing pressure for both the older V.34 and the new interoperable V.90 PC modem products. Automation's sales were about the same as a year ago. Income from continuing operations for the 1998 second quarter was $109 million, or 53 cents per share, compared to income from continuing operations of $155 million, or 71 cents per share, for the second quarter of 1997. Earnings per share continues to be favorably impacted by the company's common stock repurchase program. Automation's 1998 second quarter operating earnings of $147 million were about the same as 1997's second quarter earnings of $149 million, with a 30 percent sales increase in Latin America, offset by sales declines in Asian markets. Automation's second quarter operating earnings as a percent of sales were 13.0 percent, compared to 12.6 percent in the first quarter of 1998 and 13.4 percent for the same period a year ago. Avionics & Communications achieved a 35 percent increase in operating earnings to $77 million from $57 million in 1997's second quarter, primarily due to strong commercial air transport, business and regional aircraft markets in North America. Avionics & Communications' second quarter operating earnings as a percent of sales were 15.5 percent compared to 13.7 percent in the second quarter of 1997. Semiconductor Systems recorded an operating loss of $27 million in the second quarter of 1998 compared to operating earnings of $71 million in 1997's second quarter. Operating results in the second quarter were adversely impacted by severe pricing pressure on modem products, continued major research and development investments in non-modem product lines and a $10 million restructuring charge. Six Months Ended March 31, 1998 Compared to Six Months Ended March 31, 1997 Overall, sales for the first six months of 1998 increased four percent over the same 1997 period as higher sales at Avionics & Communications and Automation more than offset the decline of Semiconductor Systems' sales. Avionics & Communications continues to capitalize on strong commercial air transport markets. Automation recorded a four percent increase in sales, principally in North and South America offset by sales declines in Asian markets. Semiconductor Systems' sales were lower due to severe pricing pressure for both the older V.34 and the new interoperable V.90 PC modem products.
ROCKWELL INTERNATIONAL CORPORATION RESULTS OF OPERATIONS (CONTINUED) For the first six months of 1998, income from continuing operations, before a special charge of $103 million ($63 million after-tax or 30 cents per share)which related to the company's acquisition of the IFE business, was $261 million, or $1.26 per share, compared to income from continuing operations of $309 million, or $1.40 per share, for the first six months of 1997. Earnings per share continues to be favorably impacted by the company's common stock repurchase program. Net income for the first six months of 1998, including the acquisition-related special charge of $63 million, was $198 million, or 96 cents per share. Net income for the first six months of 1997, including discontinued operations, totaled $368 million, or $1.66 per share. Automation's operating earnings for the first six months of 1998 increased four percent over the same period a year ago principally due to higher sales in North and South America. Avionics & Communications' operating earnings, before the acquisition-related special charge, for the first six months of 1998 increased 30 percent over last year as a result of strong commercial air transport, business and regional aircraft markets. Including the special charge, Avionics & Communications' operating earnings for the first six months of 1998 were $48 million. Semiconductor Systems' operating earnings decreased 89 percent for the first six months of 1998 compared to the first six months of 1997 due to severe pricing pressure on PC modem products, continuing major research and development investments in new non-modem product lines and a $10 million restructuring charge. The full year 1998 tax rate is expected to be approximately 35.5 percent, one percentage point less than the 1997 rate of 36.5 percent, as the company continues to benefit from ongoing tax planning initiatives. Looking ahead to the second half of 1998, management expects continued excellent performance from Avionics & Communications. Automation should achieve higher sales and earnings in 1998 despite the depressed business activity in Asia, particularly South Korea, which is now adversely impacting markets in that region. Management anticipates that Semiconductor Systems will return to profitability in the second half, with increased unit volumes across all product platforms more than offsetting continued pricing pressures in modem products. For the full 1998 fiscal year, management expects earnings per share to be at about the same level as last year's $2.89 per share; although this level of performance will require improved Automation markets, and improved volume and a moderation of price declines in Semiconductor Systems' core modem products.
ROCKWELL INTERNATIONAL CORPORATION FINANCIAL CONDITION The major uses of cash for the first six months of 1998 were the acquisition of the IFE business, the common stock repurchase program, property additions, and cash dividends paid to shareowners. During the first six months of 1998, the company completed the $1 billion common stock repurchase program announced in December 1996 and substantially completed the $500 million program announced in September 1997. The company has repurchased a total of 24.4 million shares of its common stock for approximately $1.45 billion through March 31, 1998 under these programs. During the second quarter and first six months of 1998, the company repurchased 6.3 million and 11 million shares of its common stock, respectively, for $356 million and $595 million, respectively. In February 1998, the company's Board of Directors approved an additional $500 million common stock repurchase program. Future common stock repurchases are expected to be funded by cash generated by operating activities and commercial paper borrowings. In January 1998, the company issued $800 million of aggregate principal amount of long-term notes and debentures in a public offering. The proceeds of this debt offering of approximately $750 million were used to repay approximately $380 million of outstanding short-term commercial paper borrowings, with the balance to be used for general corporate purposes, including the company's ongoing common stock repurchase program. In the first six months of 1998, the company's dividend payments to shareowners totaled $103 million or $0.51 per share, compared to $126 million, or $0.58 per share, in the first six months of fiscal 1997. The lower 1998 dividends reflect the apportionment of the company's total 1997 dividend between Rockwell and Meritor. Upon the spin-off of Meritor at September 30, 1997, the annual $1.16 per share dividend was apportioned at $1.02 for Rockwell and $0.14 for Meritor. A major source of cash for the first six months of 1997 was from the sale of the Graphic Systems business for approximately $600 million, consisting of $553 million in cash and $47 million in preferred stock. Information with respect to the effect on the company and its manufacturing operations of compliance with environmental protection requirements and resolution of environmental claims is contained under the caption Environmental Issues in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of the company's Annual Report on Form 10-K for the fiscal year ended September 30, 1997. Management believes that at March 31, 1998, there has been no material change to this information.
ROCKWELL INTERNATIONAL CORPORATION Item 3. Quantitative And Qualitative Disclosures About Market Risk The company's financial instruments include cash, equity securities, short- and long-term debt, and foreign currency forward exchange contracts. At March 31, 1998, the carrying values of the company's financial instruments approximated their fair values based on current market prices and rates. It is the policy of the company not to enter into derivative financial instruments for speculative purposes. The company enters into foreign currency forward exchange contracts to protect itself from adverse currency rate fluctuations on foreign currency commitments entered into in the ordinary course of business. These commitments are generally for terms of less than one year. The foreign currency forward exchange contracts are executed with creditworthy banks and are denominated in currencies of major industrial countries. The notional amount of all the company's outstanding foreign currency forward exchange contracts aggregated $363 million at March 31, 1998 and $239 million at September 30, 1997. The gains and losses relating to these foreign currency forward exchange contracts are deferred and included in the measurement of the foreign currency transactions subject to the hedge. Any gain or loss incurred on foreign currency forward exchange contracts is offset by the effects of currency movements on the respective underlying hedged transactions. Based on the company's overall currency rate exposure at March 31, 1998, a 10 percent change in currency rates would not have had a material effect on the financial position, results of operations, or cash flows of the company.
ROCKWELL INTERNATIONAL CORPORATION PART II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds On January 9, 1998, the company issued 154, 205, 35, and 205 shares of restricted stock, respectively, to the following directors of the company: George L. Argyros, Richard M. Bressler, William H. Gray, III, and John D. Nichols. These shares were issued pursuant to deferral elections made in accordance with the Directors Stock Plan in partial or full payment for retainer fees otherwise payable in cash. On February 4, 1998, the company issued 400 shares pursuant to the Directors Stock Plan to each of the non-employee directors of the company whose term continued after the annual meeting held on that date (George L. Argyros, Richard M. Bressler, Judith L. Estrin, William H. Gray, III, J. Clayburn LaForce, Jr., William T. McCormick, Jr., John D. Nichols, Bruce M. Rockwell, Joseph F. Toot, Jr. and William S. Sneath) as annual grants pursuant to the Directors Stock Plan. The issuance of all these shares was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(2) thereof. Item 4. Submission of Matters to a Vote of Security Holders (a) The regular annual meeting of shareowners of the company was held on February 4, 1998. (c) At the annual meeting, the shareowners: (i) voted to elect four directors of the company. Each nominee for director was elected by a vote of the shareowners as follows: Affirmative Votes Votes Withheld George L. Argyros 169,880,589 2,964,619 Don H. Davis, Jr. 170,014,500 2,830,708 William H. Gray, III 169,797,459 3,047,749 William T. McCormick, Jr. 170,054,092 2,791,116 (ii) voted upon a proposal to approve the selection by the Board of Directors of the firm of Deloitte & Touche LLP as auditors of the company. The proposal was approved by a vote of the shareowners as follows: Affirmative votes 170,956,825 Negative votes 800,009 Abstentions 1,088,374 Item 5. Other Information Government Contracts For information on the company's United States government contracting business, certain risks of that business and claims related thereto, see the information set forth under the caption Government Contracts in Item 1, Business, on page 3 of the company's Annual Report on Form 10-K for fiscal year ended September 30, 1997, which is incorporated herein by reference.
ROCKWELL INTERNATIONAL CORPORATION PART II. OTHER INFORMATION (Continued) Cautionary Statement This Quarterly Report on Form 10-Q contains statements relating to future results of the company (including certain projections and business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in political and economic conditions; domestic and foreign government spending, budgetary and trade policies; demand for and market acceptance of new and existing products; successful development of advanced technologies; and competitive product and pricing pressures; as well as other risks and uncertainties, including but not limited to those detailed from time to time in the company's Securities and Exchange Commission filings. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 3-b-1 - Copy of resolution of the Board of Directors of the company, adopted March 27, 1998, amending the By-Laws of the company effective March 27, 1998. Exhibit 3-b-2 - By-Laws of the Company as in effect on the date hereof. Exhibit 11 - Computation of Earnings Per Share Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges for the Six Months Ended March 31, 1998. Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K: The company filed a Current Report on Form 8-K dated January 20, 1998 in respect of the company's press release reporting earnings for the three months ended December 31, 1997 (Items 5 and 7(c)). The company filed a Current Report on Form 8-K dated January 26, 1998 relating to the issuance of $800 million in aggregate principal amount of long-term notes and debentures (Items 5 and 7(c)).
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ROCKWELL INTERNATIONAL CORPORATION (Registrant) Date May 13, 1998 By W. E. Sanders W. E. Sanders Vice President and Controller (Principal Accounting Officer) Date May 13, 1998 By W. J. Calise, Jr. W. J. Calise, Jr. Senior Vice President, General Counsel and Secretary
ROCKWELL INTERNATIONAL CORPORATION INDEX OF EXHIBITS TO FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998 Page Exhibit 3-b-1 - Copy of resolution of the Board of Directors of the company, adopted March 27, 1998, amending the By-Laws of the company effective March 27, 1998. Exhibit 3-b-2 - By-Laws of the company as in effect on the date hereof. Exhibit 11 - Computation of Earnings Per Share for the Three Months Ended March 31, 1998. Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges for the Three Months Ended March 31, 1998. Exhibit 27 - Financial Data Schedule