-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ooJz/eaTwQbBrc+lNsYIYYcGGHNY3nF89pABJqB3/nkEB15aLoHnfvYVbUEaoCOB f8a/i1dkdxRycLrbvlD+Yg== 0000040834-95-000009.txt : 19950530 0000040834-95-000009.hdr.sgml : 19950530 ACCESSION NUMBER: 0000040834-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL SIGNAL CORP CENTRAL INDEX KEY: 0000040834 STANDARD INDUSTRIAL CLASSIFICATION: 3669 IRS NUMBER: 160445660 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00996 FILM NUMBER: 95536948 BUSINESS ADDRESS: STREET 1: ONE HIGH RIDGE PARK CITY: STAMFORD STATE: CT ZIP: 06904 BUSINESS PHONE: 2033578800 MAIL ADDRESS: STREET 1: P O BOX 10010 CITY: STAMFORD STATE: CT ZIP: 06904 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL RAILWAY SIGNAL CO DATE OF NAME CHANGE: 19710926 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1995 Commission file number 1-996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 GENERAL SIGNAL CORPORATION (Exact name of registrant as specified in its charter) New York 16-0445660 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) High Ridge Park, Box 10010, Stamford, Connecticut 06904 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 329-4100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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. X (Yes) (No) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $1.00 47,299,987 (Class) (Outstanding at May 5, 1995) PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES Statement of Earnings (In millions, except per share data) (Unaudited) Three Months Ended March 31, 1995 1994 Net sales $ 411.0 $ 342.4 Cost of sales 293.3 243.0 Selling, general and administrative expenses 71.6 62.3 Total operating costs and expenses 364.9 305.3 Operating earnings 46.1 37.1 Interest expense, net 4.1 2.8 Earnings from continuing operations before income taxes 42.0 34.3 Income taxes 14.7 12.1 Earnings from continuting operations 27.3 22.2 Discontinued operations: Operating earnings - - 2.4 Net earnings $ 27.3 $ 24.6 Earnings per share of common stock: Continuing operations $ 0.58 $ 0.47 Discontinued operations - - 0.05 Net earnings $ 0.58 $ 0.52 Dividends declared per common share $ 0.24 $ .225 Average common shares outstanding 47.2 47.4 See accompanying notes to financial statements. GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES Balance Sheet (In millions) (Unaudited) March 31, December 31, Assets 1995 1994 Current assets: Cash and cash equivalents $ 5.0 $ 0.3 Accounts receivable 259.7 258.3 Inventories 217.2 213.3 Prepaid expenses and other current assets 46.7 44.5 Assets held for sale at estimated realizable value 160.0 153.6 Deferred income taxes 44.1 47.2 Total current assets 732.7 717.2 Property, plant, and equipment 279.9 280.5 Intangibles 187.8 194.3 Other assets 144.3 134.5 Deferred income taxes 17.9 16.1 $1,362.6 $1,342.6 See accompanying notes to financial statements. GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES Balance Sheet-Continued (In millions) (Unaudited) March 31, December 31, Liabilities and Shareholders' Equity 1995 1994 Current liabilities: Short-term borrowings and current maturities of long-term debt $ 3.9 $ 2.2 Accounts payable 136.6 152.9 Accrued expenses 151.7 183.1 Income taxes 26.9 18.9 Total current liabilities 319.1 357.1 Long-term debt, less current maturities 308.1 269.1 Accrued postretirement and postemployment obligations 156.7 161.2 Other liabilities 12.2 7.3 Total long-term liabilities 477.0 437.6 Shareholders' equity: Common stock, authorized 150.0 shares; issued 63.9 shares at March 31, 1995 and 63.7 shares at December 31, 1994 77.5 77.4 Additional paid-in capital 285.7 281.1 Retained earnings 636.4 620.5 Cumulative translation adjustments (10.8) (12.1) Common stock in treasury, at cost; 16.7 shares at March 31, 1995 and 16.6 shares at December 31, 1994 (422.3) (419.0) Total shareholders' equity 566.5 547.9 $1,362.6 $1,342.6 See accompanying notes to financial statements. GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES Condensed Statement of Cash Flows (In millions) (Unaudited) Three Months Ended March 31, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Earnings from continuing operations $ 27.3 $ 22.2 Adjustments to reconcile earnings to net cash from operating activities: Deferred taxes 2.9 0.5 Discontinued operations - - 2.4 Depreciation and amortization 13.8 14.0 Pension credits (2.2) (3.0) Other, net 6.6 (0.7) Changes in working capital (52.9) (26.1) Net cash from operating activities (4.5) 9.3 CASH FLOWS FROM INVESTING ACTIVITIES: Divestitures 2.7 15.4 Acquisitions - - (9.2) Capital expenditures (11.8) (17.2) Other, net (5.8) (4.3) Net cash from investing activities (14.9) (15.3) CASH FLOWS FROM FINANCING ACTIVITIES: Net change in short and long-term borrowings 40.7 20.2 Dividends paid (11.3) (10.7) Issuance of common stock 0.6 2.5 Shares repurchased (5.9) - - Net cash from financing activities 24.1 12.0 Effect of exchange rate changes on cash - - - - Net change in cash and cash equivalents 4.7 6.0 Cash and cash equivalents at beginning of period 0.3 1.3 Cash and cash equivalents at end of period $ 5.0 $ 7.3 See accompanying notes to financial statements. GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES Notes to Financial Statements (Unaudited) (In millions, except per share data) 1. The accompanying unaudited financial statements reflect all adjustments (consisting of normal, recurring items) necessary for the fair presentation of results for these interim periods. These results are based upon generally accepted accounting principles consistently applied with those used in the preparation of the company's 1994 Annual Report on Form 10-K. 2. Inventories March 31, December 31, 1995 1994 Finished goods $ 61.6 $ 62.1 Work in process 78.1 68.0 Raw material and purchased parts 100.8 106.4 Total FIFO cost 240.5 236.5 Excess of FIFO cost over LIFO inventory value (23.3) (23.2) Net carrying value $ 217.2 $ 213.3 3. Business Segment Information Three Months Ended March 31, 1995 1994 Net sales: Process Controls $ 175.6 $ 141.7 Electrical Controls 160.1 134.5 Industrial Technology 75.3 66.2 $ 411.0 $ 342.4 Operating earnings: Process Controls $ 22.1 $ 18.1 Electrical Controls 12.5 9.6 Industrial Technology 14.9 11.5 Total operating earnings before unallocated expenses, equity income and interest 49.5 39.2 Equity income - - 0.7 Net interest expense (4.1) (2.8) Unallocated expenses (3.4) (2.8) Earnings before income taxes $ 42.0 $ 34.3 4. Property, Plant and Equipment March 31, December 31, 1995 1994 Property, plant and equipment, at cost $ 618.4 $ 611.8 Accumulated depreciation and amortization (338.5) (331.3) Property, plant and equipment, net $ 279.9 $ 280.5 5. Supplemental Information-Statement of Cash Flows Three Months Ended March 31, 1995 1994 Cash paid (received) for: Interest $ 3.4 $ 1.4 Income taxes $ 2.1 $ (0.9) Liabilities assumed in conjunction with acquisitions: Fair value of assets acquired $ - - $ 7.8 Cash paid - - (7.8) $ - - $ - - 6. Repurchase of Shares In March 1994, a two year program to repurchase up to 3.4 percent or 1.6 million shares of the company's outstanding stock at that time was approved by the Board of Directors. These shares will be purchased systematically in open market transactions, and will be used to offset dilution from the expected exercise of employee stock options arising from the company's executive stock ownership program. To date, approximately 774 thousand shares have been repurchased under the program. 7. Subsequent Acquisitions On May 8, 1995, the company and Data Switch Corporation agreed to merge. Subject to government and Data Switch shareholder approval, the merger is expected to be completed during the fourth quarter of 1995. The agreement calls for General Signal to issue 1.5 million shares of common stock in exchange for all of the outstanding shares of Data Switch. The company intends to account for the merger as a pooling of interests. Data Switch designs, manufactures, markets and services a range of products for large scale, high speed data networks. Data Switch is the number two supplier, behind IBM, of switches which connect mainframe computer systems with local or remote peripherals such as printers, magnetic tape drives, and disk drives. On May 10, 1995, the company agreed to acquire Best Power Technology for approximately $200 million of cash. Subject to government approval, the merger is expected to be completed before September 30, 1995. The acquisition will be accounted for as a purchase. Best Power is a leading manufacturer of uninterruptible power supply products, which provide backup power and protect computers, information networks, and other critical systems from power line disturbances. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - First Quarter 1995 Compared With First Quarter 1994 First Quarter 1995 1994 Change Net sales $411.0 $342.4 20.0% Sales improved 20 percent over 1994 levels, of which 8 percent related to acquisitions and the remainder reflected improved order activity. International sales in 1995 totalled 21 percent of the company's net sales. Export sales increased 48.5 percent, reflecting the acquisition of Fairbanks-Morse Pump Corporation in late 1994 and several large orders in Process and Electrical Controls. Offsetting the rise in export sales was a decline in foreign sales, mostly in Process Controls' German-based industrial mixer business. Overall, Process Controls sector sales increased 23.9 percent from increased shipments of pumps, valves, industrial mixers and laboratory equipment, despite minor declines in foreign sales of industrial mixers. The increased pump sales resulted primarily from the acquisition of Fairbanks-Morse. In addition, the sector benefitted from increased shipments of crystal growing furnaces, primarily from stronger demand for the product in far east Asia. Sales in the Electrical Controls sector increased 19.0 percent. The increase was led by stronger demand for building and life safety products and broadcast equipment, price increases in the distributor products line, and higher exports of uninterruptible power supplies from Italy to other parts of Europe as a result of the weakening of the Italian lira relative to other European currencies. The Industrial Technology sector sales increased 13.7 percent, mostly due to strong demand for OEM automotive components. In addition, higher shipments of farebox upgrades and token vending machines boosted Industrial Technology sales. First Quarter 1995 1994 Change Gross profit $117.7 $99.4 18.4% Percentage of net sales 28.6% 29.0% Gross margins were flat reflecting more low margin project orders in Process Controls, as well as higher shipments of lower margin jobs in backlog. Gross profits in 1994 included $0.5 million of LIFO reserve liquidations. First Quarter 1995 1994 Change Selling, general and administrative expenses $71.6 $62.3 14.9% Percentage of net sales 17.4% 18.2% Selling, general and administrative expenses improved as a percent of sales in 1995 reflecting the company's continued cost management efforts. Included in selling, general and administrative expenses were pension credits of $2.2 million in 1995 and $3.0 million in 1994. First Quarter 1995 1994 Change Operating earnings $46.1 $37.1 24.3% Percentage of net sales 11.2% 10.8% Earnings for the Process Controls sector were up 22.1 percent. The improved results, which were led by pumps and mixers, came principally from productivity improvements, reduced costs and the acquisition of Fairbanks-Morse. Electrical Controls sector operating earnings were up 30.2 percent. This improvement is attributable primarily to stronger sales activity during the period and cost containment efforts, with the strongest earnings growth seen in broadcast equipment, followed closely by uninterruptible power supplies. The Industrial Technology sector operating earnings improved 29.6 percent during 1995. This sector's improvements were led by telecommunications and OEM automotive products, offset by a sharp decline in transit equipment earnings that resulted from the substantial completion of the U. S. Postal Service stamp vending machine contract. During 1995, non-recurring items (primarily cash settlements of royalty and insured matters) increased earnings of Electrical Controls by $1.8 million and Industrial Technology by $2.0 million, and reduced unallocated expenses by $1.9 million. During 1994, non-recurring items (primarily non-cash adjustments to reserves) increased Industrial Technology earnings by $1.8 million. First Quarter 1995 1994 Change Net interest expense $4.1 $2.8 46.4% Percentage of net sales 1.0% 0.8% Net interest expense increased as a result of higher average debt levels and borrowing rates during 1995 as compared to 1994. Net earnings from continuing operations were $27.3 million or $0.58 per share in 1995 compared to $22.2 million or $0.47 per share in 1994. The company's effective tax rate was approximately 35.0 percent in both years. Financial Condition - March 31, 1995 Compared to December 31, 1994 Operations used cash of $4.5 million, compared to $9.3 million of cash generated in 1994, with the decline reflecting primarily payments of year-end payables and accruals. Included in operating cash flows were expenditures of $12.3 million for previously divested operations and restructuring of existing units, and $2.4 million for severance pay. These expenditures were charged against accruals. Management anticipates that these expenditures will result in lower future costs from higher productivity. Proceeds from the disposition of a portion of the discontinued operations were $2.7 million in 1995, with no impact on income during the quarter. The company used $11.8 million for capital expenditures and $6.0 million for purchases of marketable equity securities. Dividends paid totalled $11.3 million, common shares repurchased amounted to $5.9 million, and additional amounts borrowed during the quarter totalled $40.7 million. Long-term debt-to-capitalization was 35.2 percent at March 31, 1995, a slight increase from year-end reflecting the modestly increased borrowing levels for payments of year-end accounts payable and accruals. At December 31, 1994, the company had a $43.2 million valuation allowance established against its gross deferred tax assets of approximately $228 million. There were no significant changes to the deferred tax assets nor the valuation allowance since year-end. The valuation allowance was based on management's assessment that it was more likely than not that the net deferred tax assets will be realized through future taxable earnings or alternative tax strategies. In the event that the tax benefits relating to the valuation allowance are subsequently realized, $6.6 million of such benefits would reduce goodwill. The company is well-positioned to finance future working capital requirements and capital expenditures through current earnings and significant available credit facilities. The pending merger with Data Switch will be financed by issuing 1.5 million additional shares of common stock, and the acquisition of Best Power will be financed through additional long-term debt. Other Matters As a producer of capital goods and equipment, the results of the company's businesses can vary with the relative strength of the economy. Demand for products in the Process Controls sector follows the demand for durable goods orders, and strength in heavy industrial and utility markets is key to the success of the sector. The Electrical Controls sector depends upon several markets, principally the construction and computer equipment industries. The Industrial Technology sector depends on several markets, primarily automotive, mass transportation, and telecommunications equipment. Mass transportation depends upon continued federal and local government spending, and telecommunications is dependent upon continued research and development and the continued success of new products. While no one marketplace or industry has a major impact on the company's operations or results, the inherent pace of technological changes presents certain risks that the company monitors carefully. Success within all of the company's businesses is dependent upon the timely introduction and acceptance of new products. PART II: OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of Shareholders of the Registrant (the "Meeting") was held on April 20, 1995. (b) The Registrant solicited proxies for the Meeting pursuant to Regulation 14; there was no solicitation in opposition to management's nominees for directors as listed in the Proxy Statement, and all such nominees were elected. (c) In addition to the election of directors, the shareholders ratified the appointment of auditors, and approved a new Senior Executive Incentive Compensation Plan. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 10.16 General Signal Corporation Senior Executive Incentive Compensation Plan as approved by the shareholders on April 20, 1995. 12.0 Calculation of Ratios of Earnings to Fixed Charges. (b) No reports were filed on Form 8-K. 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. GENERAL SIGNAL CORPORATION /s/ Terry J. Mortimer Terry J. Mortimer Vice President and Controller Chief Accounting Officer DATE: May 10, 1995 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. GENERAL SIGNAL CORPORATION Terry J. Mortimer Vice President and Controller Chief Accounting Officer DATE: May 10, 1995 EX-12 2 Calculation of Ratios of Earnings to Fixed Assets General Signal Corporation (Dollars in millions) Exhibit (12.0) Quarter Ended March 31, Year Ended December 31, 1995 1994 1993 1992 1991 1990 Earnings: Earnings from continuing operations before income taxes & extraordny items 42.0 160.3 139.1 9.5 97.4 15.5 Add: fixed charges 6.3 20.2 22.6 35.3 39.3 46.4 - - - - ----------------------------------------------------------------------- 48.3 180.5 161.7 44.8 136.7 61.9 Fixed charges: Interest Expense (Gross) 4.7 14.4 18.0 28.6 31.8 37.2 One-third of rent expense 1.6 5.8 4.6 6.7 7.5 9.2 - - - - ------------------------------------------------------------------------ $ 6.3 $ 20.2 $ 22.6 $ 35.3 $ 39.3 $ 46.4 - - - - ------------------------------------------------------------------------ Ratio 7.67 8.94 7.15 1.27 3.48 1.33 EX-27 3
5 0000040834 GENERAL SIGNAL CORP. 1000 YEAR DEC-31-1995 MAR-31-1995 5000 1198 274100 14400 217200 732700 618400 338500 1362600 319100 308100 77500 0 0 489000 1362600 411000 411000 293300 364900 0 0 4100 42000 14700 27300 0 0 0 27300 0.58 0.58
EX-10.16 4 GENERAL SIGNAL CORPORATION SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN* 1. Purpose The purpose of the General Signal Corporation Senior Executive Incentive Compensation Plan (the "Plan") is to provide senior executives of General Signal Corporation and its subsidiaries (the "Corporation") with incentive compensation based upon the achievement of established performance goals. 2. Administration The Plan shall be administered by a committee of not less than three (3) members appointed annually by the Board of Directors (the "Committee"). The Committee, which may but need not be the Personnel and Compensation Committee, shall be composed of members of the Board of Directors who are "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code (the "Code"), and who are not eligible to participate or to receive any benefits pursuant to the Plan. The Committee shall have full power to administer and interpret the Plan and to establish rules for its administration. The Committee may designate employees of the Corporation to act in its behalf to engage in daily administration of the Plan. The Committee, in making any determination under or referred to in the Plan shall be entitled to rely onopinions, reports or statements of officers or employees of the Corporation and other entities and of counsel, public accountants and other professional expert persons. 3. Eligibility Eligibility for the Plan shall be limited to the Chief Executive Officer of the Corporation and any other individual employed by the Corporation at the end of any Plan Year who appears in the Summary Compensation Table of the Corporation's Proxy Statement to Shareholders for that Plan Year. Individuals eligible to participate in the Plan are herein called "Participant(s)". *Approved by shareholders on April 20, 1995 4. Awards Each Participant shall be eligible to receive a share of an incentive compensation pool; provided, however, that the Committee shall have full discretion to reduce or eliminate the share for any Participant for any Plan Year. The incentive compensation pool for any Plan Year shall equal 5% of operating earnings of the Corporation for that Plan Year and it shall be based on reported operating earnings in the Corporation's financial statementsincluded in the Corporation's Annual Report to Shareholders. The financial statements shall be prepared in accordance with generally accepted accounting principles and shall be audited by the Corporation's external auditors. For purposes of this Plan, reported operating earnings may be adjusted to exclude or include items of an unusual, non- recurring or extraordinary nature as shall be specifically defined by the Committee prior to the end of the first quarter of the Plan Year. In the event that the Committee pays out less than the amount of the incentive compensation pool for any Plan Year, the amount which is not paid out may, at the Committee's sole discretion, be added to the incentive compensation pool that is available for any subsequent Plan Year or Years. Each Participant shall be eligible to receive a maximum award of 30% of the incentive compensation pool for the applicable Plan Year. By the end of the first quarter of each Plan Year, the Committee shall approve the amount of each Participant's share of the incentive compensation pool. Following each Plan Year, the Committee shall certify the total amount of the incentive compensation pool. In determining the amount to be paid to a Participant, the Committee shall consider a number of performance factors based on individual merit and on the level of achievement of the earnings-per-share goal and the progress in carrying out the Corporation's objectives and strategies. Awards under the Plan shall be paid in cash as soon as practicable after the Plan Year, except to the extent deferred pursuant to the General Signal Corporation Deferred Compensation Plan. 5. Miscellaneous Provisions Amendment of the Plan. The Board of Directors shall have the right to suspend or terminate this Plan at any time and may amend or modify the Plan prior to the beginning of any Plan Year. Assignment or Transfer. No opportunity shall be assignable or transferable by a Participant. Costs and Expenses. The costs and expenses of administering the Plan shall be borne by the Corporation and shall not be charged against any Participant. Effect on Employment. Nothing contained in this Plan or any agreement related hereto or referred to herein shall affect or be construed as affecting, the terms of employment of any Participant except to the extent specifically provided herein or therein. Nothing contained in this Plan or any agreement related hereto or referred to herein shall impose, or be construed as imposing, any obligation on (a) the Corporation to continue the employment of any Participant and (b) any Participant to remain in the employ of the Corporation. Effective Date. Subject to shareholder approval, this Plan shall be effective as of January 1, 1995. Governing Law. The Plan shall be governed by the laws of the State of New York and applicable federal laws. Other Incentive Plans. The adoption of the Plan does not preclude the adoption by appropriate means of any other incentive plan for employees. Plan Year. "Plan Year" means the calendar year commencing January 1, 1995, and each calendar year thereafter. Taxation. The Corporation shall have the right to deduct from any award to be paid under the Plan any federal, state or local taxes required by law to be withheld with respect to such payment. -----END PRIVACY-ENHANCED MESSAGE-----