ML20236E502

Rockwell Intl 1988 Annual Rept

ML20236E502
Person / Time
Site:	07000025
Issue date:	12/31/1988
From:	Beall D ROCKWELL INTERNATIONAL CORP.
To:
Shared Package
ML19311A788	List: ML19311A787 ML19311A789 ML20236E479 ML20236E482 ML20236E487 ML20236E492 ML20236E495 ML20236E498 ML20236E502 ML20236E505 ML20236E510
References
NUDOCS 8906050295
Download: ML20236E502 (52)

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.4 ' : ,9 flN ANCI Al HIGHlIGHIS (Dollars in n:illions, except per dare amounts) Years ended September 30 1988 1987 Sales $ 11,946.3 $12,123.4 Earnings per common share Primary 3.04 2.27 Fully diluted 3.01 2.23 Dividends declared 188.6 181.2 -? Stockholders' equity 3,693.0 3,314.2 Per common share 14.10 12.01 Total backlog 13,160 11,997 Employees 112,160 116,148 1 v. e. v e L a e u w he EARNINGS PrR DIVIDI.NDs Pi.R RITURN ON AVIRAGE CowMos SHAR: COMMON SHARE STOCKHOLDL Rs' Equrry antt:ani anktlea oPanuen m iffect of one.nme tax ad ustment. i u__.____ ______._s

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(C6ntracks with. the Departmsrit Ef &aL -

s D % ::!E Mefense accounted for 31Nrcnt of O. l.! e 2fh 1988'sa,les;comparyd'to 45 per' cent' 1 h[Mg ',, [.ihe yearbefore? Tota! government busi 3 ~ s, ~ g< f ["ri.ess, including sales to the National ? M i 3,s m _,. H Aeron. au,t2cs.and Sp.. ace Admmistra..-

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~^. v,s a. P .~ 4; .g N& Fiscal 19.89 will be challenging. " W ^ T"Of NB-1Bievenue's will decline further a ' fl f td About $jo6 milliod,' nearing the \\s ' f,1 hj, 75500 million' level we expect to, sustain Dow nR.Bini elevel above thit of1988 before the &%n.. W fer many years, f. rom $1.4 b,illion in' y onbrime favorable'iax adjustment. E fi, scal 1988, and more than $3 billion These im..pr.ovemen,ts, and further,, ,l ',O. * ' i in each of the thre prior years. . growth tGond fiscal 1989, will be (f(,. 3 .e t. v,/ ~-We will also see th6 completion driven by'our leadership posmon m m n g;n i988 wucs eun qv n y;i., of. the restrucrarmy ofour General many of the markets we serve, our i ant... ,,m m2m,, y W nsomy 'i m" Industries businesses through we' sales strons backlog, our commitment to .r mec seree. n ms aw . > f o..ur hicasurement & Flow Control realise m6te fully the performance M Ren.,

o eseumine msm J, n21 Rock'well Rimoldi divisions, which potential of our businesses and the i+/

a 2 per mmm ue 2mpmec la 1'have contnbuted substantially to sales . long term benefits of our restructuring. mg'W-i .and earnings. er ne mwme e sw e t /o a in Armrpact we expect contmued j s maun m sm aer me o, -.Over,all,,however, we see earn. 1 mgs growth from our partypaticn ic the. m~ f+', - rper shkre for fiscal 1989' reach'm.ga Space Shnttle and expendable launch m8 ermm ver ue moua d O'fetme WDT dult M f w / t -l, 2 ammem e a tenn pe ur p, f U 16 4 y? l Q ,ft' i y_ .d b ) '.4 1 .., h ',4 ' t. g l, j e i pf i. M b1 e ~.

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versus $121 billon in $U W 3' m t. heir bus, esse..,,deve; lo.p an 2, #w> m ~, g. m s to ee.s.% esu when os program saw a . I,ch,:as Space Station Fredsfand in Fenha.ncedlevelof teamwork ahdC ~ ~ H W, g & J evel0P.ing futge technologies such;as.. ' .ue si e dimon supe, 9 ., m s% ke e - pe,rsonal commitmeni? n >y .;7, . _ -. s. Operatmg emnmp mereased 'We. have developedihis[ strategy :

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{[* g ' % "pommunicatioss businesses'are well - wo,,y n,y,, M au'tomation, avionics, and tele. - 'and cliief executive o'ffic'erl Also [( pq i recenfiy retired isJohnJ1Roscia who,M C ,. g 3,n %,c,,,,nm, Vas a senior executiviandjeneral34 1 %.4ff positioned;to krog with deferise :1 g$y m ic 3m,,,, y gg

cihctrohics co' t.inuing tb maintain.its counsel for 25 years, contributed jh

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$U dMr [ P5.ent simsg position ir6ddressed sli 'significantly to the company's success. ' ' f 4%f n ,m3,1,onocon,mm, mg,mmm $e yy ymarkets? . 7 Our businessedan perforniit: an mmas, m space their full potential only by effectively,.f.-%-[ m 7 [ m. j In Automotirvand Craf>hkSyjtems .j. sem earames g.7 ' new proddcts andcontinued glohdl.7, Jserving their c' ustomers and'irwolving)

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[ c,orporate strategy ofn f,,J me y,omcs,ne eie,,stame, f and organizational beliefs developed u yy V" M _.over nankyckrs~.Thecredo,reproducicIMr J U 1 ff ' id pro. vidmg supermr value to, cM Commitment.ro quality p;roducts' maustnai automatmn ousmesses j- , :ar on the inside back_iover'o.f this rep 5rth tg ; h 4 a Q;;, mcustomers and stockholders eonee earnme rose ~is abatement of the company wef, d~ ja 1 ~ g p i 7D O Sound financial manageinent. - 12 percent he m <Wume - intend Rockwelico becomeio S

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.v ?J- ' N, N g [N O, . O'Insiste,nce..on adhe'rence to the' imamements m tmth the x om m 7x highest standards ofintegrity and '. d hean av trucue c ^ m : 9us! ness conguct. ..c . g _ p_p

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e. paswage caousmesses 30 Growth through inteinal - - - ~ - DONA 1.0 R BtAtt w-1 expansion of our ' core businesses, k""8""5f""5 "*"E5 e# Oairass ojde %rdad, '"*3"U MF* "' ")C *m-T m r i > 3.; J supplemented by strategic-. pnmanh ecupgne ChkJ' E"wn.n ofjher - .4 ti V~' ' '" acquisitions, joint verd sees and. U .:a s Mumbry 30. Iw8 j, y (x, .a , partnerships,.. eanunn oy monen ,m, tv . "~ ~ c. a Ns..ajor capital investments to

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-w- +. w < p. Investment in techn, ology-V' ' he common denominator of all our " " * ' * *' " 2 N t businesse. s. c /s y .o Flexible, entrepreneurial J seep, a im a n u m Lbusiness units that place continued -t e acwg p, m 4 e'mphasis on simplifying structures mtarmate or mcommes _1 M<x and p'rocedures;- and page 2t fu ommem or La And,' involving'Rockwell people - 3, tne comnam stoo reDTChdW PWT am x. A >? 5 e ) '? g g Y r.} (- 4 g ( d [.y .'p (. 4' + 9 -+- .3 s. v 4 po ,S-" f vX e g m% u rm.2, ~, ~ ~ s .. u s

E i S[l[CT[0 WISHilGHTS a 3 )M NOVEMBER 1.1987 APRIL 30 Rockwell ring laser gyroscope navigator B-1B production program completed successfully completes North Atlantic with delivery of100th aircraft to Treaty Organization sea trials per-McConnell AFD, Wichita, Kan. formed by U.K. Ministry of Defence. MAY NOVEMBER 4 B m Snys rcrat Installation begins of first Goss Color-o Rockwell reports fiscal 1987 is 12th con-liner at The Times Journal Company, secutive year of higher earning sees Inc., Spring 6 eld, Va.; newspaper further increases ahead for 6 scal 1988. production begins in October. V ^ DECEMBER 1 M AY 3 NASA selects Rock' ell's Rocketdyne Rocketdyne receives orders for an addi-w Division to design and build Space tional 43 Atlas engine systems, bringing Station electric power system; contract backlog for Atlas and Delta expendable for $1.6 billion is signed in September launch vehicle engine systems to 92. &y&$ 1988. MAY 5 N'M "" T 3 ""' ' ' ' JANUARY 1,1988 Congressional! @up honors Rockwell Da h esm wer - Rockwell R9696DP V.32 integral for innovauve employee child care modem for data transmission named programs. one of products of the year by Electronic MAY 16 Products magazine. } / Dedication of Aircraft Modi 6 cation o JA ARY H Center, Shreveport, La., for integration / Acquired SOM A Europe Transmissions, \\ and installation of avionics and mission component supplier serving systems for a variety of aircraft. off-highway construction equipment manufacturers; renamed Rockwell SVI. MAY 18 com N m omn' Rockwell wins $162 million contract to FEBRUARY 10 g ,,.e dM i d ne fw Pe Directors elect Donald R. Beall, or ' arrr keeper ICBM Rail Garrison program. - chairman and chief executive ofGcer, ] JUNE 10 succeeding Robert Anderson. i. b) Regular quarterly cash dividends per Successful test Gring of highly efficient comrnon share were increased 9 percent, ['r divert thruster rocket engine, an eterncnt the 10th time in the past 11 years that of Strategic Defense Initiative Space dividends on Rockwell common shares f Based Interceptor program. The 2-ounce were increased. engine generates 150 pounds of thrust. /: 4

O 0 o ' JUNE 14 SEPTEMBER 22 Collins Pro Line 4 advanced avionics 2 i -p-Heavy-duty Rockwell truck clutches system takes to the air with government introduced, bringing us cioser to supply. certification of the Beech Starship ing a coniplete truck drivetrain. corporate aircraft. SEPTEMBER 29 JULY 5 nehcum ausma9 U.S. manned space program returns Communication Machinery Corporation to flight with launch of Space Shuttle acquired to enhance Rockwell's position S * "" P"" " Discorny for four-day mission. in local area network market. OcrOBER 4 ' JULY 6 ,P Allen Bradley and Digital Equipment Allen Bradley, Milwaukee, Wis., named k4 I h9 Corporation introduce Pyramid Inte-one of nation's 10 best advanced tech-grator, industrial control system that nology plants by Society of Manufactur- ) improves flow of factory production data ing Engineers, and also receives society's I within a company. prestigious LEAD award for achievement in computer integrated manufacturing. ' OCTOBER 1I wen w ernoe:new Space Transportation Systems Division ptY19 receives NASAJohnson Space Center Rockweli-Rimoldi, our industrial " Award for Team Excellence." sewing machine business,is sold. g**;QiT q d OcrOBER 12 AU N 4 j ' Rocketdyne receives NASA " Excellence Collins Government Avionics Division l Award for Quality and Productivity" for named U.S. Department of Defense Air k outstanding contributions to the Force Programs Contractor of the Year advancement of our nation's space for value engineering achievements. f program. OcrOBER 20 SEIYEEMBER 8 t.oen 8: sin

• """'"P l

Proposed sale of Measurement & Flow Laurinburg, N.C., plant opened to build l Control Division announced. on-highway truck transmissions begin-ning in 1990. SEI"rEMBER 14 First combat system hardware for new Royal Australian Navy submarines l delivered five weeks ahead of schedule. qay, i,$ w. ) .r$, k, h J in ; s l

I [ / th-f* = ? -.

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-8 s i ,~ a yNo Nf -r E.? <HE '4 -A! ?e 7 Wn g \\ .( ,3 ap p,- i ,~ ! ~ + ~ h O3: ' AEROSPACE \\ T E ELECTRONICS' c 4 n. s n M. n. a nyN, M--d-. - 1988 1987e ~1986 - 1988 ' 1987. 1986 _ :/' s 4 Q3[ kw g +W . ; M a > ; anrikst - OsmH%st 4 f' ,d > .n,. O $p(Q[p3g,, ]p ,,l sga. ( 'f U

p N. -

i + t., . Space Systems 1

$2,360 $1,880 $1,738 '

' A-BIndustrjal i $ ' ' ? f;' Aircraft 1 ' ' '4 1,61113,193 c 3,807 ; e Automatior.. , $1,249 $1,080,$bO76* o 767' 7655' 5925[ _i,, Q Y, ; Total ^ $3,971 $5,073 $5,545,

Avi nics

} ,. ti43,, 860 _761 > T3 888 Sales by Busmess legmem

Telecommunications -

+ t Vpp.4 f, ;OperatingEarningsi $492.6 5700.0 $571,1\\ 2 . Defense Electronics 1,663 1,747 1,792 s

g3 P.

E 3h Aerospace

h 4.j#(();E PRODUCTS ANDSERVICES Total i $4,$22 $4,342,$4,2211

~ M2 3 38% Bectromcs y

g. g> w ' <

Operating Earnings $377,9 $367.0' $400.5g A 7q t.i' 77-1 E 18% Automotive i m, ? $ pace Shuttle orbiter," main engines, flijht; a n % ceneraiindustnes a p ^ w 3 E PRODUCTS ANDSERVICES. i* h[M M, ^p. Joperarians support ,i, a ESpace sntems anci vehicles Allen-Bradley industri2 Automation Ly ' dvanced propaldon s'y'tems > A s t y., QQ M : ; Space Station electrical power. ' } Wror control and - Relays termmalblocks Industrial control: C )$ -: Aclvanced military aircraft ' Operan imerface; I mchine vision pudcin ~ Satellites ad other unmanned space syitemi 'I E pnuestion pmducts Presence sensors ~ 4 + w I(. ' M<.

• Aircraft structures

'i ? PMN"* 0'Od" products ~ 1 %,*<'e %-

• Operation of Depstment of Energy facilities '

'a - s ' industrial systems and components;,- .y 3 t T ' Minor control centers f ' DNA lMorion courtol produed ". Data cullection and *. 1 '. mimituru g systems 7 . e ; STRATEGIC DEFENSE PROGRAMS AC A DCmotordoves - Automated quahry.. s 6nd systems management equipmeor - a s Passive electmnic

• Industrial burne'r systems.

f '

9. f( p e

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1-Space Basee Interceptor program

, components, - . gagnetie matetials iN s o

c Bomt Surveillance and Tracking 4 I'~

s , '.A -\\ .c M J ' 1 S ' stem elemerits, - . Industrialcomputers and communication. 3 s Programmable (ontmilers ' Comrnunication networks N! ~ ;Crround based Su.rveillance and Trackin8 ' IndustrWomputers s .f . System elements .m Commercial Eletronics, } )a 'pamic isokope Power System ( Asrborne weather radar D g M,,. Avton1C5: .s. c O. C; y 9 'i

• Communication and

+ s, i navigation avionics' l'ngine indication and ' # 4 }! W i'9 ,. systems - . crew slerting systems 3L Electronic flight i V l , marrument systems. i

kr

? 0' , Telecommunications: . -, + Lightwave mod merowave. ' Telephone special [* f ,.'? communicatenssystems > service products - L r 4' - Mukiplex products , Image and dars +g, t W . / c Automatic call. miem products T distribution systems ' Ah speed M' M Network management' #. devices and subsystems, eclecommunications, systems yi _ Digital crossconnect . Microcomputer controller ev systems ! and peripheraldevices m. Dyital loop astriers LAN products. id1 j g ..q j .b Defense Elektronia l 1 \\ ~ Gmdance und navigarmn Undersea warfare, 4 3,, s .T, 1 s systems <. -aip. ial processing. Tactic al weapons Shipboard electronics s

r -

Command, control, Space electnmics.. c jj . communicarmns Sensors and ciertro optic 9 ' and mte!!ytence products ?.j b pmducts and systems Advanced technologies Automatic target Electronsr combat and. i I handover systems iruelhgena systems - s > ,$ 7 ,>J ,t; '" P. j dis' o.urion systems, Advanced intgrated - Tacucat informanun 4 r 1

cockpit avionics systems,

%f A P b I L./ /* P '1 H f . m..M kM rn.mw e y y [ g n ( p ,Q r \\ N, r + e a 3f 7 J ;, e3 '. 4 n# t-g] y ' y {. i.3' Ll s a ^ ^'

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p. L,

..s. ^ ~

1988" ;A987; JL1986-9 C

.1988 9 = 1987. i.1986 ;-

• 'A g,,,,ging 3

gg,m; & y v- .t? (Sales: D' '4 . Salesi, ' ! .y y l,,,, " D HeavyVehicles $1,509 '$1,200 $1,150 ~ T Graphic Sptems ; . $ 808 $ : 560 L $ 522 % ' > ;j. 376/ '320s 329: - Light Vehides '645 ' 516 '438 Energy! +1I5 112 L ' 91'E 'O~ k

Torel <

$2,154' $1,716' $1,588 -

91cf ~

0;vatink Earnings'.$182S $163.7 !$1534 888 omatmg Wmng@ p Torai ! . $1,299 $1992 $ 942 L,

g Busmess segment Oprating Earnings. $1443 $111S? $87.9[

,H -1 I E PRODL' CTS AND SERVICES ' J" ~i r 32% Dectrumcs 3s PRODUCTS AND SERVICES ' ' - p<~'[ ~ , f 1k.stp Whihkr 17 m In Automotwe i _ E, 7 OdM#M - ~ i ' Axl's fx trucks, tractors, trailers, buses; a 12% ceeanestnn e arid off highway equipmenr- ' Newspaper pmduction systems-f' ~ *4 g . ' Air disc, dry disc, wet disc, wedge an'd. , Commercialprinting presses; ~ c f ~ '1

w 4 cam brakes ~

. ~, Newspaper mailroom systems ~ ,k H On ,l. board electronics Pipe repair clamps andfouplings. r<, %p yrgings and tastings-- s s 3- .,1, Transfer cases ~ .,a-Ligit Widda - i .n > l . r i s Plastic body f ncls and a'semblies for cars and trucks ~ . ~. i Manual and powr door latch and ' ' ' y'- window lift systems 3 Manualind power sunroofs ' N Suspension systems Suspension springs and stabiliar bars ' f Steel wheels 4 1 Cold-wound coil and stamped steel e lj wire forms N s \\, 4 4 l 'w,. Ic Te (., p t-l. s / b O h W 9 a W / \\ N N ( Al h. i l i i 8 4 f e + i

a A[ROSPAC[ i ( .;u e are a wor!J leader m We are budding a fifth orbiter Wdesigner and proJuar - E, Jehvery schedukd for 1991, as well spacecraft and rodet '.i.. under a S13 bilhon contract wah 4 y propuhion systems, a 4 1 as four mam engines under a 505 of military aircraf t, the milhon a,ntract. designer of the power system for We are one of three design Space Station Frodaz, and a maior wntractor s wmpermg for Shuttle-C. participant in the development of NASA's proposed heavy-lift unmanned advanced technologies for national laum b system derited from shuttle' defense and space programs. incluchng rethnology. Further. we are performing the Strategic Defense Imtiath e. design studies on a Shuttle C SAM F. I Awartus Our maior proyrams include pro @ ion mm l Gir Pn adat alPn udas the N,ational Aeronautics and Spaa In 1988, we were awardeJ a .w propuum AJmmistration's (N ASA) space shuttle 51.6 billion worrau to dt velop the and shuttle thght operations support. eleuru al power sprem for Space adsanced rotket propulsion sprems Station Finde The system is for the shattle and for the Adas and expected to be based initially on Deha expendable launch vehales, the existmg photovoltan ret hnology and space station power system, NA\\'3 TAP. later expanded to supply more pova r Global Positioning. 5vstem IG PS) i bv int orporatmg efticient solar satellites. and ongomg suppon and dynamk technology We also are modiGcations for the U.S. Air I ort c b wmpeong f or an operations suppot t b-lO program. y 06Titract Nsr the space statlon. /t/ J[J. t J ) ilt r'd, li r ((ct) rl.t /t.i.//'if f \\ Dematid is itR red smk' for role m returning the U.S. manned expendable launt h v-hitles for space program to thpht wah the f gmernment and wnuntroal suaesstuilaunch of Dnwo r> in j msromers. In 1988, we received major Septembtr F>SS. As prime wnuactor >f orders for Atlas and Deha engmes for the shuttic and us main enu..es. l w hith. u nh opnons for addinonal we made a number of haidware j engines, have a potential sales value modificanons as part of N AS A's l of nearl> S I bdlion. We also are G,ronct W,.Ji n s perfor mng ih sign uudies oa.. heavy mawr ef fort to enhana thght saf ety , g p, j preparanon, trainmg and sustaining j g,j htt propulsmn sptem f or the Air l'or(c We also manage spaa shuttle thght

s.,,,

Ads ans ed l_ aunt h 5ptern. engirleef Hig at N AS A 6 b>hr om Spate l Wt < <,ntirait ns luiild the hiuith I Center. Ilouston, Tex as; prm de stage tor the Peat ekeept r mter logistk s. engineerin g and mu gratie wn.mt ntal balbsta nowie. In _c am,em _m._ supp_ e, & #mmma m_ .i engines at Nefint Jv 5p.ut Ceriter.Ila.! j liringi: c tt,t al unit, delis (1> ! tu (>ll, and prova crzgineenng support l l u ith 19 more >n order t FhgLt l l In sau lbte and spau ( k t tronit s. sers ites at Marsh.dl hpa1 Center, lluntsulle. Ala-l the dw Lpmem m as of our GPS i i IU H F.4 I LI IN !! E N 4l t< >\\ M 8 =

l W J'. 7__' l y a e: ) ! l 9., j esegne t \\ T\\ k 'h a 5 m g ( l i;.0 s *" A - , s e .y g n a 2 s Y 4 4 ( E e s Delmar L WMe. !ett,0uakty contro! inspector. Rocketcyne Divuica w:th manager D D C#' strap m the huge n0Z21e of a space shtttle mam engme at Kennedy Space Center Fia A nn ri,.i n turne J1, m.v:ve el sju.t fli;;l: in lusK Ibid u vilIa:!.ls tla si;ia?!e ori.ite r.u:,1in m. tin e n;irn 3. an lj e rJhrn:_s n:any snj:p8it a r:ix jn ll > r::.i! %A.s A,t.r4ran:.

f \\G deli:'t rid the 1(XIth Ib]B strategic aircrap in April 1988 ahead ofsdudale and within 1:u,lga. L' f 9 f / sb,,j \\ ,o 9, s s e 4' s. ' E' ? . c .{ <,. e r- [ y I f I s - 1 / 'h 5 i ~ 4 + p 4' l. / l ~ c t g. ase t Howard L Chambers, left, vice president and B IB program manager, pauses with U S. Air Force Col. Philhp ford. commander. 384th bombardment wmg. on the tarmac of McConnell Air Force Base. Wichita. Kan.. where the 100th B 18 aircraft was dehvered

D AERUSPACf 1 j I satelhte network, w hit h provides 'g.- i ! materials needed for NASP to fly up to precise nas teation signals to govern-7 ' 25 times the speed of sound and enter ment and cornmercial users. are flow 1:arthortut. performing superb!) in orbit. Two b ariother advanced tedmology development satt !htes hase beer d'- program, produ(tion began on the operating for 10 years. f ar bcrond first of tuo L 31 A enhanced tuarieu-l Robert H. Gulcher, vice their expected in" t s We are perform. I ' verabdity fighter demonstration president and progtrm ing ur' der a $1.3 bdlion Defense { aircraft under an SSO niilhon t ontract manager, NASP, studies the Departmeta contran for 2S pn duc contours of a model of the uith Messeruhmitt Unikow-Blohm for i tion satelhtes, fise of a hnh han been { the U.5 and West German defense hypersomc craft. dt lnered through 1988. We also are i departmen1. fhght tests sc heduled t ompermg tur a tontrat t to prodote in 1989 are designed to demonstrate 20 addit'orial satelhtes technoloaes that break the sta!! i In aiur.g. a e d /m rtd de /*,i-b..rru r' and a: low more ef fettive ElB stratepit aircraft to the Air forte, , Jose-m c ombat than existing aircraft. completmp one of the most important Work also began in 198S undt r programs in our history ahead ')I ! a $}S.5 million Air Forte full st ale scht dele anJ uithin budget. In 1988 ! ' deschiI, ment contrau to outfit a the B-ld w as awarded the Air Force's [ new C-130 cargo plane as a highly u seted Mackay trophy for its extra-I l sophisticated AC-140l: gunship. This urdinary performance m suting 3g f , aiu r. tit is a heduled for dehvery in l My' ~ ' 1990. Exerust of produuion opoent % world retords for spet d Pa> toad 5' anohsunm nde the a in pmaue , <ouu a u 3300 mdhon to the tion program has b(en Liimi ered. u e AC-130U program. d cK pt t t bu pport at.riVl!1c5 a rP I f nodilit a-I Uh r Mhiltyi, Ojt uy i t rift f h ori tions to generare sales of about $s00 l new wntraus m 1988 that bring our Remipen Ork tnillion annually into the nt xt century. Crump breaks away vom a pm padon m progum rebd m We base an unportant position l Soviet EG 27 in mock aerial

• M "t'FK U'U"I"U N E ( U )

in the t ompetition to des clop the '" "d S I l"U'on. he pmgr.uns F combat m our dame flight National Acrospate Planc (N AW) tor i* l"E ik U""" hu r" d * "Ud simulator. u segundo. cakt. the Den nse Departnient and NASA. LWng hem, haa bM durmg development testmg et i The team of North Amerit an Ancraf t " P'"C *"" M " 'd h"F the X 3tA thght propulsion and Spate Transponanon 5p.rer, sediam e anJ ~Iratkmg System, and control system. Dis ision. u nh support f rom um Dynannt isotope Power $ystem in Lent e Center. n one of three t omt fin al 1989, the tenter wdl most to tors c ompeting to Jt sign tht.u r t r a n u. Neal Heat h. Cahf., into a 200,00i-Our Rocketine Dn iso,n is one of tw o square tout state.oti he art f atihry that t desigm rs tone une for the cropubion u di u rse as a fot al poun for our $DI watrau. In Ws8, a wnwrnum of the pmgrarns and a resoort e for mher t ompeting wotrat tot s was formed to mulo divnional pnyet ts deuloping Jevelop the high temperature and lugh!) sophisus acJ tec hnologiec high strength <nrhame and engine I -%aumi 4 l 0

ti fl[CTRONICS \\ t s O ur electronics business

• ls

?. variety of machinery control desices i i j to all parts of a company w nhout maior suppliers ofindusuial ,j. auto mation, avionics, j ( L.- j expensive custom soitware or telecommunications anJ defense I d[ hardware intertat es electronics produas and systems g In azionio. u e arc a u auu de to a broad base of domestic and leader m advanced technology prod-i 4 i international CustofHerS. I uctS athi systems Ior corn'rlerClal air l Thrugh AiheHrad/n. Rdu ell

transport, cor porate and gosernment is a leading manufacturer ofindustrial i markets.

automation conn ois, including systerns ~ j With commercullttliner orJers that control manufacturing machinery l ~- ' at an industry high, we are well-K N M O'^CK f and processes, and colhar and l posnioned for u ntinued sa es growth I '"7,w#" "" " in this marke segment. Almost all (ommunitare qu ahty and produuion us. m::x i i major airliners in the tiee world are data. A b also is a maior rnanufa turer t of electronit t omponents. equipped with Colhns avionics, and We hold a large share of most we hold substantial supplier positions f industrial (ontrol n)?rkets and have for a s aTiety ob as tonks prth!utts and , systems wnh B,cing. McDonnell earned a reputation for high quality, .,7 y excelient tustomer scrvice and a broad g :-. i We broadened our avionics Douglas, Airbus and Fokker, product line. Major customers are in l . m. the automotive, food proc essing, fg j product hoe with the introducuon chtmit al, mining and metals and t. ' in 1988 of aitborne satellae com. i r forest products industries. I munRations radios, prlfilarily for Among the more Significant k trans-oceanK alflitter$ and tolhsion h products introduced by A.B during 6 (r i avoidant e produas-a response i 198N Wefe new programmable Io a federal Aviation administration ] s (ontrollers. an AC aJ ustable speed I (FA A) requirement for sut h equipment. i motor drive. a small motion (ontrollt r, , We also expanded our strong position a usion system, and a persona! ! at Hoemg with a complement of conipua r based sof tw are px kage to avionic s for the Boeing "U. iOO and streamline desn:n and produuion of 7 U-3UO and derivatise sersions. J. TnAcv O'Rouxxt i Our anonics also are standard or control system panels. w %ia,;u k dx In October 19Hs, A-B and Dicital standard options on a broad range ut an w t n. u:n + n Equipment Corporation jointly (orporate and regional airhnt rs. More . L e !a.../.; i t. %; m N introduced the Pyramid Integrator. than halt of our eener.d avianon sales a new family of produus to facihtate have been oserseas. inJudmg systems informanon Ibw in tnanufacturing tor of fshore m.mutx tun rs of regional Compa nnt s bir Impftn ed etlic ;cid y, airllInc, t oT}N> rate allJ ut tht) airc raft. quahty and costs. The new produus, m huse de elopt d an integrated w hith wdl be available by mid.19ML s3 stems approat b to (orporate anJ pernor fxtory produuion data to be a ponal airkne am ratt that ( ommunn au d t leuronically f rom a siemfic antly rnlus t s w eight and o n o iu : ursson 12

l .s.' h .c..,. n e-f _l-( ~ '\\ .i e' ,o 9 s i An AllenBradley St amberg AC dnves control system has rtduced mamtenance costs at Uman Camp Corp 's Savannah Ga., kraft paper mill Heidi L Hoyles, Allen Bradley sales engmeer, with Jerry G Archer. linion Camp electnce mstrumentation supervisor,left, and Ruy W R;"er, paper machme electrician l 1 l l l l Allot-Hra.!!n indu tru! ant nnats.n voitro!< an importata tonis il?at1.rlyIbn I:u!!, astvmen improve quah:3 an /pnufactitit;

i i ((ECTRONICS I b of hghtw ave, or fiber optit, trans-solurne and improves reliabihty and - A capability.1:lernents of this new-aT i l mission s> stems. We also supph bI generation digital avionic s system, j specialized switching systems, network k j management systems and digital com-called Collins Pro lint zi, were FA A-a (ertified on the new 13eech Aircraft I M'. I munit ations products. Corp. $lan/vp in 1988. The first ~ With telephone industry corporate jet to otfer the f ull benefits l improvements to long-distante When a May 1988 fue in an l Illmois Bell centrai office i 1 of Pro lane d will be the new b,w,ja l ! networks largely complete. operaung knocked out telephone i I schedultd W cerrih. canon in 1989. tompanies are moderni,:ing their local service to 35,003 residential !i enhanges-a market in whu. h c apital in gmernment avianics,198h, alid Commercial CUStoiner$ m I was the first full year of production l j expenditures are foretast to nearly W Nagnubum deliseries or the NAVSTAR Global double over the next five years. We are Positioning Sy.sts m (GPS) user equip-j Rockwell people in thrt.e i shifting eniphasis to the lot al service states went to wo:k withm ment. W,ich launches of opt rational ' market and mtroducmg vu produtts hours to hdp install G P5 sateilites beginning in 1989, w e

to improve ( all thstribution, reduce i

emergency microwave

i. Installation and operatmg(osts and expect orders for our user equipmetu systems for temporary j upgrade network management.

to increase as the navigatior: system seiMce. Regul/. tiell h.,*r i approaches full capability in cl.e 1990s. A pe,nc er m microwave optic service was restored Under a full-scale development transmissmn systems. we are eMonding after sevural days. The tne app!it ation of this tec hnologi contract, we are bud. ding terminals RoChwell teleComlliuolcation$ for the multi sersite Joint latra al } through tht ocselopment of a new team was led by hm F. Information Distri'oution 5vstem, radio designed to provtJe enore Polutmk, Midwest regional as a suticontrat tor to Pless(v l ef fet tive an ! eftkient teicphone ~ sales representative, kneeling L.lettronics Sy3tems Corporation. service to the remote rural (ustomer. left. Thomas E. Wessime ()ur a.lvant ed spectah/cd Defen& Departmt at production go. semor project engmeer,left ahead for rhis iam resistant adt anctd i switt hing systems f ar tall management center; and Dean F Cassman, ambat information enhange system are sold to a brorJemng (ustomer manager marketmg support. is expected m 1989 wht n h,ockwell ' ban, nuluJmt eac h of the regional network mterface products, ar.d I,lessey will enter mto compuinon llell operau n,: uunpames. right center. Illmois Bell shop for a production contrAt. I Our sermcondut tor products steward William S Thomasis Orders were reteiteJ Jtom i 5 and business in telttommunis atn.ns has s on the f ar nght. intern.itional mditar y t ustomers m more than o,oula d its sales iner the 1988 for upgrading aircraft u ith ime-past inc years bv shilung us tm us from grated Lockp.t managemern systems commoJay Jes ucs to propiicury btit the l!.5. Arniy, w e w ill prt du<c digit al t <>mniunn atnuts pri,dut ts. We and install Automatu Lrgo linJou r holJ a n+r share M data and image Systems umts aboarJ approx u 'au l) moA in markm. mJ are the utlJs 600 Apda attac k behtoptt rs 'I h e !c.ohng 3upplier a 6 simile modems system also tan be applied m a w dt most W w hn b u n port tdapm rdnge of tactical airtrait h{(>re than llJ!l (d ()U r Rn.K(inJm tig prthIuct sales a R ((i ig;terna!mnal /71/rit t o ?/,I/ih Flh J///11) i.

• J f e /, Pic of North Amerkai n.aior suppliers t ustomers hid k V 1 I I i N I t h N U li l'.. \\i 14

Abnon all major airliners in thefree unrld are equipped u ith our avio tics prodaiis andspiews. Our Collins adianceddigitalavionics synems andinuraments are sundar Jon the neu Ming 74 7-a00 ,1 - > -. m o 4 9 - 4

• k - 2.a_,

.b

• r s's - y' n

/ , l _ s s. - > -..ls.,, N _l .v.. ....sn ..,... s... v 4 ,,6., .g*_ ..s , wk h, (~ y,., .f ' 45, " ' (,. ~ ' > ... - c <,, .y a ., m 4> s. 4. ', y; J, < _ -), k g 4 -'( .f . t c k s t. v .s i 3 j 1 jq Roy L hett foreground. Sea sle mariager. Collms Air Transport Division. mspects a 74M00 cockpd simulator mtli Rictiard E. Spradim, cluef design engmeer-aviomcs,[verett Dmsr., Boeing Commercial Airplane Co

) Strenghtning ourposition in the guidame andionnml sytons maria, u e are nou the second wurce nij>jdje rj.r the l\\aniape rinertial measurement unit, tvhich also has ban designattd the prnuar; !A10 lbr the SmallICIUl. ^ ' 4., l }[* [g s Ronnell F Eliot. nght precision as:embler.and Clyce D Heath, manufacturmg supervisof. Imn Tom NagamL*.o. mdustnal engmeer,left,in a clean roon, at our Autonetics Electromes Systems Omsion. Anaheim. Calit, where Peacekeeper mettial measurement umts are assembled

O [l((TRONICS j /*; our t$/irne r/n'leMia liairit.n. A. in contracts as a second source for the we are one of the nation's leading Peacekeeper mettial measurement suppliers of produus and systems for unit (IMU), w hk h also has been (ommand, control, c onn umcations designated ; s the primary IM U for the and intelhgence (C'i); guidance and Small ICD M. navigation; tactital w eapons, and In our tactical weapons business, In a rad car mock-up mth a shipboard electronics and sensors. further U.5 Army and Marine Corps scale modelof thelaunch Our C'l products and systerus orders were received f.or the llellfire control system for the are being Jelivered to the U1 air-launched, at varmor missde. To Peacekeeper Rad Garnson Department of I)etense and more than enharne the llellb..re s capabihty, we program are. left to 30 countries to irnprove the rehabihtv are developing a digital autopilot right.Tracey L Kreidt. and security of communicatmos system and new warhead under a Jay Mercado and Damell. among their military fort (s. U.S. Arm) (ontrac t. Wdlems, all of Peacekeeper .We continue development of. We conMnue m supply the Air project engmeenng, adcanced, Jam resistant terminals Force and international customers Autanetm flec'romes Sydems. for the MILSTAR satellite network, w th the GBU 15 stand-off weapon San Cerr.rdmo, Cakt a lugh prionty Air Force strategic sysatn. Ahhough ala J,th( tommunicanons program. j g AG M 130 nnssile, the row cred sersion m;gg@7 l of the GBU 15,is advancing through i M We are the principal suppher M( 'e -c of very low frequency (VI.F) development dight tests. <j' 3 We ;d,_m mmd Us arms cem_ mens, pmen_ Navy anJ Air Forte contracts during i the Defense Departrnent. and are developing new VLi systems for 1988 for advanced elettro-optical and 7 airborne command posts and other radar sensor systems for both strategic i 5trafeg5C aircraIt under Air liirce and and tactical applicaricins Nav> contracts. Our invoNement b imananond j i An nenBradier automated We are becoming estabhshed as a l batch processing syat im defens; niarkets is increasmg, maim suppliu of eleuronic combat j ,,sy,,, 3,gn y,,,,,,,no panululy in me aupond a e and intelligeru t products and systems tror h s business. In Septenibu, we volume m bakmg premaes A leading suppin t of gualance and l for the U S and allied gover,ments. , dehvered the first subtnarine t ombat trom Roush Prottucts. a cedar pg g g sy stem t emponents for the Royal i comrol systems, we have a map r role l blendisgica Frank Hurtte, Australian Nasy under a $57 5 rnilhon in eac h of the nation's interu,ntinental l gg,J 8 C@ RWs hd, c ontr.n r au arded in 19H 7 balusth missile t.lCBM) programs l manager, wth ymcent i koce, i W"""""O P f"' E *"" d l induding the P(at ekeeper. the 5 mall ~ pm met eer ""V'ganon systems f or U.5 attat k ICBM and the Minuteman l and hallism missde submarines and We enhana d our pmaoon m this i m 19hs reu.ised mon than $i00 mih market in 19HS with the award of I lion m new awards f or these

$162 mil! ion c ontrat t to sapply l programs; the launt h tontrol system f or the l

~ I rea(ekeeper R <il Garrison program. l We received more nan $90 rnillion i I I f .u >u; i 17

O AUTOMOTlH O ur automotise busintss L jac kknifing during sudden stops. WL among the world's leading expect to complett flect evaluatit us produters of components for and to begin produc tion m 1990. I.eavy-and medium-Jury The global competitiveness of our trucks, buses, trai!crs and truck ax;e manufacturing operatiens heavy duty off-highw ay vehicles. We I advanced significantly in 1988 as we also design and build components and began to realize enhanced productivity systems for light trucks and passcnger and quality at out Brazilian facility, cars. In fiscal 1988, w e operated full owner ship of w hit h we acquired manufacturing facilities in 15 in June 1987 We have made significant countries principally the U.S., Brazil, lARTuun P. RONAN C.anada, England, France,G rmany, i investments to deulop ntw products \\ u lW:Joa nJPuaJmt ) ,n d Italy. ' and enter new markets, especially A;,ww opm ;su Our automotive businesses l heas 3-duty truck clucthts and face intensifying global c ompetition f transmissions. where success hinges on our ability to As part of our olan to otfer 7 prov Jc a bread line of advanced, high j j templete drisetrains to North quality, unt-competitive products.

f' American truck manufacturers, 1

Ikaryduty ulide uda..mnt /s Rotku ell Clutch Company has about 70 percent of our automotive 4 j introduced diaphragm spring clutches I volume. The majority of trucks and l in the U.S. through a jomt venture trailer s in North America ride on l [p " i with Daikin Manuf acturing Co. Ltd., Rockwell brakes. l - ( l Japan's largest clutt h maker. The Rockwell avles and stop with p

new umts are deugned to last longer, Factory sales in the North l

reduce drisettam sibration and Ameritan heavy-duty : rut k market with the 1988 acquisition ot SOMA det rease pedal eft'nrt totaied lN,000 m fiscal 1988, versus l We base begun field tests of Europeiransmissmns, France, 155,000 last year. Methum Jury truck we expanded our capabihties prototype nuck uanminions sales were 160.000, compared with i in comtionents for oft highway produc ed at our Laurinburg, N.C. l plant. l'ull-ss ale production of trans-15 5,000 units in fiscal 1987 l nNdes. 50Museen In fiscal 1988, w e broadened mhuons for heaWuty noch is mnmned Rockweli svi Michet our line of World Ax!cs with the , expectod to begin in 1990. sovvignet. iett. quakty introduction of six models of new-in out ofMughu a) buunm. we control techmcian and Chnstian gentratwn tandem nles hir heavy-RabEyr n. mdustnal engmeenng continue m reduct produet tosts and duty truck 5. The new axles offer techmcian. inspect gears at our

• C"50 4"dI'ty through design c ustomers statt -of-the-art year unpro.ements and plant (onsohdation.

ag,%g mIinolog),lonp r ! Ire anJ reduced in P)ss. we adicil ro oar of f-operating costs lughway < arabihty w ith the As safety requirements int rease c ompiction of the m quisitmn of for truck brakmg sysrems, we are l ' SOM A i urope Transnussions 5 A. denlop:ng a new Wimle Stabihty a I rent h su} pher of componems for Syrem, designed to mirumve s chnic axk s and transnussums for olhighway su ux i i r n. n no v em 18

I 1 w n,, e(, ,f . ~ -3 j/j f .< g g ;,< 'N j w., s [- g, .j 3'e. ~ -* 1 j-f

4 3

. _k,.' ~W t $$ y n. d. k t \\.. 7 = k / e W Mac Whittemore, foreground. distnct service manager %dwest region, shoni with a Rockwell t'almng truck. reviews displays of axle gears and brakes wrth Sidney S Rard. left, vehicle test techmcian, and Robert J Goeckel, lead veh!cle test techmcian Training andprodi.a denvinstrations at trad dcah r, distributor and aperator locain,ns are impnrtant parts aj our c ommitn: cut to l l . tuft rio r cullomcr.it rt'ict.

O AUTOM0ilH i~ . [ 3 construction vehicit s SOM A, w hich Throuth our hunt venture in suspensmo systems uith Mitsubishi has been renamed Rotkwell SVI, also [ i 5 teel Manufnturing (.ompany, w e are J expands our of ferings in light-and ~. 7, _, descloping a templete rear suspension medium range planetary axles and for a North American passenger car iransfer cases. &~ ~~ in addition, our long-term manufacturer. A decision on the 1 Ohno. %tsubestu engmeer. rnarketmp agreement in 1988 with produttion contract, w hith woulJ gg g a major transmission manufacturer significantly expand our posttion, is e xpet ted in mid-IVS9. expands our offhighway drivetrain Qualdy at out Jomt venture product line and positions us for future We are also a maior suppher of suspnsion systems plant, growt'). l.Inder this agreement we lightwt ight plastit body panels and began Indrketmg lO models o power-a%5lmbhes Ior heaiy dut) Wd }igbf shift transmissions in late 1988 to tr uc ks and passengr tars in ret of d major of f-highw ay s ehicle manufac-short lead time we dntlupt d and turers in the UX, Canada and Europe. began proJuttion of an aerodynamn 1.1ght < /w/r &n./m.>.'n cw;l+1w hood and tender assembly for heavy-about $O pt'rcent (IIUur automatis t: ' UI) IIU'kh UNIIIS UUI ( J bJh lt Ch , in prograni rnanagenwnt and ] sales. We have a strong position in J European passenger car markets simuhanmus t nymump M @n through our roof, door and access to expand that produt t hne in 19S9. Con rol syste ms, w hit h mclude A ndiamlhondodar MeoNk-art paintmg system for rnolded plastic sun mis. met hanic al and elet tric winJow lifts, ek ttric motors and 3 bod) unponents wdl begm operatmg latches. We see further opportunities in fiscal 1989 at our Centraha, Ill.. e far market penetratmn through long-plauf. term suppl) contracts w trh s chi;ie sales of roof systems. M"""""*""'*""I'"F"# i manuf acturers. In 1988, we pur( hased i includmg these Rockwelk iug anu br innomin W d MNs the mtert sts ofIhree of our tirrmer in N tan a trutb : polde sunrocts made m I partners in automotive body tempo-l Frankfurt. West Germany, are tu nts operations in Ital) and Spani contabutmg to the gro#b 0' int rt ased interest from our bght vemje components { raanuf acturers in addmg lusury busmess At an automatic features to pasicnger cat 3 and in Sta s pnmer are left to right, tom,oihnyhe,r assunu toes ue _,o#_ r inc reasing sales of our root s) sterni Thomas seegers. Peter We produt cd more than 13 mdhon htkard and Cerbra be'fimg ( sunroofs in 1988 anJ hat e devehmed j a mmp!cte root s) stern of surn isors. l sunroof, nurron and other met han-j i isrns that t an be installed mare I i tjuit k!) at ( ars nbat a[t'/ty shlirtt r } as,embly hnes i i i l l l 2C )

D SEN[R Al INDUSTRif S . ; ~~ ;r ' y. P"'~" I dis idons. and the Rockw of a wide range of prmting furo tions n fiscal 1988, our Gent tal sophistn ated control systt m in the ab Industries businenes consisted mdustr y, is nin roproct shor-based, of the Graphic Systems and I modular, and c entralues management Mt asurement & Flow Comrol to imprme produttivny. Rinmldi Group. In restruaunny ou-o The Goss flexolint r uses the l. Our penetration of (..sencral ln. dustries businesses, w e th xographic process to print vibrant international newspaper I,ress sold Roc kwell.RimolJi m lu!e and in t olers u ich wau r-based m.ks that do rnarkets is miptovmg Dur beptember annourR(d our intetnion ru.t r ub ut t. Goss Headimer ett:,et U0 to sell Measurement & I. low L,ontrot. o I.he G.oss lleadhnt r Offset.I -'O press began productioit at The /oN G r /j'/ A 3 ph % f D/r (non lulJ was desclopt J to meet the paging and Ima,ciallunes. Louton. the world in the manuf acture of-color tequuements oflarge neu v England. ui fiscal BB8, where new spap(r prodlution systems and papers ost rseas. Packwell p*?ss erector Joe is emtrging as a leader in the fastest O l.he G.oss (e500 (ommerual Marns mspects a copy growing segment of the commert tal press w as design ( d for produc tion of printing rnarket. The da ismn has regional anJ nanonal neu spaper boosted its sales Si pc rcent smce advertising insern and th t rs 1986 anJ maintained a backlog of g. gn Manufauunny fauhues and nearly $1 bdhon throughout fisc al capatity ha c been imprmed and 1985, pnmardy becaust of aggressise expandtd to m omnn.date rec ord developmerit of tel hnidogn e!!y orders, crisu re proJtu t qu.Jiry arid adsanced new products. provide (ost ads antages. Our P>S7 New produa programs have bet n acquisioon et a U2,000 square foot ariven b n usm mer<cquiremens for h. pu m susbmuyntenbueaascen m itnproved print quahty, expandt J

• i our cusring plant. dvabhng our assem-color d Jpabihty and page capasity, and bit capacir> at Cedar RapiJs, Iowa.

increased productivity Tht '.,us m ess l In fiscal 1989, a fleuble manufae g g,, y is rewgnaed as a globalleader in the

turmg sy stem u di be adJed m Ledar

, g advana d technologies incorporatcJ l R" P u '" d""Id" * ' h"""F '"P""' b utard,n Pontmg. cmcmnatt m us new prodm ts. Grow th has been i " " ' " * '" " '

• E ' "' ' ' l " " I " h
• Ob.o.as press manager kck enhanted by selcaeJ aquninon' 1 t apaaties of ur f,a duies at Nanu s.

W r um and supporn d through m er (apual Franc c, Pu ston. EnglanJ and ReaJ-expendaures mg. Pa. al,o has e hu n n panded. Prinupal new proJusts are: I Tht fast ('ok,rluu r byan i O The Goss Cikt hm t, mrnuiu< ed ' . produ tio: i: ( A t.ber 1W8 at The i '1 in 1987. is the most sum ssem new l Times. lour na! Compang lne produa in the divuio is hamry j spnnyfielJ, W The faq ef fn e Celorbnt r was designt d to nu t t ! Color hners n u ht Juk J to go 'on c ustomer demand for espanded color etbnon" m Mm h 19m at th< I on capabiht) and nrfrmeJ new' paper

LauJerdale. I la, N

.

b. c % u;a l print quaht) its AJea sed Press l Major ( oi,rhner orJers in in.al U;ss Comrol 5 stem. n cardcJ as the most l uert n ( en ed imm 7/4 la;mi. 9 3

1t i #r,, t 21

l t / \\ . +. w Ig ' 5' *. "* .M ) 3 g;& Stretchmg for more ttian 200 feet. a Enss Colorliner press ime being mstalled at the fort Lauderdale News?micittmet dwarts William Birket press erector. center;1ames E. Cavar.augh, presideut Graphic Systems Division, right, and James Rchmson, #ews?sSerrtmel vice pres:Jent and production director. The Goss Colorbnerprenfnr larp cirada: ion ne uapartrs n die ost sa:ce.upd neu prodiat in the butary ofnur Gr.:p/w 5ptuns Ditvion. ns l

O f_ GINf R Al INDUSTRlf S r l . ? (Thomson New spa rt n, I td.L Gnton, i l oitset presses rn.u t( tt J m tht UA.md Ohio; T/s Palm /h.n/> /W (Lox i nu t-I Lanada undt r the M u hic trau marl 5 prises, Inc.), West Pahn Beat h, I'la., l (h r 3 h a iu y"a >J 6 I /u (.paro/ i j Dnision n one of the wor!Ji rnaio: Gu inna! D.no h, (Tl e New Yor L Times Cornpan) L I aw reta t s ille, Ga. I l supphers of inett rs and s ahes for the a nd T/,r E rmt m.n1 (G atint. t r ( ii. I nc. ), ! w at e r, oil, na t u r ol pas, t let tt h pow 1 r An autoniated prottuctmn L M,ishW5llU.l.enn. i a nd t helint al mdu st! Les. I.h'l du Non r .I.h ( t irst.I le v.oh ner pr e!> u s N p.tn. system was llevelope' ::t our J I operutes plants and l'at shties in six blet, k C.. plant to speed h printing in Ottolier 198h in Lahti,rnia ; st.ites. Canada.1 ranc e and Austraha. dehvery of steelplug va!ves at 14.hi< +, h,n a n J 1,, r 1/,.<,./, In 'se pt e rr.ht r. w c. mn,u n. eJ < >u r Wilham l. Nashburn,left. Montt re). mtt ntion to u it the da isnin and semor manufactunng ()or first I. O began produt tiun t expn t to tompeert tin *.alc m t he engmeet. and Janies Cobb. in Oc tober at //r / trist u/ /m t l ca r he, r par f oi tist al 19%.. wehlmg baison techmaan. l.ondon, i ngla nd In attdira.in. our lu,. laid /s,t"/W ii(ir4/*o!. h,.cn Designed the system s Ikyat-(stisNJapanca att'hatt rc t c : fly l!sk a w'orld it adt r en the pro lut tion automate!! welder. Intr,:dut t d t>ur ke} !cu takir. +t t h ist hainstif t h tradustrial $t w irm tdc) u ha h druplifics oper armo of ru.u rune, w as sold in J ul) U/HK : t pn su s tnanuf at turt d f or the.b.</i -.o._,._ Slj n:i, r;. t in (ommt it ia! prt sses. tht L.eo "*'th %h g t /., .p +- e .i.W, a j (7 41 n the h ader m t he market t'or g high speed pr. Jut tion of tu!!1olor "L 'g inset ts a ad flyct s f or national ict.al adsertin rs. In 19M, C'UU of de rs g. M t te rn( f \\ L d f TlflF) Sf hd S. ITIC 8 Charlestown. Inj ' i aster n ( dor Goss Colorimer prenes are Pritir mg, As on, (:enn ; Pr; o.In; anemblett anit mspected at Gret f a alle. M n h ;.%ca ('on,muni. our 332.000 square foot piant t ations, Louiss.!!c, K) .inJ Ret.ul i m W bm w G r a nh a s, l ot, Kansas ( it). Ri. ()ur 8 Acgwret! m 198L the pir It prt u tn e ia ihe (ii nna t c u! l Ie3s sTQlttCarltly if1 Creases Otif niarlet w dt bc t nh.s r,1t d t hroaph t ht on, L 5UU, t ht firs: : w hu h was erectors Will.am B Hamstath. shipprJ m Nou nc mr !'/K' W WM D hap l 1.m N h o I n s .ht'uirt d in l W mth totorhner emetromt b v ( tvrnhelin hi (*U t ; ( 1,d j + f <. l' ':ltit CDFlir0I paritt p.oJu.t lim, rnonuf at rares a t i prt sses to pro.Lu t boh t. .;l. c pt ri..du ais, and tma u ul a n i. e. ntrai t onunt rc ui ; ro.n n. Demandohona ateng dm me tbe year for t on.mt n u! sha ti : l l 1 l l l h l !7 II l 23

D CORP 0BMI R[3P0XSIBillH I i i k are tommuted to mam-y ser s a e oig.m uations. ( n n o rnl raining and et.hatu mg out

• [@h#

. g t ummua.n da t lauta or. t ru irs. podtion as < espornilde j l national mscarth onJ pabla poho [ groups.u.d ( ohut.J anJ p( rios m ng wr poratr t ttt<en. 4 Corpur W wnt ribu- '.u t s or g a m <,u s om tions, t dut at,onal a,J dn elopmema! l , ETWC5 AND SMNDARDs 01 tr aining. era ironnn ntal managtmrot, j BUHN! $5 CONDl'CT fair empl ent nt pr a t n er and tbc MB Chanthe Contnbutmns highest Stac 3ards of buunt a wndust B 42% Itiutatma W art (omnottrd to tht I ht st s it d. hunc nu W our t or por.ar a 2C% theted We utandard3 A besme, t endut t m our atc responsibsht) prot a.ims th:ou.nout

1. M% &arth aM Nman t.emces ! t onmxtt od anJ J< h use boun sws the vorid R 12% tutwe anc1hr Arts la IN. our s.dat u d a nd I our!)

a 9% Cmc 0gamratens pt oph at all Ggmt h am 1.' '. tih iht u s 1988 CHARITABL.I CONTRIr.UTIONS p.o n,ip m d m etha s a au m ss 4 tr.nnmg A smniar pr cram is The wmrany and u, t:ost food wntobuted $11 1.*ulhon to u:Jt r w as to t r.u n tLost w ho. ur k 4 educ ananal, nonpre t niu and j m the fu U or at n more sues un ic or;',anizatmos.. M domesuc r w - i heuir Mi.ooa % L ucU pcopic +,. kI a L l i IY 3 I kl6 5 a r)e b $ib i k kt b a ( s k ie 4 b k\\ () S .or Jewm d to m !p as n myract and Columb;a and foreign wanton in n spona to t thu.J.,ues atu t tu7 us, n ( ognition of Ilot L a cWs and tht i our t us omt i.. sou LhMJu anJ natmni grow mg net d foi quaht' icd s engua e rs end v u nosts, ut v ill wmmanun s ' k unpor t., c! et hu al bouness i ondo. i nphn <<d npand our inaumtment to e duc anon. ,k as an u.n g ul part s the h Lw(H Dire (t wntributions in (ducanonal institunous rouh J S C nulhan m Cn do ami n. annual n in she pn g.ams. In the priott. atove. km Atpu I In addition. o 't ( kn! utb o mn 19hs Thest wc.rc made prirnan,1y to $bper.nor othr# auturiiat, < 4 tin t t'n L k !.!i. 't t t i...ri ! 2(10 n p u t s to !LgCh and anivt rsitit s frorn u hu h ,md mquir a f r"m < n,pim t t 3 .n a u r reuust employt et to sc hools w ith hunyiwiirsin f!k unJu i t br ' id I a n,i:t s:t issut s 'I I.c 3 c q., t t t rx i rest art h pD>gra n of intriest h1 us. .uan osumn p ttha unt! st hkeuls and stu atit uud (etirt rs iri plus nrire. h ;.n 12 t > <,r in i s' w ri t awarenen wittt tett to i (of u rnanit u-s u ht f r % e maint.u n m a p H arstm.'c1 and rn a v t !unJrrtht n;M Luant hems. mamunm th ib!)f E l!i aJJirn,n u r ut. it lirJ dirnin-it.. r u t i n i r r r,.1 ,. ( r:, r u mmw V.mx bmnz $600 MOO m rmpim(t tonuibuuousto' b 'nt. N. i 41 (. ( sed im c 8 flWikfRr y ilpht MrWtM, and I t if orliitit f cfn[ appli p at: dig i j f ld!Lgb and unis t r$1t tes of t ht it t h?)h e hff tl.I f.l; bhdff fi i ( d f 1 r. 1)( . M c r r 1,: kr { i

5. n it t'.k E'ay I a f Cp a ig[is $l; mi tr e j '!1(lal s i

t han 0(om:nuranes a u nt J t ompam i A' Rodx 1 m h W u (t! u s n gooJ t wotobati ms ui $ 2.4 mdhon m pM i bm o a. u in ad hnon io substate a!.anounts ENV RONMI NTA1. M ATTI RS 1 pleJp J b) ih huhpeople 'Ib balam e ni FM ( omnbon m,, l ~ni t our< m m m, ai. enun s was rnade to oth!r bean .J hornan pr oer.mi. t b m no u m al ;,r n.et t .ui ,i,

u., s. ofdennestic and international facilities u W' are regularly reviewed to assure 4g compliance with applicable federal, 7; e >4

14g state end local laws and regulations.

v.- i 4 -. mJ. Air emissions, water discharges and % k

• solid and hazardous waste disposal are 1--

r .h g carefully monitored. y In cooperation uith federal state l e and loc al environmental agencies, we j. es aluate plant sites for potential W. ,4 j hazards, and develop and irnplement J"~ ~ i/ 3 remedial action plans where necessary. "J-M EQUAL EMPLOYMENT OPPORTUNITY I 1 ~ Wc have a well established and n y / 'r g effective program to provide equal ., l - y ' " y p-Mg employment opportunities to qualified individuals, regardless of r ace, color, rehgion, sex, age, national origin or e hanoicap. L 'S, 4 Our pcrcentage of minority suIfsort for universities involved with Our child care programs were employees is above the average f.or the tec hnolobies and disci slines of I recogmzed for excelience in national labor force, as w ell as the imnortance to us. 1988 by the Congressional I average for U.S,. manufacturing Caucus for W9 men s..isues. In Our participation takes many companies. A special effort is made to forms, meluding e'ifts in kind. cash ad$ tion to referral semces attract both minorities and women in and financial contributions to contributiori3 and funding for our college recruiting. Last year, of 1 professorships, sc holarships, researc h, 2 mdependerit centers. we 1,. 36 new (o!!cge graduates joinmg sabbatical leaves, visiting professors, operate one of the largest day Roc kw ell._,3 percent were minorities and fenow ships. We are guided by care centers m the nation to and 22 pyrcent women. i ng-term objectives and work closely ser rnore than no mme in addition, in Scal 1988 we of our people in Cedar Rapids. with faculty and students. placcd more than 592 mdban m. Research funding is coordinated lowa, where we employ 8 60u,. orders for products and sertices from and focused in selected techru'lofnes. Above. Rockwell children minority-owned businesses. Curremly O uniursities serve as surround Cedar Rapids child N "* * " " "" UNIVERSITY AFFAIRS can center emeter Juke K l Meyer. Left to right. Justm talent or mM our peopk in Since Rockwell's global compen..nu e, s Wd na BM maintaining and enhancing their skdis position hinges in a large d gree on through parucipanon in continumg the skills and knowledge of our education prograrnse BoswefL 4. Pyan French. 6. 26,900 engineers, scientists arid Jenmfer Whrte. 6. Seth Wells. 4 fe(hnic al support people, we have and Stacy Proctor.3 developed a broad-based program ot j j.s e s aoso f 2b

[' a w e Chietiinauial 0llicenileview + 1.

r 1

y 8 ,) ~ ' DISCUSSION AND ANALYSIS OF 9 aircraft in April, a 8abstantial amount of ' TINANCIALCONDITION AND

• ql cp l

B 1B program income became taxable RESULTS OF OPERATIONS s j 1 in 1988 under the completed contract ' > ' FINANCIAL CONDITION method of accounting used by the com- '4 g ~l ] pany for tax reporting purposes. As a R, ockwellInter' national,s sound q result, the company,s tax payment for h ~ r, financial coridition and solid lj - 1988 will total $1.4 bibn, of which $500 ) capital structure provide the b-l million ha:, been paid and a finalinstall quidity needed for our op~ rations - 2 - J i ^ e meat of $900 rnillion will be pa..d in the 4 i to be successf 1irithe highly first quarter of fiscal 1989. ' competitive global marketplace, i i

V hile this tax payment will sigrufi-

,in 1988, the company mam. tamed its t canti: increase the company,s 1989 cash-sound financ:ial conda..ti iwhile contmu-I requi ements, our excellent internal cash. r' 'ing to make substantialinvestments in b _Lue,d flow, dong with our available cash bal-s advanced manufacturing technologies and t ances and current borrowing capacity, are 'j m research and product development. sufficient to fund the tax payment, sup- . Capital expenditures amounted to cunu port the fina.ncial requirements ofour t $555 rnibn durm.g the year, primarily her wm u s 1 ~ for fa,cilin.es and high-technology equip. . businesses and finance contiriued, ternal m 4 ="+ 4 and external growth., ment necessary for the company's In addition the company anticipat. operations to mainta' n I leading competi-i significant cash proceeds m.,1989 from tive edge m. he worldwide. markets they t the sale of the Measurernent & Flow Con-serve. In 1989 the company plans to con-f trol Dm...s on which is expected to be i tmoe an aggressive capitalspending 4 consummated m. the earh.er part of program which s. -t agam expects to fund fis,. cal 1989. from internallygenerated cash. "Ihe company's' total debt at Research'and product development ~ September 30,1988 was $949 million, ' o, ex3senditures in 1988 totalect $1.6 billion, 1 remitmg in a debt-to-equity ratio of 26 - of which $430 rnibn was company initi-Percent @ company's long term Mt is ced and the remainder was related to contracts with the'U.S.Goverrunent.These rated AA by Standard & Poors, Moody's [ 7 tant element'.in the cornpany's long term - I andDuffandPhelps,at 3ourcommercial - expenditures help assure a continuing i paper has the highest possible rating from ') stream ofinnovative, high-quality prod-these egencies.' Rockwell has ready access i t ucts to our customers. '"I in 1988 Rockwell expended nearly $300 mibn in its common stock RESULTS OF OPERATIONS repurchase program which is an impor- ] 1988 Companduit$ 198' goal ofimproving stockholder values.. Sales for 1988 totaled $11.9 billion, a Since the compan; began its stock decrease of $177 mihn from 1987. A ' repurchase program in 1984, a total of. decline in 1988 B-1B program sales of j 57 million shares have been purchawd ^ $1.8 bibn was substantially offset by i og fh $1.1 billion. 3 m., higher sales in the company's other l With the delivery of the 100th B-1B busmesses. j l ) <L ~ 26 s

gn a wr. m ? j a: .y y. A, s r = 7 m p2d M g. N3tos "e, . rub 'W s -}<,

u. i -

q{ms (hYi[Q' i g(n kM" h8f ? ,.', k .A m y$ b./ h; h v i N h

• [,, y>, P"'Vi M N b:.

f 1 4 a v m,. n M,.y W: wo m .a' h jQ A l' g' M@ GF" /N 'w wfY w[N ;. +m4 T ',C [ m 4 $W 'p ikm

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w" 9 - e ~ q +,c U$gg 4,l y' ' % * '. P. ' t ' w s I i v . /, g%.. s n W Mu ~ @,i :. O' ,y e. s y v % e,;>g g a,.., ;, ' a,.~ -. a + m l - %, sq< /- , Il V v m pp k - )?8[^ 9, k-t c,o k '- 5 s '4 k- ) : y.k..,...,..@h}f M. I I ~.r ( s s ( @.4~'t v; 1Netincome for 1988 was $811.9 qqq ~ he sale'oftheindustrial,sewingmachine' ~ y3 < q t f a y million compared to $635.1 milhonlfor ' q d business; Earnings of the, Graphic' Systems ' ' ' &d l l1 Divisionkere appioximatdly the s ($ 1 01987.Earninhs per conm on share for f f W d d t, ,%o, > 1988.wdre $,. 3.04;iricludinj; a one time -1 .i,4",;- 2N, a yea,r ago as new product start-up costs N a . fav.. ble tax adju. s.stment of 74 cents per 1 r s offset the benefit, ofincreased, sale,s. V - W . ra. 4 o y g W ~ ~ - 3-m J *, ', ; hare, com_ pared to $2.27 per share l D he favorable tax adjustment in 1988 i i, V MN-s ]g s $f% (( N A'erospay1988 earnings bf $495 _ l l for 1987,[ '. ) k "results from sub'stantialB1B program

• f ;N dI Did D k I

income,' deferred'for Axp[ufposesinprior q.j dh }# ' million were 30 percent lower than 1987 i Jh f [due'prirnarilytolthecompl$tionduring ' ( years under the completed-contract 4 M'9 C s. [ thelyeir of B-1B alicraft p"roduction. A . l l}(l method,becomingtaxableini988 ata k ( reserve'for pot,ential cost problems on a. l lower U.S. income tax' rate than'was used 2 NT wrw E j previouslylo pro $ide'relaie,d deferr.ed '> M 4 ' 4 $. N / . < weapons systems moderniza' ion progrm6 . e n ~.. ~, j j income taxes. Le adjustment takes into (' j g g d 'q 0J t 3 .# 9 . was a further factor in the lower Aero _A 1N account reserves for technicaltax issues 6[ D M M s related to the completed-contraci method.: / e space earningsfAerospace benefitted, ~ t i(@ lhowev'er, from an increase in space 9 swn helower incomd tax rats had a'fut hs 'j '~ i ,. carmrigsdrincipally refleching increased ther favrable effect on 1988 net income E, [I[j ~ "s E @dlume in^the Spade Shuttle prograrn, since operating earnings were taxed at'a " JIMi Elect [6nics earb.ings fo(1988 kere ' lowerratethanin'1'987.Earningshersluir'e} "j % [Y b W l $378 milliorireflectingsignificant sales for 1988 also benefitted from the com-4 f 4 y M y,& .. v; Land earningsimprovements in the - pany's' stock repurchase program.l WO c avionics and Allen-Bradleyindustrial '1987Mareduith1986, - x Y I i . automation businesses.[HoAver, ' , Q. ,, [

p(*

Electronics earnings were~up only slightly Sales for 1987 totaled $12.'1 billisn, a , I^ h i, from the prior year due principally to less ' decrease of $173 rnillion from 1986;%e - T, ]Yj ' n favorable product mix 'and performance decriase resulted from'a decline in B-1B -' _ Py$ 3 [*,Q', ^;g cin telecommuriications and plant - 84 sales reflectinj; the start of the wind 41own '. ' n irestriscruting costs in ilefense electronics. lof the'100 aircraft' program. i ( NM j iAutomolive 1988 earnings totaled ' Net indome for 1987 was'$'6354 a: Q' W \\ ' $18(million, u[12 perceid from 1987, million compared to 1986 net iii$ne of: ~ d Adue to volume improvements in both the $611.2 million.-. y t _ heavy dutytruckland passenger car Aerospace 1987 earnings were up 23 - 'pj " +. neomporients businesses. New product percent from 1988. ne stronj; earnin' s ,,c g j development costs.and lower volume in performance was attributable to a significant O [ ~ ]j m x ? military truck Smponents, as well as improvement in the B 1B hrofd rate, due to! s ' ^ E L continuing cor' petitive pricing pressures, excellem performance on the program, an'd ; IF n 1 + unfavorably affected Automotive's the favorable irnpact of tNe 1987 pension X e 'I n d(1988 earnings i accountmg change.%eEospace earnings : "f (- 4[ . j Ear'nings from the[ompany's General . also benefitted from increased volume in : n W [ p industiles businesses'in 1988 were $144 the Space Shuttle program. fi t M% 2nillion, an incr' ease of 29 perhent from Electronics earnings for 1987 i q-W. ; >f tax adiustmtw W

1987,primarilyreflecting higlStr earnings -

declined 8 percent from 1986, due h,,4. i by the energy opefations and a gain from principally ro the lower earnings ofAllen- " ' N "" ,t n. ~ q. , lt,! l r ? s '.s I j ') .i - r .I ,4 I. g-J fm '.. Q, ' ,h, N $hkI dk bI ^[ f I o p. .,GQ y, flly'W-Q a fl y g;q t

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i s&$m %

8 m Q $5 h y} m ~, ;, ;hm l- ' y' ; q.: ,, " ? ;; ' ,'Qr k W &h?, * ~ f #jj~ t i: ? ,~ k;. ' l Dd i.p +* d :;l "- M v:kb y

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El( s, m v m m. q s m. ::%. e 4 rw, n-y ~ ~ .u 3 M D, w, J Brad re"sulti.ng from softnes. s in indus.

position ofseveral tax issues. Ear,nings,per ; ;.-

D h~w tax rate benefitted. f, rom the favorable disJ ~ L N ~ M{y ;gd trial automanon markets,'less favorable - m .r i Nkfa%rsidcrinix, and sub$tantiid Expenditures ' ? share for 1987 also beriefitted from the ! - ^ d h8DM(dinew product develdpmen~ and market? $ c'ompany's stockirepurchase program'. t 1 J$$M j@ng programslDefense eledronics was n' . The sales and opsrating earnings by ^ -1 l W$hyh smajoi contributor to Electronics earnings,. 1 business segment in the table to the right,# ,j [p@W se[by unfavorable con ~ tract adjustments., S Meven t$gt!its 1987 re,sults.wdre reduced 'and th,e consolidated finaricial statements v, i j k p. ' and notes to fina.ncial statiments (pages 31lr - m. W. j i to 43) should bs read as' ah integral art of m M M@d }%;..The avio.n.,ics AndlelAcommurdcations ~' ,a o ..x i $* :oM T.6... n businesses ofElectronics aIso had strong' this review. 9j c ~ r > a l y8 Da r. i f perform ~ance's in 19.87, with semicon-STOCKHOLDERS

• EQUITY '

N [5 [.[1N,.ductor products,prin,cipally high-and. s x<M A Stockholders, equity mcreased to $3.7 bils ."I 3,-.., . - - tegralmodems for data '- - a t N :F,t$- medium-speed m. z 4 Ua WiPN - - s .s. 7 .m lion at the end of fiscal 1988 from $3.3 e -A., w .. dcommunicatsons, achievmg significant - . billion a year earlier. The return on aver 1 ' w. ; ;. I 3. -7 m ~ i ,;n 7: ya,. ?C_am 7 mprovement m both sale and,ea. age stockholders, eqm.. -ty was 23.2 percent A - 9 l mmgs< r + - - x .u. 1 wm: e m * + LAutomot.ive 1987 earnings were up. m 1988 comi ared tE 19.6 percent in 1987, 9 4 m g % g, a wmm w..M e ' @% .s x : - a x

e e

e d R. percent from 1986,The higher e.armngs 4 - - y u i x .u s. -o g, s,3,y n o n Stockholders, equiry per share of common. 't 1 ge v@m< t were primard..y due.. :to mcreased olume. ' ^ Dm u,m m stock was" $14.10 at September 30,1988,. r i3 rmance by..

i N;au g"

, : andimpr' vedp+erfo... - -the l.ight-Eun som H s u:> '? o s 'y an increase of $2.09, or '17 percent, over - c2-vehicle op.. ...Au.tomotive's 1987 : y m erano,._ns..- y> i last year. ,sm c w"R > earning.s als.o be.nefitted from stronger 4~R g s w - m r Stocl-holders ofrecord at September ~ - ~- h _n.wy;gm z heavy, and m,.. dm.m duty truck markets, e 30,1988 m.cluded 95,085 holders of Com-

• ' Mr roffset somewhat bylower volume m.mili-n mon Stock,86,131 holders of Class A

~ s 4-Q^h::tary truck components and locomotive ~ s "e' 2 - W ' fucastings as well as continuing competitive Common Stock,1,291 holders of Sen.es A i t_ ~ c ' c - Preferred' Stock and 702' holders o.f Senes - 1 4 % g 3 o. -, m. ' % pjM Pncmg pressures., ' ? 7 B Preferred Stock; ' _0 MWM:3 KGeneralIndustries earnings for 1987 y. d i Y * # nbreised 27 p rientover1986.The; DIVIDENDS J , y m.s. -,i Cash dividendsin 1988 amounted to a : g 4 increase was'due to a significarit improve - %&. Ikment in the energy opehations, whose " h((f , record $189 millicin, or 23 percent of neti *

.1986. earnings were deprbssed b'y product

~ income. The company has paid dividends g"r ?M %' ! line resir'ucturing and environmental ' gjf for 41 consecutive yearsf ij n y a [i. lean-up; costs (Thegraphics operations j Cash dividends'per common share in .. @< 1 continued to make a strong contribution 1988 totaled 70.5 cents compared with ~ k' . jtoGeNrk!Industnesearmngs.; 64.5 cents in 1987. The comjiany's 1988 ~ /WWgy, The 1987 adoption of the new ' L quarterly dividends per common share ' Mr. Sg Opension accounting : ides of the Financial were 16 Scents in the first quarter and 18 7 9 Qf MSj Accodting S$ndards Boird, which fav-l cents irl the second, third and fdurth ' quar 1 d [s %%. ntabiy aPred primarily the companfs., - ters. In 1987 quarterly dividends per ~ .1 is w s v 4p - 4 Aero: space and Electronics busine.sses,. common share were 15 -cents in the first ij .w, nm.s. creased 1987' net income by $105 mihion, Gsu Dmomos quarter and 16.5 cents ici the second, third 4 . ~-. @N@,gg[Mor 38 cents per share.( / M ' i wu and fourth quarters. ~ 1 7 'b'% 1 Earnings for 1987 compaFed to 1986 Dividends per sh'are on the Series Al f, Were adversely affected by a higher effec-and B preferred stocks in both 1988 and .j ~ r af(p& j tive income tax rate since the 1986 income 1987 were $4.75 and $1.35 respectively. e .t :+l,- t '~ t3s i, f'; f. 5~ q ,[s( - p ~., , w ' q 4. ' A* j 5. o. ~j; i : 6- ..E we: ~ WU EU U.,., YYN 5 f ?<: ^ %g y. m &:W ' ' < } ;,/. 4 go. 8 :q,s m ,Myvu,#m W ex; 38-u "Li : y [P i NU?$~ lFW -~ -4 W +- i ' Myidt1 2_h i ' ~ ' ' l

q v

z 72n. M

~ G SALES AND OPERATING idRNINGS BY BUSINESS SEGMENT &n endedSepember 30 1988 1987 1986 1985 1984 Sales Eaming ^ Sales Earning . Sales Earning Sales Earning ' Sales Earning ^ (in mdlion) Aerospace ' $ 3,971 $ 492.6 $ 5,073 $ 700.0 $ 5,545 $ 571.1 $ 5,309 $ 493.8 $4,332 $ 397.7 Electronics 4,522 377.9 4,342 367.0 4,221 400.5 3,412 354.2 2,387 220.2 Automotive 2,154 182.9 1,716 163.7 1,588 153.6 1,722 225.9 1,758 214.8 ~ GeneralIndustries 1,299 144.3 992 111.6 942 87.9 895 104.3 845 86.6 Total sales and operating earnings $11,946 1,197.7 $12,123 '1,342.3 $12,296 1,213.1 $11,338 1,178.2- $9,322 919.3 General corporate-net (43.3) (65.7) (57.7) ' (24.1) 23.0 Interest expense (101.4) (89.9) (96.8) (91.6) (42.8) l Provision for income taxes (241.1)- (551.6) (447.4) (467.2) (403.0) ~ Net income $ 811.9 $ 635.1 $ 611.2 - $ 595.3 $496.5 As a result of a pension accounting change in 1987, operating earnings for that year increased as follows: Aerospace, $109.2 million; Electronics, $66.8 million; Automotive, $4.5 million; and General Industries, $8.1 million. Electronic sales and earnings include the resul's of Allen-Bradley from February 1985. Amortization ofintangible assets related to Allen Bradley reduced Electronics carnings by $90 million in 1988, $95 million in 1987, $98 million in 1986 and $66 million in 1985. QUARTERLY COMMOh STOCK Commercial orders consist of relatively INFORMATION shon and frequently renewed cornmitments. The quarterly market price ranges of the Funded government orders include amounts company's Common Stock during 1988 which have been appropriated by Congre's s and 1987 were as follows: and allotted under contracts by the pro. 1988 1987 curing government agency. Typically Fiscal Quarters liigh Iow High Iow only a portion of the price of a large govern-ment c ntract is funded at the time work First - 25 14 % 24 / 18 % Second 21 % 16 % 30 % 22 % ? commences. For the unfunded portion of nird 21% 17'Is 31 24 % government orders, there is no assurance Fourth 22 % 19 % 29 % 24 % that congressional a},propriations or agency allotments requisite for funding will be BACKLOG forthcoming. Allgovernmentcontracts, Rockwell's backlog at September 30,1988 whether funded or unfunded, can be termi-was $13.2 billion, up 10 percent from SeP-nated or curtailed at the convenience of the tember 30,1987. This year's backlog government. included $3.3 billion of commercial orders. ~ %e majority of the commercial and $4.2 billion of funded government orders funded government backlog relates to work and $ 5.7 billion of unfunded government expected to be performed during fiscal orders. 1989. Historically, because of the nature The principal programs included in of the business, backlog has been more backlog at September 30,1988 were significant in the company's Aerospace, (in billions): Electronics and Graphic Systems l _ Backlog businesses, o Program Funded Unfunded Total Space Shutde $.2 $ 2.0 f2.2 Space Station .1 1.4 1.5 B-1B 1.0 .3 1.3 29 lL

.m Managernenfs Responsibility for financial Reponing 4 The consolidated finansial statements of Rockwell Interna-consisting of six outside directors, oversees management's tional have been prepared by management which is financial reporting responsibilities and programs for ethical responsible for their integrity and objectivity. These state-business conduct. As part of these respc nsibilities, the audit ments have been prepared in conformity with generally committee meets periodicaUy with representatives of man-accepted accounting principles and, where appropriate, agement, the independent accountants and the company's reflect estimates based on judgments of management. internal auditors. The independent accountants and the The system ofinternal controls of Rockwell Interna-compar.y's internal auditors have full and free access to the tionalis designed to provide rvsonable assurance that audit committee and meet with the committee both with company assets are safeguarded from loss or unauthorized and without the presence of management. use or disposition, and that transactions are executed in accordance with management's authorization and properly g" recorded to permit the preparation of financial statements in accordance with generally ac:epted accounting principles. DONALn R. BLALL This system is augmented by careful selection and training Chaiman/rhe N daed . of qualified personnel, proper division of responsibilities, chu/rx,arir, offurr the dissemination ofwritten policies and procedures and an i internal audit program to monitor its effectiveness. //

• O The financial statements have been examined by

/'. ' Deloitte Haskins & Eells, independent certified public R.A. or PALM A accountants, whose report appears below. Senkr FAr Prrudent. Finance 6 Mansmg and The board of d_ rectors, through its audit committee Chuf fmandalofft.,r Repon of Independent Cenified Public k:ountants TO THE DIRECTORS AND STOCKHOLDERS OF ROCKWELL INTERNATIONAL CORPORATION: We have audited the accompanying consolidated balance financial statement presentation. We believe that our audits sheet of RockwellInternational Corporation and consoli-provide a reasonable basis for our opinion. dated subsidiaries as of September 30,1988 and 1987 and in our opinion, the above mentioned financial state-the related consolidated statements ofincome, stockholders' ments present fairly, in all material respects, the financial equity and cash flows for each of the three years in the position of Rockwell International Corporation and consoli-period ended September 30,1988. These financial state-dated subsidiaries at September 30,1988 and 1987 and the ments are the responsibility of the company's management. results of their operations and their cash flows for each of the Our responsibility is to express an opinion on these financial three years in the period ended September 30,1988 in con-statements based on our audits. formity with generally accepted accounting principles. We conducted our audits in accordance with generally As discussed in Note 16 to the financial statements, the accepted auditing standards. Those standards require that company changed its method of determining pension costs we plan and perform the audit to obtain reasonable in the year ended September 30,1987. assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures A in the financial statements. An audit also includes assessing the accounting principles used and significant estimates Pittsburgh, Pennsylvania made by management, as well as evaluating the overall November 2,1988 30

O. { 4 ROCRTEl.L INTERNATIONAL 1. CORPORATION AND CONSOUDATED SUBSIDI ARIES Statement of Consolidated Inteme Years anddSepteweer 30 1988 1987' 1986 On mdlwns) SALES AND OTiiER INCOME Sales $11,946.3 $ 12,123.4. $12,295.7 Other income 152.3, 76.6. 90.8 Total sales and other income 12,098.6. 12,200.0 12,386.5 COSTS AND EXPENSES Cost ofsales 9,508.8 9,560.3 9,913.0. . Selling, general and administrative 1,435.4 1,363.1 1,318.1 Interest 101.4. 89.9 96.8 Total costs and expenses. 11,045.6 - 11,013.3 11,327.9 Income before income taxes 1,053.0 1,186.7 1,058.6 s-Provision for income taxes 241.1 551.6 '447.4 NETINCOME $ 811.9 $. 635.1 611.2 He douars) } EARNINGS PER Primary $3.04 $2.27 $2.06 COMMON SilARE Fully diluted. $3.01 ' $2.23 $2.03 See notes to financial statements. \\ A 9' l l l-l ~ l l i i o l' 31 I

g. ROCKWELL INTERNATIONAL CORPORATION AND CONSOLIDATED SUBSIDI ARIES j-Consolidated Balme Sheet 1 ] e, I Septe=6er 30 1988 1987 un m:5mno ASSETS Current assets Cash $ 899.7 $1,103.4 1 Receivables 2,209.0 1,990.1 Inventories 1,526.7 1,451.6 l Other current assets 289.4 76.9 Totalcurrent assets 4,924.8 4,622.0 ] Property 83.6 85.1 Land Land and leasehold improvements 152.2 146.8 Buildings 1,138.6 1,112.7 Machinery and equipment 2,821.7. 2,703.1 Office and data processing equipment 1,019.1 v27.7 Construction in progress 311.8 254.5 Total 5,527.0 5,229.9 j less accumulated depreciation 2,886.6 2,560.8 Net property 2,640.4 2,669.1 Intangible assets. 1,053.6 1.098.0 Other assets 589.7 350.1 Total $9,208.5 $8,739.2 -i LIABILITIES AND Current liabilities STOCKIlOLDERS' EQUITY Short-term debt $ 203.7 $ 151.6 Accounts payable-trade 1,014.5 1,103.1 Advance payments from customers 410.9 321.0 . Accrued compensation - 478.1 489.7 Accrued income taxes 1,065.8 64.2 Deferred income taxes 1,341.1 Other current liabilities 622.9 521.7 Totalcurrent liabilities 3,795.9 3,992.4 Iong-term debt 745.3 762.6 Other liabilities (principally deferred income taxes) 974.3 670.0 Stockholders' equity Preferred stock Liquidation value-$ 10.7 million) 2.3 2.5 Common Stock (shares issued: 1988,200.2 million; 1987,190.8 million) 200.2 190.8 Class A Common Stock (shares issued: 1988,79.4 million; 1987,88.7 million) 79.4 88.7 Additional paid-in capital 101.9 100.2 Retained earnings 3,716.2 3,099.6 Foreign currency translation adjustments (19.4)

46.1) i.

Treasury stock (387.6) (121.5) l. Total stockholders' equity 3,693.0 3,314.2 O Total $9,208.5 $8,739.2 u See notes to financial statements, f f 32 ca__ _.___

n ROCKWELL INTERNATIONAL CORPORATION AND CONSOLIDATED SUBSIDIARIES Statement of Consolidated Cash flows Years undeJ5epember 30 1988 1987 1986 (in mdinns) CASil FROM OPERATIONS Net income $ 811.9 $ 635.1 $ 611.2 Adjustments to net income to arrive at cash provided by operations: Depreciation 493.9 491.3 450.1 Amortization ofintangible assets 106.5 107.8 108.0 Deferred income taxes (1,351.3) - 390.7 260.0 Net pension income (131.3) (160.3) - Changes in assets and liabilities: ] Receivables (252.7) (258.0) 21.7 j Inventories (94.0) (78.6) (59.8) '] Accounts payable-trade (76.4) 124.8 0.5 - Advance payments from customers 90.4 158.4 (43.1) Income taxes 1,081.7 (95.0) (74.7) Other assets and liabilities 17.2 57.4 50.6 i Cash provided by operations 695.9 1,373.6 1,324.5 INVESTING ACTIVITIES Property additions (554.8) (474.1) (543.6) l Acquisition of businesses, net of cash balances (55.5) (204.7) (12.7) Proceeds from the disposition of: Businesses. 90.6 14.3 26.0 Property 52.4 31.3 18.1 Cash used for investing activities (467.3) (633.2) (512.2) i FINANCING ACTIVITIES Purchase of treasury stock (296.5) (344.4) (271.6) i Dividends (188.6) ' (181.2) (172.6) increase in short-term debt ~3.0 15.4 16.3 Reduction in long-term debt - (26.0) (104.5) (100.5) Long-term borrowings 2.0 207.2 9.0 ksuance of common stock 3.8 13.6 12.5 1 Cash used for financing activities (432.3) (393.9) (506.9) I (Decrease) increase in cash (203.7) 346.5 305.4 l Cash at beginning ofyear 1,103.4 756.9 451.5 i Cash at end ofyear 5 899.7 $ 1,103.4 $ 756.9 l Income tax payments were (in millions) $508 in 1988, $270.7 in 1987 (see Note 17) and j $236.6 in 1986. Interest payments on borrowings were (in millions) $106.8 in 1988, $86.9 in 1987 and $96.4 in 1986. l Statement of Financial Accounting Standards No. 95, " Statement of Cash Flows," was adopted 'l in 1988 for all years presented. See notes to financial statements. ] i 33

m O s ROcKvTLt.INTERNATION AL CORPORATION AND CONSOLIDATED SUBS! DIARIES Statement of Consolidated Stadholders' Equity o s-mrs endedsepirmher 30 1988 1987 1986 1 (le milhons) PREIIRRED STOCK Beginning balance 2.5 i.4 1.6 Stock dividend - .1.3 Conversion of preferred stock (0.2) (0.2) (0.2) . Er. ding balance 2.3 2.5 1.4 COMMON STOCK ~ , Beginning balance 190.8 155.3 155.3 Stock dividend 27.4 1' Class A Common Stock conversion -9.4 8.1 Endingbalance ' 200.2 190.8 155.3 CLASS A COMMON STOCK Beginning balance 88.7 Stock dividend ' 96.5 , Conversion into Commo'n Stock, (9.4) (8.1) Exercise of stock options and stock appreciation rights 0.1 0.3 Ending balance 79.4 88.7 bDITIONAL. Beginning balance 100.2 221.1 220.1 PAID-IN CAPITAL Stock dividend (125.2) Exercise of stock options and stock appreciation rights 1.7 4.3 1.0 Ending balance 101.9 100.2 221.1 RETAINED EARNINGS Beginning balance - < 3,099.6 '3,270.4 2,843.2 _ Netincome 811.9 635.1' 611.2 Cash dividends: Common (per share: 1988,5.705; 1987, . $.645; 1986, $.58) (188.1) (180.7) (172.0) Preferred (per share: Series A-$4.75, Series B-$1.35) (0.5) (0.5) (0.6) Stock dividend paid with treasury stock (611.8) Other stock transactions (6.7) (12.9) (11.4) Ending balance 3,716.2 3,099.6 3,270.4 FOREIGN CURRENCY Beginning balance (46.1) (75.3) (109.9) . TRANSLATION Translation adjustments 7,3 33.8 38.7 ' ADJUSTMENTS Incnme taxes (4.0) (4.6) (4.1) ' Disposition of businesses, net ofincome taxes of $15.8 million 23.4 + - Ending balance (19.4) (46.1) (75.3) TREASURY STOCK Beginning balance (121.5) (410.8) (162.0) Purchases (296.5) (344.4) (271.6) Acquisition of business 22.8 . Stock dividend 611.8 l' Exercise of stock options and stock appreciation rights 3.3 13.8 16.0 j. Conversion ofpreferred stock and debentures 4.3 8.1 6.8 l Ending balance (387.6) (121.5) (410.8) s Total stockholders' equity $3,693.0 $3,314.2 $3,162.I See notes to fmancial statements. h. ' ' b_ t 4 $ It A i N i-C i 34

D RocKTELL INTERN ATION AL CORPORATION AND CONsOI.1 DATED St'bsiDIARIEs Notes to finarmial Staternents

1. FINANCI AL STATEMENT PRESENTATION

3. INVENTORIES Significant accounting policies are set forth in italics as an Inventories at September 30 are summarized as follows integral part of the notes to financial statements to which the (in millions):

policies relate. 1988 1987 The consolidatedfinancial statements indade the accounts ofthe compny andallsignificant majorityouwdsubsidiaries exceptfor the Finished goods 5 313.1 5 347.6 company 'sfinance subsidiary (see Notes 6 and 7). Intercompany bal. Inventoried costs related to long-term ances andtransacions are diminatedin consolidation. contracts and programs 466.2 412.7 Cash indades cash andcash equivalents. Casb equivalents W rk in proceu 646.5 609.5 indade those short-term intistments that a e readily contrrtible to N** **5"I P* *"0 '"PP 548'9 07A'O II cash and har e no significant risk ofchange in ta/ue. Cash equiv-Total 1,974.7 1,944.4 alents include time deposits and certi6 cates of deposit of Less allowance to adjust the carrying i $783.7 million and $9N.9 million at September 30,1988 value of certain inventories (1988, and 1987, r"spectively. $602.9 million; 1987, $587.3 million) I to a LIFO basis 102.6 106.0 Remainder 1,872.1 1,838.4

2. Rtct tvABLLs less related progre, payments 345.4 386.8 Receivables at September 30 are summarized as follows Inventories

$ 1,526.7 $1,451.6 i (in millions): Int entories are statedat the lower ofcost (using L1FO, FIFO or at trage methods) or market (determinedon the basis ofestimated Accounts and notes receivable: realizable alues), less rdatedprogresspayments receitsd. Title to all Commercial,less allowance for inventories related to United States Government contracts doubtfd accounts (1988, $24.1 that provide for progress payments vests in the United States million,198', $29.9 million) $1,150.2 $ 1,012.0 Governmenr. United States Government 268.9 14 & 7 Inventoried costs related to long-term contracts and pro-United States income taxes receivable grams principally apply to 6xed price-type United States (see Note 17) 155.1 145.0 Government contracts and other contracts and programs of Unbilled costs and accrued profits, the Aerospace and Electronics businesses. Such int j,g,g, yj,,,,,,,,, gj,,,,j,(,,,j,g,,,g;,,,,j,g,,g,,,'entoried costs less related progress payments jj,g,,,g (l988. $ 1.2 lC.7 million; ,7jg7,,,,,5,,3,,,,_ g,,,,_gj,,,,,,,$,,g,,,,, j,g,g, g,,,,,j,,g 1987, $ 1,247.8 mdlion) 634.8 690.4 adstr i @dW bidadrydemdM Receivables 52,209.0 $ 1.990.1 pendent research anddes dopment costs) allou able in accordance uith ~ United States Gcrernment untract costprinciples. In accordance uith Unbilled costs and accrued proGts consist principally f j,j ,,yj, ,3 j,,,,,,j,j g,,, j,;;,j,,,,,,,,,ygj,g,,, i o revenues recognized on Umted States Governmer.t contracts ,,,,,7,,,,j,, jy,,,jj,,j, j,3j,,,,,,,7, for which billings have not been presented. Such amounts are General sad administrative exynses related to United related principally to contracts accounted for onder the per-States Government contracts incurred and charged to centage-of-completion (cost-to-cost) method of accounting inventoried costs were $ 523.6 million, $536.6 million and (see Note 13). The company generally receives progress $525.3 million in 1988,1987 and 1986, respectively. General payments as costs are incurred under its 6xed price type and administrative expenses remaining in inventoried costs contracts, the most significant of which are the B-1B and before consideration of progress payments were estimated at Global Positioning System programs. Unbilled costs and $64 million and $56 milhon a: September 30,1988 and accrued pronts,less related progress payments, are billed 1987, respectively. Such estimates assume that general and in accordance with applicable contract terms. administrative expenses for each contract have been relieved There are no signi6 cant amounts of contract holdbacks from inventories on a basis proportional to total costs charged or claims sub,iect to uncertainty as to their realization. Sub-to inventories. stantially all amounts are expected to be collected within Inventories do not include any significant amounts of "" Y' * '- unamortized tooling, learning curve and other defected costs, or claims or other similar items subject to uncertainty con-cerning their realization. n

O t [.. .RUCKW ELL INTERNATIONAL CORPORATION AND CONSOUDATED 5l'BSIDI AluLs l ~ Notes to financial Statements U ln ~

6. OTIIER ASSETS 5

4. PROPIRTY AND DEPRECIATION '

~ Property is statedat cost. Depreciation ofproperty is provided b ued Other assets at September 30 are summariied as foilows on estimated usefullins generaHy using accderated andstreight-line (in millions): methods. Significant reneuals andbetterments are capitalizedand '9"* replacedunit: are uristen off Alaintenance and repairs, as u euas. l reneuals ofminor amount, are chargedto expense. Maintenance Prepaid pension costs (see Note 16) $388.5 $183.3 and repairs were $256.4 million in 1988, $247.2 million in Investments in unconsolidated 1987 and $244 million in 1986, subsidiaries and affihates 125.5 108.3 Whinassetsaresddor retired accumulateddepreciationis Other 75.7 58.5 charged uith theportion thereofapplicable to such assets The result. og,,,,,,,, ,$gy,y 3,,9,7 ~ ing gain or loss is recordedin income in the year ofs,de or retirement, exapt as to certain assetsfor uhich gains (to the extent ofaccumulated Innstments in unconididatedsubsidiaries andaffiliates, com. depreciation) andlosses are recordedin otrrheadaccounts in confor-panies ou ned209c' to $09c' in ubich the company has the ability to ^mity u ith United States Goternment contract cost principles. exercise significant influence, are aaountedfor on the equity method. other innstments are accountedfor at the lou er ofcost or market.

5. INTANGIBl.E AS5ETS

~ 7 FINANCE SUB5IDIARY Intangible assets at September 30 are summarized as follows (in millions): Summary financialinformation for the company's unconsoll-dated finance subsidiary, Rockwell International Credit 1988 1987 Corporation, is shown below (in millions): . atents, product technology and other intangibles,less accumulated Financial position at September 30: 1988 1987 amortization (1988, $340.8 million; Finance receivables-net $173.5 $ 191.2 1987,-$250.7 million) $ 572.8 $ 629.7 I4ng-term investments 5.7 7.1 Goodwill,less accumulated Other asseu 13.6-6.9 amortization (1988, $53.6 million: 1987, $39 million) 480.8 468.3 Total assets $192.8 $205.2 Intangible assets. . $1,053.6 $ 1,098.0 - Commercial paper borrowings $100.0 $ 105.0 Other liabilities 13.5 26.4 Patents, product technology and other intangibles, relating prin-Stockholder's e'quity 79.3 73.8 ~ cipally to AHen-Bradley, are being amortizedon a straight-line basis our their estimated usefullitts, generally rangingfrom 3 to 20 years.

• • • ' lE*bi 'I ""0 *'kh*I0 ' '9"5'Y I'9I'0

$ 0}' Goodu iH represents the excess ofthe cost ofpurchased businesses our thefair salue oftheir net assets at date ofacquisition and,ener. Results ofoperations: 1988 1987 1986~ aHy is being amortized by the straight line methodourperiod' k enues S l8.4 $21.6 $22.2 rangingfrom 13 to 40 years. Net income $ 5.5 $ 6.1 - $ 5.3 The company guarantees commercial paper borrowings of the finance subridiary. 36 i

O s

8. SHORT. TERM DEBT

10. LONG.Truf DEBT short. term debt at September 30 consisted of the following Long-term debt at September 30 consisted of the following (in millions):

(in millions): 1988 1987 1988 1987 Short term bank borrowings 10% % notes, payable in 1992 . $300.0 $300.0 (principallyforeign) ' $118.6 $ 130.3 ' 9% % notes, payable in 1990 200.0 200.0 Comercial paper borrowings 70.0 7% % r res, payable in 1997 200.0 200.0 Current portion oflong-term debt 15.1 21.3 Other u.igations, payable thrc ugh 2001 (average interest rate: 1988,11.2 W ; Short term debt $203.7 $151.6 1987,11.3.% ) 60.4 83.9. . At September 30,1988 the company had $443 million Total 760.4 ' 783.9 of unsecured lines of credit through informal arrangements Irss current portion 15.1 21.3 with various banks.1.ines of credit typically are established or renewed for one year periods and unused lines may be ter-long. term debt - .5745.3 $762.6 - minated at the option of the lending banks or the company. At September 30,1988 aggregate maturities of tong-term There are no significant commitment rees under the arunge-debt during the fiv years ending September 30,1993 are as ments. These lines also are available tc RockwellInternational follows ( n millions): 1989, $15.1; 1990, $208.6; 1991, $8.7; Credit Corporation with the company's guarantee of related .1992, $ 3d7.4; and 1993, $7.1. borrowings. There were no borrowings under the lines of ' credit at September 30,1988. Short-term credit facilities available to foreign subsidi-

11. CAWTAt. stock aries amounted to $280 million and consisted of arrange-ments for bank overdrafts, borrowings and letters of credit The authorized common stock of the company at September 30, 1988 c nsisted of 600 million shares of Common Stock and for which there are no significant commitment fees.

200 million shares of Class A Common Stock, eac'h with a il par value. The company also had authorized 12 million shares

9. OTilER CURRENT LI ABil.lTIES of preferred stock without par value. The aggregate liquida-tion value of all shares of preferred stock outstanding at any

' Other current liabilities at September 30 are summarized as time cannot exceed $650 million. i follows (in millions); In April 1987 the company distributed a stock dividend . ) 1988 1987 of one share of Class A Common Stock (or Common Stock in ^ certain cases) f r each share ofissued Common Stock. The Accounts payable-other $164.7 $ 128.1 Class A Common Stock is substannally mentical to the Com-Accrued product warranties 114.6 85.5 m n St ck except that each share of Class A Common Stock - j Accrued taxes other than income taxes 70.5 70.7 Accrued plant restructunng costs 43.4 63.9 entitles the holder to ten votes on all matters on which holders Other ' 229.7 173.5 of Common Stock are entitled to vote, is not transferable except in certain limited circumstances and is convertible Other current liabilities $622.9 $521.7 at any time into Common Stock on a share.for-share basis. Shares of Class A Common Stock converted into Common Stock were 9.4 million in 1988 and 8.1 million in 1987. At September 30,1988,22.8 million shares of common stock were reserved for various employee incentive plans (see Note 12) and 2.5 million shares were reserved for conversions 1 q of preferred stock and convertible debentures. Each share of Series A Freferred Stock is convertible (sub-1 ject to adjustment under certain conditions)inco 9.8985 shares each of Common Stock and Class A Common Stock. Each share of Series B Preferred Stock is convertible (subject to adjustment under certain conditions)into 3.6 shares each j of Common Stock and Class A Common Stock.The Series A 1 and B preferred stocks are stated in the accompanying finan-cial statements at the aggregate par value of the number of i 4 31 ) j

E g-O y 6, 5 RoCKwELLINTIRNATioNALCoRPORATION ANDCONsOLIDATEDSL*lislDIARIE3 j t { \\ N,' ~ - Notes to financial Statements 2 "11. CAPITM STOCK (connnued)

12. EMPLOYEE STOCK OPTIONS

~. shares of common stock into which such preferred stocks are Options to purchase common stock of the company have been granted under various incentive plans to officers and V ., convertible.The company may redeem Series A and B pre

ferred stocks at $100 and $36 pe'r share, respectively.'

other key employees at prices equal to the fair market value of ' Changes in shares of treasury stock and outstanding com. such stock on the dates the options were granted. The plans

• ,.motistock during 1988,1987 and 1986 are summarized as provide that the option price for certain options granted ifollows'(in millions):,

st ck or in a combination thereof. under the plans may be paid in cash, the company's common Outstanding i ~ Treasur' Inf rmation for 1988 relative to employee stock options y common stock ' stock is as follows: Balance at October 1,1985 ' 6.0 149.3 Number of shares under option: !L' Purchases - '6.2 (6.2) Outstan' ding at beginning of year 5,313,271 ' Exercise of stock options and stock Granted 1,758,300 ' appreciation rights and conversion of Exercised (305,413) (0.8) 0.8 Expired (131,075) i 'i preferred stock and debentures : Surrendered upon exercise of ' Balance at September 30,1986, f 11.4 143.9 stock appreciation rights (15,267) Purchases 10.3 (10.3) Outstanding at end of year Stock dividend: 96.5 < - (including 4,208,483 Class A Common) 6,619,816 s Gass A Comr si Stock Newlyissue ammon Stxk: Exercisable at end of year To trer 14.9 f (including 2,478,958 Cass A Common) 4,890,291 To stockholders in nominee name 12.5 ~ Treasury stock < (31.4) 31.4 Kumber of shares available for future grant - . Exercise of stock options and stock, at September 30: appreciation rights and anversion of 1987 3,944,430-i. preferred stock and debentures: 1988 14,422,475 ' Qass A Common Stock' 0.3 The 19881.ong Term Incentives Plan, approved by the asury 0J company's stockholders in February 1988, limits to 16 million Balance at September 30,1987_ 4.5 275.0 the number of shares that may be used for stock options and 15.4 , (15.4) other grants or payments under the plan. Accordingly, shares ' Purchases Exercise.of stock options and stock available for future grant of stock options at September 30, appreciation rights and conversion of 1988 will be decreased to the extent such other grants or preferred stock and debentures: payments are made. s, Cass A Common Stock, 0.1 Certain of the options granted have related appreciation 3- . Treasury, (1.1) 1.1 (0.3) 0.3 rights which permit an optionee to surrender all or a portion Acquistoon of business of an exercisable stock option and exercise the related stock Balar.e at September 30,1988. - 18.5 261.1 appreciation right. An.optionee exercising a stock apprecia-tmn right receives, at the company's option, cash or shares of ,,, Outstanding common st&k at September 30,1988 con-common stock, or a combination thereof, of a value equal to sisted of181.7 million shares of Common Stock and 79.4 the excess of the fair market value of the company's common million shares of Class A Common Stock. There were also stock on the date of exercise over the option price.' ' outstanding at September 30,1988,52,347 shares of Series A Common stock options outstanding at September 30, Preferred Stock and 150,698 shares of Series B Preferred 1988 have option prices ranging from $4.97 to $27.44 per Stock. share and expire at various dates from April 4,1989 to May s t, 4,1998. Options available for future grant may not be granted after September 30,1997. Stock appreciation rights outstanding at September 30,1988 are related to options for 1,823,066 common shares having option prices ranging from $4.97 to $27.44 per share. f' i f j !'( i f 3B j s

0

13. CONmcT S Atts

14. RESEARCH AND DEVFLOPMLNT COSTS Sales under cost-type contracts are accountedfor ander thepercentage-The company performs research and development under both

- of-completion (cost to-cost) methodofaccounting in u hi.h sales are company initiated programs and contracts with others, pri-ncordedfor costs. as incurred. plus a proportion ofthe propt expected marily the United States Goverament. Company initiated to be realizedon a contract in the ratio that costs incarndlear to the programs include research and development for commercial estimatedcosts at comp /crion. products and independent research and Development and bid Sales underfirm fixed-price-type contracts are rccordedgenerally and pic.pusal wark related to government products and serv-as ddit eries are made at the cor tract sales price ofthe items ddivered. ices. A Iatge portion af the cost ine.irred for independent Sales underfixed-price-incentire-type contracts are recordedge nerally researeh and development and bid and proposal wark is as dditrries are mah at the cost ofitems ddis eredplus a proportion of recoverable tbrough overhead cost allowances on government theprofit expectedto be nali: don a ce ntract in the rativ that iosts of conttacts. items ddit ered bear to total estimated costs at completion. Sales under Research and development tosts incurred by the com-certainpxed-price-type contracts reijairing substantialperformame pany aggregated approximately $1.6 billion in 1988, and ot>cr senra/ periods prior to ammenument ofdditvries are accounted $1.4 billion in both 1987 and 1986. A major portion of these for under thepercentage-of. comp /crion (a;st-to-cost) method of expenditures was incurred under research anJ development accounting. coctracts for the B 1B and Space Shuttle and other programs Profits expeardio be realizedon contracts are basedon the com-such as those related to strategic and tactical missiles, satel-

• any's estimates oftotal sales ralue andcosts at completion. These lites and defense electronics. The portion of research and esJmates are nrieu edand revisedperiodically throughout the fires of development costs representing company initiated programs the contracts, andadjustments to profts resultingfrom such revisions was $430.6 million in 1988, $423.9 million in 1987 and are recordedin the periods in u hich the revisions are made. Losses on

$407.5 million in 1936, contracts are ncordedinfullas they are identiped. Sales under United States Government contracts accounted for 47 % of total sales in 1988,58% in 1987 and

15. RENTAL AND 1. EASE INFORM ATION 614 in 1986. The company's two major programs with the The company leases certain facilities and equipment under -

Uruted States Government are the B 1B, on which work is operating leases, many of which contain renewal options and being performed under a fixed-price-incentive type contract, escalation clauses. Total rental expense on all operating leases and the Space Shuttle, on which work generally is bemg per-(net ofimmaterial income from sublease rentals) was $108.9 formed under cost-type contracts. United States Govercment million, $115.2 million and $112.1 million for 1988,1987 and sales by contract type are as follows: 1986, quively. Contingent rentals under the operating 1988 1987 1986 leases were not significant. Minimum future rental commitments under operating Fixed-pn.ce-incennve type 34 % 53W 58 % gg, gg g g g aggregated $279.1 million as of September 30,1988 and are fi d price-type r payable as follows (in millions): 1989, $ 59.3; 1990, $48.8; Total 100W 100 % 100g 1991, $ 36.1; 1992, $ 28.9; 1993, $18.9; and after 1993, $b7.1, The major portion of work performed for the United States Government is under contracts that contain cost or performance incentives or both. These incentives provide for increases in fees or profits for surpassing stated targets or other criteria, or for decreases in fees or profits for failure to achieve such targets c r other criteria. Performance incentins.f>r u hich a reasonable prediction ofaccomplishment cannot be made in adsance, are indadedin sdes at ihe time there is cufpcient informa-tion lo rclate actualperf>rmance to largets or other criteria i I t 39

3 k.. 'i ~RoCKwELE INTERNATIONAL CORPORATION AND CONSOLIDATED SUBS!DI ARIES 3 Notes to financial Statements L 16. RETIREMENT PLANS The company has pension plans which cover most ofits The following table sets forth the plans' funded status, employees and provide for monthly pension payments to eligi. and amounts recognized in the company's consolidated ' ble employees upon retirement. Plans covering salaried . balance sheet for its U.S. pension plans (in millions): employees generally provide benefits based on years of cred-1988 1987 ited service and average earnings. Pension benefits for hourly ' Plans .. Plans

employees generally are based on specified benefit amounts Plans and years of service. The company's policy generally is to fund Eumteng h uu Exeedmg Benenu Accumulated Exuedmg Accumulated Eumimg its pension plans m. amounts computed actuarially using the w n.

As,

Benen, Am entry-age normal method.

~ Acmmutated benent ' Net pension income was $131.3 million in 1988 and $160.3 million in 1987; pension expense was $77.1 million in ),"sfed s3,623.2 s 580.8 $3,315.8 $ 501.4 1986. In 1987 the company adopted the provisions of State' Nonvested 348.2 34.3 352.6 20.5 ment of Financial Account ng Standards No. 87 for its United i States pension plans which increased net income by $105 mil-Total 3,971.4 615.1 3,668.4 521.9 . lion, or 38 cents per :. hare, primarily as a tesult of the Effects of projected recognition of the plans' lavorable funding position. If the wmimation increases 540.3 24.3 516.8 14.3 - company had not adopted the provisions of this standard, Pio ected benefit . pension expense would h ive been $36.8 million in 1987 obligation .4,511.7 639.4 4,185.2 536.2 1 under the previously applicatsle accounting standard. At the Fair value of plan assets 5,776.7 445.7 6,377.3 430.6 date o' f adoption of the new standard, the fair value of the Pl"" "55S i" '*55 "I pension plan assets exceeded the projected pension benefit liabilities by $1.7 billion. This initial net asset is being reccg-Gesuhan) projected nized as a reduction of pension costs over 13 years, the average benefit obligation 1,265.0 (193.7) 2,192.1 (l')5.6) - remaining service period of the company's employees at the U",,'8'"f,' ";"",^"*I 559.2 53.7 (414.1) (6.9) date of adoption. p,g,,,,y;c,,, % Net pension income consisted of the followm, g recognized in future (in millions); periods 57.8 31.2 42.8 0.2 1988 19g7 Unrecognized initid Service cost-benefits earned duringi year $(117.6) $(113.5) Prepaid (accrued) Prior service cost amomzation (16.7) pension costs at Interest accrued on projected September 30 $ 388.5 5 (33.0) $ 183.3 s (25.0) benefit obligation (414.1) (383.5) 'I.he projected benefit obligation was determmed using an Assumed return on plan assets $51.8 528.9 Amortization ofinitial net asset 132.5 132.5 assumed discount rate of 9% and an assumed compensation increase rate of 5 %. The assumed long-term rate of return on Net pension income for U.S. plans 135.9 164.4 plan assets was 9 %. Pension amounts are determined using a Pension ~ costs for foreign plans (4.6) (4.1) measurement date ofJune 30. Net pension income $ 131.3 $ 160.3 Although the company has no intention of doing so, should it terminate certain retirement plans, the company has Pension plan assets are primarily United States Govern-an agreement with the United St. es Government whereby the ment obligations, fixed income investments and equity Government is entitled to an equiu.ble share of any assets securities whose values are subject to fluctuations of the remaining after providing for plan obligations. securities market. The actual return on plan assets was a net Certain retirees also are eligible to participate in medical gain of $1,004.9 million in 1987 and e net loss of $350.7 and life insurance programs which continue to provide cover-million in 1988. Differences between these actual returns and age after retirement. Thuompany's policy is to expense the cost of -the related assumed returns on plan assets are considered in proriding these benefits as costs are incurred. The cost of providing the determination of net pension income or expense in future retiree insurance coverage was $101 million in 1988, $90 mil-periods. lion in 1987 and $78 million in 1986. s l 40

El i

17. INCOM E TAXES 7;rxes are provided, at appropriate rater, on the basis ofitems included 1988 at a lower rate than was used in such years to provide in the determin.nion ofincomeforpnancial reporting pu >oses regard.

related deferred income taxes. As a result, a(ter taking into las of the periodin which such items are reportedfor taxpurposes. account the company's position on certain technical tax issues, ~ The components of the provision for income taxes were as the 1988 tax provision has been decreased and net income follows (in millions): increased by $198 million or 74 cents per share. In addition, the lower U.S. statutory income tax rate reduced the 1988 1988 1987 1986 provision ror mcome taxes. Current: Deferred income taxes result from timing differences in United States $ 1,373.7 $ 66.9 $ 83.7 the recognition of revenue and expense for financial and tax l Foreign 70.4 46.9 59.0 reporting purposes and are provided at the statutory tax rate State and local 148.3 47.1 44.7 in effect at the time the differences originate.The company's Totalcur ent 1,592.4 160.9 187.4 net cu rent deferred income taxes at September 30,1988 prin-cipally relate t expenses that have been recognized for

Debad, United States (1,284.6) 355.5 241.4 financial reporting purposes but not yet deducted for tax Foreij;n 12.7 4.6 1.3 reporting purposes which will result in future tax benefits.

State and local (79.4) 30.6 17.3 Accordingly, deferred income taxes of $206.3 million have been included in other current assets at September 30,1988. Total deferred (1,351.3) 390.7 260.0 The income tax provisions were calculated based upon Provision for income taxes $ 241.1 $551.6 8447.4 the following components ofincome before income taxes The deferred income tax provision (benefit) consisted of tax effects of timing differences related to the following 1988 1987 1986 (in millions): United States income $ 862.0 $ 1,051.7 $ 900.9 1988 1987 1986 Foreign income 191.0 135.0 157.7 Income fmm Total $1,053.0 $ 1,186.7 $ 1,058.6 long-term contiacts $(l,401.6) $273.6 $260.4 ,,,,,,,,,,,,,,,,,,,,,,,f,or United Stata, state.ad additional No provision is made Net pension ineome 51.3 73.0 ,,,,g,,,,,,,,,,g,,,,5,,o,,,,,,,,o,,,g,

1. N" #"U'"I " #/Ou##" "

" b" *' #" I"""M '* K book depreciation 16.4 22.2 31.5 be, permanently reinentedf r normal working capitalrequirements, Other-net (17.4) 21.9 (31.9) capitalexpansion andfuture acquisitions. Such undistributed Deferred income tax earnings, exclusive of those amounts which if remitted would (benefit) provision $(1,351.3) $390.7 $260.0 result in little or no tax based upon statutes currently in "II'C "#' "

• SI "IOC8"I' 8

The consolidated effecdve tax rate was different from the A new acc unting standard f r inc me taxes, which the United States statutor y rate for the reasons set forth in the table below. c mpany expects t ad pt m fiscal 1991, wdl require that deferred tax liabilities and assets be adjusted to reflect stat-1988 1987 1986 utory tax rates enacted at the date of the financial statements. Statutory tax rate 34.0 % 43.0 % ' 46.0% Adoptien of this standard is not expected to have a material Effect of tax rate decrease on effect on the company's financial statements. completed contract income (21.7) (0.6) As a result of a settlement ofits United States income tax State and localincome taxes 4.3 3.7 3.2 returns for the years 1970 through 1982, a tax payment of Investment tax credits (2.7) $121.4 million and interest of $123.5 million was made by Taxes related to foreign operations 2.5 0.5 (0.9) the company in September 1987 and the company will Other 3.8 (0.1) (3.3) receive a tax refund of $44 million and interest ($111.1 milli n at September 30,1988)in 6 scal 1989. Management Effective tax rate 22.9 % 46.5 % 42.3 % believes that adequate provision for income taxes has been The decrease in the 1988 provision for income taxes and made for all years through 1988. related effective tax rate is primarily due to substantial B.lB prograni income, deferred for tax purposes in prior years under the completed contract method, becoming taxable in 41

s t-RocKwtLt. lNTERNATION AL CORPORATION AND CoNSOI.lDAR D SUB5tDIARH s Notes to financial Statements

18. BuslNEss SEGMENT INFORM ATION The company's business segments are engaged in research, development and manufacture of diversified products as follaws:

1 Aerospace-military aircraft, manned and unmanned space Automotire-components for heavy and medium. duty trucks,: systems, rockst engines, advanced space-based surveillance buses, trailers, heavy-duty off highway vehicles, light trucks , sys: ems and high. energy laser and other directed energy and passenger cars. j P*E ' * *S ' GeneralIndustries-high. speed printing presses and related - Electronics-defense and commercial electronics systems graphic arts equipment; measurement and flow control equip-and products principally for precision guidance and control; ment for energy markets including utility, oil, gas and nuclear -i tactical weapons; command, control, communications and industries; and industrial sewing machines. In the fourth j intelligeri~ce; precision navigation; avionics; telecommunica-quarter of 1988, the company sold its industrial sewing l tions; and Allen Bradley electronic industrial automation machine business and announced its intention to sell its equipment'and systems, including programmable controllers, measurement and flow control businesses. j industrist computers, motion control products, sensing j devices and computer numerical control systems. Sales and operating earnings by business segment are j included in the table on page 29. The following tables j provide additional segment information (in millions). l ASSET INFORMATION BY SEGMENT // 1 Provis;cn for Ident fiable Assets Depreciation and Amortization Capital Expenditures Business Segment 19887 1987 1986 1988 1987 1986 1988 1987 1986 ~ Aerospace ' $1,646 $1,385 $1,431 5105.9 ~ $118.7 $116.8 S114.2 $ 631 - $ 101.2 Electronics 3,843 3,810 3,549 319.0 315.6 290.0 ,231.9 211.5 263.5 Automotive _1,340' 1,228 995 91.1 81.1 70.5 102.8 - 84.9 86.8 i General Industries ^726 691 567 39.1 36.4 33.1 73.5 7L0 43.) Total segments 7,555 7,114 6,542 555.1 551.8 510.4 522.4 430.5 495.0 Corporate 1,654 1,625 1,161 45.3 47.3 47.7 32.4 43.6 48.6 Total company $9,209 . $8,739 $7,703 $600.4 $599.1 $558.1 5554.8 $474.1 $543.6 Electrucs Hentifiable assets and provision for depreciation and amortization indude Allen-Bradley's intangible assets and related amorti2ation. ' SALES OPERATING EARNINGS AND ASSETS BY GEOGRAPlilC AREA identifiable Assets s Sales Operating Earnings Segments Corporate Geographic Area 1988 1987 1986 1988 1987 1986 1988 1987 1986 1988 1987 1986 United - States $ 9,986 $10,798 $11,115 $ 966.4 $1,177.3 $1,043.6 $6,342 $5,936 $5,653 51,278 $1,378 $ 984 Europe 1,141 847 752 89.1 73.5 71.2 715 702 612 141 127 73 Canada 378 345-323 61.3 59 6 73.9 219 198 180 116 86 51 South America 192 48 36 54.4 15A 11.3 147 169 34 20 5 45 Other 249 85 70 26.5 16.5 13.1 132 109 63 99 29 8 Total $11,946 $12.123 $12,296 51,197.7 $1,342.3 $1,213.1 57,555 $7,114 $6,542 51,654 $1,625 $1,161 s United States sales include export sales of $620 million in 1988, $503 million in 1987 and $493 million in 1986. c e

-r- .)- t i ' C i \\ i 1 1'-' s s s IB. BUSINESS. SEGMENT INFORM ATION kononueJ>

19. EARNINGS PER COM MON Sil ARE t

The only customer of the company which accounted fbr Primary earnings per share ofcommon stock, after recognition 100f or more of consolidated sales is the United States Gov-of the Series A and B preferred stock dividend requirements ern. ment and its agencies. Such sales by business segment are are based on the weighted average number ofcommon shares r 'as folk ws (in millions):. outstanding during each year (266,605,000 in 1988; 280,035,000 in 1987 and 296,517,000 in 1986).-The corm SALES TO UNITED STATES GOVERNMENT e - putation does not include a negligible dilutive effect of stock i 1988 '1987 - 1.986 options and stock appreciation rights. Aerospace. ~$3,836. $4,986 $5,425 Fully dituted earnings per share of comnion stock are Electronics 1,704' '1,911 1,869 based on the assumption that all preferred stocks and convert-Other business segments 113-134 167 ible debentures were converted at the beginning of the year and all dilutive stock options were exercised at the beginning-Total. 55,653 $7,031 $7,461 of the year or at date of grant, iflater. The computation Included in sales to the Unisd States Government are puumes the ehmination of prderred Mends and convert. able debenture interest expense (net of taxk the following major programs (m. millions): 1988 1987 1986

20. CONTINGENT LI A'llfLITIEs Space Shuttle

$1,686 $ 1.355 $ 1,168 B-1B 1,360 3,132 3,845 Various lawsuits, claims and proceedings have been or may be instituted or asserted against the company relating to the can. Total ' $3,046 $4,487 - $5,013 duct ofits business, including those pertaining to product liability, environmental, safety and health, and employment. ' matters. Although the outcome oflitigation cannot be predicted with certainty imd 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 consolidated financial statemems of the company. I A

21. QUARTI RLY FINANCI AL INFORM ATION tUNAUDITED) 1988 Fiscal Quarters 1987 FiscalQuarters First Second Third Fourth 1988 First Second Third Fourth 1987 (In mdhoes. emptper share amounts)

$2,681.5 $3,035.4 $ 3,072.6 $3,156.8 $11,946.3 $ 2,867.9 $3,168.2 $ 3,021.1 $3,066.2 $12,123.4 ~ . Sales E Cost of sales 2,098.3 2.378.4 2,428.4 2,603.7 9,508.8 2,267.6 ' 2,469.4 2,394.1 2,429.2 9,560.3 - Net income 192.9 218.4 214.7 185.9 811.9 149.4 175.6 170.1-140.0 635.1 Earnings per common share: , Primary .71 .81 .82 70 LO4 a .62 .61, .51 2.27-Fully diluted 70 .81 .80 70 3.01 .52 .61 .60 < .50 2.23 ' Quarterly financial information for fiscal 1988 reflects the favorable income tax benefits related to B.lB program income discussed in Note

17. This item increased fiscal 1988 ;uarterly net income as follows: first quarter, $50.2 million or 18 cents per share; second and third quar-ters, $50.2 million or 19 cents per share; and fourth quarter, $47.4 million or 18 cents per share.

t L 43

f-E' RCCKUELL INTERNATIOMA!. CoRPORMION AND CONSO!JDATED SUBSIDitJUEs Tendear Review-t (Is mi&ss except as noted) 1988 1987 .1986

(-

SUMMARY

OF OPERATIONS - Sales ' $11,946.3 ~$12,123.4 ; $12,295.7 - Cost of sales 9,508.8 9,560.3 9,913.0 ,x Selling, general and administrative ; 1,435.4-1,363.1. 1,318.1 101.4, 89.9 96.8 - Interest expense - Provision for income taxes. 241.I 551.6 447.4 Net income 811.9.' 635.1 - 611.2 Earnings per common share (in dollars); - ~ 2.06 Primary ?3.04 2.27 Fully diluted '3.01 2.23-12.03 i Cash dividends 188.6 '181.2 172.6 ,t Per common share (in dollars)~ .703 .645 .58 . Average number of shares of. common stock outstanding > 266.6 - 280.0 296.5 ' FINANCIALPOSITION ' -) Current assets '- $ 4,924.8. $ 4,622.0 $ 3,837.5 ATSEPTEMBER 30 Currentliabilities , 3,795.9 3,992.44 3,411.4 Working capital .1,128.9 - 629.6 - 426.I' Ratio of current' assets to current liabilities 1.30 '1.16 1.12 2,669.1 2,620.4 , Property-net 1 2,640.4 t Total assets. 9,208.5 8,739.2. 7,703.4 Iong-term debt 745.3 762.6- - 627.4 Ratio of total debt to stockholders

• equity.

. l.26 .28 ~.23 Stockholders' e'quity' [ 3,693.0 { 3,314.2 3,162.1 Per common share (in dollars) 14.10 12.01 10.94 OTHER STATISTICAL DATA Backlog at September 30 . $ 13,160.0 '. 1 $11,997.0 $11,550.0 Payrolls and fringe benefits 4,813.8 4,850.6-4,737.2-Depreciation expente 493.9 491.3-450.1 ~ ~ Capitalexper ditures 554.8 474.1 543.6 Number ofemployees at september 30 '112,160 i 116,148 121,194 In 1988 a one-time f vorable tax adjustment increased net income by $198 md' ion or 74 cents per come ton sha3e (see note 17 s f Notes to Financial Statements). In 1989ue company adopted Statement of Financial Accounting Standards No.87," Employers' Accouutin T. Tensions," which increased net income by $105 million or 38 cents per common share for that irar. on>3: 44

J O i 1 a I 8 1985 1984 '1983 1982 1981 1980 1979 $11,337.6 $ 9,322.1 . $8,097.9 - $7,395.4 $7,039.7 $6,906.5 $6,176.4 9,090.7 7,562.4 6,581.1 5,992.9 5,778.1 5,605.3 4,971.6 i .1,218.3 961.4 938.8 950.0 854.5 874.9 768.4 91.6 42.8 27.2 35.7 40.5 46.8 62.4 467.2 403.0' 301.0 299.3s '.267.3 245.5 225.3 595.3 496.5 389.1-331.6 318.8 280.2 261.1 2.00' 1.63 1.26 1.08 1.05 .94 ,92 1.96 1.59 1.23 '1.05 1.02 .90 .85 158.7 144.3 129.1 120.6 - 110.7 102.5 92.3 .53 . 47_- ,415, .39 .36 .3375 .3125 297.5 304.6 307.5 305.0 302.4 294.9' 280.0 $ 3,492.7. $ 3,612.8 $3,224.3 $3,056.3 $3,223.4 $2,937.9 $2,763.6 3,317.5 2,839.5 - '2,432.5 2,344.4 2,323.9 2,090.1 1,953.0 175.2 ,773.3 791.8 711.9-899.5 847.8 810.6 1.05 1.27 1.33 1.30 1.39 1.41 1.42 2,523.8 1,990.3 1,716.4 1,525.9 1,223.5 1,154.0 1,044.3 -7,332.8 5,869.5 5,231.1 4,870.3 4,702.9 4,372.0 4,073.1 647.5 218.6 197.1 232.7 293.4 363.6 431.0 .26 .11 .09 .12 .17 .23 .37 2,948.3 2,521.6 2,367.3 2,097.3 1,910.6 1,740.2 1,539.2 9.82 8.39 7.57 6.73 6.15-5.64 5.07 $14,630.0 $10,220.0 $8,410.0 $6,370.0 $6,480.0 $7,070.0 $6,930.0 4,438.9 3,958.6 3,719.7 3,468.7 3,247.7 3,071.1 2,752.4 377.8 301.5 232.7 187.6 169.7 151.8 128.2 614.4 567,1 479.4-539.4 316.7 281.1 275.8 123,266 105,759 102,707 100,271 103,455 108,199 114.452 l l e m f

\\ -DIRf C10RS, Of flCf RS AND M AN AGEMf NT l ^1 t I I DIRECTORS J mes Clayburn La Force,Jr-EUROPEAN ADVISORY GeneralJohannes (2,4,6,7) BOARD Memhdf Donald R. beall 0,3,4) D<d" ld" l ^"d"W CI'ir// 5'dll Chairman ofthe Wardand Graduan SchmdofManayment, Robert Anderson German Air Fora Ui"r'u) of Cali,4n nia. Chairman efthe Exe<stin

Chairman, kku di br:ena$@ional ChiefExayun O ca, I.os Angdes. Las Anples.

Com mina. Af disar) Com mittee of NATO, s Cahprnia Rwk u diInternat ;cnal &nn, Federa! Republic ) Robert Anderson (1,3,4,6) ,,f c,rma yy Chairmac ofthe Eae aure firuce M. Rockwell(4,6,7) Umberto Agnelli Co mmittee. Senior Via Prnident, Vnt Chairman. Rocku c!! International First ofAtubigan Corporation Fiat, S.p A. OIYICENS (sntinment hardtn;0 Turin. haly Richard M. Bressler (4,6,7) Detrrdt, Mehip,i Chairman of the Board, Dr. Guido Carli Donald R. Heall-Pruidnt and ChiefExeunce Robert E. Seymour thrn.tr Gotannr, Chairman ofthe Ward Offiar, Barhngton Nortlern luc U 2,3 A 3) Centr.d Bank ofhaly andChief Exautin Offher (transjwrtation and natxraj Rarred Chairman ofthe Ward. Rome. haly 1 nwunes) Scatk Kbshingon Cunsdidated Nan ral Gas k,'"' M ' OI" k' Sir Michael Edwardes \\ ea Presuhru and Prnid nr. g,p,, JohnJ. Creedon (4.6.7) 7,,,,,gy; ChnfExaut. n. Charonics opaations Twidan and ClielExecutar pin,s,,,p,pennaj,,,;, MINORCO Richard W. Bohlen' Offiar, >\\arepolitan Life Is.n mbou rg in,urana Company Ross D. Siragusa,Jr. (2,4.7) 5""* " I,'" P""A "'- (insurana andfin. ncialscenan Pruident. GameTinc. Inc. ]4"C5M'YOU* UP' 5""' New nrL New nok tpark andplaygroundmairment) Fornar Chairman' Thainas A. Campahasso" Fort Payne. Alabama $aaru Gennak 5,,o, y,, pn,,,,,,. Robert A. dePahna Chairman. 0MI ' " " ' " ' ".""'I Senir,r Vue Praident. William S. Sneath (2,3,4,M (Options Marla rranas Finana & Planning ar:d Retned Chairman of the Ward Chairman of tle Robert L Cattoi= Cfief Finamial Olfiar. and Chief Ex nain offue r. Stpersiwry Ward. Sann.r Via Prnbkra. Rudn ellInternational L'nion Carinde Corporation EUR15 Research & Enynaring n hemuah and orber j>rodaas) [Gmpagnic Earopanne Harrington Drake <2,3,4) g,w y34 ge, n,4 g.jy n yju,yyy,g Lee H. Cramer Renred Chairman and Via Prnidua and Treanaer h"" IE'"" Chief E>.autit e 0,9ct r. Joseph V Thot,Jr. (2 AM " ^' The Dsn 6 Bradstrea President. The Timien Gmpan) Sir Austin Pearce Sewr V.ia Pnudent. Corporaru,n (tapend rdia bearing and porn;e, chair,na,,, tho rinns inprmation ranced >?"ialt) Sledl Urrtid Aanpaaplc ' "' "" ? P"'""'"# ""'""' W"" New %rl New %rk CJ'unn. Oh!" Lt ndon. Englar:d

Chairman, Jerome A. Earlev Robin C.h ndle: Duke a,,ju,n,7,5,yo,,j,g o,,,a,n 9,;,,, y,,,,,,,,,, g,,,,,

3,, pn,5n,, u,,,n,,u 'Y cut.w rac R An,iera ns.a., Oxlsd. England Dudupmrnt \\ ja Chairman, leniink of International Educanon: ~ C ' ^ *'" ! ' '*' l' "*'"" H. Ytans van den Hoven Charles H. Harif' andNationalG Chanman.

• b"G"I"*""'"""

Teren r Clairman, senuw Via Prnido t. U "" *" Pvt'ulatin Crius Ommina! Uniht a N Y Gun ral Gunsd andkratary p;,pg p,,,j % "uns:mr W\\ una a s w cy,;,,,,, S *

• Y ' * '"hh, * '

ont rnationalfamd> planning) """"'"""""""E*W Nuperijwry Ward Y P""A "' " "#"'I'" New %rk New %rl AMRO Bar.l a s arme & kandgy 1 J1. n:, a* Rmda Tlw Nain!ard A ""I'" I '0"'" fred L Hartley (L3 AS,6) us,mo Chaaman of the Ward. s ut Re q.<,, >>,iur b u r,. s u r:t hmd.e un Lennep George W,. Jeffs* Ex:utiti \\;ur 1% udeut I,raul Corporanon acaw Mzunur vihute. 5"'W"U'N"" (energy. chemicah and minoah) Forma hecraary Genaal. "O Los Angdn. Cahprsaa Orpenzanon hr La.nov.i. Caperation & Det dnlcnant Th Hupe. The Nahedamli Ruf KWill. N I F hMIF rN Al. 46

O LawrenceJ. Komatz AEROSPACE Mkhael L Yarymorych Richard E. Shelton Vue Psai4 nt and Gntrdle r MANAGEMENT Viu linihnt and Anoaate Srnuir Vice Pnsi4nt, G "'" D'"""r. Indaari.d Automation Richard R. Mau' Via I&eiidrut, Sam E lacobellis 5tratvir D /rnse Guter P,od,a3 G m enwicatiuns Via Prruhur and Pruident. D matic %hs Grup ELECTRONICS Arnopaa Ojeration, MANAGEMENT Robert K. Thomas James A. McDivitt. Senior Via Preu4nt. Business Units: Ewutin Via 1+aident, Kent M. Black leidmirialGnted Grup Ga n rnmna opvanon, Richard E. Derr dia Presiint and Preuhnt. Norman R. Thomson l. Robert H. Murphy

• yyg,3,y, 3y,,w,/, 6 3j ar Ehari,riics oj,<ratigrn Vize Praikut.

($a,,,,,y 9,g,,, Miur Via irnihnt. Businas Units: Jednaria! Automanon Atanayount and .. Organization Robert H. Gukher Produas Via 14< uhnt and Prnra.: Gilbert V Ameho inu rnanon.d Grup J. Tracy O,Rourke* ,g,x, n pygjj,,,, g, j y gf Via Prardent anJ Pruihnt stir,bl.% 5 Pline Grimarn;ats,r, 5m rra AUTOMOTIVE and Chief Exeratiu offker. MANAGEMENT Aihn-Brad!ry Gmpany. Inc. John), Pscrro James L Churchill """ '*#'"""^^"'""#" ""'"#' ^ "**'a Grat Arthur P. Ronan Arthur P, Ronan' "A "' '"# I*"Ed""' ^ ""? Vue Pr nidan and Praihnt. John D. Cosgrove ^""'""" ' I"'"""' Atanmun e Operations ' Seymour 2. Rubenstein Prailon. Gl!im D<fense I"* "'U# William 4. Sante, il Tra nspor tativi 5y aern s Gcnna/Audiar John A. McLuckey Den Debsset Dir e n P""d""^'""""'" Charles C, Sroops,~1r. Pn uhnt. ollH:phu ay DominkkJ Satwhini Eharonia byaorn p,,,j,a,,,,j y,.n diru Gruaal'fa Gunu! Proic!uit. Unky Tian Phva pI""6" Paul B. Smith Charles R. Ven nel. Via Perudnt, Richard Sc hwartz Via Presehnt and Stephen M. Humphrey Human Rourai Prailan. Rod adyn. Da inan Gentral ALa:arr. Via Praidra arilGerurul Aliwh byucms Dani"" Mart <.gcr, Trarunrinir<r:s arid STRATEGIC DEFENSE ^*#"""" h p m r s e,,nu % i" dECHNOLOGY ALLEN.BRADLEY MANAGEMENT COMPANY William E Rebone,Jr. MANAGEMENT p,g,3,g, f jg y,fgfg Gearge W.Jeffs a,,,p,,,,,u, k uta e Vne Ihu.iv.tJ.,r J. T1acy O'Rourhe sirang:c Defen te ami Via P> onkra and I+aijna Ronald L Roudebush Tu huJ..gy : andChd Ewu:ne uj!br Freuhnt. Or: Harlu a) Prailun and t.inur D:naar 1%odnas U"'I"'" U'""; %uyi: Difime Gnuv GENERAL INDUSTRIES feasinas Units: Walter V. Casto MANAGEMENT 5en:,r Vu e (4rsiani. Robert L Cattoi indu uria: S vkun and Basivess Units: honur Vu e Prt, h va Rwa n h Gml*u rin Group lames D, Cavanaugh & Inpr:n rnig Don H. Davis -p,g,g,y, g, Joseph T. Longo he nwr Via Pre vaan. pu;g Yia Proidnu arid Gnieral Indnunal Gr.pter and nianapr, %iour Coacr G m".wnuanan Grout 5tephen D. 8pentc P*oidnu, haasawa & tto.co A. Petrone pf, g,,,,a g,g y,,, Via Praident.\\v:ou Safa; IVM AWUAl Ri W*T U

O s G E NIR Al IN F O R M Ai!D N f. COMMON STOCK AND $4.75 CONVERT!BLE 7% w NOTES ANNUAL M EETING I-class A COMMON STOCK PREFERRED STOCK, SERIES A 7 "< d" 9'r '""'B"9 s annu M rwiw N.mc "'"'N h ah a./ nir!'J" Symbol; ROK Pr Manuhu rurro, Hanmer r hur Company che barily I hin.n II.uct Mdion bar.L. N A. ,,non A r ayo:t, unct iUWa" DeverIv iidh (. abiornia. at P.O lh.,.i4 600 f mb Ast nur htt3 burgh. Pennu lvanu 1%l 40 Mr!!un Bank. N A New WL, New Wrk hin20 I" *

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• i'nanc9g7 New Wk. New WL 10u01 l'nueJ 9 ares % W1 DIVIDEND REINVESTMENT The hN Nduouai h,mk The Iire N.mu! Hank of besmo of bumni ROCKWELL

1. ""I""O bos m, M u n huu ns02102 Bouon. Ma%husetts U2t02 INTERNATIONAL

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• tmnytk lhlad, <ria DEBENTURES

/ ' K " !><a i d*" da ean) s s.a k a' i 'n n u < w G,,d a 'Im $ N""' A ' Ao > :' l " "< N A melod ne m bn i r rva. mr Me I f Avr d Ihpuhk of (2.t On.tlu U. t: t M ic s a h ' : pe r o r.m ! t ht / aij;ar W L i Bm.. N A " ' U "/l " ? " "'"If" "7 km b Ilats pb r m ( ; wrad .b pa n % ()ne M 4 ) bd (a nic: im rN U % Dvomt m ut Sv. ira riad lb /. C rne tSud urgh. h : ny h,un, M.m I nerrv. w di be turnnhed to I.naa m.. r J h.c i: ii2 M W wwn m d w khah n ulv m 1% ! KncL i louin, w rnwn n. m u INDEPENDENT AUDITORS 1 u i..uu f is L un a N H, 2 i00 Om J P(, PLi l's t d 11 d., Ir sihalita !E i ,00+ M ir L.W 1 (1 IN1) k NM k rNM 48

. We believe maxim; ting the satisfaction of our customers is our most important concern as a means of carranting their continued loyalty. 3 We believe in providing superior value to customers through - high-quality, technologically advanced, fairly-priced products and customer service, designed to meet customer needs better than all ahernatives. We believe Rockwell people are our mostimportant assets,., e making the critical difference in how well Rockwell performsi and, through their work and effort, separatity Rockwell from all

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,-w competitors, q _ pg We believe wgnave an obligation foribi well-being of the s* communitie N5hich we live and work. Y i( l#^' ? ' We belide$cellence is the' standard for all we do, achievid by n - encouraging and nourishing:. 9s Y o Resiect for the individual h ~. ,w, + .g; b.- w o Honest, open commurucanon v 1 o Individual development :and satisfaction -. ' [xQ, o A sensepfownership and responsibility fbr Rockwds suppssj a Participation,' cooperation and readworki + 3 rs Creativity,irinovation and initiative yr, ' s Prudent risk taking ; ..,,70 ' di o Recognition and rewards for achievement -. We beheve success is realized by-. l o Achieving leadership in;tiw markps dserve ' a Focusing our ret,ources aEl ene:gy on global m'arketMerd our - technoiagy,knowled J,iapabilitic's and understanding of J F cust6mers combine to provide the opportunity for leadersidp' .i a Maintaining the highest standards of ethics and integrity in - every action we take, in everything we do; We believe the ultimate measure of our success is thesbility to - provide a superior value to our stockholders, balancing neari erm : t <and long term objec tives to achieve both a competitive return on1 investmem, and consistent increased market vahe.a - 'v- . l >i a

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