-----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, OYrSmO0cVoAVotWXio7dLNxBNeX/gGnAby2NfracrYTf5oZohQv022LrEYHXabx0 E95Hv4Ilukzp1O3ogSiPIQ== 0000084636-94-000012.txt : 19940822 0000084636-94-000012.hdr.sgml : 19940822 ACCESSION NUMBER: 0000084636-94-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROCKWELL INTERNATIONAL CORP CENTRAL INDEX KEY: 0000084636 STANDARD INDUSTRIAL CLASSIFICATION: 3760 IRS NUMBER: 951054708 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01035 FILM NUMBER: 94543983 BUSINESS ADDRESS: STREET 1: 2201 SEAL BEACH BOULEVARD CITY: SEAL BEACH STATE: CA ZIP: 90740 BUSINESS PHONE: 4125654004 MAIL ADDRESS: STREET 1: 2201 SEAL BEACH BOULEVARD CITY: SEAL BEACH STATE: CA ZIP: 90740 FORMER COMPANY: FORMER CONFORMED NAME: NORTH AMERICAN AVIATION INC DATE OF NAME CHANGE: 19671017 10-Q 1 FORM 10-Q FOR QUARTER ENDED JUNE 30, 1994 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1994 Commission file number 1-1035 Rockwell International Corporation (Exact name of registrant as specified in its charter) Delaware 95-1054708 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2201 Seal Beach Boulevard, Seal Beach, California 90740 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (412) 565-4004 (Office of the Corporate Secretary) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No 181,831,610 shares of registrant's Common Stock, $1.00 par value, and 37,648,924 shares of Class A Common Stock, $1.00 par value, were outstanding on July 31, 1994. ROCKWELL INTERNATIONAL CORPORATION INDEX PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: Page No. Condensed Consolidated Balance Sheet-- June 30, 1994 and September 30, 1993........... 2 Statement of Consolidated Income--Three Months and Nine Months Ended June 30, 1994 and 1993... 3 Statement of Consolidated Cash Flows-- Nine Months Ended June 30, 1994 and 1993....... 4 Notes to Financial Statements.................. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 8 Other Financial Information.................... 11 Exhibit 11 - Computation of Earnings Per Share........... 13 PART II. OTHER INFORMATION: Item 5. Other Information.............................. 14 Item 6. Exhibits and Reports on Form 8-K............... 14 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ROCKWELL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET June 30 September 30 1994 1993 (Unaudited) ASSETS (In millions) Current assets: Cash........................................... $ 585.8 $ 772.8 Receivables.................................... 2,234.9 2,209.1 Inventories.................................... 1,560.3 1,430.8 Other current assets........................... 572.5 533.7 Total current assets................... 4,953.5 4,946.4 Net property...................................... 2,365.8 2,325.8 Other assets...................................... 2,649.6 2,612.9 TOTAL.................... $9,968.9 $9,885.1 LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term debt................................ $ 217.5 $ 166.4 Accounts payable - trade....................... 822.9 859.8 Accrued compensation and benefits.............. 686.9 710.1 Advance payments from customers................ 370.8 362.7 Accrued income taxes........................... 150.1 94.1 Other current liabilities...................... 805.6 797.8 Total current liabilities.............. 3,053.8 2,990.9 Long-term debt.................................... 846.0 1,028.2 Accrued retirement benefits....................... 2,690.1 2,731.2 Other liabilities................................. 183.8 178.8 Total liabilities............. 6,773.7 6,929.1 Shareowners' equity: Preferred stock ............................... 1.4 1.5 Common Stock (shares issued - 209.5 million)... 209.5 209.5 Class A Common Stock (shares issued: June 30, 1994, 38.1 million; September 30, 1993, 41.6 million)............ 38.1 41.6 Additional paid-in capital..................... 173.7 164.3 Retained earnings.............................. 3,684.7 3,471.9 Currency translation and pension adjustments... (195.7) (196.8) Common Stock in treasury, at cost (shares held: June 30, 1994, 27.7 million; September 30, 1993, 30.1 million)............ (716.5) (736.0) Total shareowners' equity..... 3,195.2 2,956.0 TOTAL.................... $9,968.9 $9,885.1 See Notes to Financial Statements. -2- ROCKWELL INTERNATIONAL CORPORATION STATEMENT OF CONSOLIDATED INCOME (Unaudited) Three Months Ended Nine Months Ended June 30 June 30 1994 1993 1994 1993 (In millions) Revenues: Sales.......................... $2,872.3 $2,813.4 $8,234.7 $ 7,996.1 Other income................... 12.3 17.2 42.0 57.0 Total revenues............... 2,884.6 2,830.6 8,276.7 8,053.1 Costs and expenses: Cost of sales.................. 2,217.6 2,212.4 6,403.7 6,322.5 Selling, general and administrative............... 369.2 345.2 1,018.1 964.6 Interest....................... 23.6 27.6 74.6 81.5 Total costs and expenses..... 2,610.4 2,585.2 7,496.4 7,368.6 Income before income taxes....... 274.2 245.4 780.3 684.5 Provision for income taxes....... 109.3 98.2 311.2 272.6 Net income ...................... $ 164.9 $ 147.2 $ 469.1 $ 411.9 (In dollars) Earnings per common share: Primary....................... $ .74 $ .66 $ 2.12 $ 1.87 Fully diluted................. $ .73 $ .65 $ 2.08 $ 1.84 Cash dividends per common share.. $ .25 $ .25 $ .75 $ .71 (In millions) Average common shares outstanding: Primary....................... 220.4 219.8 220.9 219.6 Fully diluted................. 224.3 223.5 225.1 223.5 See Notes to Financial Statements. ROCKWELL INTERNATIONAL CORPORATION STATEMENT OF CONSOLIDATED CASH FLOWS (Unaudited) Nine Months Ended June 30 1994 1993 (In millions) OPERATING ACTIVITIES: Net income......................................... $ 469.1 $ 411.9 Adjustments to net income to arrive at cash provided by operating activities: Depreciation..................................... 322.3 321.5 Amortization of intangible assets................ 38.5 42.7 Deferred income taxes............................ 36.8 (23.2) Net pension income and contributions............. (80.7) (91.1) Changes in assets and liabilities: Receivables.................................... 0.4 42.7 Inventories.................................... (116.2) (83.8) Accounts payable - trade....................... (54.2) (164.5) Accrued compensation and benefits.............. (26.1) 42.1 Advance payments from customers................ (2.4) (12.9) Income taxes................................... 56.3 81.5 Other assets and liabilities................... (73.2) (37.0) Cash provided by operating activities....... 570.6 529.9 INVESTING ACTIVITIES: Property additions................................. (349.9) (249.7) Proceeds from disposition of property and businesses....................................... 8.0 14.6 Acquisition of businesses.......................... (13.3) (131.0) Cash used for investing activities.......... (355.2) (366.1) FINANCING ACTIVITIES: Increase (decrease) in short-term borrowings....... 26.5 (4.6) Increase in long-term debt......................... 17.7 Payments of long-term debt......................... (208.2) (11.9) Net decrease in debt............................. (164.0) (16.5) Purchase of treasury stock......................... (108.8) (61.8) Dividends.......................................... (165.9) (156.2) Reissuance of common stock......................... 36.3 46.2 Cash used for financing activities.......... (402.4) (188.3) DECREASE IN CASH................................... (187.0) (24.5) CASH AT BEGINNING OF PERIOD........................ 772.8 602.6 CASH AT END OF PERIOD.............................. $ 585.8 $ 578.1 Income tax payments were $206.1 million and $218.2 million in the nine months ended June 30, 1994 and 1993, respectively. See Notes to Financial Statements. ROCKWELL INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. In the opinion of the company the unaudited financial statements contain all adjustments, consisting solely of adjustments of a normal recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These statements should be read in conjunction with the company's Annual Report for the fiscal year ended September 30, 1993. The results of operations for the three- and nine-month periods ended June 30, 1994 and 1993 are not necessarily indicative of the results for the full year. It is the company's practice at the end of each interim reporting period to make an estimate of the effective tax rate expected to be applicable for the full fiscal year. The rate so determined is used in providing for income taxes on a year-to-date basis. 2. Receivables are summarized as follows (in millions): June 30 September 30 1994 1993 Accounts and notes receivable: Commercial, less allowance for doubtful accounts (June 30, 1994, $54.0; September 30, 1993, $47.3)............ $1,343.0 $1,258.2 United States Government................ 136.4 149.0 Unbilled costs and accrued profits, less related progress payments (June 30, 1994, $465.0; September 30, 1993, $550.5)............. 755.5 801.9 Receivables............................. $2,234.9 $2,209.1 3. Inventories are summarized as follows (in millions): June 30 September 30 1994 1993 Finished goods............................ $ 350.3 $ 330.3 Long-term contracts in process............ 298.8 338.2 Work in process........................... 613.0 508.7 Raw materials, parts and supplies......... 512.8 492.4 Total................................... 1,774.9 1,669.6 Less allowance to adjust the carrying value of certain inventories to a last-in, first-out (LIFO) basis.................. 76.3 67.2 Remainder................................. 1,698.6 1,602.4 Less related progress payments............ 138.3 171.6 Inventories............................. $1,560.3 $1,430.8 ROCKWELL INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 4. Other assets are summarized as follows (in millions): June 30 September 30 1994 1993 Goodwill................................. $ 571.6 $ 581.5 Patents, product technology and other intangibles...................... 172.1 175.2 Intangible pension asset................. 37.5 52.5 Prepaid pension costs.................... 1,276.2 1,187.4 Deferred income taxes.................... 338.8 374.6 Customer finance receivables............. 142.1 150.5 Investments and other assets............. 111.3 91.2 Other assets........................... $2,649.6 $2,612.9 5. Other current liabilities are summarized as follows (in millions): June 30 September 30 1994 1993 Accounts payable - other................. $247.2 $191.8 Accrued product warranties............... 165.6 165.6 Accrued taxes other than income taxes.... 73.3 80.7 Accrued restructuring costs.............. 32.2 62.1 Other.................................... 287.3 297.6 Other current liabilities.............. $805.6 $797.8 6. Long-term debt consisted of the following (in millions): June 30 September 30 1994 1993 7-1/2% notes, redeemed in March 1994..... $ 200.0 8-7/8% notes, payable in 1999............ $300.0 300.0 8-3/8% notes, payable in 2001............ 200.0 200.0 6-3/4% notes, payable in 2002............ 300.0 300.0 Other obligations, principally foreign... 64.5 35.6 Total.................................. 864.5 1,035.6 Less current portion..................... 18.5 7.4 Long-term debt........................... $846.0 $1,028.2 ROCKWELL INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 7. Accrued retirement benefits consisted of the following (in millions): June 30 September 30 1994 1993 Accrued retirement medical costs......... $2,525.1 $2,579.2 Accrued pension costs.................... 352.0 352.0 Total.................................. 2,877.1 2,931.2 Amount classified as current liability... 187.0 200.0 Accrued retirement benefits............ $2,690.1 $2,731.2 8. In the quarter ended June 30, 1994, the company purchased 1.3 million shares of Common Stock for $47.1 million. Since the company's Common Stock repurchase program began in 1984, the company has purchased 109.2 million shares of Common Stock for $2.4 billion. 9. Various lawsuits, claims and proceedings have been or may be instituted or asserted against the company relating to the conduct of its business, including those pertaining to product liability, environmental, safety and health, and employment matters. Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to the company, management believes the disposition of matters which are pending or asserted will not have a material adverse effect on the company's financial statements. ROCKWELL INTERNATIONAL CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS 1994 Third Quarter Compared to 1993 Third Quarter The contributions to sales and earnings by business segment of the company for the third quarter of fiscal 1994 and 1993 are presented below. Sales Earnings 1994 1993 1994 1993 (in millions) Electronics...................... $1,276 $1,228 $ 174.1 $ 154.9 Aerospace........................ 649 776 87.9 96.5 Automotive....................... 779 679 50.8 48.7 Graphics......................... 169 130 9.7 (1.8) Sales and operating earnings.. 2,873 2,813 322.5 298.3 General corporate - net.......... (24.7) (25.3) Interest expense................. (23.6) (27.6) Provision for income taxes....... (109.3) (98.2) Total......................... $2,873 $2,813 $ 164.9 $ 147.2 Sales for the 1994 third quarter increased two percent from the same period in 1993. In the current quarter, 66 percent of sales were to U.S. commercial and international customers (32 percent international) up from 60 percent in 1993's third quarter (29 percent international). The quarter produced the highest level of international sales in the company's history. Sales to the U.S. Department of Defense declined to 19 percent in the latest quarter from 24 percent in 1993's third quarter. Net income for 1994's third quarter increased 12 percent from 1993's third quarter primarily due to three of the company's four business segments -- Electronics, Automotive and Graphics -- recording earnings increases over their 1993 third quarter results. Aerospace earnings in the current quarter remained strong, but as expected, were down nine percent from last year's third quarter due to lower sales. Within the business segments, six of the company's nine businesses achieved higher 1994 third quarter earnings. Earnings per share for the current year's third quarter increased 12 percent over last year's third quarter, and marked the sixth consecutive quarter the company has achieved double-digit earnings per share growth. Electronics 1994 third quarter earnings rose 12 percent from 1993's third quarter due to continued strong sales and earnings increases in the Telecommunications and Allen-Bradley Automation businesses, as well as improved earnings in Defense Electronics resulting from favorable contract adjustments. Avionics earnings for the current quarter were down, as expected, as commercial air transport markets remained soft. Telecommunications third quarter sales reached another all-time high as demand for high-speed data modems continued to grow. Earnings were up ROCKWELL INTERNATIONAL CORPORATION RESULTS OF OPERATIONS (CONTINUED) 23 percent over last year's third quarter, despite the pressure of competitive pricing and increased investment in new product development. The Allen-Bradley Automation business achieved its second consecutive quarter of record sales and earnings with continuing strong demand for its products in all its primary markets worldwide. Allen-Bradley's incoming orders reached $9.1 million per day, the highest in its history. The Space Systems and Aircraft businesses within the Aerospace segment had lower 1994 third quarter sales and earnings compared to the 1993 comparable quarter. Both businesses, however, increased their profit margins, benefitting from ongoing cost improvement programs. Although Automotive's sales were up 15 percent from 1993's third quarter, earnings increased only four percent due to higher warranty costs, increased automotive electronics product development expenses and a favorable $5 million medical accrual adjustment in 1993. Earnings of the Graphics business improved significantly from 1993's third quarter due to higher sales of newspaper printing presses and the ongoing benefit of cost reduction programs. Nine Months Ended June 30, 1994 Compared to Nine Months Ended June 30, 1993 The contributions to sales and earnings by business segment of the company for the nine months ended June 30, 1994 and 1993 are presented below. Sales Earnings 1994 1993 1994 1993 (in millions) Electronics....................... $3,717 $3,439 $ 521.5 $ 450.9 Aerospace......................... 1,917 2,189 263.2 275.2 Automotive........................ 2,145 1,925 115.0 102.1 Graphics.......................... 456 443 23.8 7.1 Sales and operating earnings.... 8,235 7,996 923.5 835.3 General corporate - net........... (68.6) (69.3) Interest expense.................. (74.6) (81.5) Provision for income taxes........ (311.2) (272.6) Total........................... $8,235 $7,996 $ 469.1 $ 411.9 Sales for the first nine months of 1994 increased three percent from the same period a year ago. U.S. commercial and international sales for the first nine months of 1994 accounted for 65 percent of total sales compared to 61 percent for 1993's first nine months. Sales to the U.S. Department of Defense were 20 percent of total sales, down from 23 percent for the first nine months of 1993, and sales to NASA were 15 percent, down from 16 percent for 1993's first nine months. ROCKWELL INTERNATIONAL CORPORATION RESULTS OF OPERATIONS (CONTINUED) Net income for the first nine months of 1994 was up 14 percent over 1993's comparable period, while earnings per share for the current year's first nine months increased 13 percent over 1993. Electronics earnings for the first nine months of fiscal 1994 were up 16 percent from the same period a year ago primarily due to substantial earnings increases in the Telecommunications and Allen-Bradley Automation businesses resulting from strong worldwide demand for high-speed data modems and automation products. Earnings of Defense Electronics also improved from the year earlier period principally as a result of favorable contract adjustments, while Avionics earnings were lower, as expected, due to the continuing depressed commercial air transport markets. Aerospace earnings for the first nine months of 1994 were down four percent over the comparable 1993 period due to decreased sales and adverse contract adjustments in the Aircraft business. Earnings of Space Systems were up for the period due to higher award fees and the benefits from cost containment programs. Automotive's earnings for the first nine months of 1994 increased 13 percent over 1993's first nine months primarily due to the strong North American truck markets. Automotive's earnings were adversely affected by higher warranty costs, including a second quarter $25 million provision to recognize the costs of inspections and potential field modifications of certain transmission products. Earnings of the company's Graphics business for the first nine months of 1994 improved significantly from the year earlier due to higher sales and the ongoing benefit of cost reduction programs. FINANCIAL CONDITION There were no significant changes in the company's financial position during the three months ended June 30, 1994. During the second quarter, the company redeemed its $200 million 7-1/2% notes, which had been payable in 1997, utilizing available cash balances and short-term credit facilities. It is the policy of the company not to enter into derivative financial instruments for speculative purposes. The company does enter into foreign currency forward exchange contracts for firm and identifiable foreign currency commitments to protect the company from losses resulting from adverse currency rate fluctuations. 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 Results of Operations, Environmental Issues in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, on pages 16 - 17 of the company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993, and is incorporated herein by reference. Management believes that at June 30, 1994 there has been no material change to this information. ROCKWELL INTERNATIONAL CORPORATION Other Financial Information (a) The company's backlog on June 30, 1994 was $10.9 billion compared to $13.1 billion on June 30, 1993. The backlog includes $3.9 billion of commercial orders, $2.1 billion of funded government orders and $4.9 billion of unfunded government orders. Backlog by major business segment is as follows (in millions): June 30 June 30 1994 1993 Aerospace Space Systems $ 5,137 $ 7,355 Aircraft 1,789 1,796 6,926 9,151 Defense Electronics 1,286 1,294 Other 2,680 2,615 Total Backlog $10,892 $13,060 (b) Sales by major product lines are summarized as follows (in millions): Three Months Ended Nine Months Ended June 30 June 30 1994 1993 1994 1993 Electronics Automation $ 545 $ 457 $1,518 $1,238 Avionics 292 287 899 896 Telecommunications 187 138 527 380 Defense Electronics 252 346 773 925 1,276 1,228 3,717 3,439 Aerospace Space Systems 502 594 1,506 1,674 Aircraft 147 182 411 515 649 776 1,917 2,189 Automotive Heavy Vehicles 470 394 1,302 1,082 Light Vehicles 309 285 843 843 779 679 2,145 1,925 Graphics 169 130 456 443 Total Sales $2,873 $2,813 $8,235 $7,996 ROCKWELL INTERNATIONAL CORPORATION Other Financial Information (Continued) (c) Composition of sales is summarized as follows (in millions): Three Monts Ended Nine Months Ended June 30 June 30 1994 1993 1994 1993 U.S. Commercial $ 973 $ 860 $2,744 $2,519 International 922 825 2,579 2,333 U.S. Government: DOD 555 668 1,683 1,860 NASA 423 460 1,229 1,284 Total $2,873 $2,813 $8,235 $7,996 EXHIBIT 11 ROCKWELL INTERNATIONAL CORPORATION COMPUTATION OF EARNINGS PER SHARE Three Months Ended Nine Months Ended June 30 June 30 1994 1993 1994 1993 (In millions, except per share amounts) Primary earnings per share: Net income...................... $164.9 $147.2 $469.1 $411.9 Deduct dividend requirements on preferred stock............ 0.1 0.1 0.2 0.2 Total primary earnings.......... $164.8 $147.1 $468.9 $411.7 Average number of common shares outstanding during the period..................... 220.4 219.8 220.9 219.6 Primary earnings per share...... $ .74 $ .66 $ 2.12 $ 1.87 Fully diluted earnings per share: Net income...................... $164.9 $147.2 $469.1 $411.9 Average number of common shares outstanding during the period assuming full dilution: Common stock................ 220.4 219.8 220.9 219.6 Assumed issuance of stock under award plans and conversion of preferred stock..................... 3.9 3.7 4.2 3.9 Total fully diluted shares...... 224.3 223.5 225.1 223.5 Fully diluted earnings per share.................... $ .73 $ .65 $ 2.08 $ 1.84 PART II. OTHER INFORMATION Item 5. Other Information The company's government contract operations are subject to U.S. Government investigations of business practices and audits of contract performance and cost classification from which claims have been or may be asserted against the company. Although such claims are usually resolved through fact-finding and negotiation, civil, criminal or administrative proceedings may result and a contractor can be fined, as well as be suspended or debarred from government contracts. Management believes there are no claims, audits or investigations currently pending against the company which will have a material adverse effect on either the company's business or its financial condition. The company's financial statements have been prepared on the basis of conservative estimates, supported by outside legal counsel, of the revenue expected to be recovered from the company's claims against the U.S. Government arising out of the government's termination of contracts for its convenience and certain contractual disputes. While management cannot reasonably estimate the length of time that will be required to resolve its claims or whether they will be resolved through negotiation or litigation, it believes their resolution will not have a material adverse effect on the company's financial statements. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11 - Computation of Earnings Per Share Exhibit 27 - Financial Data Schedule Exhibit 99 - Form of Group Annuity Contract No. 13673 between Metropolitan Life Insurance Company and First Interstate Bank of California, as Trustee of the Company's Savings Plan (b) Reports on Form 8-K: There were no reports on Form 8-K filed during the quarter ended June 30, 1994. 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 August 15, 1994 By L. J. Komatz L. J. Komatz Vice President and Controller (Principal Accounting Officer) Date August 15, 1994 By C. H. Harff C. H. Harff Senior Vice President, General Counsel and Secretary EX-27 2 FINANCIAL DATA SCHEDULE FOR JUNE 30, 1994 FORM 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30, 1994 CONSOLIDATED BALANCE SHEET, STATEMENT OF CONSOLIDATED INCOME FOR THE NINE MONTHS ENDED JUNE 30, 1994 AND NOTES TO FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 9-MOS SEP-30-1994 JUN-30-1994 586 0 2,235 54 1,560 4,954 2,366 0 9,969 3,054 846 248 0 1 2,946 9,969 8,235 8,277 6,404 7,422 0 0 75 780 311 469 0 0 0 469 2.12 2.08
EX-99 3 FORM OF GROUP ANNUITY CONTRACT EXHIBIT 99 Metropolitan Life Insurance Company A Mutual Company Incorporated in New York State One Madison Avenue, New York, New York 10010-3690 Contractholder First Interstate Bank of California, its Successors or Assigns, as Trustee of the Rockwell International Corporation Savings Plan Group Annuity Contract No. Issue Date 13673 January 14, 1994 In Consideration of the Contractholder's payments under this Contract, Metropolitan Life Insurance Company ("MetLife") Agrees to make payments, and to pay annuities bought, under this Contract in accordance with and subject to its terms. Therefore, the Contractholder and MetLife execute this Contract in duplicate to take effect as of the Issue Date. First Interstate Bank of California Metropolitan Life Insurance Company Nicholas D. Latrenta Signature Vice-President and Secretary Ted Athanassiades Title President and Chief Operating Officer Witness Registrar Date Date City and State City and State ALTHOUGH THIS IS A PARTICIPATING CONTRACT, METLIFE DOES NOT ANTICIPATE THAT THIS CONTRACT WILL BE ENTITLED TO ANY DIVIDEND. SEE SECTION 6.1. Defined Contribution Plan Accumulation Contract Nonparticipating Annuities Contents Section Page 1. Introduction 2 2. Relation Between Plan and Contract 2.1 General Understanding 3 2.2 Changes in Plan's Terms and Operation; Competing Plan 4 3. Payments to Metlife 3.1 Payments for Addition to the Plan Reserve Account 9 3.2 Interest Rates 9 3.3 Payment of Expenses 9 3.4 Grace Period 10 4. Payments by Metlife 4.1 Reports of Plan Benefits and Transfers 11 4.2 Withdrawals from Plan Reserve Account 11 4.3 Application of the Plan Reserve Account Withdrawals 12 5. Annuities 5.1 Annuity Purchases 13 5.2 Stipulated Payments 13 5.3 Certificates 13 5.4 Misstatements 14 6. General Provisions 6.1 Participation; Dividends 15 6.2 Entire Contract 15 6.3 Assignment or Alienation 15 6.4 Liability for Payments 16 6.5 Communications; Payments 16 6.6 Information to be Furnished 16 6.7 Termination of Contract 16 7. Stipulated Payments 17 Section 1. Introduction 1.1 "Plan" means the Rockwell International Corporation Savings Plan. The Contractholder has given MetLife a copy of the Plan as in effect on the Issue Date. The Plan is mentioned for reference purposes only. MetLife is not a party to the Plan. 1.2 "Plan Reserve Account" means the account MetLife will establish under this Contract and to which it will add Contractholder payments of Plan contributions. 1.3 "Qualified Plan" means a plan that meets the requirements for qualification under Section 401 of the United States Internal Revenue Code or that is a governmental plan, as defined in Section 414 (d) of such Code, established by an employer for the exclusive benefit of its employees or their beneficiaries and under which it is impossible before the satisfaction of all liabilities with respect to such employees and their beneficiaries for any part of the corpus or income to be diverted to purposes other than for their exclusive benefit. The Contractholder represents that the Plan is a Qualified Plan as of the Issue Date. Section 2. Relation Between Plan and Contract 2.1 General Understanding The Plan permits contributions made thereunder to be paid to an insurance company under a contract of this type. However, the existence of this Contract between the Contractholder and MetLife does not cause MetLife to be a fiduciary of the Plan. The Contractholder and MetLife agree as follows: (1) As of the Issue Date of this Contract the Plan has certain provisions and/or related administrative practices applicable to contributions by and on behalf of participants, investment options available to Plan participants, allocation of contributions (including loan repayments) among the Plan's investment options, transfers of account balance amounts between investment options and payments to participants or their beneficiaries because of retirement, termination of employment, disability, death, loans or in-service withdrawals. References in this Contract to the Plan's provisions mean, unless MetLife agrees otherwise, such provisions and/or administrative practices as in effect on the Issue Date. As used in this Contract, "termination of employment" does not include either (i) transfer or other change of employment from an employer to a parent, subsidiary or any company under common ownership or control with the employer, or (ii) any change of employers as the result of the spin-off, sale or merger of any unit of the employer or Plan sponsor. (2) Notwithstanding the provisions of Section 6.3 to the contrary, the prohibition against assignment or alienation will not apply to a qualified domestic relations order as defined in Section 414(p) of the United States Internal Revenue Code and Section 206(d) of the Employee Retirement Income Security Act. (3) Participants will exercise their own independently determined judgments, without influence or direction by the Contractholder, employer or Plan sponsor, in regard to their actions under the Plan. Upon request by MetLife, the Contractholder will furnish it with copies of communications to participants concerning the Plan. (4) In accordance with the Plan's accounting basis, any withdrawal from the Plan's Guaranteed Return Fund made on account of a Plan participant for whatever purpose will be made on a last-in, first-out basis from the various funding vehicles of such Fund in which the participant's account balance is held. 2.2 Changes in Plan's Terms and Operation; Competing Plan The Contractholder agrees to furnish MetLife promptly with a copy of each amendment to the Plan that takes effect after the Issue Date and to notify MetLife promptly if the Plan is determined not to be a Qualified Plan. Section 2.2 - Continued If the Plan is amended so that its terms no longer conform to those set out in Section 2.1, or if in practice the Plan is administered in a manner that has the substantive effect of changing the Plan's terms or administration from that set out in Section 2.1, or if any of the agreements expressed in Section 2.1 or this Section 2.2 is breached, or if the Contractholder has not made any payment specified in Section 3.1 by the end of the Grace Period or any report specified in Section 4, or if the Plan is determined not to be a Qualified Plan, MetLife will have the right as of the effective date of such Plan amendment, administrative change or breach of agreement, or as of the end of the Grace Period in which the Contractholder did not make the required payment, or as of the date the Contractholder did not make the required report or MetLife learns that the Plan is no longer a Qualified Plan, to do any or all of the following: (a) If the Plan is amended so that its terms no longer conform to those set out in Section 2.1, or if in practice the Plan is administered in a manner that has the substantive effect of changing the Plan's terms or administration from that set out in Section 2.1, and MetLife determines that such amendment or administrative change would adversely affect MetLife's financial experience under this Contract, the following provisions will apply: (i) If MetLife determines that such amendment or change would increase the amount of payments MetLife would have to make under this Contract or change the interval between such payments, MetLife will make only the payments that MetLife determines would have been made if the amendment or change had not been made. (ii) If MetLife determines that such amendment or change would decrease the amount of payments MetLife would have to make under this Contract or change the interval between such payments, MetLife will determine the additional amounts that it will withdraw from the Plan Reserve Account and pay to the Contractholder so that the aggregate of all payments made by MetLife under this Contract would be the same as the payments that would have been made under this Contract had the amendment or change not been made. (iii) If such amendment or change occurs before April 1, 1995 and MetLife determines that such amendment or change would increase the amount of payments to be paid to MetLife under this Contract or change the interval between such payments, MetLife will not accept under this Contract any payment that in MetLife's determination is attributable to the amendment or change nor will the Contractholder be obligated to pay to MetLife under Section 3.1 the amounts MetLife determines are attributable to such amendment or change. Section 2.2 - Continued (iv) If such amendment or change occurs before April 1, 1995 and MetLife determines that such amendment or change would decrease the amounts paid to MetLife under this Contract or change the interval between such payments, MetLife will reduce the rate of interest it will thereafter credit on amounts in the Plan Reserve Account to the extent necessary to compensate MetLife for the loss or losses MetLife determines in connection with such decreased amount of payments. In no event will any such reduction cause the rate of return under Section 3.2 to be less than a rate, compounded daily, equivalent to an effective annual rate of 3.00%. (b) If the Contractholder has not made any payment specified in Section 3.1 by the end of the Grace Period or any report specified in Section 4, or if the Plan is determined not to be a Qualified Plan, or if any of the agreements expressed in Section 2.1 or this Section 2.2 is breached, and MetLife determines that such event would adversely affect MetLife's financial experience under this Contract, MetLife will have the right to charge the Contractholder and, to the extent not paid by the Contractholder, to withdraw from the Plan Reserve Account, the amount necessary to compensate MetLife for the loss or losses MetLife in its sole discretion determines in connection with an event described in this item (b). If MetLife exercises its rights under the foregoing items (a) and (b) and within 90 days thereof the Contractholder and MetLife agree upon an alternative arrangement, then MetLife will rescind its action or actions under said items upon such agreement. No action by MetLife under said items (a) and (b) will exceed that necessary to avoid an impairment of MetLife's financial experience under this Contract. In any event MetLife will provide the Contractholder with sufficient information to substantiate MetLife's action. Notwithstanding the foregoing provisions of this Section 2.2, MetLife will not exercise its rights under the second paragraph of this Section 2.2 if after the Issue Date of this Contract the Plan is amended to continue to meet the requirements for qualification under Section 401 of the United States Internal Revenue Code. If under the Plan, the nature or length of maturity of investments, or the operation of any investment option offered, changes significantly from that in effect on the Issue Date in a manner that causes such option to become competitive with the Plan's Guaranteed Return Fund, then MetLife will have the right to deem such change to be a change in the Plan's terms as contemplated by the second paragraph of this Section 2.2 and so permit MetLife to exercise its rights under subitems (i) and (iv) of said second paragraph. Section 2.2 - Continued If the Contractholder, employer or Plan sponsor establishes another pension or profit sharing plan or program to which participants contribute, or any plan or program to which participants contribute and which contains a savings element, or amends an existing plan or program so that it falls within the foregoing description, and if such plan or program is available to participants eligible for the Plan, or if the employer agrees to make payroll deductions for another plan or program (whether or not established by the employer) as described in this paragraph on account of participants eligible for the Plan, then MetLife will have the right to deem such action to be a change in the Plan's terms as contemplated by the second paragraph of this Section 2.2 and so permit MetLife to exercise its rights under item (a) of said second paragraph. If a spin-off, sale or merger of any unit of the employer or Plan sponsor occurs, and if with respect to Plan participants employed by that unit (i) such Plan participants become participants under a defined contribution plan adopted by the successor employer (the "Successor Plan"), (ii) the Successor Plan provisions conform to those represented to MetLife for the Plan pursuant to Section 2.1 of this Contract, and (iii) the successor employer applies to MetLife for a guaranteed interest contract issued in connection with the Successor Plan (the "Clone Contract") to receive, at issue, designated amounts which had been added to the Plan Reserve Account under this Contract, then MetLife will, upon mutual agreement with the successor employer, do the following: (a) Issue the Clone Contract to the new contractholder in accordance with MetLife's underwriting guidelines for contracts in the class to which this Contract belongs. (b) Amend this Contract to effect the withdrawal and transfer to the Clone Contract of the portion of the Plan Reserve Account attributable to Plan participants employed by the successor employer. (c) Assess a one-time expense charge in connection with the issuance of the Clone Contract and the corresponding amendment of this Contract. However, if MetLife and the successor employer do not reach a mutual agreement for the issuance of a Clone Contract, then MetLife will apply the provisions of the next following paragraph separately to each business- related event that would otherwise have resulted in the issuance of a Clone Contract. Section 2.2 - Continued If a Plan or business-related event causes a group of participants eligible on the Issue Date to be thereafter excluded from eligibility, and if as a result of such exclusion withdrawals are to be made on account of such participants, the Contractholder will (i) promptly advise MetLife of any such event and (ii) as soon as practicable thereafter request MetLife to withdraw from the Plan Reserve Account this Contract's share (see Section 4.1) of the amounts needed to accommodate such event. The Contractholder will identify to MetLife amounts to be withdrawn for each such event. MetLife will determine the ratio of the amount of each such withdrawal to the amount in the Plan Reserve Account as of the date prior to the day such withdrawal is to be paid. So long as the sum of all such ratios attributable to all such events, determined since the Issue Date, expressed as a percentage, does not exceed 5%, MetLife will make application of such withdrawals in accordance with item (a) or (b) of Section 4.3. If an event would cause the sum of these percentages to exceed 5%, then MetLife will deem such event to be a change in the Plan's terms as contemplated by the second paragraph of this Section 2.2 and so permit MetLife to exercise its rights under subitems (i) and (iv) of said second paragraph. This paragraph does not apply to events, such as layoffs and plant closings, that result in bona fide termination of employment for participants. If the Plan is extended to a group of participants not eligible on the Issue Date, MetLife will not accept under this Contract any payment on account of such group of participants, nor will the Contractholder be obligated to pay to MetLife under Section 3.1 any payment on account of such group of participants unless otherwise agreed upon by the Contractholder and MetLife. Section 3. Payments to MetLife 3.1 Payments for Addition to the Plan Reserve Account The Contractholder will pay to MetLife under this Contract the following: (a) One hundred percent of that portion of the maturing proceeds payable to the Contractholder on March 31, 1994 that is directed by Plan participants to be reinvested in the Plan's Guaranteed Return Fund. (b) One hundred percent of the Net Allocations to the Plan's Guaranteed Return Fund made during each month after March 31, 1994 and before April 1, 1995. Such Net Allocations will be paid to MetLife promptly after the date any such Allocation is made. MetLife will add each such payment to the Plan Reserve Account as of the date of MetLife's receipt of the payment. As used in this Contract, the term Net Allocations means for any month the excess, if any, of (1) the amounts allocated or transferred to the Plan's Guaranteed Return Fund during that month, pursuant to the plan provisions and administrative practices referred to in Section 2.1, over (2) the amounts withdrawn or transferred from the Plan's Guaranteed Return Fund during that month, pursuant to such provisions. 3.2 Interest Rates MetLife will credit interest on amounts while in the Plan Reserve Account. Interest will be credited from the date of addition up to, but not including, the date of withdrawal from the Plan Reserve Account. Any rate of interest specified in this Section 3.2 is subject to reduction as provided in Section 2.2. Such interest will be credited at a rate, compounded daily, equivalent to an effective annual rate of 5.00% which will be the rate of return under this Contract on amounts while in the Plan Reserve Account. 3.3 Payment of Expenses The administrative expenses allocated to this Contract will be as follows: MetLife will determine the administrative expense charges allocated to this Contract if MetLife performs administrative services under this Contract at the Contractholder's request that are not taken into account by MetLife under this Contract. MetLife will notify the Contractholder after the completion of such services of the amount of the expense charges due. The Contractholder will, upon receipt of notice of the amount of such expense charges, pay MetLife such amount. MetLife will not add any such payment to the Plan Reserve Account. To the extent the Contractholder does not pay all or any portion of such amount within the Grace Period, MetLife will have the right to withdraw the unpaid amount from the Plan Reserve Account. 3.4 Grace Period The Contractholder will have a Grace Period of 31 days within which to pay MetLife any amount, except the first amount, payable under this Contract. Section 4. Payments by MetLife 4.1 Reports of Plan Benefits and Transfers The Contractholder will promptly report to MetLife under this Contract the following: MetLife's share of each Withdrawal from the Plan's Guaranteed Return Fund made during each month after March 31, 1994. In such report, the Contractholder will also specify the application of any such amount under Section 4.3. As used in this Contract, the term Withdrawal means for any month the amount withdrawn or transferred by or on account of a Plan participant from the Plan's Guaranteed Return Fund, pursuant to the Plan provisions referred to in Section 2.1, during that month. MetLife's share of any Withdrawal will be the portion of such Withdrawal, determined under the Plan's accounting basis referred to in Section 2.1(4), attributable to the portion of the Plan participant's account balance in the Plan's Guaranteed Return Fund maintained under this Contract. Any determination of MetLife's share will not be affected by the bankruptcy, insolvency or other failure to act of any bank, insurance company or other provider of a Guaranteed Return Fund funding vehicle. 4.2 Withdrawals from Plan Reserve Account MetLife will withdraw from the Plan Reserve Account each amount the Contractholder reports under Section 4.1. MetLife will make each withdrawal from the Plan Reserve Account under this Section 4.2 as of the date the Contractholder specifies in its report under Section 4.1, except that MetLife will not make any withdrawal as of a date before the date MetLife receives the Contractholder's report. In addition to any withdrawal on account of a report under Section 4.1, MetLife will withdraw the entire amount remaining in the Plan Reserve Account on April 1, 1997. If the date any withdrawal would otherwise be made is a day on which MetLife, MetLife's bank or the payee is not open for business, such withdrawal will be made on the next following date on which all such parties are open for business. In no event will any withdrawal from the Plan Reserve Account exceed the total amount in the Plan Reserve Account. 4.3 Application of the Plan Reserve Account Withdrawals MetLife will apply each amount withdrawn from the Plan Reserve Account under Section 4.2 in one of, or a combination of, the following ways, as the Contractholder specifies: (a) To buy immediate annuities under this Contract on account of persons entitled to Plan benefits. (b) To provide a payment to the Contractholder or, upon agreement between the Contractholder and MetLife, to a payee the Contractholder names. If the amount withdrawn from the Plan Reserve Account under Section 4.2 exhausts the Plan Reserve Account and if there are then any charges under Section 3.3 not previously paid by the Contractholder, then notwithstanding the first paragraph of this Section 4.3, MetLife will deduct such charges from the amount withdrawn from the Plan Reserve Account before making any application under the foregoing item (a) or (b). Section 5. Annuities 5.1 Annuity Purchases At the Contractholder's option, all or part of any amount payable under Section 4 may be used to buy annuities under this Contract for persons entitled to Plan benefits. The Contractholder will report the following information to MetLife for each person on whose account an annuity is to be bought under this Contract. (a) The date as of which payment of the annuity is to commence. Such date will be the Annuity Commencement Date. The Annuity Commencement Date may not be more than 60 days after the date of the Contractholder's report. If MetLife receives the report less than 30 days before the date reported as the Annuity Commencement Date, MetLife will have the right to make the Annuity Commencement Date the first day of the month next following the date reported by the Contractholder. (b) The amount to be applied as a Stipulated Payment to buy the annuity. (c) The form of annuity to be bought. (d) The name, sex, date of birth and any other relevant data for each annuitant. 5.2 Stipulated Payments Stipulated Payments are the amounts required to buy annuities under this Contract. As of the Issue Date, the Stipulated Payments to buy annuities are those set forth in Section 7. MetLife may change such Stipulated Payments on the first anniversary of the Issue Date and at any time thereafter. No such change will be made within one year of any previous change. MetLife will give the Contractholder at least 90 days notice of any change in Stipulated Payments. 5.3 Certificates MetLife will issue to the Contractholder, for delivery to each annuitant, a certificate outlining the benefits payable under the annuity. Any certificate or certificate rider issued under this Contract that contains MetLife's name in the space provided for execution thereof will be considered as certified by MetLife as fully as if the signature of one of its officers appeared in such space. 5.4 Misstatements * If the age or sex or any other relevant fact relating to any annuitant is found to be misstated, MetLife will not pay a greater amount of annuity than that provided by the actual Stipulated Payment and the correct information. Any overpayment or underpayment of an annuity will, together with interest, be deducted from or added to, respectively, future annuity payments. The interest rate will be that used to determine the Stipulated Payment. * SEE ENDORSEMENT FORM G.7812-28 Section 6. General Provisions 6.1 Participation; Dividends This Contract is a participating contract except that the financial experience of annuities bought under this Contract will not be considered in determining this Contract's financial experience. MetLife will determine annually any dividend to which this Contract may be entitled. However, in view of the manner in which MetLife determines the rates of interest credited under this Contract on amounts in the Plan Reserve Account, MetLife does not anticipate that this Contract will be entitled to any dividend. Any dividend will be paid to the payee the Contractholder names. 6.2 Entire Contract This Contract is the entire contract between the parties. The Contractholder's statements will be deemed representations and not warranties. No sales representative or other person, except an authorized officer of MetLife, may make or change any contract or make any binding promises about any contract on behalf of MetLife. Any amendment, modification or waiver of any provision of this Contract will be in writing and may be made effective on behalf of MetLife only by an authorized officer of MetLife. It is intended that this Contract's provisions will be fairly construed and applied in accordance with its terms, and will not be strictly construed against either the Contractholder or MetLife. 6.3 Assignment or Alienation No amounts payable under this Contract may be assigned or encumbered and, to the extent permitted by law, no amount payable under this Contract will be subject to legal process or attachment for payment of any claim against any payee. This Contract may not be assigned to any person except the Plan sponsor or a trustee of the Plan; however, if the Plan is consolidated or merged with another plan or if the assets and liabilities of the Plan are transferred to another plan, this Contract may be assigned to the plan sponsor or trustee of such other plan. 6.4 Liability for Payments MetLife has no obligation to inquire as to the authority of any payee to receive any payments made under this Contract or to inquire into or see to the payee's application of any amounts so paid. 6.5 Communications; Payments All communications between the Contractholder and MetLife provided for in this Contract will be in writing. For this purpose MetLife's address is its Home Office at One Madison Avenue, New York, New York 10010-3690. The Contractholder will state its address to MetLife. All payments to MetLife under this Contract are payable at its Home Office. Any communication or payment may be made for the Contractholder by a party or parties the Contractholder names to act on its behalf. MetLife will report to the Contractholder the amount in the Plan Reserve Account. Such reports will be made monthly. 6.6 Information to be Furnished The Contractholder will furnish all information and documents that MetLife may reasonably require to determine its rights and duties under this Contract and to otherwise administer this Contract in accordance with its terms. 6.7 Termination of Contract This Contract will cease upon Metlife's and the Contractholder's fulfillment of all their duties and obligations hereunder. Section 7. Stipulated Payments The Stipulated Payment for an annuity is the amount from the appropriate schedule below for each $1 of monthly annuity payment, plus $300 and plus any applicable tax. (A) Life Annuity Payable on the first day of each month from the date of purchase to the first day of the month in which the annuitant dies. Annuitant's Amount per $1 Monthly Exact Age Annuity Payment 55 $212.44 60 188.22 65 162.33 Edition B (Unisex) (B) Joint and Survivor Annuity Payable on the first day of each month from the date of purchase to the first day of the month in which the second of the annuitants dies. Annuitants' Exact Ages Primary Survivor Amount per $1 Monthly Annuitant Annuitant Annuity Payment 55 60 $239.73 60 65 216.25 65 65 201.68 Edition B (Unisex) On request MetLife will furnish values for ages and forms of annuity not shown. Also, if at the time an annuity is bought MetLife makes it available on more favorable values under contracts in the class to which this Contract belongs, then such more favorable values will be applicable. MetLife will calculate such values on the same actuarial basis as that used to determine the values shown above. Metropolitan Life Insurance Company A Mutual Company Incorporated in New York State One Madison Avenue, New York, New York 10010-3690 Group Annuity Contract No. 13673 issued to First Interstate Bank of California, its Successors or Assigns, as Trustee of the Rockwell International Corporation Savings Plan is hereby endorsed as follows effective January 14, 1994: Notwithstanding any provision of the Contract to the contrary, MetLife will make no adjustment in an annuity on account of a misstatement of sex. This endorsement is attached to and made part of the Contract. Metropolitan Life Insurance Company Nicholas D. Latrenta Vice-President and Secretary Registrar Date City and State -----END PRIVACY-ENHANCED MESSAGE-----