0000084636-95-000018.txt : 19950816 0000084636-95-000018.hdr.sgml : 19950816 ACCESSION NUMBER: 0000084636-95-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950809 SROS: NYSE 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: 95559993 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 THE QUARTER ENDED JUNE 30, 1995 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 June 30, 1995 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 90740-8250 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (412) 565-4090 (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 183,678,027 shares of registrant's Common Stock, $1.00 par value, and 33,429,581 shares of registrant's Class A Common Stock, $1.00 par value, were outstanding on July, 31 1995. ROCKWELL INTERNATIONAL CORPORATION INDEX PART I. FINANCIAL INFORMATION: Item 1. Financial Statements: Page No. Condensed Consolidated Balance Sheet-- June 30, 1995 and September 30, 1994............ 2 Statement of Consolidated Income--Three Months and Nine Months Ended June 30, 1995 and 1994.... 3 Statement of Consolidated Cash Flows-- Nine Months Ended June 30, 1995 and 1994........ 4 Notes to Financial Statements.................... 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 10 Other Financial Information...................... 16 Exhibit 11 - Computation of Earnings Per Share............. 17 PART II. OTHER INFORMATION: Item 5. Other Information................................ 18 Item 6. Exhibits and Reports on Form 8-K................. 18 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ROCKWELL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET June 30 September 30 1995 1994 (Unaudited) ASSETS (In millions) Current assets: Cash........................................... $ 577.3 $ 628.3 Receivables.................................... 2,550.3 2,267.2 Inventories.................................... 2,064.9 1,532.8 Other current assets........................... 505.1 499.5 Business held for sale......................... 475.0 Total current assets................... 6,172.6 4,927.8 Net property...................................... 2,895.0 2,383.4 Intangible assets................................. 2,026.0 777.0 Other assets...................................... 1,716.2 1,772.6 TOTAL.................... $12,809.8 $9,860.8 LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term debt................................ $ 1,295.6 $ 160.2 Accounts payable - trade....................... 941.1 976.9 Accrued compensation and benefits.............. 781.2 668.8 Advance payments from customers................ 313.1 294.6 Accrued income taxes........................... 120.6 137.6 Other current liabilities...................... 978.7 781.7 Total current liabilities.............. 4,430.3 3,019.8 Long-term debt.................................... 1,777.7 831.0 Accrued retirement benefits....................... 2,533.8 2,414.8 Other liabilities................................. 407.3 239.6 Total liabilities............. 9,149.1 6,505.2 Shareowners' equity: Preferred stock ............................... 1.3 1.4 Common Stock (shares issued - 209.5 million)... 209.5 209.5 Class A Common Stock (shares issued: June 30, 1995, 34.2 million; September 30, 1994, 36.9 million)............ 34.2 36.9 Additional paid-in capital..................... 183.5 174.0 Retained earnings.............................. 4,060.6 3,762.3 Currency translation........................... (93.9) (97.1) Common Stock in treasury, at cost (shares held: June 30, 1995, 26.6 million; September 30, 1994, 27.8 million).......... (734.5) (731.4) Total shareowners' equity..... 3,660.7 3,355.6 TOTAL.................... $12,809.8 $9,860.8 See Notes to Financial Statements. ROCKWELL INTERNATIONAL CORPORATION STATEMENT OF CONSOLIDATED INCOME (Unaudited) Three Months Ended Nine Months Ended June 30 June 30 1995 1994 1995 1994 (In millions) Revenues: Sales.......................... $3,452.4 $2,872.3 $9,436.3 $8,234.7 Other income................... 32.6 12.3 72.7 42.0 Total revenues............... 3,485.0 2,884.6 9,509.0 8,276.7 Costs and expenses: Cost of sales.................. 2,660.9 2,217.6 7,263.4 6,403.7 Selling, general and administrative............... 445.8 369.2 1,209.6 1,018.1 Interest....................... 51.9 23.6 119.5 74.6 Total costs and expenses..... 3,158.6 2,610.4 8,592.5 7,496.4 Income before income taxes....... 326.4 274.2 916.5 780.3 Provision for income taxes....... 129.4 109.3 363.4 311.2 Net income ...................... $ 197.0 $ 164.9 $ 553.1 $ 469.1 (In dollars) Earnings per common share: Primary....................... $ .90 $ .74 $ 2.54 $ 2.12 Fully diluted................. $ .88 $ .73 $ 2.49 $ 2.08 Cash dividends per common share.. $ .27 $ .25 $ .81 $ .75 (In millions) Average common shares outstanding: Primary....................... 216.8 220.4 217.3 220.9 Fully diluted................. 221.8 224.3 222.5 225.1 See Notes to Financial Statements. ROCKWELL INTERNATIONAL CORPORATION STATEMENT OF CONSOLIDATED CASH FLOWS (Unaudited) Nine Months Ended June 30 1995 1994 (In millions) OPERATING ACTIVITIES: Net income........................................... $ 553.1 $ 469.1 Adjustments to net income to arrive at cash provided by operating activities: Depreciation..................................... 336.9 322.3 Amortization of intangible assets................ 69.6 38.5 Deferred income taxes............................ 82.5 36.8 Net pension income and contributions............. (60.6) (80.7) Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments: Receivables.................................. (74.1) 0.4 Inventories.................................. (184.1) (116.2) Accounts payable - trade..................... (134.3) (54.2) Accrued compensation and benefits............ 21.9 (26.1) Advance payments from customers.............. (6.3) (2.4) Income taxes................................. (68.9) 56.3 Other assets and liabilities................. (6.1) (73.2) Cash provided by operating activities..... 529.6 570.6 INVESTING ACTIVITIES: Property additions................................... (443.8) (349.9) Acquisition of businesses, net of cash balances of $59.7 million in 1995 and $3.2 million in 1994..... (1,616.2) (13.3) Proceeds from disposition of property and businesses. 28.8 8.0 Cash used for investing activities........ (2,031.2) (355.2) FINANCING ACTIVITIES: Debt activity excluding the acquisition of existing Reliance debt: Increase in short-term borrowings................ 921.9 26.5 Increase in long-term debt....................... 826.7 17.7 Payments of long-term debt....................... (43.9) (208.2) Net increase (decrease) in debt................ 1,704.7 (164.0) Purchase of treasury stock.......................... (120.4) (108.8) Dividends........................................... (176.3) (165.9) Reissuance of common stock.......................... 42.6 36.3 Cash provided by (used for) financing activities.............................. 1,450.6 (402.4) DECREASE IN CASH..................................... (51.0) (187.0) CASH AT BEGINNING OF PERIOD.......................... 628.3 772.8 CASH AT END OF PERIOD................................ $ 577.3 $ 585.8 Income tax payments were $337.3 million and $206.1 million in the nine months ended June 30, 1995 and 1994, 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, 1994. The results of operations for the three- and nine-month periods ended June 30, 1995 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. In January 1995, the company completed its acquisition of Reliance Electric Company (Reliance), a major manufacturer of industrial products and telecommunications equipment, for $1,586 million. The purchase price was financed through $786 million of short-term borrowings and $800 million of long-term debt. A portion of the short-term debt was repaid with the $475 million proceeds from the August 1995 sale of Reliance's telecommunications business to an affiliate of Kohlberg Kravis Roberts & Co. The company's results of operations do not include the results of Reliance's telecommunications business or the interest expense during the holding period related to the incremental borrowings that were repaid with the sales proceeds. The carrying value of the business as of June 30, 1995, which is reflected in the accompanying balance sheet as "Business held for sale", has been adjusted to equal the approximate sales proceeds, with a corresponding increase to goodwill. The acquisition of Reliance has been accounted for as a purchase as of December 31, 1994 and the results of operations of Reliance (exclusive of its telecommunications business) are included in the company's statement of consolidated income commencing January 1, 1995. The assets acquired and liabilities assumed were recorded at estimated fair values determined by the company's management based on appraisals, evaluations, estimations and other studies, some of which are still in process. The excess of the purchase price over the estimated fair value of the net tangible assets acquired has been recorded as identifiable intangibles of $380.9 million and goodwill of $851.9 million, which are being amortized over periods ranging from seven to forty years (see Note 5). ROCKWELL INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 2. (Continued) The following unaudited pro forma condensed consolidated results of operations combine the historical results of operations of the company and Reliance, assuming Reliance had been acquired and its telecommunications business had been sold at the beginning of each period. The pro forma results are presented for information purposes only and are not necessarily indicative of the results which would have occurred if the business combination had been in effect on the dates presented, or of the results which may occur in the future. Further, the results do not reflect cost savings or other synergies expected to result from the integration of Reliance and the company's Automation business. Nine Months Ended June 30 1995 1994 (In millions, except per share amounts) Sales and other income $ 9,838 $ 9,181 Net income 553 437 Earnings per common share: Primary 2.54 1.98 Fully Diluted 2.49 1.94 The company also purchased several other businesses at a cost of $109.4 million. The results of operations of these businesses were not material in relation to the company's consolidated results of operations. 3. Receivables are summarized as follows (in millions): June 30 September 30 1995 1994 Accounts and notes receivable: Commercial, less allowance for doubtful accounts (June 30, 1995, $77.1; September 30, 1994, $68.0)............ $1,762.2 $1,364.2 United States Government................ 138.4 128.1 Unbilled costs and accrued profits, less related progress payments (June 30, 1995, $291.2; September 30, 1994, $387.4)............. 649.7 774.9 Receivables............................. $2,550.3 $2,267.2 ROCKWELL INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 4. Inventories are summarized as follows (in millions): June 30 September 30 1995 1994 Finished goods............................ $ 471.4 $ 355.5 Long-term contracts in process............ 374.7 300.0 Work in process........................... 868.8 619.5 Raw materials, parts and supplies......... 578.8 472.6 Total................................... 2,293.7 1,747.6 Less allowance to adjust the carrying value of certain inventories to a last-in, first-out (LIFO) basis.................. 74.0 67.8 Remainder................................. 2,219.7 1,679.8 Less related progress payments............ 154.8 147.0 Inventories............................. $2,064.9 $1,532.8 5. Intangible assets are summarized as follows (in millions): June 30 September 30 1995 1994 Goodwill................................. $1,467.2 $ 589.3 Trademarks, patents, product technology and other intangibles.................. 558.8 187.7 Intangible assets...................... $2,026.0 $ 777.0 The increases in goodwill and other intangible assets are due primarily to the acquisition of Reliance (see Note 2). 6. Other assets are summarized as follows (in millions): June 30 September 30 1995 1994 Prepaid pension costs.................... $1,291.2 $1,214.6 Deferred income taxes.................... 79.8 299.7 Customer finance receivables............. 149.6 137.3 Investments and other assets............. 195.6 121.0 Other assets........................... $1,716.2 $1,772.6 ROCKWELL INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 7. Short-term debt consisted of the following (in millions): June 30 September 30 1995 1994 Commercial paper......................... $1,153.2 $ 40.0 Short-term bank borrowings, principally foreign.................... 123.9 105.2 Current portion of long-term debt........ 18.5 15.0 Short-term debt......................... $1,295.6 $ 160.2 The short-term commercial paper borrowings are primarily due to financing of the Reliance acquisition and refinancing $200 million of Reliance short-term borrowings (see Note 2). 8. Other current liabilities are summarized as follows (in millions): June 30 September 30 1995 1994 Accounts payable - other................... $319.5 $227.0 Accrued product warranties................. 219.8 217.4 Accrued taxes other than income taxes...... 67.7 81.8 Other...................................... 371.7 255.5 Other current liabilities................ $978.7 $781.7 9. Long-term debt consisted of the following (in millions): June 30 September 30 1995 1994 7-5/8% notes, payable in 1998............ $ 300.0 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 6.8% notes, payable in 2003.............. 137.5 7-7/8% notes, payable in 2005............ 200.0 6-5/8% notes, payable in 2005............ 300.0 Other obligations, principally foreign... 58.7 46.0 Total.................................. 1,796.2 846.0 Less current portion..................... 18.5 15.0 Long-term debt......................... $1,777.7 $ 831.0 ROCKWELL INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) 9. (Continued) In June 1995 the company issued $300 million of 6-5/8% notes due June 1, 2005, and in February 1995 the company issued $300 million of 7-5/8% notes due February 17, 1998 and $200 million of 7-7/8% notes due February 15, 2005. The proceeds were used to reduce short-term debt incurred in connection with the acquisition of Reliance. The 6.8% notes, payable in 2003, represent $150 million of long-term debt of Reliance which has been adjusted to reflect interest rates in effect at the time of the acquisition. The discount is being amortized over the remaining term of the debt as interest expense. 10. The company's financial instruments include cash, notes receivable, short-and long-term debt and foreign currency forward exchange contracts. At June 30, 1995, the carrying values of the company's financial instruments approximate their fair values based on current market rates. The company enters into foreign currency forward exchange contracts to protect itself from adverse currency rate fluctuations on firm and identifiable foreign currency commitments entered into in the ordinary course of business. These foreign currency forward exchange contracts are executed with creditworthy banks for terms of generally less than six months and are denominated in currencies of major industrial countries. Outstanding foreign currency forward exchange contracts, netted on a bank-by-bank basis, amounted to approximately $195 million at June 30, 1995. The company does not anticipate any material adverse effect on its results of operations or financial position relating to these foreign currency forward exchange contracts. 11. Accrued retirement benefits consisted of the following (in millions): June 30 September 30 1995 1994 Accrued retirement medical costs......... $2,555.1 $2,507.0 Accrued pension costs.................... 176.1 97.8 Total.................................. 2,731.2 2,604.8 Amount classified as current liability... 197.4 190.0 Accrued retirement benefits............ $2,533.8 $2,414.8 12. In the quarter ended June 30, 1995, the company purchased 0.6 million shares of Common Stock for $27 million. Since the company's Common Stock repurchase program began in 1984, the company has purchased 113.6 million shares of Common Stock for $2.6 billion. 13. 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, employment and government contract 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 1995 Third Quarter Compared to 1994 Third Quarter The contributions to sales and earnings by business segment of the company for the third quarter of fiscal 1995 and 1994 are presented below (in millions). Three Months Ended June 30 1995 1994 Sales Electronics Automation $ 1,029 $ 545 Avionics 325 292 Telecommunications 236 187 Defense Electronics 260 252 Total Electronics 1,850 1,276 Aerospace Space Systems 474 502 Aircraft 133 147 Total Aerospace 607 649 Automotive Heavy Vehicle Systems 510 470 Light Vehicle Systems 325 251 Total Automotive 835 721 Graphic Systems 160 169 Sales of ongoing businesses 3,452 2,815 Divested business 58 Total $ 3,452 $ 2,873 Operating Earnings Electronics Automation $ 139.1 $ 74.7 Avionics/Telecom/Defense 115.6 99.4 Total Electronics 254.7 174.1 Aerospace 83.6 87.9 Automotive 60.6 48.0 Graphic Systems 13.1 9.7 Operating earnings of ongoing businesses 412.0 319.7 Divested business 2.8 General corporate - net (33.7) (24.7) Interest expense (51.9) (23.6) Provision for income taxes (129.4) (109.3) Net Income $ 197.0 $ 164.9 ROCKWELL INTERNATIONAL CORPORATION RESULTS OF OPERATIONS (CONTINUED) Sales for the third quarter of $3.5 billion were nearly $600 million, or 20 percent, higher than 1994's third quarter sales of $2.9 billion. Sales of the recently acquired Reliance contributed $354 million to this increase, while the remaining increase was attributable to growth in the company's other commercial businesses. In the quarter, commercial and international sales were up 34 percent from last year's third quarter, and now comprise 73.5 percent of total sales compared to 66 percent in the third quarter of 1994. Earnings per share for the 1995 third quarter of 90 cents increased 22 percent over last year's 74 cents per share, marking the tenth consecutive quarter the company has achieved double-digit earnings per share growth. Reliance added three cents per share to the company's third quarter results, after considering the financing cost of the acquisition and amortization of goodwill and other intangible assets. In its third quarter earnings release the company's chairman and chief executive officer said, "We see continued strong earnings by our businesses in the fourth quarter and expect to achieve full year earnings per share of around $3.40." Net income for 1995's third quarter increased 19 percent from 1994's third quarter net income primarily due to strong performances by the company's Automation, Avionics, Telecommunications and Automotive component systems businesses. Third quarter earnings of the Electronics businesses were up 46 percent over last year's third quarter due to strong contributions from the Automation, Avionics and Telecommunications businesses. Operating earnings of the Automation business, which exclude interest expense related to the Reliance acquisition, were up $64 million from the year earlier quarter. The earnings increase was due about equally to the continued strong worldwide markets for Allen-Bradley products and to the inclusion of Reliance in this quarter's results. Integration of the Allen-Bradley and Reliance businesses, which collectively form Rockwell Automation, is proceeding successfully and enhancing the company's ability to serve customers worldwide with a broad range of automation products. In the company's other Electronics businesses, earnings of the Avionics business were 55 percent higher than last year's third quarter due to strengthening of the air transport market and substantial completion of development work on the Boeing 777 program. Telecommunications third quarter earnings were up 30 percent over 1994 principally due to strong customer acceptance of the business' new high-speed data modem products. Third quarter earnings of Defense Electronics were below 1994 due to favorable contract adjustments in last year's third quarter. ROCKWELL INTERNATIONAL CORPORATION RESULTS OF OPERATIONS (CONTINUED) Aerospace third quarter earnings were down five percent from the year earlier third quarter primarily due to lower sales and award fees. Automotive's third quarter earnings increased 26 percent from 1994's third quarter reflecting higher sales in both the Heavy and Light Vehicle Systems businesses. These results were achieved while significant investments are being made to launch several new products in Light Vehicle Systems. Automotive's third quarter return on sales increased to 7.3 percent compared to 6.7 percent in the year earlier quarter. Third quarter earnings of the Graphic Systems business were up as a result of its continuing cost containment and productivity programs, even though sales were below 1994's third quarter. As expected, Graphic Systems' third quarter earnings were below the levels recorded in the first and second quarters of this year principally due to less favorable pricing on large newspaper presses combined with continuing weak commercial press markets. The company continues to expect Graphic Systems' earnings for the second half of 1995 will be lower than this year's first half. The company's current year third quarter results included higher corporate expenses, principally related to the timing of contributions to the company's charitable trust. Interest expense for the third quarter increased due to borrowings for the Reliance acquisition. ROCKWELL INTERNATIONAL CORPORATION RESULTS OF OPERATIONS (CONTINUED) Nine Months Ended June 30, 1995 Compared to Nine Months Ended June 30, 1994 The contributions to sales and earnings by business segment of the company for the nine months ended June 30, 1995 and 1994 are presented below (in millions). Nine Months Ended June 30 1995 1994 Sales Electronics Automation $ 2,575 $ 1,518 Avionics 899 899 Telecommunications 614 527 Defense Electronics 652 773 Total Electronics 4,740 3,717 Aerospace Space Systems 1,397 1,506 Aircraft 397 411 Total Aerospace 1,794 1,917 Automotive Heavy Vehicle Systems 1,473 1,302 Light Vehicle Systems 901 674 Total Automotive 2,374 1,976 Graphic Systems 528 456 Sales of ongoing businesses 9,436 8,066 Divested business 169 Total $ 9,436 $ 8,235 Operating Earnings Electronics Automation $ 368.7 $ 199.3 Avionics/Telecom/Defense 280.3 322.2 Total Electronics 649.0 521.5 Aerospace 255.3 263.2 Automotive 170.4 108.7 Graphic Systems 51.3 23.8 Operating earnings of ongoing businesses 1,126.0 917.2 Divested business 6.3 General corporate - net (90.0) (68.6) Interest expense (119.5) (74.6) Provision for income taxes (363.4) (311.2) Net Income $ 553.1 $ 469.1 ROCKWELL INTERNATIONAL CORPORATION RESULTS OF OPERATIONS (CONTINUED) Sales of $9.4 billion for the first nine months of 1995 increased $1.2 billion, or 15 percent, over the same period a year ago principally due to the inclusion of Reliance and to strong demand for the company's Allen-Bradley Automation products and Automotive heavy and light vehicle components products. Sales of the company's Defense Electronics and Aerospace businesses were lower due to reduced government spending levels. Net income for the first nine months of 1995 was up 18 percent over 1994's first nine months. Electronics earnings for the first nine months of fiscal 1995 were up 24 percent from the same period a year ago. Earnings of the Automation business for the first nine months of 1995 increased substantially due to strong worldwide markets and the inclusion of Reliance. In the company's other Electronics businesses, Avionics earnings were slightly lower due to higher new product investments. Earnings of the Telecommunications business were down due to pricing pressures on lower-speed data modems and launch costs associated with the next generation high-speed data modem products. Defense Electronics earnings were below those of last year's first nine months due to lower sales and favorable contract adjustments in last year's comparable period. Aerospace earnings for the first nine months of 1995 were below those of the comparable 1994 period primarily as a result of lower sales. Automotive's earnings for the first nine months of 1995 increased 57 percent over last year's first nine months primarily due to substantial earnings growth in its Heavy Vehicle Systems business resulting from strong North American truck markets, improved operating performance and lower product warranty costs. Earnings of Automotive's Light Vehicle Systems business were also up from last year's first nine months due to improved volume which more than offset higher new product launch costs. Earnings of the Graphic Systems business for the first nine months of 1995 improved significantly from the year earlier due to increased sales in the higher-margin large newspaper printing press business principally in the first half of fiscal 1995. The company's results for the first nine months of 1995 included higher corporate expenses, principally related to the timing of contributions to the company's charitable trust and adjustments to reserves for costs related to divested businesses. Interest expense for the first nine months of 1995 increased due to borrowings for the Reliance acquisition. FINANCIAL CONDITION Changes to the company's financial condition since its September 30, 1994 fiscal year-end are principally related to the inclusion of the assets and liabilities of Reliance and the financing of the company's acquisition of Reliance. In addition, the company also purchased several other businesses at a cost of $109.4 million (see Note 2 of Notes to Financial Statements). ROCKWELL INTERNATIONAL CORPORATION FINANCIAL CONDITION (CONTINUED) A summary of the assets and liabilities of businesses acquired (including Reliance) during the first nine months of 1995 is as follows: Working capital 524.9 Property 405.6 Intangibles resulting from acquisitions 1,302.1 Investments and other assets 106.7 Long-term debt (146.1) Long-term liabilities (497.7) Cost of purchased businesses 1,695.5 The company's working capital at June 30, 1995 was $1,742 million, down $166 million from working capital at September 30, 1994. The decrease is principally due to the $786 million short-term financing of the Reliance acquisition at June 30, 1995 offset by the addition of $553 million in working capital of Reliance. At June 30, 1995, the company had financed the $1,586 million purchase price of Reliance through $786 million of short-term debt and $800 million of long-term debt. The company's total debt to total capital ratio (debt as a percent of shareowners' equity plus debt) increased to 46 percent at June 30, 1995 from 23 percent at September 30, 1994. Had the proceeds from the sale of Reliance's telecommunications business of $475 million been received and used to repay short-term debt at June 30, 1995, the company's debt to total capital ratio would have been 41 percent. During the quarter the company completed its acquisition of the aerostructure components and defense business of Aero Space Technologies of Australia (ASTA) Limited from the Commonwealth of Australia. On July 31, 1995 the company agreed to pay the U.S. Government $23.6 million to settle a government claim that the company provided inaccurate cost and pricing information during the negotiation of the original B-1B aircraft contract in 1981. The payment was previously reserved by the company and will have no adverse effect on the company's financial results. 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 18 - 19 of the company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and, with respect to Reliance, in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, on page 15 of the company's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 1994. Management believes that at June 30, 1995 there has been no material change to this information. ROCKWELL INTERNATIONAL CORPORATION FINANCIAL CONDITION (CONTINUED) Other Financial Information (a) The company's backlog on June 30, 1995 was $11.2 billion compared to $10.9 billion on June 30, 1994. The backlog includes $5.0 billion of commercial orders, $2.1 billion of funded government orders and $4.1 billion of unfunded government orders. Backlog by major businesses is as follows (in millions): June 30 June 30 1995 1994 Electronics Automation $ 617 $ 209 Avionics 1,072 1,102 Telecommunications 608 231 Defense Electronics 1,429 1,286 3,726 2,828 Aerospace Space Systems 4,271 5,137 Aircraft 2,126 1,789 6,397 6,926 Automotive 538 597 Graphic Systems 497 541 Total Backlog $11,158 $10,892 (b) The composition of the company's sales by customer is as follows (in millions): Three Months Ended Nine Months Ended June 30 June 30 1995 1994 1995 1994 U.S. Commercial $1,399 $ 973 $3,625 $2,744 International 1,139 922 3,175 2,579 U.S. Government: DOD 524 555 1,535 1,683 NASA 390 423 1,101 1,229 Total $3,452 $2,873 $9,436 $8,235 EXHIBIT 11 ROCKWELL INTERNATIONAL CORPORATION COMPUTATION OF EARNINGS PER SHARE Three Months Ended Nine Months Ended June 30 June 30 1995 1994 1995 1994 (In millions, except per share amounts) Primary earnings per share: Net income...................... $197.0 $164.9 $553.1 $469.1 Deduct dividend requirements on preferred stock............ 0.1 0.1 0.2 0.2 Total primary earnings.......... $196.9 $164.8 $552.9 $468.9 Average number of common shares outstanding during the period............... 216.8 220.4 217.3 220.9 Primary earnings per share...... $ .90 $ .74 $ 2.54 $ 2.12 Fully diluted earnings per share: Net income...................... $197.0 $164.9 $553.1 $469.1 Average number of common shares outstanding during the period assuming full dilution: Common stock................ 216.8 220.4 217.3 220.9 Assumed issuance of stock under award plans and conversion of preferred stock..................... 5.0 3.9 5.2 4.2 Total fully diluted shares...... 221.8 224.3 222.5 225.1 Fully diluted earnings per share.................... $ .88 $ .73 $ 2.49 $ 2.08 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 reasonable estimates, supported by the opinion of 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 3 - Copy of By-Laws of the company as amended effective July 10, 1995 Exhibit 10 - Copy of the company's Deferred Compensation Plan as amended effective July 1, 1995 Exhibit 11 - Computation of Earnings Per Share Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges and Computation of Pro Forma Ratio of Earnings to Fixed Charges for the nine months ended June 30, 1995. Exhibit 27 - Financial Data Schedule Exhibit 99-a - Unaudited pro forma condensed consolidated statement of income of the company and Reliance for the nine months ended June 30, 1995 PART II. OTHER INFORMATION (CONTINUED) Item 6. Exhibits and Reports on Form 8-K (Continued) (b) Reports on Form 8-K: The Registrant filed a Current Report on Form 8-K, dated June 14, 1995, in respect of the issuance of $300 million aggregate principal amount of its 6-5/8% Notes due June 1, 2005. The items reported in such current report were Item 5 (Other Events) and Item 7 (Financial Statements, Pro Forma Financial Information and Exhibits). 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 9, 1995 By L. J. Komatz L. J. Komatz Vice President and Controller (Principal Accounting Officer) Date August 9, 1995 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 JUNE 30, 1995 Page Exhibit 3 Copy of By-Laws of the company as amended effective July 10, 1995 22 Exhibit 10 Copy of the company's Deferred Compensation Plan as amended effective July 1, 1995 49 Exhibit 12 Computation of Ratio of Earnings to Fixed Charges and Computation of Pro Forma Ratio of Earnings to Fixed Charges for the nine months ended June 30, 1995 75 Exhibit 99-a Unaudited pro forma condensed consolidated statement of income of the company and Reliance for the nine months ended June 30, 1995 76 EX-3 2 AMENDED BY-LAWS OF THE COMPANY EXHIBIT 3 BY-LAWS of Rockwell International Corporation As Amended Effective July 10, 1995 BY-LAWS OF Rockwell International Corporation ARTICLE I. Offices SECTION 1. Registered Office in Delaware; Resident Agent. The address of the Corporation's registered office in the State of Delaware and the name and address of its resident agent in charge thereof are as filed with the Secretary of State of the State of Delaware. SECTION 2. Other Offices. The Corporation may also have an office or offices at such other place or places either within or without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation requires. ARTICLE II. Meetings Of Shareowners SECTION 1. Place of Meetings. All meetings of the shareowners of the Corporation shall be held at such place, within or without the State of Delaware, as may from time to time be designated by resolution passed by the Board of Directors. SECTION 2. Annual Meeting. An annual meeting of the shareowners for the election of directors and for the transaction of such other proper business, notice of which was given in the notice of meeting, shall be held on a date and at a time as may from time to time be designated by resolution passed by the Board of Directors. SECTION 3. Special Meetings. A special meeting of the shareowners for any purpose or purposes, unless otherwise prescribed by law, may be called at any time by the Chairman of the Board, the President, by order of the Board of Directors or by a shareowner or shareowners holding of record at least twenty percent of the outstanding stock of the Corporation entitled to vote at such meeting. SECTION 4. Notice of Meetings. Except as otherwise provided by law, written notice of each meeting of the shareowners, whether annual or special, shall be mailed, postage prepaid, not less than ten nor more than sixty days before the date of the meeting, to each shareowner entitled to vote at such meeting, at the shareowner's address as it appears on the records of the Corporation. Every such notice shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Notice of any adjourned meeting of the shareowners shall not be required to be given, except when expressly required by law. SECTION 5. List of Shareowners. The Secretary shall, from information obtained from the transfer agent, prepare and make, at least ten days before every meeting of shareowners, a complete list of the shareowners entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each shareowner and the number of shares registered in the name of each shareowner. Such list shall be open to the examination of any shareowner, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareowner who is present. The stock ledger shall be the only evidence as to who are the shareowners entitled to examine the stock ledger, the list referred to in this section or the books of the Corporation, or to vote in person or by proxy at any meeting of shareowners. SECTION 6. Quorum. At each meeting of the shareowners, the holders of a majority of the issued and outstanding stock of the Corporation present either in person or by proxy shall constitute a quorum for the transaction of business except where otherwise provided by law or by the Certificate of Incorporation or by these by-laws for a specified action. At each meeting at which the holders of the Preferred Stock are entitled to elect a director or directors, the holders of a majority of the issued and outstanding Preferred Stock, present either in person or by proxy, shall constitute a quorum for the election of said director or directors. Except as otherwise provided by law, in the absence of a quorum, a majority in interest of the shareowners of the Corporation present in person or by proxy and entitled to vote shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until shareowners holding the requisite amount of stock shall be present or represented. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at a meeting as originally called. The absence from any meeting of the number of shareowners required by law or by the Certificate of Incorporation or by these by-laws for action upon any given matter shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting, if the number of shareowners required in respect of such other matter or matters shall be present. SECTION 7. Organization. At every meeting of the shareowners the Chairman of the Board, or, in his absence, the President, or in the absence of the Chairman and the President, a director or an officer of the Corporation designated by the Board shall act as Chairman. The Secretary, or, in his absence, an Assistant Secretary, shall act as Secretary at all meetings of the shareowners. In the absence from any such meeting of the Secretary and the Assistant Secretaries, the Chairman may appoint any person to act as Secretary of the meeting. SECTION 8. Business and Order of Business. At each meeting of the shareowners such business may be transacted as may properly be brought before such meeting, except as otherwise provided by law or in these by-laws. The order of business at all meetings of the shareowners shall be as determined by the Chairman, unless otherwise determined by a majority in interest of the shareowners present in person or by proxy at such meeting and entitled to vote thereat. SECTION 9. Voting. Except as otherwise provided by law, the Certificate of Incorporation or these by-laws, each shareowner shall at every meeting of the shareowners be entitled to one vote for each share of stock held by such shareowner. Any vote on stock may be given by the shareowner entitled thereto in person or by proxy appointed by an instrument in writing, subscribed (or transmitted by electronic means and authenticated as provided by law) by such shareowner or by the shareowner's attorney thereunto authorized, and delivered to the Secretary; provided, however, that no proxy shall be voted after three years from its date unless the proxy provides for a longer period. Except as otherwise provided by law, the Certificate of Incorporation or these by- laws, at all meetings of the shareowners, all matters shall be decided by the vote (which need not be by ballot) of a majority in interest of the shareowners present in person or by proxy and entitled to vote thereat, a quorum being present. ARTICLE III. Board of Directors SECTION 1. General Powers. The property, affairs and business of the Corporation shall be managed by or under the direction of its Board of Directors. SECTION 2. Number, Qualifications, and Term of Office. The number of directors shall be fixed from time to time, but at not less than three, by resolution passed by a majority of the whole Board. Directors need not be shareowners. Except as otherwise provided in these by-laws, the directors shall be elected annually, and each director shall hold office until the annual meeting held next after his or her election and until his or her successor shall have been elected and shall qualify, or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided. SECTION 3. Election of Directors. At each meeting of the shareowners for the election of directors, at which a quorum is present, the directors shall be the persons receiving the greatest number of votes cast by the holders of stock entitled to vote for such directors. SECTION 4. Quorum and Manner of Acting. A majority of the members of the Board of Directors shall constitute a quorum for the transaction of business at any meeting, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors unless otherwise provided by law, the Certificate of Incorporation or these by-laws. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum shall be obtained. Notice of any adjourned meeting need not be given. The directors shall act only as a board and the individual directors shall have no power as such. SECTION 5. Place of Meetings. The Board of Directors may hold its meetings at such place or places within or without the State of Delaware as the Board may from time to time determine or as shall be specified or fixed in the respective notices or waivers of notice thereof. SECTION 6. First Meeting. Promptly after each annual election of directors, the Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, at the same place as that at which the annual meeting of shareowners was held or as otherwise determined by the Board. Notice of such meeting need not be given. Such meeting may be held at any other time or place which shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. SECTION 7. Regular Meetings. Regular meetings of the Board of Directors shall be held at such places and at such times as the Board shall from time to time determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day not a legal holiday. Notice of regular meetings need not be given. SECTION 8. Special Meetings; Notice. Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board and shall be called by the Chairman of the Board or the Secretary at the written request of three directors. Notice of each such meeting stating the time and place of the meeting shall be given to each director by mail, telephone, other electronic transmission or personally. If by mail, such notice shall be given not less than five days before the meeting; and if by telephone, other electronic transmission or personally, not less than two days before the meeting. A notice mailed at least two weeks before the meeting need not state the purpose thereof except as otherwise provided in these by-laws. In all other cases the notice shall state the principal purpose or purposes of the meeting. Notice of any meeting of the Board need not be given to a director, however, if waived by the director in writing before or after such meeting or if the director shall be present at the meeting. SECTION 9. Organization. At each meeting of the Board of Directors, the Chairman of the Board, or, in his absence, the President, or, in the absence of the Chairman and the President, a director or an officer of the Corporation designated by the Board shall act as Chairman. The Secretary, or, in the Secretary's absence, any person appointed by the Chairman, shall act as Secretary of the meeting. SECTION 10. Order of Business. At all meetings of the Board of Directors, business shall be transacted in the order determined by the Board. SECTION 11. Resignations. Any director of the Corporation may resign at any time by giving written notice to the Chairman of the Board, the President or the Secretary of the Corporation. The resignation of any director shall take effect at the time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 12. Removal of Directors. Any director may be removed, either with or without cause, at any time, by the affirmative vote of a majority in interest of the holders of record of the stock having voting power at a special meeting of the shareowners called for the purpose; and the vacancy in the Board of Directors caused by any such removal may be filled by the shareowners at such meeting; provided, that a director elected by the holders of the Preferred Stock, voting as a class, may be so removed only by the affirmative vote of a majority in interest of the holders of record of such Preferred Stock, and the vacancy in the Board of Directors caused by such removal may be filled as provided in the Certificate of Incorporation. SECTION 13. Vacancies. Any vacancy in the Board of Directors caused by death, resignation, removal, disability, disqualification, an increase in the number of directors, or any other cause (except a vacancy in the office of a director elected by the holders of the Preferred Stock, voting as a class) may be filled by the majority vote of the remaining directors, though less than a quorum, or by the shareowners of the Corporation at the next annual meeting or any special meeting called for the purpose, and each director so elected shall hold office for a term to expire at the next annual election of directors, and until his or her successor shall be duly elected and qualified, or until his or her death or until he or she shall resign or shall have been removed in the manner herein provided. A vacancy in the office of a director elected by the holders of the Preferred Stock, voting as a class, may be filled as provided in the Certificate of Incorporation. In case all the directors shall die or resign or be removed or disqualified, any shareowner having voting powers may call a special meeting of the shareowners, upon notice given as herein provided for meetings of the shareowners, at which directors for the unexpired terms may be elected. SECTION 14. Compensation. Each director shall be paid such compensation, if any, as shall be fixed by the Board of Directors. SECTION 15. Indemnification of Directors and Officers. (A) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent (except in each of the foregoing situations to the extent any agreement, arrangement or understanding of agency contains provisions that supersede or abrogate indemnification under this section) of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. (B) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent (except in each of the foregoing situations to the extent any agreement, arrangement or understanding of agency contains provisions that supersede or abrogate indemnification under this section) of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of Delaware or such other court shall deem proper. (C) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (A) and (B), or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by or on behalf of such person in connection therewith. If any such person is not wholly successful in any such action, suit or proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters therein, the Corporation shall indemnify such person against all expenses (including attorneys' fees) actually and reasonably incurred by or on behalf of such person in connection with each claim, issue or matter that is successfully resolved. For purposes of this subsection and without limitation, the termination of any claim, issue or matter by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. (D) Notwithstanding any other provision of this section, to the extent any person is a witness in, but not a party to, any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent (except in each of the foregoing situations to the extent any agreement, arrangement or understanding of agency contains provisions that supersede or abrogate indemnification under this section) of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise, such person shall be indemnified against all expenses (including attorneys' fees) actually and reasonably incurred by or on behalf of such person in connection therewith. (E) Indemnification under subsections (A) and (B) (unless ordered by a court) shall be made only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in subsections (A) and (B). Such determination shall be made (1) if a Change of Control (as hereinafter defined) shall not have occurred, (a) by the Board of Directors by a majority vote of the Disinterested Directors (as hereinafter defined), even though less than a quorum or (b) if there are no Disinterested Directors or, even if there are Disinterested Directors, a majority of such Disinterested Directors so directs, by (i) Independent Counsel (as hereinafter defined) in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (ii) the shareowners of the Corporation; or (2) if a Change of Control shall have occurred, by Independent Counsel selected by the claimant in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, unless the claimant shall request that such determination be made by or at the direction of the Board of Directors, in which case it shall be made in accordance with clause (1) of this sentence. Any claimant shall be entitled to be indemnified against the expenses (including attorneys' fees) actually and reasonably incurred by such claimant in cooperating with the person or entity making the determination of entitlement to indemnification (irrespective of the determination as to the claimant's entitlement to indemnification) and, to the extent successful, in connection with any litigation or arbitration with respect to such claim or the enforcement thereof. (F) If a Change of Control shall not have occurred, or if a Change of Control shall have occurred and a director, officer, employee or agent requests pursuant to clause (2) of the second sentence in subsection (E) that the determination whether the claimant is entitled to indemnification be made by or at the direction of the Board of Directors, the claimant shall be conclusively presumed to have been determined pursuant to subsection (E) to be entitled to indemnification if (1)(a) within fifteen days after the next regularly scheduled meeting of the Board of Directors following receipt by the Corporation of the request therefor, the Board of Directors shall not have resolved by majority vote of the Disinterested Directors to submit such determination to (i) Independent Counsel for its determination or (ii) the shareowners for their determination at the next annual meeting, or any special meeting that may be held earlier, after such receipt, and (b) within sixty days after receipt by the Corporation of the request therefor (or within ninety days after such receipt if the Board of Directors in good faith determines that additional time is required by it for the determination and, prior to expiration of such sixty-day period, notifies the claimant thereof), the Board of Directors shall not have made the determination by a majority vote of the Disinterested Directors, or (2) after a resolution of the Board of Directors, timely made pursuant to clause (1)(a)(ii) above, to submit the determination to the shareowners, the shareowners meeting at which the determination is to be made shall not have been held on or before the date prescribed (or on or before a later date, not to exceed sixty days beyond the original date, to which such meeting may have been postponed or adjourned on good cause by the Board of Directors acting in good faith); provided, however, that this sentence shall not apply if the claimant has misstated or failed to state a material fact in connection with his or her request for indemnification. Such presumed determination that a claimant is entitled to indemnification shall be deemed to have been made (I) at the end of the sixty-day or ninety-day period (as the case may be) referred to in clause (1)(b) of the immediately preceding sentence or (II) if the Board of Directors has resolved on a timely basis to submit the determination to the shareowners, on the last date within the period prescribed by law for holding such shareowners meeting (or a postponement or adjournment thereof as permitted above). (G) Expenses (including attorneys' fees) incurred in defending a civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding to a director or officer, promptly after receipt of a request therefor stating in reasonable detail the expenses incurred, and to an employee or agent as authorized by the Board of Directors; provided that in each case the Corporation shall have received an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this section. (H) The Board of Directors shall establish reasonable procedures for the submission of claims for indemnification pursuant to this section, determination of the entitlement of any person thereto and review of any such determination. Such procedures shall be set forth in an appendix to these by-laws and shall be deemed for all purposes to be a part hereof. (I) For purposes of this section, (1) "Change of Control" means a change of control of the Corporation of a nature that would be required to be reported in response to Item 5(f) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or not the Corporation is then subject to such reporting requirement; provided, however, that, without limitation, a Change of Control shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Corporation representing 20% or more of the combined voting power of the Corporation's then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person attaining such percentage interest; (ii) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors immediately thereafter; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Corporation's shareowners was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors. (2) "Disinterested Director" means a director of the Corporation who is not and was not a party to an action, suit or proceeding in respect of which indemnification is sought by a director, officer, employee or agent. (3) "Independent Counsel" means a law firm, or a member of a law firm, that (i) is experienced in matters of corporation law; (ii) neither presently is, nor in the past five years has been, retained to represent the Corporation, the director, officer, employee or agent claiming indemnification or any other party to the action, suit, or proceeding giving rise to a claim for indemnification under this section, in any matter material to the Corporation, the claimant or any such other party; and (iii) would not, under applicable standards of professional conduct then prevailing, have a conflict of interest in representing either the Corporation or such director, officer, employee or agent in an action to determine the Corporation's or such person's rights under this section. (J) The Indemnification and advancement of expenses herein provided, or granted pursuant hereto, shall not be deemed exclusive of any other rights to which any of those indemnified or eligible for advancement of expenses may be entitled under any agreement, vote of shareowners or Disinterested Directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. Notwithstanding any amendment, alteration or repeal of this section or any of its provisions, or of any of the procedures established by the Board of Directors pursuant to subsection (H) hereof, any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of any partnership, joint venture, employee benefit plan or other enterprise shall be entitled to indemnification in accordance with the provisions hereof and thereof with respect to any action taken or omitted prior to such amendment, alteration or repeal except to the extent otherwise required by law. (K) No indemnification shall be payable pursuant to this section with respect to any action against the Corporation commenced by an officer, director, employee or agent unless the Board of Directors shall have authorized the commencement thereof or unless and to the extent that this section or the procedures established pursuant to subsection (H) shall specifically provide for indemnification of expenses relating to the enforcement of rights under this section and such procedures. ARTICLE IV. Committees SECTION 1. Appointment and Powers. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more directors of the Corporation, which, to the extent provided in said resolution or in these by-laws and not inconsistent with Section 141 of the Delaware Corporation Law, as amended, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. SECTION 2. Term of Office and Vacancies. Each member of a committee shall continue in office until a director to succeed him or her shall have been elected and shall have qualified, or until he or she ceases to be a director or until he or she shall have resigned or shall have been removed in the manner hereinafter provided. Any vacancy in a committee shall be filled by the vote of a majority of the whole Board of Directors at any regular or special meeting thereof. SECTION 3. Alternates. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. SECTION 4. Organization. Unless otherwise provided by the Board of Directors, each committee shall appoint a chairman. Each committee shall keep a record of its acts and proceedings and report the same from time to time to the Board of Directors. SECTION 5. Resignations. Any regular or alternate member of a committee may resign at any time by giving written notice to the Chairman of the Board, the President or the Secretary of the Corporation. Such resignation shall take effect at the time of the receipt of such notice or at any later time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 6. Removal. Any regular or alternate member of a committee may be removed with or without cause at any time by resolution passed by a majority of the whole Board of Directors at any regular or special meeting. SECTION 7. Meetings. Regular meetings of each committee, of which no notice shall be necessary, shall be held on such days and at such places as the chairman of the committee shall determine or as shall be fixed by a resolution passed by a majority of all the members of such committee. Special meetings of each committee will be called by the Secretary at the request of any two members of such committee, or in such other manner as may be determined by the committee. Notice of each special meeting of a committee shall be mailed to each member thereof at least two days before the meeting or shall be given personally or by telephone or other electronic transmission at least one day before the meeting. Every such notice shall state the time and place, but need not state the purposes of the meeting. No notice of any meeting of a committee shall be required to be given to any alternate. SECTION 8. Quorum and Manner of Acting. Unless otherwise provided by resolution of the Board of Directors, a majority of a committee (including alternates when acting in lieu of regular members of such committee) shall constitute a quorum for the transaction of business and the act of a majority of those present at a meeting at which a quorum is present shall be the act of such committee. The members of each committee shall act only as a committee and the individual members shall have no power as such. SECTION 9. Compensation. Each regular or alternate member of a committee shall be paid such compensation, if any, as shall be fixed by the Board of Directors. ARTICLE V. Officers SECTION 1. Officers. The officers of the Corporation shall be a Chairman of the Board of Directors and a President, each of whom shall be chosen from the members of the Board of Directors, one or more Vice Presidents (one or more of whom may be Executive Vice Presidents, Senior Vice Presidents or otherwise as may be designated by the Board), a Secretary and a Treasurer, all of whom shall be elected by the Board of Directors. Any two or more offices may be held by the same person. The Board of Directors may also from time to time elect such other officers as it deems necessary. SECTION 2. Term of Office. Each officer shall hold office until his or her successor shall have been duly elected and qualified in his or her stead, or until his or her death or until he or she shall have resigned or shall have been removed in the manner hereinafter provided. SECTION 3. Additional Officers; Agents. The Chairman of the Board or the President may from time to time appoint and remove such additional officers and agents as may be deemed necessary. Such persons shall hold office for such period, have such authority, and perform such duties as in these by-laws provided or as the Chairman of the Board or the President may from time to time prescribe. The Board of Directors or the Chairman of the Board or the President may from time to time authorize any officer to appoint and remove agents and employees and to prescribe their powers and duties. SECTION 4. Salaries. Unless otherwise provided by resolution passed by a majority of the whole Board, the salaries of all officers elected by the Board of Directors shall be fixed by the Board of Directors. SECTION 5. Removal. Except where otherwise expressly provided in a contract authorized by the Board of Directors, any officer may be removed, either with or without cause, by the vote of a majority of the Board at any regular or special meeting or, except in the case of an officer elected by the Board, by any superior officer upon whom the power of removal may be conferred by the Board or by these by-laws. SECTION 6. Resignations. Any officer elected by the Board of Directors may resign at any time by giving written notice to the Chairman of the Board, the President or the Secretary. Any other officer may resign at any time by giving written notice to the Chairman of the Board or the President. Any such resignation shall take effect at the date of receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 7. Vacancies. A vacancy in any office because of death, resignation, removal, or otherwise, shall be filled for the unexpired portion of the term in the manner provided in these by-laws for regular election or appointment to such office. SECTION 8. Chairman of the Board of Directors. The Chairman of the Board of Directors shall be chief executive officer of the Corporation and, subject to the control of the Board of Directors, shall have general and overall charge of the business and affairs of the Corporation and of its officers. He shall keep the Board of Directors appropriately informed on the business and affairs of the Corporation. He shall preside at all meetings of the shareowners and of the Board of Directors and shall enforce the observance of the rules of order for the meetings of the Board and the shareowners and the by-laws of the Corporation. SECTION 9. President. The President shall be the chief operating officer of the Corporation and, subject to the control of the Chairman of the Board, shall direct and be responsible for the operation of the business and affairs of the Corporation. The President shall keep the Chairman of the Board and the Board of Directors appropriately informed on the business and affairs of the Corporation. In the case of the absence or disability of the Chairman of the Board, the President shall perform all the duties and functions and exercise all the powers of, and be subject to all the restrictions upon, the Chairman of the Board. SECTION 10. Executive Vice Presidents. One or more Executive Vice Presidents shall, subject to the control of the Chairman of the Board and the President, have lead accountability for components or functions of the Corporation as and to the extent designated by the Chairman of the Board and the President. Each Executive Vice President shall keep the Chairman of the Board and President appropriately informed on the business and affairs of the designated components or functions of the Corporation. SECTION 11. Vice Presidents. The Vice Presidents shall perform such duties as may from time to time be assigned to them or any of them by the Chairman of the Board or the President. SECTION 12. Secretary. The Secretary shall keep or cause to be kept in books provided for the purpose the minutes of the meetings of the shareowners, of the Board of Directors and of any committee constituted pursuant to Article IV of these by-laws. The Secretary shall be custodian of the corporate seal and see that it is affixed to all documents as required and attest the same. The Secretary shall perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her. SECTION 13. Assistant Secretaries. At the request of the Secretary, or in his or her absence or disability, the Assistant Secretary designated by him or her shall perform all the duties of the Secretary and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary. The Assistant Secretaries shall perform such other duties as from time to time may be assigned to them. SECTION 14. Treasurer. The Treasurer shall have charge of and be responsible for the receipt, disbursement and safekeeping of all funds and securities of the Corporation. The Treasurer shall deposit all such funds in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of these by-laws. From time to time and whenever requested to do so, the Treasurer shall render statements of the condition of the finances of the Corporation to the Board of Directors. The Treasurer shall perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her. SECTION 15. Assistant Treasurers. At the request of the Treasurer, or in his or her absence or disability, the Assistant Treasurer designated by him or her shall perform all the duties of the Treasurer and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Treasurer. The Assistant Treasurers shall perform such other duties as from time to time may be assigned to them. SECTION 16. Certain Agreements. The Board of Directors shall have power to authorize or direct the proper officers of the Corporation, on behalf of the Corporation, to enter into valid and binding agreements in respect of employment, incentive or deferred compensation, stock options, and similar or related matters, notwithstanding the fact that a person with whom the Corporation so contracts may be a member of its Board of Directors. Any such agreement may validly and lawfully bind the Corporation for a term of more than one year, in accordance with its terms, notwithstanding the fact that one of the elements of any such agreement may involve the employment by the Corporation of an officer, as such, for such term. ARTICLE VI. Authorizations SECTION 1.Contracts. The Board of Directors, except as in these by-laws otherwise provided, may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. SECTION 2. Loans. No loan shall be contracted on behalf of the Corporation and no negotiable paper shall be issued in its name, unless authorized by the Board of Directors. SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, employee or employees, of the Corporation as shall from time to time be determined in accordance with authorization of the Board of Directors. SECTION 4. Deposits. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may from time to time designate, or as may be designated by any officer or officers of the Corporation to whom such power may be delegated by the Board, and for the purpose of such deposit the officers and employees who have been authorized to do so in accordance with the determinations of the Board may endorse, assign and deliver checks, drafts, and other orders for the payment of money which are payable to the order of the Corporation. SECTION 5. Proxies. Except as otherwise provided in these by- laws or in the Certificate of Incorporation, and unless otherwise provided by resolution of the Board of Directors, the Chairman of the Board, the President or any other officer may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation to cast the votes which the Corporation may be entitled to cast as a stockholder or otherwise in any other corporation any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporations, or to consent in writing to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such vote or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises. ARTICLE VII. Shares and Their Transfer SECTION 1. Certificates of Stock. Certificates for shares of the stock of the Corporation shall be in such form as shall be approved by the Board of Directors. They shall be numbered in the order of their issue, by class and series, and shall be signed by the Chairman of the Board, the President or a Vice President, and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation. If such certificate is countersigned (1) by a transfer agent other than the Corporation or its employee, or (2) by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent, or registrar at the date of issue. SECTION 2. Record Ownership. A record of the name and address of the holder of each certificate, the number of shares represented thereby and the date of issuance thereof shall be made on the Corporation's books. The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as required by law. SECTION 3. Transfer of Stock. Shares of stock shall be transferable on the books of the Corporation by the person named in the certificate for such stock in person or by such person's attorney or other duly constituted representative upon surrender of such certificate with an assignment endorsed thereon or attached thereto duly executed and with such guarantee of signature as the Corporation may reasonably require. SECTION 4. Lost, Destroyed and Mutilated Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such person's legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. SECTION 5. Transfer Agent and Registrar; Regulations. The Corporation shall, if and whenever the Board of Directors shall so determine, maintain one or more transfer offices or agencies, each in charge of a transfer agent designated by the Board of Directors, where the shares of the stock of the Corporation shall be directly transferable, and also one or more registry offices, each in charge of a registrar designated by the Board of Directors, where such shares of stock shall be registered, and no certificate for shares of the stock of the Corporation, in respect of which a registrar and transfer agent shall have been designated, shall be valid unless countersigned by such transfer agent and registered by such registrar. The Board of Directors may also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. SECTION 6. Fixing Record Date. For the purpose of determining the shareowners entitled to notice of or to vote at any meeting of shareowners or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed (1) the record date for determining shareowners entitled to notice of or to vote at a meeting of shareowners shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held and (2) the record date for determining shareowners for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of shareowners of record entitled to notice of or to vote at a meeting of shareowners shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 7. Examination of Books by Shareowners. The Board of Directors shall, subject to the laws of the State of Delaware, have power to determine from time to time, whether and to what extent and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the shareowners; and no shareowner shall have any right to inspect any book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the shareowners of the Corporation. ARTICLE VIII. Notice SECTION 1. Manner of Giving Written Notice. Any notice in writing required by law or by these by-laws to be given to any person may be delivered personally, may be transmitted by electronic means or may be given by depositing the same in the post office or letter box in a postpaid envelope addressed to such person at such address as appears on the books of the Corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed, and notice by other means shall be deemed given when actually delivered (and in the case of notice transmitted by electronic means, when authenticated if and as required by law). SECTION 2. Waiver of Notice. Whenever any notice is required to be given to any person, a waiver thereof by such person in writing or transmitted by electronic means (and authenticated if and as required by law), whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE IX. Seal The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal" and "Delaware." ARTICLE X. Fiscal Year The fiscal year of the Corporation shall begin on the first day of October in each year. ARTICLE XI. Amendments All by-laws of the Corporation shall be subject to alteration, amendment or repeal, and new by-laws not inconsistent with any provision of the Certificate of Incorporation or any provision of law may be made, either by the affirmative vote of the holders of record of a majority of the outstanding stock of the Corporation entitled to vote in respect thereof, given at an annual meeting or at any special meeting, provided that notice of the proposed alteration, amendment or repeal or of the proposed new by-laws be included in the notice of such meeting, or by the Board of Directors at any regular or special meeting. By-laws made, altered or amended by the Board of Directors shall be subject to alteration, amendment or repeal by the shareowners or by the Board. APPENDIX Procedures for Submission and Determination of Claims for Indemnification Pursuant to Article III, Section 15 of the By-Laws. SECTION 1. Purpose. Effective as of November 5, 1986, the Board of Directors of Rockwell International Corporation, a Delaware corporation (the "Corporation"), has adopted these Procedures for Submission and Determination of Claims for Indemnification Pursuant to Article III, Section 15 of the by-laws (the "Procedures") to implement the provisions of Article III, Section 15 of the by-laws of the Corporation (the "by-laws") in compliance with the requirement of subsection (H) thereof. SECTION 2. Definitions. For purposes of these Procedures: (A) All terms that are defined in Article III, Section 15 of the by- laws shall have the meanings ascribed to them therein when used in these Procedures unless otherwise defined herein. (B) "Expenses" include all reasonable attorneys' fees, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in, a Proceeding; and shall also include such retainers as counsel may reasonably require in advance of undertaking the representation of an indemnitee in a Proceeding. (C) "Indemnitee" includes any person who was or is, or is threatened to be made, a witness in or a party to any Proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent (except in each of the foregoing situations to the extent any agreement, arrangement or understanding of agency contains provisions that supersede or abrogate indemnification under Article III, Section 15 of the by-laws) of another corporation or of any partnership, joint venture, trust, employee benefit plan or other enterprise. (D) "Proceeding" includes any action, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee unless the Board of Directors shall have authorized the commencement thereof. SECTION 3. Submission and Determination of Claims. (A) To obtain indemnification or advancement of Expenses under Article III, Section 15 of the by-laws, an Indemnitee shall submit to the Secretary of the Corporation a written request therefor, including therein or therewith such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to permit a determination as to whether and what extent the Indemnitee is entitled to indemnification or advancement of Expenses, as the case may be. The Secretary shall, promptly upon receipt of a request for indemnification, advise the Board of Directors thereof in writing if a determination in accordance with Article III, Section 15(E) of the by-laws is required. (B) Upon written request by an Indemnitee for indemnification pursuant to Section 3(A) hereof, a determination with respect to the Indemnitee's entitlement thereto in the specific case, if required by the by- laws, shall be made in accordance with Article III, Section 15(E) of the by-laws, and, if it is so determined that the Indemnitee is entitled to indemnification, payment to the Indemnitee shall be made within ten days after such determination. The Indemnitee shall cooperate with the person, persons or entity making such determination, with respect to the Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. (C) If entitlement to indemnification is to be made by Independent Counsel pursuant to Article III, Section 15(E) of the by-laws, the Independent Counsel shall be selected as provided in this Section 3(C). If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Corporation shall give written notice to the Indemnitee advising the Indemnitee of the identity of the Independent Counsel so selected. If a Change of Control shall have occurred, the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board of Directors, in which event the immediately preceding sentence shall apply), and the Indemnitee shall give written notice to the Corporation advising it of the identity of the Independent Counsel so selected. In either event, the Indemnitee or the Corporation, as the case may be, may, within seven days after such written notice of selection shall have been given, deliver to the Corporation or to the Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Article III, Section 15 of the by-laws, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. If, within twenty days after the next regularly scheduled Board of Directors meeting following submission by the Indemnitee of a written request for indemnification pursuant to Section 3(A) hereof, no Independent Counsel shall have been selected and not objected to, either the Corporation or the Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Corporation or the Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom an objection is favorably resolved or the person so appointed shall act as Independent Counsel under Article III, Section 15(E) of the by-laws. The Corporation shall pay any and all reasonable fees and expenses (including without limitation any advance retainers reasonably required by counsel) of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Article III, Section 15(E) of the by-laws, and the Corporation shall pay all reasonable fees and expenses (including without limitation any advance retainers reasonably required by counsel) incident to the procedures of Article III, Section 15(E) of the by-laws and this Section 3(C), regardless of the manner in which Independent Counsel was selected or appointed. Upon the delivery of its opinion pursuant to Article III, Section 15 of the by-laws or, if earlier, the due commencement of any judicial proceeding or arbitration pursuant to Section 4(A)(3) of these Procedures, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). (D) If a Change of Control shall have occurred, in making a determination with respect to entitlement to indemnification under the by- laws, the person, persons or entity making such determination shall presume that an Indemnitee is entitled to indemnification under the by- laws if the Indemnitee has submitted a request for indemnification in accordance with Section 3(A) hereof, and the Corporation shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. SECTION 4. Review and Enforcement of Determination. (A) In the event that (1) advancement of Expenses is not timely made pursuant to Article III, Section 15(G) of the by-laws, (2) payment of indemnification is not made pursuant to Article III, Section 15(C) or (D) of the by-laws within ten days after receipt by the Corporation of written request therefor, (3) a determination is made pursuant to Article III, Section 15(E) of the by-laws that an Indemnitee is not entitled to indemnification under the by-laws, (4) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Article III, Section 15(E) of the by-laws and such determination shall not have been made and delivered in a written opinion within ninety days after receipt by the Corporation of the written request for indemnification, or (5) payment of indemnification is not made within ten days after a determination has been made pursuant to Article III, Section 15(E) of the by-laws that an Indemnitee is entitled to indemnification or within ten days after such determination is deemed to have been made pursuant to Article III, Section 15(F) of the by-laws, the Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of the Indemnitee's entitlement to such indemnification or advancement of Expenses. Alternatively, the Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. The Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within one year following the date on which the Indemnitee first has the right to commence such proceeding pursuant to this Section 4(A). The Corporation shall not oppose the Indemnitee's right to seek any such adjudication or award in arbitration. (B) In the event that a determination shall have been made pursuant to Article III, Section 15(E) of the by-laws that an Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 4 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, the Corporation shall have the burden of proving in any judicial proceeding or arbitration commenced pursuant to this Section 4 that the Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. (C) If a determination shall have been made or deemed to have been made pursuant to Article III, Section 15 (E) or (F) of the by-laws that an Indemnitee is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 4, absent (1) a misstatement or omission of a material fact in connection with the Indemnitee's request for indemnification, or (2) a prohibition of such indemnification under applicable law. (D) The Corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 4 that the procedures and presumptions of these Procedures are not valid, binding and enforceable, and shall stipulate in any such judicial proceeding or arbitration that the Corporation is bound by all the provisions of these Procedures. (E) In the event that an Indemnitee, pursuant to this Section 4, seeks to enforce the Indemnitee's rights under, or to recover damages for breach of, Article III, Section 15 of the by-laws or these Procedures in a judicial proceeding or arbitration, the Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all expenses (of the types described in the definition of Expenses in Section 2 of these Procedures) actually and reasonably incurred in such judicial proceeding or arbitration, but only if the Indemnitee prevails therein. If it shall be determined in such judicial proceeding or arbitration that the Indemnitee is entitled to receive part but not all of the indemnification or advancement of Expenses sought, the expenses incurred by the Indemnitee in connection with such judicial proceeding or arbitration shall be appropriately prorated. SECTION 5. Amendments. These Procedures may be amended at any time and from time to time in the same manner as any by-law of the Corporation in accordance with Article XI of the by-laws; provided, however, that notwithstanding any amendment, alteration or repeal of these Procedures or any provision hereof, any Indemnitee shall be entitled to utilize these Procedures with respect to any claim for indemnification arising out of any action taken or omitted prior to such amendment, alteration or repeal except to the extent otherwise required by law. EX-10 3 AMENDED DEFERRED COMPENSATION PLAN EXHIBIT 10 ROCKWELL INTERNATIONAL CORPORATION DEFERRED COMPENSATION PLAN AS AMENDED EFFECTIVE JULY 1, 1995 ROCKWELL INTERNATIONAL CORPORATION DEFERRED COMPENSATION PLAN THIS PLAN is established by Rockwell International Corporation effective April 3, 1985, for the benefit of certain employees of the Corporation in executive, managerial or professional capacities so as to enhance the Corporation's ability to attract and retain outstanding employees who are expected to contribute to its success. It shall remain in effect, as it may be amended from time to time, until termination as provided in Article VII of the Plan. ARTICLE I DEFINITIONS For the purposes of the Plan, the following words and phrases shall mean: 1.1 Account. The bookkeeping or accounting records maintained (having and requiring no segregation or holding of any assets) by Rockwell pursuant to Article IV with respect to and resulting from a Participant's Deferral Election. 1.2 Affiliate. (a) Any corporation incorporated under the laws of one of the United States of America of which Rockwell owns, directly or indirectly, eighty percent (80%) or more of the combined voting power of all classes of stock or eighty percent (80%) or more of the total value of the shares of all classes of stock (all within the meaning of section 1563 of the Code); (b) any partnership or other business entity organized under such laws, in which Rockwell owns, directly or indirectly, (i) eighty percent (80%) or more of the total capital or profits interest of such partnership, or (ii) eighty percent (80%) or more of the total value of such other business entity (all within the meaning of section 414(c) of the Code); and (c) any other company designated as an Affiliate by the Board of Directors of Rockwell. 1.3 Base Compensation. Salary paid by the Corporation to an Executive for services as an employee of the Corporation, including Compensation Deferral Contributions as defined in Section 1.13 of the Savings Plan, but excluding other contributions by Rockwell to any pension, profit sharing, employee stock ownership or other similar plan, compensation for overtime, bonuses and other incentive compensation, payments under Rockwell's Performance Award Plan; foreign service premiums, differentials and allowances; tuition payments, relocation payments, imputed income on employee benefits; patent awards and such other similar awards or payments as the Committee may determine. 1.4 Beneficiary. The person, persons or entity entitled under Article VI to receive any Plan Benefits payable after a Participant's death. 1.5 Board. The Board of Directors of Rockwell. 1.6 Change in Control. A change of control of the Corporation of a nature that would be required to be reported in response to Item 5(f) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act, whether or not the Corporation is then subject to such reporting requirement; provided, however, that, without limitation, a Change of Control shall be deemed to have occurred if: (a) any "person" (as such term is used in sections 13(d) and 14(d) of the Securities Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act), directly or indirectly, of securities of the Corporation representing 20% or more of the combined voting power of the Corporation's then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person attaining such percentage interest; (b) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors immediately thereafter; or (c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors. 1.7 Code. The Internal Revenue Code of 1986, as amended. References in the Plan to sections of the Code are to such sections as in effect on August 1, 1993. 1.8 Committee. The Compensation and Management Development Committee of the Board. 1.9 Corporate Officer. Any Executive who has been elected by the Board as an officer of Rockwell. 1.10 Corporation. Rockwell or an Affiliate of Rockwell. 1.11 Deferral Election. An election pursuant to Article III by an Executive to defer receipt of all or part of his Incentive Compensation. 1.12 Deferred Compensation. The portion of Incentive Compensation which an Executive elects to defer pursuant to a Participation Agreement. 1.13 Determination Date. The last day of each calendar quarter; that is March 31, June 30, September 30 and December 31. 1.14 Director. The Corporate Director of Compensation. 1.15 Effective Date. April 3, 1985, the effective date of the establishment of the Plan. 1.16 Executive. A person in the full time active salaried employ of the Corporation in Salary Grade 17 or above on Rockwell's Executive Payroll. 1.17 Financial Hardship. A severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstance arising as a result of events beyond the control of the Participant. In case of the Participant's death, the word "Beneficiary or other person or entity entitled to receive a Plan Benefit" shall be substituted for the word "Participant" wherever the latter appears in this Section 1.16. 1.18 Incentive Compensation. Any award payable to an Executive under Rockwell's Incentive Compensation Plan that, but for a Deferral Election under the Plan, would be paid to the Executive and considered to be "wages" for purposes of United States federal income tax withholding. 1.19 Incentive Compensation Plan. Rockwell's Incentive Compensation Plan as approved by the Board and as amended from time to time. 1.20 Installment Payment Sub-Account. A Sub-Account of a Participant's Account established pursuant to Section 4.3 to which Deferred Compensation under a single Deferral Election, and all interest accrued thereon, as to which the Participant has elected payment of his Plan Benefit in installments is credited. 1.21 Interest Rate. One-twelfth of the annual interest rate for quarterly compounding that is 120% of the "applicable Federal long- term rate" determined by the Secretary of the Treasury pursuant to Section 1274(d) of the Code, or any successor provision, as applicable for each of the months in the three-month period ending on each Determination Date. 1.22 Lump Sum Payment Sub-Account. A Sub-Account of a Participant's Account established pursuant to Section 4.3 to which Deferred Compensation under all Deferral Elections, and all interest accrued thereon, as to which the Plan Benefit is payable only in the form of a lump sum payment is credited. 1.23 Participant. An Executive who has elected to participate in the Plan and has executed and filed with Rockwell a Participation Agreement as provided in Article III; provided, however, that such term shall include a person who no longer has an effective Deferral Election so long as he retains, under the Plan, an interest in an Account under the Plan. 1.24 Participant Agreement. An agreement between Rockwell and a Participant setting forth the Participant's Deferral Election. 1.25 Plan. This Deferral Compensation Plan, as it may be amended from time to time. 1.26 Plan Benefit. The benefit payable to a Participant in accordance with Article V hereof. 1.27 Plan Year. Each of the twelve (12) month periods ending December 31 and occurring while the Plan remains in effect beginning with the twelve (12) month period ending December 31, 1986. The term "Plan Year" shall also include the period beginning on the Effective Date and ending December 31, 1985, and any period of less than twelve (12) months beginning January 1 and ending on the date the Plan is terminated. 1.28 Rockwell. Rockwell International Corporation, a Delaware Corporation. 1.29 Savings Plan. The Rockwell International Corporation Savings Plan as amended from time to time. 1.30 Securities Exchange Act means the Securities Exchange Act of 1934, as amended. 1.31 Sub-Account. An Installment Payment Sub-Account or a Lump Sum Payment Sub-Account. 1.32 Termination of Employment. Any severance of a Participant from full-time active salaried employment by the Corporation for any reason. ARTICLE II ADMINISTRATION 2.1 Administrators. The Plan shall be administered by the Committee and the Director. 2.2 Committee. The Committee shall have the authority (a) to make, amend, interpret and enforce all rules and regulations for the administration of the Plan and (b) to decide all questions, including interpretation of the Plan, as may arise in connection with the Plan insofar as it is applicable to Executives (i) who are Corporate Officers or whose annual Base Compensation shall require the approval of the Board or the Committee, or (ii) with respect to whom questions are referred to the Committee by the Director. A majority of the members of the Committee shall constitute a quorum. The Committee may act by a vote of a majority of a quorum at a meeting, or by a writing signed by a majority of the members of the Committee. 2.3 Director. The Director shall administer the Plan in accordance with the terms of the Plan and the rules and regulations of the Plan as established by the Committee. The Director shall have the authority to decide all questions, including interpretations of the Plan, as may arise in connection with the Plan insofar as it is applicable to Executives other than those described in Section 2.2(b)(i); provided, however, that the Director shall follow precedents established by the Committee under Section 2.2(b) in deciding all subsequent questions arising in connection with the Plan. The Director may, in his discretion, decline to decide any question presented to him and refer such question to the Committee for decision. ARTICLE III PARTICIPATION 3.1 Participation. (a) Subject to the limitations set forth in this Article III, any person who is an Executive on the last date in any Plan Year specified for filing Deferral Elections under this Section 3.1 may participate in the Plan by executing and filing with the Director a Participation Agreement. (b) In each Participation Agreement, the Executive shall specify the percentage of Incentive Compensation in respect of a specified Rockwell fiscal year to be deferred and, subject to the limitations of Section 5.1.A or 5.1.B, as applicable, the form of Plan Benefit. (c) For a Deferral Election applicable to Incentive Compensation payable in respect of Rockwell's fiscal year ending September 30, 1985, a Participation Agreement must be filed no later than April 30, 1985. Any such Deferral Election may not be amended or revoked after September 6, 1985. (d) On or before September 15, 1985, and September 15 of each subsequent Plan Year, each Executive who elects to become a Participant shall file with the Director a Participation Agreement specifying his Deferral Election for any Incentive Compensation payable in respect of Rockwell's fiscal year commencing October 1 in that Plan Year. 3.2 Deferral Elections. Any Executive may elect to defer any percentage of his Incentive Compensation; provided, however, that each Deferral Election, to be effective, must result in deferral of a minimum of $1,000 and the amount deferred shall be rounded to the nearest $100. 3.3 Modification of Deferral Election. By written notice to Rockwell, a Deferral Election filed in any Plan Year (other than the Deferral Election described in Section 3.1(c)) may be modified or revoked at any time prior to October 1 of such Plan Year. Thereafter, a Deferral Election specified in a Participation Agreement shall be irrevocable, except that the Committee or the Director, as appropriate under Article II, may permit a Participant at any time to reduce the designated percentage to be deferred upon a finding, based upon uniform standards established by the Committee, that the Participant has suffered a Financial Hardship. 3.4 Limited Election for Participants Who Have Elected Installment Payments Prior to August 1, 1993. During the period October 1 through November 30, 1993, a Participant who prior to August 1, 1993, has elected installment payments pursuant to a Deferral Election, and whose employment has not terminated, but who would receive a lump sum under Section 5.1.A(a) if his employment terminates prior to his attaining age 62, may elect that his entire Plan Benefit shall be paid in accordance with Section 5.1.B. Such election shall be irrevocable, except as provided in Section 5.2 and shall apply to all Deferral Elections made prior to August 1, 1993. ARTICLE IV DEFERRED COMPENSATION 4.1 Deferred Compensation. The amount of Incentive Compensation deferred pursuant to a Deferral Election shall be withheld in a single lump sum at the time such Incentive Compensation, but for a Deferral Election, would be paid. 4.2 Withholding of Taxes. Any withholding of taxes or other amounts which is required by any federal, state, or local law shall be withheld from the Participant's remaining undeferred Incentive Compensation, if any. If necessary in order to comply with any federal, state or local law, the amount of Incentive Compensation deferred may be reduced by an amount equal to any required withholding. Otherwise, such withholding may be made from any of the Participant's other compensation payable by the Corporation, or, at the election of the Director, a Participant may be permitted to pay to the Corporation the amount of any such required withholding at or prior to the time such withholding would otherwise be required to be made. 4.3 Accounts. For recordkeeping purposes only, a separate Account shall be established and maintained by Rockwell for each Participant to which his Deferred Compensation and interest accrued thereon pursuant to Section 4.4 shall be credited. Each such Account shall be divided into the following Sub-Accounts for purposes of Section 5.1: (i) a Lump-Sum Payment Sub-Account to which there shall be credited all Incentive Compensation deferred (and all interest thereon) pursuant to all Deferral Elections under which a Plan Benefit is payable only in the form of a lump sum; and (ii) a separate Installment Payment Sub-Account for each Deferral Election under which the Participant has elected that his Plan Benefit be payable in installments (if he qualifies therefor under Section 5.1(b)), to which the Incentive Compensation deferred (and all interest thereon) pursuant to such Deferral Election shall be credited. For administrative purposes, all Installment Payment Sub-Accounts under which the number of installment payments selected is the same may be combined into a single Installment Payment Sub-Account except that if a Participant was eligible to make the election under Section 3.4 but did not do so, separate Installment Payment Sub-Accounts shall be maintained for Deferral Elections made before August 1, 1993 until the Participant becomes eligible to receive distribution of those Installment Payment Sub- Accounts pursuant to Section 5.1.A(b). 4.4 Determination of Account. The value of each Participant's Account as of each Determination Date shall be the total of the Participant's Lump Sum Payment and Installment Payment Sub- Accounts. The value of each such Sub-Account shall consist of (i) the balance of such Sub-Account as of the last preceding Determination Date plus (ii) any Deferred Compensation credited to such Sub-Account since the last preceding Determination date, plus (iii) the sum of the three monthly amounts determined by multiplying the average daily balance of such Sub-Account during each of the three calendar months since the last preceding Determination Date by the Interest Rate applicable to such month, less (iv) the amount of all Plan Benefits, if any, paid during the period since the last preceding Determination Date. Interest, determined as provided in (iii) above, shall be credited to each such Sub-Account as of the Determination Date as of which such Sub-Account is valued. 4.5 Statement of Accounts. Rockwell shall submit to each Participant, within one hundred twenty (120) days after the close of each Plan Year and at such other times as determined by the Committee, a statement setting forth the total balance of the Participant's Account, and the balance of each Sub-Account thereof, as of the last day of such Plan Year and as of the immediately preceding Plan Year, the Deferred Compensation and interest credited to each Sub-Account during the Plan Year and the payments of Plan Benefits from each Sub-Account during the Plan ARTICLE V PLAN BENEFITS 5.1.A Plan Benefit Payable on Termination of Employment With Respect to Deferral Elections Made Prior to August 1, 1993. (a) Subject to the provisions of (b) and (c) of this Section, upon Termination of Employment a Participant shall receive a Plan Benefit equal to the balance of his Account as of the Determination Date immediately preceding such Termination of Employment, plus the amount of any Deferred Compensation credited to his Account after such Determination Date. Such Plan Benefit shall be payable as a single lump sum on the forty-fifth (45th) day following such Termination of Employment. In addition, the Participant shall receive concurrently interest on the balance of his Account for the period from such Determination Date to the date of payment at a daily simple interest rate equivalent to the Interest Rate during such period. (b) In the event that a Participant's Termination of Employment occurs as a result of his retirement under circumstances entitling him to a benefit calculated in accordance with Section 5.1 or 5.2(b)(i) of the Rockwell International Corporation Retirement Income Plan for Certain Salaried Employees as in effect on the Effective Date (or, if he is not then a participant under said Retirement Income Plan, under circumstances which would entitle him to such benefit if he were then a participant thereunder) the Participant shall receive the Plan Benefit payable in respect of each of his Installment Payment Sub-Accounts in the number of annual installments (not exceeding ten (10)) specified by him in the Deferral Election or Elections to which each such Installment Payment Sub-Account relates. In such event, any lump sum payment received by the Participant pursuant to Section 5.1.A(a) shall be limited to the balance of his Lump-Sum Payment Sub-Account. Each annual installment payable out of an Installment Payment Sub-Account shall be paid during the period January 2 through January 5 in each calendar year commencing with the calendar year next following the Participant's Termination of Employment. Each such installment shall be based on the unpaid balance of such Installment Payment Sub-Account as of the immediately preceding December 31, including interest credited pursuant to Section 4.4 through such date, and shall be in an amount determined by dividing such unpaid balance by the number then remaining unpaid installments. (c) In the event that a Participant's Termination of Employment occurs because of his death, his Beneficiary or, if no designated Beneficiary shall survive him, his estate shall receive the Plan Benefit in the manner provided in Section 5.1.A(a); provided, however, that if the Participant's Beneficiary designation shall result in all or any part of his Plan Benefit passing to his surviving spouse or to an entity for the benefit of his surviving spouse in such a way as to qualify for the marital deduction under section 2056 of the Code, and at the time of his death the Participant was eligible to retire and would have been entitled thereafter to receive all or such part of his Plan Benefit in installments pursuant to Section 5.1.A(b), payments from his Installment Payment Sub-Account or Sub-Accounts shall be made to such surviving spouse or to such entity for the benefit of such surviving spouse, as the case may be, in the manner provided in Section 5.1.A(b). Notwithstanding the foregoing, if such surviving spouse shall die prior to complete distribution of all Plan Benefits, the balance then remaining in such Installment Payment Sub-Account or Sub-Accounts shall be paid to the estate of such surviving spouse or to such entity for the benefit of such surviving spouse, as the case may be, in a lump sum on the forty- fifth (45th) day following such spouse's death, with interest on the balance of such Sub-Account or Sub-Accounts from the Determination Date immediately preceding such spouse's death to the date of payment at a daily simple interest rate equivalent to the Interest Rate during such period. 5.1.B Plan Benefit Payable on Termination of Employment With Respect to Deferral Elections Made on or After August 1, 1993. (a) Subject to the provisions of Section 5.1.B(b), upon Termination of Employment a Participant shall receive the Plan Benefit attributable to Deferral Elections made on or after August 1, 1993, (i) payable in respect of the portion, if any, of the Participant's Lump-Sum Payment Sub-Account relating to those Deferral Elections in the manner provided in Section 5.1.A(a); and (ii) payable in respect of each of the Participant's Installment Payment Sub- Accounts relating to those Deferral Elections in the number of annual installments (not exceeding ten (10)) specified by him in those Deferral Elections. Each annual installment payable out of an Installment Payment Sub-Account shall be paid during the period January 2 through January 5 in each calendar year commencing with the calendar year next following the Participant's Termination of Employment. Each such installment shall be based on the unpaid balance of such Installment Payment Sub-Account as of the immediately preceding December 31, including interest credited pursuant to Section 4.4 through such date, and shall be in an amount determined by dividing such unpaid balance by the number of then remaining unpaid installments. (b) In the event that a Participant's Termination of Employment occurs because of his death, his Beneficiary or, if no designated Beneficiary shall survive him, his estate shall receive the Plan Benefit attributable to the Participant's Deferral Elections made on or after August 1, 1993, payable in the manner provided in Section 5.1.A(a) with respect to the Plan Benefit attributable to Deferral Elections made prior to August 1, 1993; provided, however, that if the Participant's Beneficiary designation shall result in all or any part of his Plan Benefit passing to his surviving spouse or to an entity for the benefit of his surviving spouse in such a way as to qualify for the marital deduction under section 2056 of the Code, payments from each of his Installment Payment Sub-Accounts, if any, relating to Deferral Elections made on or after August 1, 1993, shall be made to such surviving spouse or to such entity for the benefit of such surviving spouse, as the case may be, in the manner provided in Section 5.1.B(a). Notwithstanding the foregoing, if such surviving spouse shall die prior to complete distribution of all Plan Benefits, the balance then remaining in such Installment Payment Sub-Account or Sub-Accounts shall be paid to the estate of such surviving spouse or to such entity for the benefit of such surviving spouse, as the case may be, in a lump sum on the forty- fifth (45th) day following such spouse's death, with interest on the balance of such Sub-Account or Sub-Accounts from the Determination Date immediately preceding such spouse's death to the date of payment at a daily simple interest rate equivalent to the Interest Rate during such period. 5.1.C Form of Plan Benefit Payable on Termination of Employment Upon Occurrence of a Change in Control. Notwithstanding any election to the contrary previously made by a Participant or beneficiary (including, for purposes of this Section 2.040, a Participant or beneficiary who is currently receiving installment payments from this Plan) such Participant or beneficiary may elect to have his Plan Benefit paid in a lump sum in the event of the occurrence of a Change in Control, subject to the following: (a) To be effective, the election of a Participant or beneficiary pursuant to this Section must be made in writing and filed with the Corporation's Vice President of Corporate Compensation and Benefits prior to the occurrence of a Change in Control. (b) An election made hereunder shall be revocable by the Participant or his beneficiary until such time as a Change in Control shall have occurred at which point the said election shall be irrevocable. (c) Plan Benefits paid in a single lump sum pursuant to this Section 5.1.C shall be paid within forty-five (45) days following the Participant's retirement, termination of employment or death; provided, however, that lump sum payments which are to be made under this Section to Participants or beneficiaries who are currently receiving annual installment payments pursuant to Sections 5.1.A and/or 5.1.B at the time of a Change in Control shall be made within forty-five (45) days following the Change in Control. 5.2 Withdrawal of Plan Benefit. No Plan Benefit shall be payable prior to the Participant's Termination of Employment or other than in the form determined pursuant to Section 5.1.A or 5.1.B, except that the Committee or the Director, as appropriate under Article II, may permit a Participant or, after a Participant's death, a Participant's Beneficiary or other person or entity entitled to receive such Plan Benefit, (i) to withdraw from the Participant's Account an amount necessary to meet a Financial Hardship, or (ii) to withdraw his entire account balance prior to the Participant's Termination of Employment with interest at the Interest Rate for the period from the immediately preceding Determination Date to the date of payment if a Participant's Account shall exceed the amount of $100,000 determined as of the immediately preceding Determination Date. Either type of withdrawal shall be requested by written notice to Rockwell and the amount of the withdrawal shall be paid within forty-five (45) days after receipt of the written notice. If a Participant does make such withdrawal other than for Financial Hardship, the Participant shall forfeit all further rights to participate in the Plan, and any previously executed election with respect to the deferral of Incentive Compensation that has not yet been transferred to the Plan shall be void. 5.3 Withholding; Payroll Taxes. Rockwell shall withhold from Plan Benefits payable under the Plan any taxes required to be withheld from an employee's wages for the federal or any state or local governments. 5.4 Full Payment of Benefits. Notwithstanding any other provision of the Plan, all Plan Benefits shall be paid to the Participant no later than the January 5 next preceding the Participant's eightieth (80th) birthday. ARTICLE VI BENEFICIARY DESIGNATION 6.1 Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person or persons as his Beneficiary (both principal as well as contingent) to whom payment under the Plan shall be made in the event of his death prior to complete distribution of all Plan Benefits due him under the Plan. Any Beneficiary designation shall be made in writing on a form prescribed by the Committee and shall become effective only when filed with the Director. Notwithstanding the foregoing, if a Participant's Incentive Compensation is community property, any designation (other than of the Participant's spouse) made by a Participant then married shall not be valid or effective unless the Participant's spouse is specified to receive at least fifty percent (50%) of such Participant's aggregate Plan Benefits or unless the spouse shall approve such designation in writing and in accordance with such other requirements as may be established by the Committee. 6.2 Amendments. Subject to the limitations of Section 6.1 of the Plan, any Beneficiary designation may be changed by a Participant only by written notice of such change to the Director on a form prescribed by the Committee. The filing of a new Beneficiary designation form will cancel all prior Beneficiary designations. 6.3 Absence of Effective Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided above or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's Plan Benefit, the Participant's remaining Plan Benefit shall be paid to his estate. 6.4 Effect of Payment. Payment to the Beneficiary designated pursuant to Sections 6.1 and 6.2 or to the Participant's estate pursuant to Section 6.3 shall completely discharge Rockwell's obligations under the Plan. ARTICLE VII AMENDMENT AND TERMINATION OF PLAN 7.1 Amendment. The Committee shall have the power in its sole discretion to amend, suspend or terminate the Plan at any time, except that no such action shall adversely affect rights with respect to any Account without the consent of the person affected. ARTICLE VIII MISCELLANEOUS 8.1 Unfunded Plan. The Plan is an unfunded plan maintained by Rockwell primarily to provide Deferred Compensation benefits for a select group of the management or highly compensated employees of the Corporation. 8.2 Unsecured General Creditor. Participants and their Beneficiaries, estates, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of Rockwell. Such assets of Rockwell shall not be held under any trust or in any other way as collateral security for the fulfillment of the obligations of Rockwell under the Plan. Any and all of Rockwell's assets shall be, and remain, the general, unpledged, unrestricted assets of Rockwell. Rockwell's sole obligation under the Plan shall be merely that of an unfunded and unsecured promise of Rockwell to pay money in the future. 8.3 Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey, in advance of actual receipt, any Plan Benefit. Plan Benefits and all rights to Plan Benefits are and shall be nonassignable and nontransferable prior to actual payment as provided by the Plan. Any such attempted assignment or transfer shall be ineffective with respect to Rockwell, and Rockwell's sole obligation shall be to pay Plan Benefits to the Participant, his Beneficiary or his estate as appropriate. No part of any Plan Benefit shall, prior to actual payment as provided by the Plan, be subject to seizure or sequestration for the payment of any debts, judgements, alimony or separate maintenance owed by a Participant or any other person; nor shall any Plan Benefit be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency, except as required by law. 8.4 Not a Contract of Employment. Neither the terms and conditions of the Plan nor those of any Participation Agreement shall be deemed to constitute a contract of employment between the Corporation and the Participant, and neither the Participant, his Beneficiary nor his estate shall have any rights against Rockwell under the Plan except as may otherwise be specifically provided in the Plan. Moreover, nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of the Corporation or to interfere with the right of the Corporation to discipline, discharge or change the status of a Participant at any time. 8.5 Protective Provisions. A Participant will cooperate with Rockwell by furnishing any and all information requested by Rockwell in order to facilitate the payment of Plan Benefits under the Plan, and by taking such other action as may be reasonably requested by Rockwell. 8.6 Terms. Whenever any words are used in the Plan in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and wherever any words are used in the Plan in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. 8.7 Captions. The captions of the articles and sections of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 8.8 Governing Law. The provisions of the Plan shall be construed and interpreted according to the laws of the State of Delaware. 8.9 Validity. In case any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal or invalid provision were not included in the Plan. 8.10 Notice or Filing. Any notice or filing required or permitted to be given to Rockwell or a Participant under the Plan shall be sufficient if in writing and hand delivered, or sent by regular mail or by registered or certified mail, to the principal office of Rockwell or to the last known address of the Participant, as the case may be. Such notice or filing shall be deemed given or made (i) when hand delivered to the residence or offices of the recipient, (ii) as of five (5) days after the date of mailing if delivery is made by regular mail, or (iii) as of five (5) days after the date shown on the postmark on the receipt for registration or certification provided to the sender at the time of mailing, if by registered or certified mail. 8.11 Successors. The provisions of the Plan shall bind and obligate Rockwell and any successors. The term "successors" as used in this Section 8.11 shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of Rockwell, and successors of any such corporation or other business entity. 8.12 Insurance. Rockwell may elect at any time to acquire for its own benefit such forms of insurance on the life of any Participant as it in its sole discretion believes to be in the best interests of Rockwell. If Rockwell so elects to acquire insurance, and if the acquisition of such insurance shall not in any way adversely affect the Participant, the Participant shall complete and authenticate such insurance applications and other forms, and assist Rockwell in any and all matters Rockwell may reasonably request to enable Rockwell to acquire such desired insurance. In no event shall the Participants or their Beneficiaries, heirs or estates have any legal or equitable right, interest or claim in any such life insurance policy, annuity contract or the proceeds therefrom owned or acquired by Rockwell pursuant to this Section 8.12. 8.13 Expenses and Costs. Rockwell shall bear all expenses and costs in connection with the operation of the Plan. 8.14 Reliance on Certified Public Accountants. Rockwell, the Board, the Committee, the Director and any employee of Rockwell or the Corporation shall be fully protected in relying in good faith on the computations and reports made pursuant to or in connection with the Plan by the independent certified public accountants who audit Rockwell's accounts. ARTICLE IX CLAIMS PROCEDURE 9.1 Claim. Any person claiming a Plan Benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Director who (a) shall respond in writing within ninety (90) days following his receipt of the request or (b) in the case of a claimant who is a person described in Section 2.2 (b)(i), shall refer the claim with his recommended response to the Committee, which shall respond in writing within one hundred twenty (120) days following the Director's receipt of the request. 9.2 Denial of Claim. If the claim or request is denied, the written notice of denial shall state (i) the reasons for denial; (ii) a description of any additional material or information required and an explanation of why it is necessary; and (iii) an explanation of the Plan's claim review procedure. 9.3 Review of Claim. Any person whose claim or request is denied may make a second request for review by notice given in writing to the Director. The claim or request shall be reviewed further by the Director or the Committee, as appropriate, and he or it may, but shall not be required to, grant the claimant a hearing. 9.4 Final Decision. A decision on such second request shall normally be made within sixty (60) days after the date of the second request. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be one hundred twenty (120) days from the date of the second request. The decision shall be in writing and, whether made by the Director of the Committee, shall be final and bind all parties concerned. EX-12 4 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12 ROCKWELL INTERNATIONAL CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES NINE MONTHS ENDED JUNE 30, 1995 (In millions, except for ratios)
Pro Forma Pro Forma Rockwell(1) Reliance(2) Adjustments Combined EARNINGS AVAILABLE FOR FIXED CHARGES: Income before income taxes $ 916.5 $(51.3) $52.9 (3) $ 918.1 Adjustments: Undistributed (income) of affiliates........ (5.0) (5.0) Minority interest in loss of subsidiaries... 8.4 8.4 919.9 (51.3) 52.9 921.5 Add fixed charges included in earnings: Interest expense.......................... 119.5 6.0 21.0 146.5 Interest element of rentals............... 49.3 2.5 51.8 Total................................... 168.8 8.5 21.0 198.3 Total earnings available for fixed charges.. $1,088.7 $(42.8) $73.9 $1,119.8 FIXED CHARGES: Fixed charges included in earnings............. $ 168.8 $ 8.5 $21.0 $ 198.3 Capitalized interest........................... 10.3 10.3 Total fixed charges.......................... $ 179.1 $ 8.5 $21.0 $ 208.6 RATIO OF EARNINGS TO FIXED CHARGES (4) 6.1 5.4 (1) The Rockwell information presented includes Reliance for the six months ended June 30, 1995. (2) The Reliance information presented is for the three months ended December 31, 1994. (3) Pro forma adjustments include the following (see Exhibit 99-a): A)To reflect the divestiture of Reliance's telecommunications business $ (8.2) B)Amortize over periods ranging from seven to forty years the excess of purchase price over the estimated fair value of net tangible assets acquired (7.6) C)Recognize interest expense on borrowings to fund acquisition (at assumed rates of 7% on short-term debt and 8.2% on long-term debt) (21.0) D)Remove unusual expenses incurred by Reliance relatingto costs associated with abandonment of a prior merger agreement and costs associated with the acquisition by Rockwell 89.7 Total adjustments to income before income taxes $ 52.9 (4) In computing the ratio of earnings to fixed charges, earnings are defined as income before income taxes adjusted for minority interest in income or loss of subsidiaries, undistributed earnings of affiliates and fixed charges exclusive of capitalizedinterest. Fixed charges consist of interest on borrowings and that portion of rentals deemed representative of the interest factor.
EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30, 1995 CONSOLIDATED BALANCE SHEET, STATEMENT OF CONSOLIDATED INCOME FOR THE NINE MONTHS ENDED JUNE 30, 1995 AND NOTES TO FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS SEP-30-1995 JUN-30-1995 577 0 2550 77 2065 6173 2895 0 12810 4430 1778 244 0 1 3416 12810 9436 9509 7263 8593 0 0 120 916 363 553 0 0 0 553 2.54 2.49
EX-99 6 EX-99A PRO FORMA STATEMENT OF INCOME Exhibit 99-a ROCKWELL INTERNATIONAL CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME The following unaudited pro forma condensed consolidated statement of income has been prepared by Rockwell's management. This statement reflects Rockwell's acquisition of Reliance and combines the historical consolidated income statements of Rockwell and Reliance for the nine months ending June 30, 1995, using the purchase method of accounting. The unaudited pro forma condensed consolidated statement of income has been prepared assuming the acquisition of Reliance had occurred at the beginning of Rockwell's fiscal year ending September 30, 1995. This pro forma statement should be read in conjunction with the historical consolidated financial statements and related notes of Rockwell and Reliance. The pro forma statement includes preliminary estimates and assumptions which Rockwell management believes are reasonable. Pro forma adjustments reflecting anticipated cost savings and other synergies resulting from the integration of Reliance and Rockwell's Automation business are, under most circumstances, not permitted. As a result, the pro forma results are not intended to be a projection of future results and are not necessarily indicative of the results which would have occurred if the business combination had been in effect on the dates presented. The pro forma condensed consolidated statement of income has been prepared using the following facts and assumptions: Rockwell acquires all the common stock of Reliance for a total cash payment of $1,586 million. Simultaneously with the acquisition of Reliance, Rockwell sells the telecommunications business of Reliance for $475 million to fund a portion of the acquisition price. Rockwell borrows $1,111 million to finance the remaining portion of the $1,586 million acquisition price. In accordance with generally accepted accounting principles, the purchase price of Reliance was allocated to the assets and liabilities of Reliance based upon their respective fair values. Such allocations were based upon appraisals, evaluations, estimations and other studies, some of which are still in process. For purposes of the accompanying pro forma statement, the pro forma adjustments have been reflected on an estimated basis using information currently available. Accordingly, the allocation of the purchase price to the acquired assets and assumed liabilities of Reliance is subject to revision as a result of the final determination of fair values. ROCKWELL INTERNATIONAL CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME NINE MONTHS ENDED JUNE 30, 1995 (Dollars in Millions) Pro Forma Business Adjustments Sold By Increase Pro Forma Rockwell (1) Reliance (2) Rockwell (3) (Decrease) Combined Sales and other income........................ $ 9,509 $ 449 $(120) $ 9,838 Costs and expenses: Cost of sales............................... 7,239 337 (89) 7,487 Selling, general and administrative......... 1,234 68 (19) 1,283 Other expense, net.......................... 89 (3) $ 7 (4) 3 (90)(5) Interest.................................... 120 6 21 (6) 147 Total costs and expenses.................. 8,593 500 (111) (62) 8,920 Income before income taxes.................... 916 (51) (9) 62 918 Provision for income taxes.................... (363) 5 (7)(7) (365) Net income.................................... $ 553 $ (51) $ (4) $ 55 $ 553 Earnings per common share (in dollars) (8): Primary..................................... $ 2.54 $ 2.54 Fully diluted............................... $ 2.49 $ 2.49 Average common shares outstanding (in millions): Primary..................................... 217.3 217.3 Fully diluted............................... 222.5 222.5 See accompanying notes to unaudited pro forma condensed consolidated statement of income.
ROCKWELL INTERNATIONAL CORPORATION NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME 1. The Rockwell information presented includes Reliance for the six months ended June 30, 1995. 2. The Reliance information presented is for the three months ended December 31, 1994. 3. To reflect the divestiture of Reliance's telecommunications business. 4. Amortize over periods ranging from seven to forty years the excess of purchase price over the estimated fair value of net tangible assets acquired. 5. Remove unusual expenses incurred by Reliance relating to costs associated with abandonment of a prior merger agreement and costs associated with the acquisition by Rockwell. 6. Recognize interest expense on borrowings to fund acquisition (at assumed rates of 7% on short-term debt and 8.2% on long-term debt). 7. Increase in the provision for income taxes primarily associated with the removal of unusual expenses noted in 5 above and reduced by the effect of additional interest expense. 8. Pro forma primary and fully-diluted earnings per share are computed on the same basis as historical amounts.