________________________________________________________________________________
________________________________________________________________________________
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-K
               [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
                  For the fiscal year ended December 31, 1993
                                       OR
 
             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
                   For the transition period from     to
 
                         Commission file number 1-8974
 
                               ALLIEDSIGNAL INC.
 
             (Exact name of registrant as specified in its charter)

                                       
                DELAWARE                                   22-2640650
- - - - - ----------------------------------------  ---------------------------------------------
    (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                    Identification No.)

           101 Columbia Road
             P.O. Box 4000
         Morristown, New Jersey                            07962-2497
- - - - - ----------------------------------------  ---------------------------------------------
(Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code (201)455-2000
 
Securities registered pursuant to Section 12(b) of the Act:

                                       
                                                      Name of Each Exchange
          Title of Each Class                          on Which Registered
- - - - - ----------------------------------------  ---------------------------------------------
Common Stock, par value $1 per share*                New York Stock Exchange
                                                     Chicago  Stock Exchange
                                                     Pacific  Stock Exchange
Money Multiplier Notes due 1996-2000                 New York Stock Exchange
9 7/8% Debentures due June 1, 2002                   New York Stock Exchange
9.20% Debentures due February 15, 2003               New York Stock Exchange
Zero Coupon Serial Bonds due 1995-2009               New York Stock Exchange
9 1/2% Debentures due June 1, 2016                   New York Stock Exchange

- - - - - ------------
*  The  common  stock  is  also  listed for  trading  on  the  Amsterdam, Basle,
   Frankfurt, Geneva, London, Paris, Tokyo and Zurich stock exchanges.
 
Securities registered pursuant to Section 12(g) of the Act:  None
 
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12  months (or  for such shorter  period that  the Registrant  was
required  to  file  such reports),  and  (2)  has been  subject  to  such filing
requirements for the past 90 days. Yes X No _
Indicate by check mark if disclosure  of delinquent filers pursuant to Item  405
of  Regulation S-K is  not contained herein,  and will not  be contained, to the
best of Registrant's  knowledge, in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
 
The  aggregate market  value of  the voting stock  held by  nonaffiliates of the
Registrant was approximately $11.2 billion at December 31, 1993.
 
There were 283,833,506 shares of Common Stock outstanding at December 31,  1993.
Such  amount  reflects the  impact of  the 2-for-1 stock split  for  shareowners
of record on February 22, 1994.
 
                      Documents Incorporated by Reference
         Part I and II: Annual Report to Shareowners for the Year Ended December
31, 1993.
        Part III: Proxy Statement for Annual Meeting of Shareowners to be held
April 25, 1994.
 
________________________________________________________________________________
________________________________________________________________________________

                               ALLIEDSIGNAL INC.
 
                             CROSS REFERENCE SHEET

                                                                                                     Page(s) in
Form 10-K                                  Heading(s) in Annual Report to Shareowners for              Annual
Item No.                                            Year Ended December 31, 1993                       Report
- - - - - ----------------------------------  ------------------------------------------------------------    ------------
                                                                                              
 1. Business                        Note 25. Segment Financial Data ............................         38
                                    Note 24. Geographic Areas -- Financial Data ................         38
                                    Management's Discussion and Analysis .......................         20
 3. Legal Proceedings               Note 19. Commitments and Contingencies .....................         35
 5. Market for the Regis-           Note 26. Unaudited Quarterly Financial
    trant's Common Equity           Information ................................................         39
    and Related Stock-              Selected Financial Data ....................................         40
    holder Matters
 6. Selected Financial Data         Selected Financial Data ....................................         40
 7. Management's Discussion and     Management's Discussion and Analysis .......................         20
    Analysis of Financial
    Condition and Results of
    Operations
 8. Financial Statements and        Report of Independent Accountants ..........................         39
    Supplementary Data              Consolidated Statement of Income ...........................         27
                                    Consolidated Statement of Retained Earnings ................         27
                                    Consolidated Balance Sheet .................................         28
                                    Consolidated Statement of Cash Flows .......................         29
                                    Notes to Financial Statements ..............................         30

                                                 Heading(s) in Proxy Statement for                   Page(s) in
                                                   Annual Meeting of Shareowners                       Proxy
                                                     to be held April 25, 1994                       Statement
                                    ------------------------------------------------------------    ------------
                                                                                              
10. Directors and Executive         Election of Directors; Voting Securities ...................        2,10
    Officers of the Registrant
11. Executive Compensation          Election of Directors -- Compensation of Directors;
                                    Executive Compensation .....................................        9,12
12. Security Ownership of Certain   Voting Securities ..........................................          10
    Beneficial Owners and
    Management

 
                                       2

NOTE:    AlliedSignal  Inc. is  sometimes  referred  to in  this  Report  as the
Registrant and  as  the Company,  and  AlliedSignal Inc.  and  its  consolidated
subsidiaries are sometimes referred to as the Company.
 
                               TABLE OF CONTENTS

           ITEM                                                                                                  PAGE
           ---------------------------------------------------------------------------------------------------   ----
                                                                                                           
Part I.    1  Business........................................................................................    4
           2  Properties......................................................................................   13
           3  Legal Proceedings...............................................................................   14
           4  Submission of Matters to a Vote of Security Holders.............................................   14
           Executive Officers of the Registrant...............................................................   14
Part II.   5  Market for the Registrant's Common Equity and Related Stockholder Matters.......................   16
           6  Selected Financial Data.........................................................................   16
           7  Management's Discussion and Analysis of Financial Condition and Results of Operations...........   16
           8  Financial Statements and Supplementary Data.....................................................   16
           9  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............   16
Part III.  10 Directors and Executive Officers of the Registrant..............................................   16(a)
           11 Executive Compensation..........................................................................   16(a)
           12 Security Ownership of Certain Beneficial Owners and Management..................................   17(a)
           13 Certain Relationships and Related Transactions..................................................   17
Part IV.   14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.................................   17
Signatures....................................................................................................   19

- - - - - ------------
 
 (a) These  items are omitted  since the  Registrant filed  with the  Securities
     and Exchange Commission a definitive Proxy Statement pursuant to Regulation
     14A  involving  the  election  of  directors.   Certain  other  information
     relating to  the Executive Officers of the Registrant appears at  pages  14
     and 15 of this Report.
 
                                       3

                                    PART I.
 
ITEM 1.   BUSINESS
 
     AlliedSignal Inc. with its consolidated subsidiaries (sometimes referred to
in  this Report as the Company) was organized  in the State of Delaware in 1985.
The Company is the successor to  Allied Corporation, which was organized in  the
State of New York in 1920.
 
     The  Company's  operations  are conducted  under  three  business segments:
aerospace, automotive and engineered materials.
 
     The Company's  products  are  used  by  many  major  industries,  including
textiles,   construction,  plastics,  electronics,  motor  vehicles,  chemicals,
housing,  telecommunications,  utilities,  packaging,  military  and  commercial
aviation and aerospace, and in the space program, and agriculture. The following
is  a description of  the Company's three business  segments and their principal
products and activities.
 
AEROSPACE
 
     The Aerospace segment is  composed of AlliedSignal  Aerospace. It is  among
the  world's largest manufacturers and suppliers of advanced technology products
and services  for  the military,  commercial  and general  aviation,  and  space
markets.
 
     The  Company serves key  military and commercial  segments of the aviation,
defense and space markets with a broad array of systems, subsystems,  components
and  services. It designs, develops, manufactures, markets and services hundreds
of products found on all types of aircraft from single-engine executive aircraft
and wide-bodied 'jumbos', flown by the world's commercial carriers, to trainers,
transports, bombers,  fighters  and  helicopters  used by  the  U.S.  and  other
countries for national defense. The Company's global business consists primarily
of  original-equipment sales  and an  extensive aftermarket  business, including
spare parts,  maintenance  and  repair, and  retrofitting.  Worldwide  customers
include  all of the  major airframe and  engine manufacturers, including Boeing,
McDonnell Douglas,  Lockheed,  Airbus  Industrie  (Airbus),  British  Aerospace,
Fokker, Cessna, Fairchild, Dassault, Rockwell, Pratt & Whitney, General Electric
(GE) and Rolls Royce as well as the world's leading airlines.
 
     Principal products, manufactured for military aircraft, civil air transport
and   general  aviation  markets,  include  primary  propulsion,  consisting  of
turboprop, turbofan, turbojet  and turboshaft engines,  and auxiliary power  gas
turbine  engines; environmental control systems, consisting of air conditioning,
cabin  pressure  and  temperature  controls;  airborne  weather  avoidance   and
collision  avoidance radar  systems; aircraft  communications --  both voice and
data; microwave  landing systems;  automatic flight  control systems;  pneumatic
control  systems; engine  and flight  instruments; motion  sensing and  air data
systems; navigation and  identification equipment,  including identification  of
friend-or-foe   systems;  cockpit  data   recorders;  ground  proximity  warning
equipment; electric  power generating  systems; fuel  control systems;  aircraft
wheels  and brakes;  test systems;  electromechanical and  hydraulic systems and
components; heat  transfer  equipment  and engine  oil  cooling  systems.  Other
products include electronic cooling systems and infrared radiation suppressors.
 
     The  Company also  manufactures products  for missiles,  spacecraft defense
command,  control   communication   and  intelligence   programs   and   oceanic
applications,  primarily  for  defense markets.  Products  include cryptographic
equipment, radar proximity fuzes, space-pointing  devices for deep space  probes
and  control  systems  for  spacecraft,  gyroscopes  for  tactical  missiles and
military aircraft, antisubmarine  warfare systems as  well as field  engineering
management  and technical support services to the National Aeronautics and Space
Administration (NASA) and the U.S. Department of Energy (DOE).
 
     In addition, the Company operates a  large network of aircraft service  and
overhaul  installations.  These operations  include airport-based  facilities in
California, Texas,  Illinois, Georgia  and New  York, plus  repair and  overhaul
facilities  in Alabama and Arizona in the  U.S. as well as Singapore, the United
Kingdom (U.K.) and Germany overseas.
 
                                       4

     In 1993 the  Company completed  the purchase of  Sundstrand's Data  Control
business  which  had  1992 sales  of  $194  million. The  operation,  now called
AlliedSignal Avionics,  strengthens  the  Company's core  avionics  business  by
broadening  its commercial and avionics product lines and by providing important
systems integration  opportunities.  The  integration of  data  management  with
communications  and derivative systems is one of the fastest growing segments of
the avionics market.  The Company  also acquired  the aircraft  wheel and  brake
overhaul  operations of Air  Treads, Inc. which had  1992 sales of approximately
$22 million. In March 1994  the Company announced  that it was  negotiating with
Moog Inc.  the sale of  a small business which manufactures  mechanical  and
hydraulic actuation products.
 
     The Company is affected by the level of expenditures for defense and  space
programs  and  the  level  of  production  of  commercial  and  general aviation
aircraft. The  Company's aerospace  products  are sold  directly  to the  U.  S.
government,  aircraft manufacturers and commercial  airlines, and to dealers and
distributors of general aviation products.
 
     Moderate growth in the Company's commercial business for aerospace products
is expected,  over  the long  term,  to mitigate  a  reduction in  U.S.  defense
spending.  Moreover, aerospace  sales are not  dependent on any  one key defense
program  or   commercial  customer.   However,  contract   awards  by   aircraft
manufacturers, some of which are discussed below, can be cancelled or reduced if
aircraft  orders are cut back. The products and services are sold in competition
with those of a large number of other companies, some of which have  substantial
financial  resources  and  significant technological  capabilities.  Among those
companies that  compete with  several of  the segment's  product areas  are  GE,
Honeywell, Rockwell International, Sundstrand and United Technologies.
 
     Sales  to the U.S.  government, acting through  its various departments and
agencies and through prime contractors, amounted to $1,911 million for 1993  and
$2,061  million  for 1992,  which  amounts include  sales  to the  Department of
Defense of $1,391 million in 1993 and $1,570 million in 1992. Approximately  61%
and  64% of sales  to the U.S.  government in 1993  and 1992, respectively, were
made under fixed-price  contracts in  which the  Company agrees  to perform  the
contract  for a fixed price and retains  for itself any benefits of cost savings
or must bear the burden of cost overruns.
 
     Government contracts are  generally terminable by  the government at  will.
Upon  termination,  the contractor  is  normally entitled  to  reimbursement for
allowable costs and  to an  allowance for profit.  However, if  the contract  is
terminated  because of the contractor's default,  the contractor may not recover
all of  its costs  and  may be  liable  for any  excess  costs incurred  by  the
government in procuring undelivered items from another source.
 
     The  Company, as are other government contractors, is subject to government
investigations of business practices and compliance with government  procurement
regulations.  Although  such  regulations  provide  that  a  contractor  may  be
suspended or debarred from government contracts under certain circumstances, and
the outcome  of  pending  government investigations  cannot  be  predicted  with
certainty,  management is not presently aware of any such investigation which it
expects will have a material adverse effect on the Company.
 
     Orders for  certain  products  sold  to  general  and  commercial  aviation
customers  mainly  consist  of  relatively  short-term  and  frequently  renewed
commitments. Government procurement agencies generally issue contracts  covering
relatively  long  periods of  time.  The total  backlog  of unfilled  orders for
products and services for  both government and  commercial contracts was  $4,773
million  at December 31, 1993  and $4,859 million at  December 31, 1992 of which
funded U.S. and foreign government orders were $1,283 million and $1,557 million
for the  respective years.  The Company  anticipates that  approximately  $2,335
million of the total 1993 backlog will be filled during 1994.
 
     The  Aerospace  segment's  international  operations  consist  primarily of
exporting  U.S.  manufactured  products,  performance  of  services,   operating
aircraft  repair and overhaul facilities and licensing activities. The principal
manufacturing facilities outside of the U.S. are in Canada and Germany.
 
     In 1993, as in the prior year, U.S. defense budgets and those of most other
nations continued to  decline. Furthermore,  most major  U.S. and  international
airlines  operated  in  a  difficult  economic  environment   with  only  modest
turnarounds beginning in the  second half of 1993.  While the regional  airlines
showed some financial strength, growth in the high end corporate aviation market
remained
 
                                       5

flat. As a result, 1993 was a challenging year. Nonetheless, Aerospace
had strong success in booking new  programs, being awarded approximately 65%  of
the programs bid.
 
     Chalk  Airlines purchased AlliedSignal Engine's (AE) TPE331-14 turboprop to
re-engine their fleet of  Albatross amphibian aircraft.  The sales potential  of
the  engine retrofit program is $24 million.  The U.S. Army funded a $73 million
contract add-on under which LHTEC, the joint venture company of the Allison  Gas
Turbine Division of General Motors and AE, will continue development of a growth
version  of its T-800 turboshaft  engine which has been  selected for use on the
RAH-66 Comanche helicopter.
 
     The Company received  new military  avionics contracts in  1993. Guidance &
Control  Systems (GCS),  teamed with  Chrysler Technology,  was awarded  a major
contract from  the  U.S. Air  Force  (USAF) for  the  update of  autopilots  and
displays  for the C-130 and  C-141 aircraft. The program  has a potential to the
Company of $500 million  in sales over  the life of  the program. Air  Transport
Avionics  was awarded  a $15  million contract  from Lockheed  to supply Traffic
Alert and Collision  Avoidance Systems  (TCAS II)  for the  C-130 aircraft.  GCS
received  an  order  from McDonnell  Douglas  Helicopter Company  to  update the
display processor for  the AH-64  Longbow Apache  helicopter, a  program with  a
sales potential to the Company of over $300 million. Communications Systems (CS)
received a significant contract from the USAF Special Operations Command for the
Multi-mission  Advanced Tactical Terminal (MATT), a program with $170 million in
sales potential. CS also led one of four winning teams for the Advanced Research
Projects Agency's  Small Low-cost  Interceptor Device  (SLID) program  which  is
expected  to develop military  land vehicle protection through  the use of smart
small projectiles.  SLID has  a sales  potential of  $110 million.  CS was  also
awarded   several  contracts   for  its   APX-100  Identification  Friend-or-Foe
transponder with the U.S. Navy, Air National Guard, U.K. Ministry of Defence and
Teledyne Ryan.  Combined,  the sales  potential  to  the Company  is  over  $150
million.
 
     Other  key  military aircraft  equipment awards  included the  F-18E/F (the
Navy's first-line fighter) wheels and  brakes by Aircraft Landing Systems  (ALS)
and  the F-22  Integrated Environmental  Control System  by Aerospace  Systems &
Equipment (ASE), together worth more than  $340 million in sales potential.  The
latter was particularly notable because it began as a component procurement, but
ASE's  strong focus  on systems  integration turned it  into a  contract for the
complete Environmental Control System.
 
     AlliedSignal Technical Services (ATSC) was  successful in booking a  number
of important technical services programs. These programs included the NASA White
Sands  program, worth  $225 million  in sales,  the U.S.  Marine Corps' Maritime
Prepositioning Ship (MPS) program, worth $125 million in sales, and a number  of
smaller NASA programs worth over $130 million in sales.
 
     In the commercial and general aviation aircraft market, ALS was awarded the
position  of one of  two wheel and brake  suppliers for Boeing  on its new 737-X
transport, a program with $1.3 billion in sales potential to the Company. On the
new Gulfstream G-5 aircraft, AE was  awarded a contract to supply the  Auxiliary
Power  Unit  (APU);  ASE,  the  Environmental  Control  System,  and  Controls &
Accessories was  awarded the  contract for  the Cabin  Pressure Control  System.
Together  the awards have a sales potential of $130 million. Also, Fluid Systems
received the  Engine Starting  System contract  for the  BMW/Rolls Royce  BR-710
engine,  the selected engine for both the Gulfstream G-5 and the Canadair Global
Express aircraft.  Furthermore, ASE  received the  Environmental Control  System
contract  for the  new Learjet Model  45 general  aviation aircraft. Significant
1993 awards from commercial  airlines included the  following: the ALS  business
won  the wheels and  brakes on the  Continental Airline fleet  with $170 million
sales potential; AE won  an APU long-term maintenance  service agreement from  a
major  airline  worth $135  million  in potential  sales;  ALS also  was awarded
significant wheels and  brake awards from  JAL, Air France  and Egyptair with  a
combined sales potential of $140 million.
 
     In  the spacecraft market, Lockheed Missile & Space Company awarded GCS the
ring laser gyro  and momentum wheel  contracts for their  Iridium program and  a
ring  laser  gyro  contract for  their  FSAT-A (Frugal  Satellite)  program. The
combined sales potential of these is $50 million.
 
     The Company was also awarded a  number of contracts in 1992, including  the
following:
 
     Learjet, a unit of Bombardier, Inc., awarded a key contract to AE to supply
its  new series  TFE 731-20 turbofan  engine for  the new Model  45 Learjet. The
contract has a potential for $1 billion  in sales 

                                       6

over the life of the  program. Also,  in the  general  aviation  area, Cessna, a
unit  of Textron Inc., selected, for its Citation  X,  APUs, Air  Turbine  Start
Systems     and     Cabin     Pressure     Control   Systems    made    by   the
Company's  Auxiliary Power, Fluid Systems and Controls & Accessories businesses.
The ALS business  received an important  launch order from  British Airways  for
wheels  and brakes  on its  Boeing 777 aircraft  and the  Air Transport Avionics
business received significant orders for its  TCAS II from British Airways,  Air
France and Thai Airways. In addition, the Air Transport Avionics business signed
a  joint venture agreement  with the Scientific  Research Institute for Aircraft
Equipment of  Russia  for  the  joint design,  development  and  manufacture  of
avionics  for aircraft to be  built in Russia. The  new partnership combines the
Institute's  software  and  systems  integration  expertise  with  the   design,
production, marketing and customer support capabilities of the Company.
 
     In  the military  market, the  Company received  several awards  on the new
F-18E/F fighter program.  McDonnell Douglas  awarded the main  and nose  landing
gear to a team of the Company's ALS business and the Dowty Group and it selected
ASE  to provide servovalves for actuation systems. LHTEC received a $240 million
development contract for a growth version of its T-800 engine that was  selected
for  use in  the RAH-66  Comanche helicopter program.  On the  new F-22 Advanced
Tactical Fighter (ATF) being developed by the team of Lockheed, Boeing and Pratt
&  Whitney, the  Company has been  awarded several contracts. The ATF Integrated
Maintenance System  (AIMS)  was awarded to the GCS  business,  a  contract  with
nearly $100 million  of sales  potential over the  life of  the program.  Boeing
awarded  a contract for the  F-22 Auxiliary Power Generation  System (APGS) to a
team of AE, ASE, Controls &  Accessories and Fluid Systems businesses. The  U.S.
Navy's  NAVSEA organization made two major awards to the Ocean Systems business,
the TB-23  and the  TB-16/BQW  follow-on submarine  towed arrays.  Together  the
awards total $24 million and offer $130 million sales potential over the life of
the programs.
 
     Some  technologically  significant  research  and  development  awards were
received by the Company  offering future contribution to  its product base.  The
DOE's  Oak Ridge  National Laboratories  awarded a  contract to  the Company for
advanced heat engine ceramic technology. The Naval Air Warfare Center awarded  a
program  for research on advanced high pressure ratio high tip speed centrifugal
compressor technology  to the  Propulsion Engines  business. The  USAF's  Wright
Laboratories  awarded a  contract for  development of  an Integrated  Power Unit
(electric APU) to the Auxiliary Power Systems business and it awarded a contract
for development of an electrically actuated braking system to a team of the  ALS
and  Fluid Systems businesses.  The trend of  customers towards the  use of more
electric systems and components in aircraft makes these awards important.
 
     The Company expects  that these  programs will require  only minimal  fixed
capital spending.
 
AUTOMOTIVE
 
     The  Automotive  segment designs,  engineers  and manufactures  systems and
components for the  worldwide vehicle manufacturers  and aftermarket  customers.
The  segment's principal business areas  are braking systems, engine components,
safety restraint  systems and  the aftermarket.  Within each  area, the  segment
offers  a wide range  of products  for  passenger  cars  and  light, medium  and
heavy trucks.
 
     For manufacturers of passenger cars and light trucks, the Company  provides
disc  and  drum brakes,  power brake  boosters  and master  cylinders, anti-lock
braking systems  (ABS),  friction  materials,  spark  plugs,  turbochargers  and
occupant protection systems (seat belts, air bags and related components).
 
     The Company's primary product offerings for the manufacturers of medium and
heavy  trucks and  off-road vehicles primarily  include air  and hydraulic brake
actuation components,  air  and  hydraulic  drum and  disc  brakes,  ABS,  slack
adjusters,  air  dryers,  fan clutches,  friction  materials,  turbochargers and
charge-air intercoolers.
 
     The aftermarket business includes replacement  parts for most of the  above
items  as well as air, oil and fuel  filters, wire and cable products, and brake
sealants and fluids.
 
     Automotive operations are located in  the U.S., Australia, Brazil,  Canada,
France, Germany, India, Ireland, Italy, Japan, Malaysia, Mexico, Portugal, South
Korea,  Spain and the U.K. Distribution and

                                       7

marketing  are  conducted  in  these  and  numerous  other  countries  as  well.
Internationally,  products  are  marketed  under  the  Bendix,  Fram,  Autolite,
Garrett and Jurid trademarks.
 
     Worldwide  passenger car  and truck original-equipment  sales accounted for
approximately 70% in 1993  and 68% in  1992 of the net  sales of the  Automotive
segment  with aftermarket  sales accounting  for the  balance. In  1993 and 1992
Automotive operations outside the U.S. accounted for $2,002 and $2,391  million,
or 44% and 53%, respectively, of worldwide sales.
 
     In  1993  and  1992  sales  of  automotive  original-equipment  systems and
components were  made to  approximately 30  customers of  which five  automotive
manufacturers  accounted for  approximately 60%  and 58%,  respectively, of such
sales. Total worldwide  sales (for original-equipment  and aftermarket use)  for
1993 and 1992 to the five automotive manufacturers amounted to $1,886 and $1,754
million,  including sales to Ford Motor Company, the segment's largest customer,
of $715 and $640 million for the respective years.
 
     The Company has established joint  venture relationships with Gilardini,  a
European  seat belt supplier, which is  expected to provide growth opportunities
in both seat belts and air bag inflators.
 
     The Company has  formed a  joint venture, International  Auto Parts,  Ltd.,
with other international companies to provide for the supply and distribution of
components   and  accessories   for  the   import  vehicle   market  in  Russia.
Additionally, the Company has purchased Filtram, the exclusive manufacturer  and
distributor of its Fram'r' filter products in Mexico. The Company intends to use
Filtram's  broad  distribution network  in Mexico  to  provide growth  for other
Company aftermarket  products, including  brakes, friction  materials and  spark
plugs.
 
     The  Automotive  segment's truck  brake  operations have  been restructured
under venture agreements with Knorr-Bremse  AG of Munich, Germany. Two  ventures
have  been  formed. The  Company  manages and  owns  65% of  the  North American
operation and  owns  35% of  the  European business.  Annual  sales of  the  two
ventures  are expected  to be  about $650 million.  The objective  of forming an
alliance with Knorr-Bremse is to provide  a higher level of support and  enhance
the Company's ability to  supply air  brake controls and related products to the
truck industry.
 
     During 1992 and 1993 the Automotive segment has been refocusing its efforts
and making investments to become a more competitive total brake system supplier.
The  Company  continues   to  apply  advanced   engineering  and   manufacturing
technologies  from around the world to improve the design and quality of its ABS
product. New  ABS product  introductions and  major awards  on a  number of  car
models  are expected to continue to provide the Company with the synergies to be
a worldwide total brake system supplier.
 
     The  Company initiated  facilities rationalization  plans in  1991 and 1992
which will significantly  reduce the  number of  worldwide automotive  locations
through  1995.  By  the  end  of 1993,  20  operating  plants  had  been closed.
Rationalization and consolidations of  sales offices, distribution centers,  and
research and development facilities will continue throughout 1994.
 
     The  segment's operations  outside the  U.S. are  conducted through various
foreign companies in  which it  has interests  ranging from  minor interests  to
complete  control. International operations  also include the  exporting of U.S.
manufactured products and licensing activities.
 
     The Automotive segment's products are sold in highly competitive markets to
customers who demand performance, quality and competitive prices. Virtually  all
automotive  components are sold in  competition with other independent suppliers
or with the captive component divisions of the vehicle manufacturers. While  the
Company's  competitive position varies among  its products, the Company believes
it is a  significant factor  in each  of its  major product  markets. The  major
independent  competitors in one or more major business areas include: ITT Teves,
Lucas Girling,  Rockwell-WABCO,  Dana, Autoliv,  Cooper  Industries,  Schwitzer,
Midland, Bosch, Kelsey Hayes, KKK, TRW, Purolator, Takata and Morton.
 
ENGINEERED MATERIALS
 
     The  Engineered Materials segment is composed  of five major divisions: the
Fibers Group,  Chemicals  and  Catalysts, Performance  Materials,  Plastics  and
AlliedSignal Laminate Systems Inc.
 
                                       8

 
     Fibers  Group. The Company  is a leading  producer of type  6 nylon and the
third largest producer  of nylon in  the U.S.  The Company is  also the  largest
domestic  producer  of  caprolactam, the primary intermediate for  type 6 nylon,
from which it produces fine and heavy denier nylon yarns  and molding  compounds
and  film. These  yarns are  sold under  the trademarks   Anso'r',  Anso   X'r',
Anso  IV'r', Anso  V'r',  Worry-Free'r', CrushResister'tm'  and  Caprolan'r'. In
addition,  the   Company  produces  heavy denier  polyester  yarns.  The Company
primarily  sells  yarns  to  the  carpet,  textile, motor vehicle and industrial
markets.
 
     In the carpet yarn markets, both continuous filament and staple nylon yarns
are sold to yarn  processors and mills for  the manufacture of carpeting.  Nylon
filament  and staple are the dominant fiber yarns used in carpet production. The
four largest  producers,  including  the  Company, have  over  90%  of  domestic
capacity.   The  Company  has  achieved  recognition  as  a  leader  in  product
development and has developed a strong customer base. Brand identity, service to
customers and quality are important competitive factors in the market and  there
is  considerable price competition. In the motor vehicle and industrial markets,
the Company's primary  products are nylon  and polyester yarns  for use in  tire
cord,  seat belts, hoses, tarpaulins and  outdoor furniture. In 1993 the Company
completed construction of a $200 million industrial polyester yarn facility with
42 million pounds capacity in Longlaville, France and started customer shipments
in  the  fourth quarter of 1993. The Company believes that polyester  yarn  will
become the primary reinforcement  for passenger car  radial tires in  the  world
in  the 1990s and is exploring development opportunities in the Far East.
 
     The   principal  markets  for  textile  fibers,  where  the  Company  sells
Caprolan'r' nylon  flat  yarns  for  warp knit  and  weaving  applications,  are
intimate  apparel, sports outerwear,  jackets and such  recreational products as
sleeping bags, back packs and luggage. The industry is highly price competitive.
 
     In October 1993 the Company announced that it is discussing a joint venture
with BASF, and that it had also completed the acquisition of AKZO's carpet fiber
business in Europe. The Company and BASF are discussing the combination of their
domestic carpet and textile nylon fiber  businesses. The Company and BASF  would
each  own 50% of  the venture. The companies believe that  the combination would
result in significant operational efficiencies. The combination is subject to  a
number of conditions. The AKZO carpet fiber business, which had 1993 revenues of
$70  million, produces  continuous filament  yarn and  is located  in Emmen, The
Netherlands. The  acquisition  will  strengthen  the  Company's  position  as  a
supplier  of  products  to the  European  market. Previously,  the  Company only
exported fibers to the European market.
 
     Chemicals and  Catalysts. The  division manufactures  and markets  fluorine
products, environmental catalysts and oximes.
 
     The  major  fluorine products  are  hydrofluoric acid  (HF), fluorocarbons,
uranium hexafluoride (UF6)  and sulfur  hexafluoride (SF6). The  Company is  the
world's largest producer of HF and an industry leader in the production and sale
of products derived from HF, including fluorocarbons, UF6 and SF6.
 
     Genetron'r'    fluorocarbons   are   sold   mainly   as   refrigerants   to
original-equipment  and  replacement  manufacturers  of  air  conditioning   and
refrigeration  equipment and  as foam  blowing agents  to rigid  foam producers.
Genesolv'r'  fluorocarbons   are  sold   as  solvents   in  precision   cleaning
applications   such   as   electronics,  optics   and   aerospace  applications.
Approximately 60%  of the  Company's Genetron'r'  and Genesolv'r'  products  are
chlorofluorocarbons (CFCs). The Montreal Protocol (Protocol), which is supported
by  87  countries,  regulates  worldwide  CFC  production  and  consumption. The
Protocol requires  100%  elimination  of fully  halogenated  CFC  production  by
industrialized  countries by December  31, 1995. The amended  U.S. Clean Air Act
also regulates CFCs and similarly requires that most U.S. production of CFCs  be
phased  out by  the end of  1995. CFCs are  also subject to  the Ozone Depleting
Chemical Tax  of  the  Revenue  Reconciliation  Act  of  1989.  Because  of  the
availability  of  non-fluorine-based  substitute technologies,  the  Company has
decided to de-emphasize the solvents market  and to focus its activities on  the
foam and refrigerant markets.
 
     The  Company is pursuing development of environmentally-safer fluorocarbons
to replace  the current  CFC  product line.  An  existing commercial  plant  was
converted  in  1991 to  manufacture  hydrochlorofluorocarbon (HCFC)-141b,  a key
substitute for CFC-11, a blowing agent  in urethane
 
                                       9

foams,  and  as  a  replacement  for CFC-113 in  critical  solvent applications.
Commercial quantities of HCFC-141b were  produced  in 1992.  In 1993 the Company
more than  doubled  the  plant's  capacity, from 20  to  50  million  pounds per
year.  The  Company  also  continued  its commercialization  effort  directed at
key  CFC substitute  products  in various applications, including automotive air
conditioning and residential,  commercial and industrial refrigeration. In early
1993 the Company began construction of a $100 million  multi-product  commercial
facility  targeted  primarily  at  the substitute  products  HCFC-123, HCFC-124,
HFC-125  and  HFC-134a.  The first phase of  the  facility,  estimated  to  cost
about $70  million,  is  expected  to begin operations in the  second quarter of
1994. These new  products are expected to service key applications as production
of  current  CFCs  are  phased out. While management cannot predict the ultimate
outcome  of  these  research  and  development efforts and continuing regulatory
issues, it does not currently expect that the Protocol or the U.S. Clean Air Act
will have a material adverse effect on the Company. However, the Company can not
predict  the impact  of possible  future regulatory issues.
 
     The  Company also  expanded its fluorocarbon  business in  1993 through the
acquisition of Praxair Inc.'s U.S.  sterilant gas business. Praxair's  sterilant
gases  primarily consist of  blends of ethylene  oxide and CFCs  and are sold to
hospitals, medical device makers  and contract sterilizers.  As CFCs are  phased
out  of  the  marketplace,  blends  of  the  environmentally-safer  HCFC-124 are
expected to become the product of choice.
 
     The Company  processes  uranium  ore  concentrates into  UF6  which  is  an
essential  intermediate in  the production  of fuel  elements for  nuclear power
reactors for  domestic  and  foreign  customers.  In  November  1992  a  Company
subsidiary  entered  into a  partnership with  a  General Atomics'  affiliate to
market UF6 conversion services supplied by  the  Company's  Metropolis, Illinois
manufacturing  facility. The partnership, ConverDyn, competes for the open world
market with  four  foreign  processors  that  are  either  government  owned  or
controlled. The Company is one of two domestic producers of SF6, a gas primarily
used  by utilities  because of its  electrical insulatory  properties in circuit
breakers, switches, transmission lines and electronic minisubstations.
 
     The Environmental  Catalysts  business is  a  major worldwide  supplier  of
catalysts used in catalytic converters for automobiles. The Company has expanded
its  catalyst manufacturing facility in Florange,  France to service the growing
European market which requires stringent automotive emission standards effective
in 1993. The  Company is  currently supplying  the European  market through  its
newly  expanded  facility. The  Company also  completed  construction of  a $4.5
million manufacturing facility in San Luis Potosi, Mexico and shipments began in
the third  quarter  of 1993.  The  Company and  General  Motors have  agreed  in
principle  to  become  partners  in  the  Environmental  Catalysts  business  by
combining their relevant assets to conduct the business. The venture is expected
to be operational before the end of 1994.
 
     The Oximes business is  the leading supplier  of specialty oxime  chemicals
for use in the agricultural, coatings, photograph, pharmaceutical, adhesives and
sealants,  and mining industries. The Company has certain cost benefits from its
captive source of hydroxylamine sulfate. In  early 1993 the Company acquired the
specialty  chemicals business of Koch Chemicals  which is expected to accelerate
the growth of this business.
 
     Performance  Materials.   Major  businesses   include  A-C'r'   performance
additives,  the  Paxon  high-density  polyethylene  (HDPE)  and  the  UOP  joint
ventures, and tar products.
 
     A-C'r' performance additives are low-molecular weight polyethylene  polymer
additives  which primarily serve the  textiles, plastics, adhesives and polishes
specialty markets worldwide.
 
     The Paxon joint venture is equally owned with Exxon Corporation. The  joint
venture  manufactures  HDPE  resins  used  in  the  production  of  plastics for
household and industrial  products. The  Company's interest in  the Paxon  joint
venture is accounted for by the equity method.
 
     UOP  is an equally owned joint venture with Union Carbide Corporation which
designs and  licenses processes,  and  produces and  markets catalysts  for  the
petroleum  refining,  gas  processing, petrochemical  and  food  industries. The
Company's interest  in the  UOP joint  venture is  accounted for  by the  equity
method.
 
                                       10

 
     The  Tar Products  business produces  binder pitch  for electrodes  for the
aluminum and  carbon industries,  creosote oils  as preservatives  for the  wood
products   and  carbon  black   markets,  refined  naphthalene   as  a  chemical
intermediate, and driveway  sealer tar  and roofing pitch  for the  construction
industry.  All of the tar products are  distilled from coal tar, a by-product of
the steel industry's coking operations.
 
     Plastics. The Plastics business manufactures and markets engineering resins
and specialty films. The  Company is a leading  producer of nylon 6  engineering
resins (Capron'r') for the automotive, electrical and electronic component, food
packaging,  lawn care  and power  tool markets.  Major products in the Specialty
Films business include  cast nylon  (Capran'r'), biaxially  oriented nylon  film
(Biax'r')  and  fluoropolymer film  (Aclar'r').  Specialty film  markets include
food, pharmaceutical, and other packaging and industrial applications.
 
     AlliedSignal Laminate Systems Inc.  The business unit manufactures  circuit
board  laminates  for the  electronic and  electrical industries.  The Company's
product line  includes  copper  clad  and unclad  laminates  used  in  computer,
telecommunication,  instrumentation and military applications. Approximately 40%
of sales  are to  the  international market,  primarily  in southeast  Asia  and
throughout  Europe. The Company, in partnership  with Mitsui Mining and Smelting
Company,  is backward  integrated in  electro deposited copper foil. The Company
completed  construction  of a new laminates  plant  in  Thailand  in  the  first
quarter of 1994.
 
     The  Company manufactures  amorphous metals (METGLAS'r'  Alloys) that offer
significant  efficiency  gains  in  electrical  distribution  transformers  over
conventional electrical steel, which is currently used.
 
     The  principal raw materials  used in the  Engineered Materials segment are
generally  readily   available  and   include  cumene,   natural  gas,   sulfur,
terephthalic   acid,  ethylene  and  ethylene   glycol,  fluorspar,  HF,  carbon
tetrachloride, chloroform,  nylon  resins, fiberglass,  copper  foil,  platinum,
rhodium and coal tar pitch. The Company is producing all of its HF and virtually
all  of its  nylon resin requirements.  Important competitors are:  Du Pont, GE,
Monsanto, Hoechst/Celanese,  BASF  Fibers, Koppers,  U.S.I.,  Phillips,  Soltex,
Atochem and Nan Ya.
 
SEGMENT FINANCIAL DATA
 
     Note  25 (Segment Financial  Data) of Notes to  Financial Statements in the
Company's 1993 Annual Report to shareowners is incorporated herein by reference.
 
DOMESTIC AND FOREIGN FINANCIAL DATA
 
     Note 24  (Geographic  Areas  --  Financial  Data)  of  Notes  to  Financial
Statements  in the Company's  1993 Annual Report  to shareowners is incorporated
herein by reference.
 
FOREIGN ACTIVITIES
 
     The Company's foreign businesses are  subject to the usual risks  attendant
upon investments in foreign countries, including nationalization, expropriation,
limitations  on repatriation of  funds, restrictive action  by local governments
and changes in foreign currency exchange rates.
 
     The Company's principal foreign manufacturing operations are in  Australia,
Brazil,  Canada, France, Germany, Ireland, Italy, Japan, Mexico, Portugal, South
Korea, Spain, Singapore,  Taiwan and the  U.K. The Company  maintains sales  and
business  offices  in  these  and various  other  countries,  including Austria,
Belgium, China, Denmark, Finland, Hong Kong, India, New Zealand, Norway, Sweden,
The Netherlands and  Turkey as  well as warehousing,  distribution and  aircraft
repair  and overhaul facilities to support  foreign operations and export sales.
Further information  about  foreign  activities  is  discussed  in  the  segment
narratives.
 
                                       11

 
RAW MATERIALS
 
     Among the principal raw materials used by the Company, in addition to those
previously  discussed  for  the Engineered  Materials  segment,  are electronic,
optical  and  mechanical   component  parts  and   assemblies,  electronic   and
electromechanical   devices,   metallic   products,   magnetic   and   induction
devices, castings, forgings, steel and bar stock, copper, aluminum, platinum and
titanium. The Company  believes that  sources of  supply for  raw materials  and
components are generally adequate.
 
PATENTS AND TRADEMARKS
 
     The   Company  owns   approximately  15,500   patents  or   pending  patent
applications and  is  licensed  under  other patents  covering  certain  of  its
products  and processes.  It believes that,  in the aggregate,  the rights under
such patents and licenses  are generally important to  its operations, but  does
not  consider that any patent or license or  group of them related to a specific
process or product is of material importance in relation to the Company's  total
business.
 
     The  Company also has  registered trademarks for a  number of its products.
Some of the  more significant  trademarks include:  AiResearch, Anso,  Autolite,
Bendix,  Bendix/King, Capron, Fram,  Garrett, Genetron, Jurid,  King and Norplex
Oak.
 
RESEARCH AND DEVELOPMENT
 
     The Company's research  activities are  directed toward  the discovery  and
development of new products and processes, improvements in existing products and
processes, and the development of new uses of existing products.
 
     Research and development expense totaled $313 million in 1993, $320 million
in  1992  and $381  million in  1991.  Customer-sponsored (principally  the U.S.
government) research and development activities amounted to an additional  $514,
$501 and $463 million in 1993, 1992 and 1991.
 
     The  Company's Research and Technology organization has research facilities
at Morris Township,  New Jersey and Des Plaines, Illinois consisting of research
and development  laboratories where  special  emphasis  is  placed  upon applied
research and upon development of new products and processes.  In addition, there
are  approximately  49 other research  laboratories and facilities which provide
direct support to the operating segments.
 
ENVIRONMENT
 
     The  Company is  subject to various  federal, state  and local requirements
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment. It is the Company's policy to comply  with
these  requirements  and the  Company believes  that, as  a general  matter, its
policies, practices and procedures are properly designed to prevent unreasonable
risk  of  environmental  damage,  and  of  resulting  financial  liability,   in
connection  with its  business. Some risk  of environmental  damage is, however,
inherent in particular  operations and products  of the Company,  as it is  with
other  companies  engaged in  similar businesses.  (See  the description  of the
Engineered Materials  segment, above,  for information  regarding regulation  of
CFCs.)
 
     The  Company is and has  been engaged in the  handling, manufacture, use or
disposal of many substances which are classified as hazardous or toxic by one or
more regulatory agencies. The  Company believes that, as  a general matter,  its
handling,  manufacture, use and  disposal of such substances  are in accord with
environmental laws  and  regulations.  It  is  possible,  however,  that  future
knowledge   or  other  developments,  such  as  improved  capability  to  detect
substances in  the  environment,  increasingly  strict  environmental  laws  and
standards  and enforcement  policies thereunder,  could bring  into question the
Company's handling, manufacture, use or disposal of such substances.
 
     Among other  environmental  requirements, the  Company  is subject  to  the
federal  Superfund law, and similar state laws, under which the Company has been
designated as a potentially  responsible party which may  be liable for  cleanup
costs  associated with various hazardous  waste sites, some of  which are on the
U.S. Environmental Protection Agency's Superfund priority list. Although,  under
some
 
                                       12

court  interpretations  of  these  laws, there  is  a  possibility  that a
responsible party might  have to bear  more than its  proportional share of  the
cleanup  costs if  it is  unable to  obtain appropriate  contribution from other
responsible parties, the Company has not had to bear significantly more than its
proportional share in multi-party situations taken as a whole.
 
     Capital expenditures  for  environmental  control  facilities  at  existing
operations  were $39 million in 1993. The  Company estimates that during each of
the years 1994  and 1995 such  capital expenditures will  be in the  $45 to  $50
million range. In addition to capital expenditures, the Company has incurred and
will continue to incur operating costs in connection with such facilities.
 
     Reference is made to Management's Discussion and Analysis at page 23 of the
Company's  1993 Annual Report to  shareowners, incorporated herein by reference,
for further information regarding environmental matters.
 
EMPLOYEES
 
     The Company had  an aggregate of  86,400 salaried and  hourly employees  at
December  31, 1993. Of the approximately  31,000 unionized employees, 15,000 are
employed in  the  Company's  U.S.  and Canadian  plants  and  other  facilities.
Unionized  employees are represented by local unions that are either independent
or affiliated with  the United  Auto Workers, the  International Association  of
Machinists,  the United Steel  Workers of America, the  Oil, Chemical and Atomic
Workers International Union, the International Brotherhood of Teamsters and many
other national and international unions.  Relations between the Company and  its
employees  and their  various representatives have  been generally satisfactory,
although  the  Company  has  experienced  work  stoppages  from  time  to  time.
Approximately  22% of  the Company's U.S.  and Canadian  unionized employees are
covered by labor contracts scheduled to expire in 1994. Major labor negotiations
in 1994 will include locations in all of the segments.
 
ITEM 2.   PROPERTIES
 
     The Company  has  almost  400  locations  consisting  of  plants,  research
laboratories,  sales  offices and  other  facilities. The  plants  are generally
located to  serve large  marketing areas  and to  provide accessibility  to  raw
materials  and  labor pools.  The properties  are  generally maintained  in good
operating condition.  Utilization  of  these plants  may  vary  with  government
spending  and other business conditions; however, no major operating facility is
significantly idle.  The  facilities,  together  with  planned  expansions,  are
expected  to meet  the Company's needs  for the foreseeable  future. The Company
owns or leases warehouses, railroad cars, barges, automobiles, trucks, airplanes
and materials handling and data processing  equipment. It also leases space  for
administrative  and sales staffs. The  Company's headquarters and administrative
complex are located at Morris Township, New Jersey.
 
     The principal plants, which  are owned in  fee unless otherwise  indicated,
are as follows:
 
                                   AEROSPACE
 
Phoenix, AZ (4 plants, 3 fully leased, 1 partially leased)
Prescott, AZ
Tempe, AZ
Tucson, AZ (partially leased)
Sylmar, CA
Torrance, CA (partially leased)
Fort Lauderdale, FL
South Bend, IN
Olathe, KS
Columbia, MD
Towson, MD
Kansas City, MO (owned by the U.S. Government and managed by the Company)
Eatontown, NJ
Teterboro, NJ
Rocky Mount, NC
South Montrose, PA
Redmond, WA (partially leased)
Rexdale, Ont., Canada (partially leased)
Montreal, Que., Canada
Raunheim, Germany
 
                                   AUTOMOTIVE
 
Greenville, AL
Torrance, CA
St. Joseph, MI
Fostoria, OH
Greenville, OH
Sumter, SC
Jackson, TN
Maryville, TN
Clearfield, UT
Campinas, Brazil
Bristol, England
Beauvais, France
Conde, France
Moulins, France
Thaon-Les-Vosges, France
Trelaze, France
Crema, Italy
Glinde, Germany
 
                                       13

                              ENGINEERED MATERIALS
 
Metropolis, IL
Baton Rouge, LA
Geismar, LA
Moncure, NC
Catoosa, OK
Philadelphia, PA
Pottsville, PA
Columbia, SC
Chesterfield, VA
Hopewell, VA
 
ITEM 3.   LEGAL PROCEEDINGS
 
     The  first paragraph of Note 19 (Commitments and Contingencies) of Notes to
Financial Statements  at  page  35  of  the  Company's  1993  Annual  Report  to
shareowners  is incorporated herein by reference.  While the ultimate results of
investigations, lawsuits and claims involving the Company cannot be  determined,
management  does  not expect  that these  matters will  have a  material adverse
effect on the consolidated financial position of the Company.
 
ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
                                 Not Applicable
 
EXECUTIVE OFFICERS OF THE REGISTRANT
 
     The executive officers of  the Registrant, listed  as follows, are  elected
annually in April. There are no family relationships among them.

          NAME, AGE,
          DATE FIRST
      ELECTED AN OFFICER                                     BUSINESS EXPERIENCE
- - - - - -------------------------------  ----------------------------------------------------------------------------
                              
Lawrence A. Bossidy (a), 59      Chairman  of the  Board since January  1992. Chief Executive  Officer of the
              1991                 Company since  July  1991. Vice  Chairman  and Executive  Officer  of  the
                                   General Electric Company (diversified industrial corporation) from 1984 to
                                   June 1991.
Daniel P. Burnham, 47            Executive Vice President and President, AlliedSignal Aerospace since January
              1991                 1992. Executive Vice President and President-Elect, AlliedSignal Aerospace
                                   Company  from July 1991 to December 1991. President, AiResearch Group from
                                   March 1990 to  June 1991. President,  Fibers Division from  April 1988  to
                                   February 1990.
Frederic M. Poses, 51            Executive  Vice President  and President,  AlliedSignal Engineered Materials
              1988                 since April 1988.
Ralph E. Reins, 53               Executive  Vice  President  and  President,  AlliedSignal  Automotive  since
              1991                 November  1991. President of  United Technologies Corporation (diversified
                                   high-technology  manufacturer)  Automotive  Group  from  October  1990  to
                                   October  1991.  Chairman, President  and Chief  Executive Officer  of Mack
                                   Truck, Inc.  (automotive heavy  vehicle manufacturer)  from June  1989  to
                                   September  1990. Senior Vice  President and President  and Chief Executive
                                   Officer of ITT  (diversified enterprise) Automotive  from January 1987  to
                                   May 1989.
Isaac R. Barpal, 54              Senior  Vice President and Chief Technology  Officer since August 1993. Vice
              1993                 President --  Science &  Technology of  Westinghouse Electric  Corporation
                                   (electric equipment manufacturer) from June 1987 to July 1993.
John W. Barter, 47               Senior Vice President and Chief Financial Officer since July 1988.
              1985

- - - - - ------------
 (a) Also a director.
 
                                                  (table continued on next page)
 
                                       14

(table continued from previous page)

          NAME, AGE,
          DATE FIRST
      ELECTED AN OFFICER                                     BUSINESS EXPERIENCE
- - - - - -------------------------------  ----------------------------------------------------------------------------
                              
Peter M. Kreindler, 48           Senior  Vice President  and General  Counsel since  March 1992.  Senior Vice
              1992                 President and General  Counsel-Elect from January  1992 to February  1992.
                                   Partner,  Arnold & Porter  (law firm) from January  1990 to December 1991.
                                   Principal and Associate General Counsel, Coopers & Lybrand (accounting and
                                   consulting firm) from September 1988 to December 1989.
David G. Powell, 60              Senior Vice President -- Public Affairs since September 1985.
              1985
Donald J. Redlinger, 49          Senior Vice  President --  Human Resources  since January  1991. Staff  Vice
              1991                 President  -- Human Resources from March 1990 to December 1990. Staff Vice
                                   President --  Organization Planning  and Compensation  from June  1988  to
                                   February 1990.
Paul R. Schindler, 52            Senior  Vice  President  --  International since  August  1993.  Chairman of
              1993                 Imperial Chemical  Industries  Asia/Pacific (chemical  manufacturer)  from
                                   April  1991 to July  1993. Chairman of  Imperial Chemical Industries China
                                   from July 1989 to March 1991. Chairman of Imperial Industries France  from
                                   January 1986 to June 1989.
James E. Sierk, 55               Senior  Vice President -- Quality and  Productivity since January 1991. Vice
              1991                 President --  Quality  Office,  Development  and  Manufacturing  of  Xerox
                                   Corporation  (business products  and systems and  financial services) from
                                   February 1990 to December 1990.  Vice President -- National Quality  Award
                                   Office,  Xerox from December 1989 to January 1990. Vice President -- Latin
                                   American and Canadian  Operations, Xerox  from February  1986 to  November
                                   1989.
Hans B. Amell, 42                Vice   President  --  Marketing   since  August  1993.   Vice  President  --
              1993                 International Strategy  of  The  Dun &  Bradstreet  Corporation  (business
                                   information,  publishing,  marketing and  television)  April 1991  to July
                                   1993. Vice President -- Corporate Marketing Programs of Unisys Corporation
                                   (business information  systems,  data processing  and  aerospace  products
                                   manufacturer) from September 1987 to March 1991.
Edward W. Callahan, 63           Vice  President -- Health, Safety and Environmental Sciences since September
              1985                 1985.
Kenneth W. Cole, 47              Vice President -- Government Relations since January 1989.
              1989
G. Peter D'Aloia, 49             Vice President  and  Controller  since February  1994.  Vice  President  and
              1985                 Treasurer from August 1988 to January 1994.
Nancy A. Garvey, 44              Vice   President   and   Treasurer   since   February   1994.   Staff   Vice
              1994                 President -- Investor Relations November 1989 to January 1994. Manager  of
                                   Investment  Manager  Relations of  General Motors  Corporation (automotive
                                   manufacturer) December 1987 to October 1989.
Andrew B. Samet, 52              Vice President, Secretary and Associate General Counsel since May 1988.
              1988

                                       15

                                    PART II.
 
ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS
 
     Market and  dividend  information  for the  Registrant's  common  stock  is
contained  in Note  26 (Unaudited Quarterly  Financial Information)  of Notes to
Financial Statements  at  page  39  of  the  Company's  1993  Annual  Report  to
shareowners, and such information is incorporated herein by reference.
 
     The  number of record holders of the Registrant's common stock is contained
in the statement  'Selected Financial  Data' at page  40 of  the Company's  1993
Annual  Report to  shareowners, and such  information is  incorporated herein by
reference.
 
ITEM 6.   SELECTED FINANCIAL DATA
 
     The information  included  under  the  captions  'For  the  Year'  and  'At
Year-End' in the statement 'Selected Financial Data' at page 40 of the Company's
1993 Annual Report to shareowners is incorporated herein by reference.
 
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS
 
     'Management's  Discussion  and  Analysis'  on  pages  20 through 26  of the
Company's 1993 Annual Report to shareowners is incorporated herein by reference.
 
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
     The  Company's consolidated financial statements,  together with the report
thereon of Price Waterhouse dated February 3, 1994 except for Note 1 (Subsequent
Events), which is as of February 7, 1994 appearing on  pages  27 through  39 of
the  Company's  1993  Annual Report to shareowners, are  incorporated herein  by
reference.  With  the  exception  of  the  aforementioned  information  and  the
information incorporated by reference in Items 1, 3, 5, 6 and 7, the 1993 Annual
Report to shareowners is not to be deemed filed as part of this Form 10-K Annual
Report.
 
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE
 
                                 Not Applicable
 
                                   PART III.
 
ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Information relating to directors of the Registrant, as well as information
relating to compliance  with Section  16(a) of  the Securities  Exchange Act  of
1934,  is  contained in a  definitive  Proxy Statement involving the election of
directors which the Registrant filed with the Securities and Exchange Commission
pursuant  to  Regulation  14A,  and such information  is incorporated herein  by
reference.  Certain  other  information  relating  to  Executive Officers of the
Registrant appears at pages 14 and 15 of this Form 10-K Annual Report.
 
ITEM 11.   EXECUTIVE COMPENSATION
 
     Information  relating to  executive compensation is contained in  the Proxy
Statement referred to above in 'Item 10. Directors and Executive Officers of the
Registrant,' and such information is incorporated herein by reference.
 
                                       16

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     Information relating to security ownership of certain beneficial owners and
management  is contained in the  Proxy Statement referred to above in  'Item 10.
Directors  and  Executive Officers  of the Registrant,'  and such information is
incorporated herein by reference.
 
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
                                 Not Applicable
 
                                    PART IV.
 
ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

                                                                                            REFERENCE
                                                                                ---------------------------------
                                                                                  FORM 10-K      ANNUAL REPORT TO
                                                                                ANNUAL REPORT      SHAREOWNERS
                                                                                    PAGE               PAGE
                                                                                -------------    ----------------
                                                                                           
(a)(1.) Index to Consolidated Financial Statements:
          Incorporated by reference to the 1993 Annual Report to shareowners:
          Report of Independent Accountants..................................         --                39
          Consolidated  Statement of Income for  the years ended December 31,
            1993, 1992 and 1991..............................................         --                27
          Consolidated Statement  of Retained  Earnings for  the years  ended
            December 31, 1993, 1992 and 1991.................................         --                27
          Consolidated Balance Sheet at December 31, 1993 and 1992...........         --                28
          Consolidated  Statement of Cash Flows  for the years ended December
            31, 1993, 1992 and 1991..........................................         --                29
          Notes to Financial Statements......................................         --                30
(a)(2.) Index to Consolidated Financial Statement Schedules:
         Report   of   Independent   Accountants   on   Financial   Statement
           Schedules.........................................................         20                --

                                                                                   
       V --  Property,  Plant and Equipment for  the years ended December 31,
             1993, 1992 and 1991.............................................         21                --
      VI --  Accumulated Depreciation and Amortization of Property, Plant and
             Equipment for  the  years  ended December  31,  1993,  1992  and
             1991............................................................         22                --
      IX --  Short-term  Borrowings for  the years  ended December  31, 1993,
             1992 and 1991...................................................         23                --
       X --  Supplementary   Income    Statement    Information    for    the
             years ended December 31, 1993, 1992 and 1991....................         24                --

     The  financial statement schedules  should be read  in conjunction with the
financial statements  incorporated by  reference in  Item 8  of this  Form  10-K
Annual Report. Schedules other than those listed above have been omitted because
of  the absence of the  conditions under which they  are required or because the
information required is shown  in the consolidated  financial statements or  the
notes thereto.
 
                                       17

(a)(3.) Exhibits
 
     See  the  Exhibit Index  to  this Form  10-K  Annual Report.  The following
      exhibits listed on the Exhibit Index are filed with this Form 10-K  Annual
      Report:

EXHIBIT NO.                                          DESCRIPTION
- - - - - -----------   -----------------------------------------------------------------------------------------
           
   10.2*      Deferred Compensation Plan for Non-Employee Directors of AlliedSignal Inc., as amended
   10.14*     Agreement dated December 21, 1993 between the Company and Alan Belzer
   13         Pages  20 through  40  (except  for the  data  included  under  the  captions  'Financial
                Statistics'  on page 40)  of the  Company's 1993  Annual Report to shareowners
   21         Subsidiaries of the Registrant
   23         Consent of Independent Accountants
   24         Powers of Attorney

     The  exhibits identified above and in the Exhibit Index with an asterisk(*)
are management contracts or compensatory plans or arrangements.
 
(b) Reports on Form 8-K
 
     No reports on Form 8-K were filed  for the three months ended December  31,
1993.
 
                                       18

                                   SIGNATURES
 
     Pursuant  to  the requirements  of Section  13 or  15(d) of  the Securities
Exchange Act of 1934, the  Registrant has duly caused  this annual report to  be
signed on its behalf by the undersigned, thereunto duly authorized.
 
                                                 AlliedSignal Inc. 

March 15, 1994                                   By     /s/ G. PETER D'ALOIA
                                                    ----------------------------
                                                         G. Peter D'Aloia
                                                   Vice President and Controller
 
     Pursuant  to the requirements of the  Securities Exchange Act of 1934, this
annual report has been signed  below by the following  persons on behalf of  the
Registrant and in the capacities and on the date indicated:

               NAME                                    NAME
               ----                                    ----

                     *                                   *
- - - - - ----------------------------------        -------------------------------------
       Lawrence A. Bossidy                      Robert P. Luciano
  Chairman of the Board and Chief                     Director
  Executive Officer and Director                       

                     *                                   *
- - - - - ----------------------------------        -------------------------------------
            Hans W. Becherer                        Russell E. Palmer
              Director                                 Director

                     *                                   
- - - - - ----------------------------------        -------------------------------------
          Jewel Plummer Cobb                       Andrew C. Sigler
              Director                                 Director

                     *                                   *
- - - - - ----------------------------------        -------------------------------------
           Eugene E. Covert                        John R. Stafford
              Director                                 Director

                     *                                   *
- - - - - ----------------------------------        -------------------------------------
            Ann M. Fudge                            Thomas P. Stafford
              Director                                 Director

                     *                                   *
- - - - - ----------------------------------        -------------------------------------
          William R. Haselton                     Delbert C. Staley
              Director                                 Director

                     *                                   *
- - - - - ----------------------------------        -------------------------------------
           Paul X. Kelley                          Robert C. Winters
              Director                                 Director

                     *
- - - - - ----------------------------------
          Robert D. Kilpatrick
              Director

         /s/ JOHN W. BARTER                        /s/ G. PETER D'ALOIA
- - - - - ----------------------------------        -------------------------------------
           John W. Barter                            G. Peter D'Aloia
         Senior Vice President                 Vice President and Controller
     and Chief Financial Officer                (Chief Accounting Officer)

*By:     /s/ JOHN W. BARTER
      ----------------------------
         (John W. Barter,
        Attorney-in-fact)

March 15, 1994

                                       19

                       REPORT OF INDEPENDENT ACCOUNTANTS
                 ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
 
To the Board of Directors of AlliedSignal Inc.
 
Our  audits of the  consolidated financial statements referred  to in our report
dated February  3, 1994  appearing  on page  39 of  the  1993 Annual  Report  to
Shareowners  of  AlliedSignal  Inc.  (which  report  and  consolidated financial
statements are incorporated  by reference in  this Annual Report  on Form  10-K)
also  included an audit of the Consolidated Financial Statement Schedules listed
in Item 14(a) of  this Form 10-K. In  our opinion, these Consolidated  Financial
Statement  Schedules present fairly,  in all material  respects, the information
set forth  therein  when  read  in conjunction  with  the  related  consolidated
financial statements.
 
/s/ PRICE WATERHOUSE

4 Headquarters Plaza North
Morristown, New Jersey 07962-1965
February 3, 1994
 
                                       20

                                                           (DOLLARS IN MILLIONS)
 
                ALLIEDSIGNAL INC. AND CONSOLIDATED SUBSIDIARIES
 
                  SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT

                                           BALANCE AT        ADDITIONS     SALES AND                       ADOPTION OF
           CLASSIFICATION               BEGINNING OF YEAR     AT COST     RETIREMENTS    ADJUSTMENTS(1)    FASB #109(2)
- - - - - -------------------------------------   -----------------    ---------    -----------    --------------    ------------
                                                                                            
                                                                 YEAR ENDED DECEMBER 31, 1993
                                                                 ----------------------------
Land and land improvements...........        $   301           $  10         $   4           $   (3)          $ --
Machinery and equipment..............          4,982             441            71              (59)            --
Buildings............................          1,173              54             7               12             --
Office furniture and equipment.......            594              73             7              (38)            --
Transportation equipment.............            146              18            17               (3)            --
Construction in progress.............            433             122            (6)             (33)            --
                                        -------------------------------------------------------------------------------
     Total...........................        $ 7,629           $ 718         $ 100           $ (124)          $ --
                                        -------------------------------------------------------------------------------
                                                                 YEAR ENDED DECEMBER 31, 1992
                                                                 ----------------------------
Land and land improvements...........        $   311           $   5         $  15           $   (1)          $ --
Machinery and equipment..............          4,431             470            51                8             91
Buildings............................          1,048              96            19               (9)            47
Office furniture and equipment.......            531              71             6               (6)             3
Transportation equipment.............            139              18            10               (1)            --
Construction in progress.............            402              31             2              (13)            --
                                        -------------------------------------------------------------------------------
     Total...........................        $ 6,862           $ 691         $ 103           $  (22)          $141
                                        -------------------------------------------------------------------------------
                                                                 YEAR ENDED DECEMBER 31, 1991
                                                                 ----------------------------
Land and land improvements...........        $   312           $   4         $   1           $   (4)          $ --
Machinery and equipment..............          4,183             426            23             (189)            --
Buildings............................            974              92             3              (17)            --
Office furniture and equipment.......            476              63             3               (5)            --
Transportation equipment.............            138              12            10               (1)            --
Construction in progress.............            352              71         --                 (25)            --
                                        -------------------------------------------------------------------------------
     Total...........................        $ 6,435           $ 668         $  40           $ (241)          $ --
                                        -------------------------------------------------------------------------------

                                        INITIALLY       DECONSOLIDATED      BALANCE AT
           CLASSIFICATION              CONSOLIDATED      BUSINESSES(3)      END OF YEAR
- - - - - -------------------------------------  ------------   -------------------   -----------
                                                                   
                                                 YEAR ENDED DECEMBER 31, 1993
                                                 ----------------------------
Land and land improvements...........      $ 18                 $ (1)         $   321
Machinery and equipment..............        61                  (58)           5,296
Buildings............................        14                   (5)           1,241
Office furniture and equipment.......        15                   (3)             634
Transportation equipment.............         2                   (1)             145
Construction in progress.............         3                   --              531
                                        ---------------------------------------------
     Total...........................      $113                 $(68)         $ 8,168
                                        ---------------------------------------------
                                                 YEAR ENDED DECEMBER 31, 1992
                                                 ----------------------------
Land and land improvements...........      $  1                 $ --          $   301
Machinery and equipment..............        33                   --            4,982
Buildings............................        10                   --            1,173
Office furniture and equipment.......         1                   --              594
Transportation equipment.............        --                   --              146
Construction in progress.............        15                   --              433
                                        ---------------------------------------------
     Total...........................      $ 60                 $ --          $ 7,629
                                        ---------------------------------------------
                                                 YEAR ENDED DECEMBER 31, 1991
                                                 ----------------------------
Land and land improvements...........      $ --                 $ --          $   311
Machinery and equipment..............        34                   --            4,431
Buildings............................         2                   --            1,048
Office furniture and equipment.......        --                   --              531
Transportation equipment.............        --                   --              139
Construction in progress.............         4                   --              402
                                        ---------------------------------------------
     Total...........................      $ 40                 $ --          $ 6,862
                                        ---------------------------------------------

- - - - - ------------
 
Notes: (1) Effect of translating foreign currency balance sheets to U.S. dollars
           and  in 1991 the  effect of write-downs  relating to the streamlining
           and restructuring program.
       (2) Effect of  adopting  FASB  #109  --  Accounting  for  Income  Taxes,
           effective January 1, 1992.
       (3) In  1993 represents  the deconsolidation  of the  European air-brake
           control business.
 
                                       21

                                                           (DOLLARS IN MILLIONS)
 
                ALLIEDSIGNAL INC. AND CONSOLIDATED SUBSIDIARIES
            SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION
                        OF PROPERTY, PLANT AND EQUIPMENT

                                                                               ADDITIONS
                                                                BALANCE AT    CHARGED TO
                                                                BEGINNING      COSTS AND      SALES AND
                        CLASSIFICATION                           OF YEAR      EXPENSES(1)    RETIREMENTS    ADJUSTMENTS(2)
- - - - - --------------------------------------------------------------  ----------    -----------    -----------    --------------
                                                                                                
                                                                               YEAR ENDED DECEMBER 31, 1993
                                                                               ----------------------------
Depreciation and amortization:
     Land improvements........................................    $   66          $  3           $ 1              $  1
     Machinery and equipment..................................     2,739           369            41               (35)
     Buildings................................................       446            53             6                 5
     Office furniture and equipment...........................       393            71             5               (34)
     Transportation equipment.................................        88            18            15                (1)
                                                                ----------------------------------------------------------
     Total....................................................    $3,732          $514           $68              $(64)
                                                                ----------------------------------------------------------
                                                                               YEAR ENDED DECEMBER 31, 1992
                                                                               ----------------------------
Depreciation and amortization:
     Land improvements........................................    $   63          $  4           $ 1               $--
     Machinery and equipment..................................     2,354           364            29                17
     Buildings................................................       390            49            11                 3
     Office furniture and equipment...........................       337            61             5                (2)
     Transportation equipment.................................        80            18             8                (1)
                                                                ----------------------------------------------------------
     Total....................................................    $3,224          $496           $54               $17
                                                                ----------------------------------------------------------
                                                                               YEAR ENDED DECEMBER 31, 1991
                                                                               ----------------------------
Depreciation and amortization:
     Land improvements........................................    $   59          $  4           $ 1              $  1
     Machinery and equipment..................................     2,092           344            14               (68)
     Buildings................................................       350            42             2                --
     Office furniture and equipment...........................       281            61             3                (2)
     Transportation equipment.................................        69            19             7                (1)
                                                                ----------------------------------------------------------
     Total....................................................    $2,851          $470           $27              $(70)
                                                                ----------------------------------------------------------

                                                                                                     BALANCE
                                                                ADOPTION OF      DECONSOLIDATED      AT END
                        CLASSIFICATION                          FASB #109(3)      BUSINESSES(4)      OF YEAR
- - - - - --------------------------------------------------------------  ------------   -------------------   -------
                                                                                            
                                                                     YEAR ENDED DECEMBER 31, 1993
                                                                     ----------------------------
Depreciation and amortization:
     Land improvements........................................        $--                $ --          $   69
     Machinery and equipment..................................         --                 (37)          2,995
     Buildings................................................         --                  (1)            497
     Office furniture and equipment...........................         --                  (2)            423
     Transportation equipment.................................         --                  --              90
                                                                ---------------------------------------------
     Total....................................................        $--                $(40)         $4,074
                                                                ---------------------------------------------
                                                                      YEAR ENDED DECEMBER 31, 1992
                                                                      ----------------------------
Depreciation and amortization:
     Land improvements........................................        $--                 $--          $   66
     Machinery and equipment..................................         33                  --           2,739
     Buildings................................................         15                  --             446
     Office furniture and equipment...........................          2                  --             393
     Transportation equipment.................................         (1)                 --              88
                                                                ---------------------------------------------
     Total....................................................        $49                 $--          $3,732
                                                                ---------------------------------------------
                                                                      YEAR ENDED DECEMBER 31, 1991
                                                                      ----------------------------
Depreciation and amortization:
     Land improvements........................................        $--                 $--          $   63
     Machinery and equipment..................................         --                  --           2,354
     Buildings................................................         --                  --             390
     Office furniture and equipment...........................         --                  --             337
     Transportation equipment.................................         --                  --              80
                                                                ---------------------------------------------
     Total....................................................        $--                 $--          $3,224
                                                                ---------------------------------------------

- - - - - ------------
 
Notes:  (1) Estimated service lives used for computing depreciation range from 3
            to 40 years.
        (2) Effect  of  translating  foreign  currency  balance  sheets  to U.S.
            dollars and  in  1991 the  effect  of write-downs  relating  to  the
            streamlining and restructuring program.
        (3) Effect  of  adopting  FASB  #109  --  Accounting  for  Income Taxes,
            effective January 1, 1992.
        (4) In 1993  represents the  deconsolidation of  the European  air-brake
            control business.
 
                                       22

                                                           (DOLLARS IN MILLIONS)
 
                ALLIEDSIGNAL INC. AND CONSOLIDATED SUBSIDIARIES
                      SCHEDULE IX -- SHORT-TERM BORROWINGS

                                                      WEIGHTED AVERAGE
                                                        INTEREST RATE        MAXIMUM OUTSTANDING
                                     BALANCE AT          ON YEAR END           AT A MONTH END        AVERAGE OUTSTANDING
     YEARS ENDED DECEMBER 31         END OF YEAR        BALANCE(1)(2)          DURING YEAR(1)          DURING YEAR(1)
- - - - - ---------------------------------    -----------     -------------------     -------------------     -------------------
                                                                                         
1993.............................       $ 220                9.12%                  $ 598                   $ 320
1992.............................       $ 154                8.92%                  $ 829                   $ 490
1991.............................       $ 736               10.91%                  $ 957                   $ 807

 
                                   WEIGHTED AVERAGE
                                     INTEREST RATE
     YEARS ENDED DECEMBER 31       DURING YEAR(1)(2)
- - - - - ---------------------------------  -----------------
                                  
1993.............................        11.17%
1992.............................         9.88%
1991.............................         9.88%

- - - - - ------------
Notes: (1) Includes  amounts  for   weighted   average  interest  rate,  maximum
           outstanding, average  outstanding and the  weighted average  interest
           rate  during the  year  for commercial paper of: 3.35%, $322 million,
           $212 million and  3.18%  for 1993; 7.74%, $507 million, $274  million
           and 4.39% for 1992, and 5.1%, $446 million, $291 million and 7.2% for
           1991. The outstanding  commercial paper balance at December 31, 1993,
           1992  and  1991,  was  $164  million,  $4 million  and $263  million,
           respectively.
       (2) Includes rates for borrowings of  foreign subsidiaries. In  1993  and
           1992  such foreign  borrowings represented  a  greater  proportion of
           total borrowings than in the prior period.
 
                                       23

                                             (DOLLARS IN MILLIONS)
 
                ALLIEDSIGNAL INC. AND CONSOLIDATED SUBSIDIARIES
            SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION

                                                                 CHARGED TO COSTS AND EXPENSES
                                                              -----------------------------------
                 YEARS ENDED DECEMBER 31                       1993           1992           1991
- - - - - ----------------------------------------------------------     ----           ----           ----
                                                                                   
Maintenance and repairs...................................    $ 356          $ 363          $ 369
Depreciation  and  amortization   of  intangible   assets,
  preoperating costs and similar deferrals................      *              *              *
Taxes, other than income taxes:
     Payroll..............................................      338            333            325
     Property.............................................       55             63             57
     Other................................................       17             21             20
                                                                ---            ---            ---
                                                                410            417            402
Royalties.................................................      *              *              *
Advertising costs.........................................      *              *              *
- - - - - ------------
* Less than 1 percent of total sales and revenues.

                                       24

                              STATEMENT OF DIFFERENCES
The registered trademark shall be expressed as 'r'

Subscript numerics in chemistry notation shall be expressed as baseline
numerics, e.g., sulfur hexaflouride would be expressed as SF6.

                                  APPENDIX

Graphic and Image information: See narratives substituted for 6 charts on pages
21, 22 and 24 of the paper format of Exhibit 13.

                                 EXHIBIT INDEX

EXHIBIT NO.                                       DESCRIPTION
- - - - - -----------   --------------------------------------------------------------------------------------------
           
   3(i)       Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit
                99.1 to the Company's Form 10-Q for the quarter ended March 31, 1993)
   3(ii)      By-laws of the Company, as amended (incorporated by reference to Exhibit 99.2 to the
                Company's Form 10-Q for the quarter ended March 31, 1993)
   4.1        Rights Agreement, dated as of May 30, 1986, between the Company and The Bank of New York
                (incorporated by reference to Exhibit 4 to the Company's Form 8-K dated June 5, 1986)
   4.2        Amendment, dated as of December 16, 1988, to the Rights Agreement, dated as of May 30, 1986,
                between the Company and The Bank of New York (incorporated by reference to Exhibit 4 to the
                Company's Form 8-K dated December 16, 1988)

     The  Company is a party to  several long-term debt instruments under which,
in each case, the total amount of  securities authorized does not exceed 10%  of
the  total assets of the  Company and its subsidiaries  on a consolidated basis.
Pursuant to paragraph 4(iii)(A)  of Item 601(b) of  Regulation S-K, the  Company
agrees  to furnish  a copy  of such instruments  to the  Securities and Exchange
Commission upon request.

           
   9          Omitted (Inapplicable)
  10.1        Master Support Agreement, dated as of February 26, 1986 as amended and restated as of January
                27, 1987, as further amended as of July 1, 1987 and as again amended and restated as of
                December 7, 1988, by and among the Company, Wheelabrator Technologies Inc., certain
                subsidiaries of Wheelabrator Technologies Inc., The Henley Group, Inc. and Henley Newco
                Inc. (incorporated by reference to Exhibit 10.1 to the Company's Form 10-K for the year
                ended December 31, 1988)
  10.2*       Deferred Compensation Plan for Non-Employee Directors of AlliedSignal Inc., as amended (filed
                herewith)
  10.3*       Retirement Plan for Non-Employee Directors of Allied-Signal Inc., as amended (incorporated by
                reference to Exhibit 19.2 to the Company's Form 10-Q for the quarter ended June 30, 1990)
  10.4*       Restricted Stock Plan for Non-Employee Directors of Allied-Signal Inc., effective September
                27, 1985 (incorporated by reference to Exhibit 10.4 to the Company's Form 10-K for the year
                ended December 31, 1985)
  10.5*       1985 Stock Plan for Employees of Allied-Signal Inc. and its Subsidiaries, as amended
                (incorporated by reference to Exhibit 19.3 to the Company's Form 10-Q for the quarter ended
                September 30, 1991)
  10.6*       Allied-Signal Inc. Incentive Compensation Plan for Executive Employees (incorporated by
                reference to Exhibit A to the Company's Proxy Statement, dated March 10, 1992, filed
                pursuant to Rule 14a-6 of the Securities Exchange Act of 1934)
  10.7*       Supplemental Non-Qualified Savings Plan for Highly Compensated Employees of AlliedSignal Inc.
                and its Subsidiaries, as amended (incorporated by reference to Exhibit 10.1 to the
                Company's Form 10-Q for the quarter ended June 30, 1993)
  10.8*       1982 Stock Option Plan for Executive Employees of Allied Corporation and its Subsidiaries, as
                amended (incorporated by reference to Exhibit 19.4 to the Company's Form 10-Q for the
                quarter ended September 30, 1991)
  10.9*       Allied-Signal Inc. Severance Plan for Senior Executives, as amended (incorporated by reference
                to Exhibit 19.1 to the Company's Form 10-Q for the quarter ended September 30, 1991)

 
EXHIBIT NO.                                       DESCRIPTION
- - - - - -----------   -----------------------------------------------------------------------------------------
           
  10.10*      1993 Stock Plan for Employees of AlliedSignal Inc. and its Affiliates (incorporated by
                reference to Exhibit A to the Company's Proxy Statement, dated March 9, 1993, filed
                pursuant to Rule 14a-6 of the Securities Exchange Act of 1934)
  10.11*      Agreement between the Company and Lawrence A. Bossidy, as amended (incorporated by reference
                to Exhibit 10.11 to the Company's Form 10-K for the year ended December 31, 1991)
  10.12*      Amendment Agreement between the Company and Lawrence A. Bossidy (incorporated by reference to
                Exhibit 19 to the Company's Form 10-Q for the quarter ended June 30, 1992)
  10.13*      Agreement dated May 6, 1988 between the Company and Alan Belzer (incorporated by reference to
                Exhibit 19 to the Company's Form 10-Q for the quarter ended June 30, 1988)
  10.14*      Agreement dated December 21, 1993 between the Company and Alan Belzer (filed herewith)
  10.15*      Description of Agreement between the Company and Ralph E. Reins (incorporated by reference to
                Exhibit 10.13 to the Company's Form 10-K for the year ended December 31, 1992)
  10.16       Revolving Credit Agreement, dated as of July 7, 1993, among the Company, certain banks,
                Citibank, N.A., as Administrative Agent for the banks, and ABN AMRO Bank N.V. and Morgan
                Guaranty Trust Company of New York, as Co-Agents (incorporated by reference to Exhibit 10.2
                to the Company's Form 10-Q for the quarter ended June 30, 1993)
  10.17       364-Day Credit Agreement, dated as of July 7, 1993, among the Company, certain banks,
                Citibank, N.A., as Administrative Agent for the banks, and ABN AMRO Bank N.V. and Morgan
                Guaranty Trust Company of New York, as Co-Agents (incorporated by reference to Exhibit 10.3
                to the Company's Form 10-Q for the quarter ended June 30, 1993)
  11          Omitted (Inapplicable)
  12          Omitted (Inapplicable)
  13          Pages 20 through 40 (except for the data included under the captions  'Financial  Statistics'
                on page 40) of the Company's 1993 Annual Report to shareowners (filed herewith)
  16          Omitted (Inapplicable)
  18          Omitted (Inapplicable)
  21          Subsidiaries of the Registrant (filed herewith)
  22          Omitted (Inapplicable)
  23          Consent of Independent Accountants (filed herewith)
  24          Powers of Attorney (filed herewith)
  27          Omitted (Inapplicable)
  28          Omitted (Inapplicable)
  99          Omitted (Inapplicable)

- - - - - ------------
 
     The Exhibits identified above with an asterisk(*) are management  contracts
or compensatory plans or arrangements.

                                                                    EXHIBIT 10.2

            DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS OF
                               ALLIEDSIGNAL INC.
                 (AS AMENDED EFFECTIVE AS OF NOVEMBER 1, 1993)
 
1. ELIGIBILITY
 
     Each   member  of  the  Board  of   Directors  of  AlliedSignal  Inc.  (the
'Corporation') who  is  not  an  employee  of the  Corporation  or  any  of  its
subsidiaries  is eligible to  participate in the  Deferred Compensation Plan for
Non-Employee Directors of AlliedSignal Inc. (the 'Plan').
 
2. PARTICIPATION
 
     (a) Time of  Election. Prior to  the beginning of  any calendar year,  each
eligible  Director  who is  not  then participating  in  the Plan  may  elect to
participate in the Plan by  directing that all or  any part of the  compensation
(including  compensation  payable for  services  as a  member  or chairman  of a
committee of the Board)  which otherwise would have  been payable currently  for
services  as a Director during such  calendar year and succeeding calendar years
shall be credited to a deferred compensation account (the 'Director's  account')
either  in cash or in  shares of the Corporation's  Common Stock. Any person who
shall become a Director during any calendar year, and who was not a Director  of
the  Corporation prior to the beginning of such calendar year, may elect, before
the Director's  term  begins,  to defer  payment  of  all or  any  part  of  the
Director's  compensation  for  the  remainder  of  such  calendar  year  and for
succeeding calendar years.
 
     (b) Form and Duration of Election.  An election to participate in the  Plan
shall  be made  by written notice  executed by  the Director and  filed with the
Secretary of the Corporation. Such election  shall continue in effect until  the
Director  terminates such election by written notice filed with the Secretary of
the Corporation. Any such  termination shall become effective  as of the end  of
the  calendar  year in  which  such notice  is given  and  only with  respect to
compensation payable for services as a Director thereafter. Amounts credited  to
the  Director's account prior to the effective  date of termination shall not be
affected by such termination  and shall be distributed  only in accordance  with
the terms of the Plan.
 
     (c)  Adjustment of Amount Deferred. Prior  to the beginning of any calendar
year, a Director participating in the Plan may file another written notice  with
the  Secretary of the Corporation electing  to change the amount of compensation
to be credited to the Director's  account for services as a Director  commencing
with such calendar year. Amounts credited to the Director's account prior to the
effective  date of such change shall not be affected by such change and shall be
distributed only in accordance with the terms of the Plan.
 
     (d) Renewal. A Director who has terminated his election to participate  may
thereafter file another election to participate for the calendar year subsequent
to the filing of such election to participate and succeeding calendar years.
 
3. THE DIRECTOR'S ACCOUNT
 
     (a)  All compensation which a Director has  elected to defer under the Plan
shall be credited to the Director's account, either in cash or in shares of  the
Corporation's  Common Stock (valued for quarterly  retainer payments at the mean
between the highest and lowest sales prices of the Common Stock reported as  New
York  Stock Exchange - Composite Transactions for the first business day of the
calendar quarter and valued  for meeting fees  at such mean for  the day of  the
meeting  (or, if  there were no  sales on  such day, at  such mean  for the next
preceding day  on which  there were  sales)), as  elected by  the Director.  The
Director  shall  not  have  any  interest in  the  cash  or  Common  Stock until
distributed in accordance with the Plan.
 
     (b) Cash  amounts credited  to the  Director's account  for services  as  a
Director  during 1993 or any prior calendar year shall accrue amounts equivalent
to interest commencing on the date such amounts would otherwise have been  paid,
at  a  rate  per  annum  for  each  calendar  quarter  fixed  by  the  Treasurer

 

of the Corporation at the commencement  of such calendar quarter based upon  the
sum  of (i) the average quoted rate  for three-month U.S. Treasury Bills for the
last full week of the preceding calendar  quarter, and (ii) a rate per annum  of
three percent.
 
     (c)  Cash  amounts credited  to the  Director's account  for services  as a
Director during  1994  or any  subsequent  calendar year  shall  accrue  amounts
equivalent  to interest commencing on the date such amounts would otherwise have
been paid, at the same rates per annum as those fixed for deferrals with respect
to  the  relevant   calendar  years  under   the  AlliedSignal  Inc.   Incentive
Compensation Plan for Executive Employees, as amended from time to time.
 
     (d)  Cash amounts  credited to  the Director's account  as a  result of the
conversion of shares  to cash pursuant  to paragraph 5(a)  shall accrue  amounts
equivalent  to interest commencing on the date of such conversion, at the higher
of the  two rates  provided under  paragraphs 3(b)  and (c),  regardless of  the
calendar  year or years to which the  underlying deferral of shares relates. The
determination of which rate is higher shall be made quarterly and, for  purposes
of  such determination, the rate provided  under paragraph 3(c) for cash amounts
deferred with respect to the then current calendar year shall be compared to the
rate provided under paragraph 3(b) for the then current calendar quarter.
 
     (e) Amounts determined pursuant to this paragraph 3 shall be compounded  at
the end of each calendar quarter and credited to the Director's account. Amounts
credited  to the Director's account shall  continue to accrue amounts equivalent
to interest until distributed in accordance with the Plan.
 
     (f)  Shares  credited  to  the  Director's  account  shall  accrue  amounts
equivalent  to  cash  or  stock dividends.  Such  amounts  shall  accrue amounts
equivalent to interest or  dividends in the same  manner as other amounts  which
may be credited to a Director's account.
 
4. DISTRIBUTION FROM ACCOUNTS
 
     (a) Form of Election. At the time a Director makes a participation election
pursuant to paragraphs 2(a), 2(c) or 2(d), the Director shall also file with the
Secretary of the Corporation a written election with respect to the distribution
of  the aggregate amount of  cash and shares credited  to the Director's account
pursuant to such participation  election. A Director may  elect to receive  such
amount   in  one  lump-sum  payment  or  in  a  number  of  approximately  equal
installments (provided the payout period does not exceed 10 years). The lump-sum
payment or the first installment shall be paid on the first business day of such
calendar year as  the Director may  elect or,  absent such an  election, on  the
first  business day of the calendar year immediately following the year in which
the Director ceases to be a Director of the Corporation. Subsequent installments
shall be paid on  the first business day  of each succeeding installment  period
until the entire amount credited to the Director's account shall have been paid.
If  shares have been  credited to a  Director's account, a  cash payment will be
made with the lump-sum payment  or the final installment  for any fraction of  a
share credited to the Director's account.
 
     (b)  Adjustment of  Method of Distribution.  Whether or not  a Director has
filed a  notice pursuant  to paragraph  2(c) electing  to change  the amount  of
compensation  to be credited to the Director's account, a Director participating
in the Plan  may, prior  to the  beginning of  any calendar  year, file  another
written  notice with  the Secretary  of the  Corporation electing  to change the
method of distribution of  the aggregate amount of  cash and shares credited  to
the  Director's account for services as a Director commencing with such calendar
year. Amounts credited to the Director's account prior to the effective date  of
such  change shall not be affected by  such change and shall be distributed only
in accordance with the election in effect at the time such amounts were credited
to the Director's account.
 
5. CHANGE IN CONTROL
 
     (a) Conversion of Shares. Notwithstanding  anything to the contrary in  the
Plan,  shares credited to  a Director's account  shall be converted  to cash, as
soon as practicable following a Change in Control but in no event later than  90
days  after the  Change in Control,  in an amount  equal to the  total number of
shares, and fractional  interests thereof, credited  to the Director's  account,
multiplied  by the Multiplication Factor. 'Multiplication Factor' shall mean (A)
in the case of  an acquisition of Common  Stock described in paragraph  5(d)(i),
the  Acquisition Price per Share, (B) in the event of the occurrence of an Offer
as defined in paragraph 5(d)(ii), the Offer Price per Share, (C) in the case  of
an event

 

described in paragraph 5(d)(iii), the Merger Price per Share, or (D) in the case
of  a change in the composition of the Board as described in paragraph 5(d)(iv),
the highest Fair Market Value per Share  of the Common Stock for any day  during
(i)  the ninety-day period ending on or within 89 days following the date of the
Change in Control which the Nominating and Board Affairs Committee of the  Board
(the  'Committee'), in its sole discretion, shall  select prior to the Change in
Control, or (ii) if  the Committee shall not  have selected a ninety-day  period
pursuant  to clause  (i) of this  sentence prior  to the Change  in Control, the
ninety-day period ending on  the 45th day  following the date  of the Change  in
Control. 'Acquisition Price per Share' shall mean the greater of (A) the highest
price per share stated on the Schedule 13D or any amendment thereto filed by the
holder  of 30% or more of the Corporation's voting power which gives rise to the
Change in Control, and  (B) the highest  Fair Market Value  per Share of  Common
Stock  during the  ninety-day period  ending on the  date the  Change in Control
occurs. 'Offer Price per Share' shall mean the greater of (A) the highest  price
per  share of Common  Stock paid in any  Offer, which Offer is  in effect at any
time during the  ninety-day period ending  on the  date on which  the Change  in
Control  occurs, or (B) the highest Fair  Market Value per Share of Common Stock
during such ninety-day period. Any securities or property which are part or  all
of  the consideration  paid for  shares of  Common Stock  in the  Offer shall be
valued in  determining the  Offer  Price per  Share at  the  higher of  (A)  the
valuation  placed on such  securities or property by  the corporation, person or
other entity making such Offer or (B) the valuation placed on such securities or
property by the Committee.  'Merger Price per Share'  shall mean the greater  of
(A)  the fixed or  formula price for  the acquisition of  shares of Common Stock
occurring pursuant to such event described in paragraph 5(d)(iii) if such  fixed
or  formula price  is determinable on  the date  on which the  Change in Control
occurs, and (B) the highest Fair Market  Value per Share of Common Stock  during
the  ninety-day period ending on the date on which the Change in Control occurs.
Any securities or property which are part  or all of the consideration paid  for
shares of Common Stock pursuant to such event shall be valued in determining the
Merger  Price  per Share  at  the higher  of (A)  the  valuation placed  on such
securities or property  by the corporation,  person or other  entity which is  a
party  with the Corporation to an event described in paragraph 5(d)(iii), or (B)
the valuation  placed on  such  securities or  property  by the  Committee.  For
purposes of this paragraph (5)(a), 'Fair Market Value per Share of Common Stock'
for  any day shall  be the mean between  the highest and  lowest sales prices of
Common Stock as reported on the New York Stock Exchange Composite Tape for  such
day.
 
     (b)  Interest Equivalents. Notwithstanding anything  to the contrary in the
Plan, in the event of a Change in Control, the Plan may not be amended to reduce
the formulas contained in paragraph 3 which determine the rate at which  amounts
equivalent  to  interest  accrue with  respect  to  cash amounts  credited  to a
Director's account, including  cash amounts  attributable to  the conversion  of
shares  in  a  Director's  account  pursuant to  paragraph  5(a),  and  the Plan
Administrator referred to in paragraph 8(c)  shall fix rates under the  formulas
contained in paragraph 3 in lieu of the Treasurer of the Corporation.
 
     (c)(i)  Initial Lump-Sum Payment Election. Notwithstanding any notice filed
pursuant to paragraph 4,  a Director may,  prior to the earlier  of a Change  in
Control  or September 30, 1990, file a  written notice with the Secretary of the
Corporation electing to  have the  aggregate amount credited  to the  Director's
account for services performed as a Director both before and after the filing of
the written notice paid in one lump-sum payment as soon as practicable following
a  Change in Control  but in no  event later than  90 days after  such Change in
Control. Notwithstanding any notice  filed pursuant to  paragraph 4, any  person
who  becomes a Director of the Corporation  after September 30, 1990, may file a
written notice with the Secretary of the Corporation before the Director's  term
begins, electing to have the aggregate amount credited to the Director's account
for  services performed as  a Director paid  in one lump-sum  payment as soon as
practicable following a Change  in Control but  in no event  later than 90  days
after such Change in Control.
 
     (c)(ii)  Subsequent Lump-Sum Payment Election. A  Director who did not make
an election  pursuant to  paragraph  5(c)(i) or  who  has revoked,  pursuant  to
paragraph 5(c)(iii), an election previously made under paragraph 5(c)(i) or this
paragraph  5(c)(ii) may,  prior to  the earlier  of a  Change in  Control or the
beginning of the calendar year in which  the election is to take effect, file  a
written  notice  with the  Secretary of  the Corporation,  electing to  have the
aggregate amount credited to the Director's account for services performed as  a
Director,  for  all  calendar  years commencing  with  the  first  calendar year
beginning after  the date  the written  notice is  filed, paid  in one  lump-sum
payment as soon as

 

practicable  following a Change  in Control but  in no event  later than 90 days
after such Change in Control. Amounts  credited to the Director's account  prior
to  the effective date  of the written  notice filed pursuant  to this paragraph
5(c)(ii) shall not be affected by  such written notice and shall be  distributed
following  a Change in Control  in accordance with any  prior election in effect
under paragraphs 5(c)(i) or 5(c)(ii).
 
     (c)(iii) Revocation of Lump-Sum Payment Election. A Director may, prior  to
the earlier of a Change in Control or the beginning of any calendar year, file a
written  notice with the Secretary of the Corporation revoking any election made
pursuant to paragraphs 5(c)(i) or 5(c)(ii), with respect to amounts credited  to
the  Director's account for services performed as a Director commencing with the
first calendar  year  beginning  after  the written  notice  is  filed.  Amounts
credited  to the Director's account  prior to the effective  date of the written
notice filed pursuant to this paragraph 5(c)(iii) shall not be affected by  such
written  notice  and  shall be  distributed  following  a Change  in  Control in
accordance with  any  prior  election  in effect  under  paragraphs  5(c)(i)  or
5(c)(ii).
 
     (d)  Definition of Change in Control. For purposes of the Plan, a Change in
Control is deemed  to occur at  the time (i)  when any entity,  person or  group
(other  than the  Corporation, any subsidiary  or any savings,  pension or other
benefit  plan  for  the  benefit  of   employees  of  the  Corporation  or   its
subsidiaries)  which theretofore beneficially owned less  than 30% of the Common
Stock then  outstanding acquires  shares of  Common Stock  in a  transaction  or
series  of transactions that results in such entity, person or group directly or
indirectly owning beneficially 30% or more of the outstanding Common Stock, (ii)
of the purchase of shares of Common Stock pursuant to a tender offer or exchange
offer (other than  an offer by  the Corporation) for  all, or any  part of,  the
Common  Stock ('Offer'),  (iii) of  a merger in  which the  Corporation will not
survive as an  independent, publicly  owned corporation, a  consolidation, or  a
sale,  exchange  or  other  disposition  of  all  or  substantially  all  of the
Corporation's assets, (iv)  of a substantial  change in the  composition of  the
Board  during any period of  two consecutive years such  that individuals who at
the beginning of such period were members  of the Board cease for any reason  to
constitute  at least a majority thereof,  unless the election, or the nomination
for election by the  stockholders of the Corporation,  of each new director  was
approved  by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period, or (v) of any transaction  or
other event which the Committee, in its discretion, determines to be a Change in
Control for purposes of the Plan.
 
6. DISTRIBUTION ON DEATH
 
     If  a Director  should die  before all  amounts credited  to the Director's
account shall have  been paid in  accordance with the  elections referred to  in
paragraphs  4 or  5, the  balance in  such account  shall be  paid on  the first
business day of the calendar year following the year of the Director's death  to
the  beneficiary  designated  in writing  by  the  Director and  filed  with the
Secretary of the Corporation. Such  balance shall be paid  to the estate of  the
Director  if  (a)  no such  designation  has  been made  or  (b)  the designated
beneficiary shall have predeceased the  Director and no further designation  has
been  made. A Director may change the  designated beneficiary at any time during
the Director's lifetime by filing a  subsequent designation in writing with  the
Secretary of the Corporation.
 
7. PAYMENT IN THE EVENT OF HARDSHIP
 
     Upon  receipt  of a  request  from a  Director  or a  Director's designated
beneficiary, delivered  in writing  to  the Secretary  of the  Corporation,  the
Committee may cause the Corporation to accelerate payment promptly of all or any
part  of the unpaid portion of deferred compensation, including accrued amounts,
then credited to the Director's account if it finds in its sole discretion  that
continued  deferral of  such deferred  compensation, including  accrued amounts,
would result in  hardship to the  Director or the  person otherwise entitled  to
receive  it.  For  this  purpose, 'hardship'  means  an  unanticipated financial
emergency that is caused by an event beyond the control of the Director or other
person entitled to  receive payment and  that would result  in severe  financial
hardship to such person if acceleration of payment were not permitted.

 

8. MISCELLANEOUS
 
     (a)  The  right  of  a  Director to  receive  any  amount  credited  to the
Director's account  shall not  be transferable  or assignable  by the  Director,
except  by will or by  the laws of descent and  distribution. To the extent that
any person  acquires a  right to  receive any  amount credited  to a  Director's
account  hereunder, such  right shall  be no greater  than that  of an unsecured
general creditor of the  Corporation. Except as  expressly provided herein,  any
person  having an interest in any amount  credited to a Director's account under
the Plan shall not be entitled to payment  until the date the amount is due  and
payable.  No person shall  be entitled to anticipate  any payment by assignment,
alienation, sale, pledge, encumbrance or transfer in any form or manner prior to
actual or constructive receipt thereof.
 
     (b) The Corporation shall not be required to reserve or otherwise set aside
funds or shares of  Common Stock for the  payment of its obligations  hereunder.
The Corporation shall make available as and when required a sufficient number of
shares  of  Common Stock  to meet  the needs  of  the Plan.  To the  extent that
registration of such shares under the  Securities Act of 1933 shall be  required
prior  to their resale, the Corporation undertakes to either file a registration
statement relating to such shares or include such shares in another registration
statement to be filed within a reasonable time.
 
     (c) Prior to a  Change in Control, the  Committee shall interpret the  Plan
and  make  all  determinations  deemed necessary  or  desirable  for  the Plan's
implementation. The  determination of  the Committee  shall be  conclusive.  The
Committee  may obtain  such advice  or assistance  as it  deems appropriate from
persons not  serving  on the  Committee.  The  Senior Vice  President  -  Human
Resources  or other appropriate  officer of the Corporation  shall, prior to any
Change in Control, name as Plan  Administrator any person or entity  (including,
without limitation, a bank or trust company). Following a Change in Control, the
Plan  Administrator shall interpret the Plan  and make all determinations deemed
necessary or desirable for the  Plan's implementation. The determination of  the
Plan  Administrator shall be conclusive. The  Corporation shall provide the Plan
Administrator with such records and information as are necessary for the  proper
administration  of the Plan.  The Plan Administrator shall  rely on such records
and other  information as  the Plan  Administrator shall  in its  judgment  deem
necessary  or appropriate in  determining the eligibility of  a Director and the
amount payable to a Director under the Plan.
 
     (d) The Board of Directors may at any time amend or terminate the Plan. The
Plan may also  be amended  by the  Corporation with  the approval  of its  Chief
Executive  Officer, provided that  all such amendments shall  be reported to the
Board. No amendment or  termination shall impair the  rights of a Director  with
respect to amounts then credited to the Director's account.
 
     (e)  Each Director  participating in the  Plan will receive  a statement at
least annually indicating the  amount of cash and  number of shares credited  to
the Director's account as of the end of the preceding calendar year.
 
     (f)  If adjustments  are made  to outstanding shares  of Common  Stock as a
result of stock dividends, split-ups, recapitalizations, mergers, consolidations
and the like,  an appropriate  adjustment will  also be  made in  the number  of
shares credited to the Director's account.

                                                                   EXHIBIT 10.14

[LOGO]                             AlliedSignal Inc.            201 455 3997
                                   P.O. Box 2245                201 455 2608 Fax
                                   Morristown, NJ 07962-2245

DONALD J. REDLINGER
Senior Vice President
Human Resources

December 21, 1993
 
Mr. Alan Belzer
AlliedSignal Inc.
101 Columbia Road
Morristown, NJ 07962
 
Dear Alan:
 
This  letter  will  confirm  our  understanding  regarding  the  extent  of your
salary continuation and other benefits to which you are entitled as a result  of
the termination of your employment on December 31, 1993.
 
SALARY CONTINUATION
 
For   the   36-month   salary   continuation   period   commencing   with   your
termination date on December  31, 1993, your compensation  at an annual rate  of
$765,000  with benefits as set forth below  and as described in, and subject the
conditions set  forth  in,  the  AlliedSignal Inc.  Severance  Plan  for  Senior
Executives,  will continue to be paid  through December 31, 1996 (the 'Severance
Period'). The Severance  Period includes  a ninety  (90) day  notice period  for
purposes of certain benefit programs. You will receive payment for earned unused
vacation.
 
INCENTIVE COMPENSATION DURING SALARY CONTINUATION
 
You  will  be eligible  for  full  bonus  consideration  for 1993. In  addition,
incentive compensation payments will be made under the Severance Plan for Senior
Executives  for  calendar  years  of   1994,  1995  and  1996.  Such   incentive
compensation  payments will  be based  on a  target bonus  percentage of  75% in
accordance with the Plan.
 
STANDARD COMPANY PROVIDED BENEFITS
 
You  may  elect  to   retain  your  coverage  in   the  Group  Life  and  Health
Insurance  Programs at  active employee  rates through the  end of  the month in
which salary  continuation  ends;  provided, however,  group  life  and  medical
insurance will cease on the date you become eligible for similar coverage from a
subsequent employer.
 
EXECUTIVE LIFE INSURANCE
 
Your  Executive  Life  coverage  of  $3,060,000  is 100%  vested and will remain
in force until  you reach  age 65.  At age 65,  ownership of  the company  owned
policies  ($3,060,000) will be transferred to you.  The cash value of the policy
will be taxable to you  at that time. However, there  will be cash available  to
borrow to offset a 30% tax liability.

 

EXECUTIVE STOCK OPTIONS
 
The Committee has approved the vesting of  all stock  options effective December
31, 1993. As a participant in the Corporation's Stock Plan, you  will have until
the lapse dates noted below to exercise these options.

            PREVIOUSLY    COMMITTEE
DATE OF       VESTED       VESTED      OPTION
 GRANT        SHARES       SHARES      PRICE     LAPSE DATE
- - - - - --------    ----------    ---------    ------    ----------
                                     
02/04/87       7,500         --        $46.38    02/04/1997
02/03/89      50,000         --        $34.75    02/03/1999
02/09/90      56,250        18,750     $35.44    02/08/2000
02/01/91       --           37,500     $28.69    01/31/2001
03/26/92      32,800        49,200     $54.07    03/25/2002
03/25/93       --           83,000     $68.69    03/24/2003

The  accompanying  performance  units  on  the non-qualified options will  lapse
without value.
 
     For assistance in exercising your options, please contact Mark Wolitzer  in
Morristown at (201) 455-5435.
 
RESTRICTED UNITS
 
The Committee approved the lapsing of restrictions on all outstanding restricted
units as of December 30, 1993.

YEAR OF AWARD                       UNVESTED UNITS
- - - - - --------------                      --------------
                                 
     1989                               40,000
     1990                                1,875
     1991                                7,000
     1992                                3,750
     1993                                2,635

The units will be paid in one of two ways:
 
          [*] 100% stock  upon receipt  of  a check  from  you for  the  minimum
              Federal and State tax withholding
 
          [*] 50%  stock, 50%  cash with  minimum withholding  deducted from the
              cash
 
RETIREMENT BENEFITS
 
At  the  end  of  the  Severance  Period,  you will be  eligible for a  80-point
pension.  You will  be provided  with an estimate  of your  pension benefits and
options available to you in accordance with the Plan, under separate cover. Your
qualified benefits will  be paid in  an annuity form,  while your  non-qualified
benefit can be paid in a lump sum, with approval.
 
ALLIEDSIGNAL SAVINGS PLAN
 
As  a  participant  in  the AlliedSignal Savings  Plan (ASSP),  you may elect to
continue to participate  in ASSP through  the earlier of  the conclusion of  the
salary  continuation  period  or  the  date  on  which  you  become  eligible to
participate in a  similar plan  sponsored by a  subsequent employer.  If you  so
elect, you will be required to continue to make contributions to ASSP by payroll
deduction from any severance payments due you and per ASSP the company will also
continue its contributions. Following the severance period, you will be entitled
to a distribution from ASSP in the manner described in the Plan.

 

SUPPLEMENTAL SAVINGS PLAN
 
Participation in the Supplemental  Savings Plan  may continue  during the salary
continuation period. Participation as well as withdrawals and distributions will
be in accordance with the terms of the Plan.
 
PERQUISITES
 
You will be permitted to purchase  your company  car for 75%  of the fair market
value.  The  amount by which  the fair market  value exceeds the  purchase price
will be included as income on your 1993 W-2.
 
Financial  and estate  planning assistance will  be paid by  the company on your
behalf through calendar year 1994. Tax preparation will be  paid by  the Company
on your behalf for tax years 1993 and 1994.
 
All other company-provided perquisites will cease on December 31, 1993.
 
CONTINGENCIES
 
If  you  become  ill  while  on this severance arrangement, you will continue to
receive  severance pay. In the event of  your death during the severance period,
any remaining payments will be made to your designated beneficiary.
 
CONFIDENTIALITY
 
You will continue to be bound by your existing  agreement  with  the Corporation
regarding  disclosure   of  trade  secrets  or  other  confidential  information
divulged  to  or acquired by  you during or  in connection with  your employment
with the Corporation.
 
In the event of your death  during the severance period,  any remaining payments
should be paid to:
 
                Debra L. Cruz and
              Frances Belzer Reid -- Daughters
        Name: __________________________________
 
        Social Security Number: ________________
 
        Address: _______________________________
 
                 _______________________________
 
                 _______________________________
 
If  no  designation  has  been  made,  or if  the  designated beneficiary  shall
predecease you, any such balance shall be paid to your estate.
 
GENERAL RELEASE
 
In  consideration  of  the  foregoing,  you hereby  release the Corporation from
any and all claims which you now, or hereafter may have in connection with  your
employment  or the termination thereof,  except for such claims  as you may have
with respect to the benefits set forth above.

 

Please sign and date the original and  the enclosed copy in  the  space provided
below, retain the signed original for your files and return the copy to me.
 
                                          AlliedSignal Inc.
 
                                          BY: /s/ D.R. REDLINGER
                                              ------------------
                                          Agreed: /s/ A. BELZER
                                                 --------------
                                          Date: 12/21/93
                                                ----------------

I elect/ [the words  'do not elect'  are crossed out here in the paper format]
to continue Group Life and Medical Insurance through the Severance Period.
 
                                                      12/21/93
                                                      --------
                                                       (Date)
 
I request that my restricted units be paid in (select one):
 
                          100% stock
        -----------------
               X          50% stock, 50% cash
        -----------------

                                                                      EXHIBIT 13
 
   Pages  20  through  40  (except for  the  data  included  under  the captions
'Financial Statistics'  on page 40)  of  the  Company's  1993  Annual  Report to
shareowners.

- - - - - -------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS                           AlliedSignal Inc.
1993 Compared with 1992
 
       IN 1993, THE COMPANY INITIATED A NUMBER OF NEW PROGRAMS AND FURTHERED
        THOSE BEGUN IN 1991 AND 1992 TO STRENGTHEN AND GROW ITS BUSINESSES. A
        number of growth businesses were enhanced through internal product
development, strategic acquisitions, joint ventures and through major
capital investments. The Company is overhauling its basic processes to increase
market penetration and forming commodity purchasing teams and working with its
customers and suppliers to raise product quality and reduce production costs.
The Company believes that its revenues will grow in 1994 through internal focus
on product development and customer satisfaction as well as through selected
acquisitions. Profits are expected to increase significantly based on the
Company's growth strategy as well as by continuing to generate strong free cash
flow and by enhancing productivity improvements, including cycle-time
reductions.

   THE COMPANY STRENGTHENED A NUMBER OF MAJOR BUSINESSES IN 1993:
 
*To become a more broad-based avionics supplier, the Company acquired Sundstrand
Data Control for $195 million. The acquired business manufactures a variety of
avionics products for data management, ground hazard avoidance, general aviation
communications, navigation and instrumentation. 1992 sales of such products were
$194 million. The Company also acquired the aircraft wheel and brake overhaul
operations of Air Treads, Inc. which had 1992 sales of approximately $22
million.
*To strengthen the Company's position in air brake controls and related products
for the truck industry, the Company and Knorr-Bremse AG formed two
ventures -- one in North America and one in Europe. The new ventures are the
market leaders for a number of truck air brake systems components in North
America, France, Italy and the U.K., and are strongly positioned elsewhere in
Europe. The Company owns 65 percent of the North American operation and 35
percent of the European operations. Annual sales of the two ventures are
expected to be about $650 million. The Company also acquired Filtram S.A., the
manufacturer and distributor of its Fram'r' filter products in Mexico.
*In the fibers business, the Company, as the majority shareowner, and Akzo NV of
Arnhem, The Netherlands, formed a new company to manufacture and market
commercial carpet fibers in Europe. The new company, which consists of fiber
production facilities previously owned by Akzo, is expected to have annual sales
of about $70 million. The Company also announced that it is discussing a
combination of its North American carpet and textile fibers operations with
those of BASF Corporation. The Company also started up its $200 million
industrial polyester fiber plant in Longlaville, France. The plant manufactures
polyester yarn which the Company believes will become the primary fiber
reinforcement for passenger car radial tires. Rayon is currently used to
reinforce car tires in Europe.
*The Company expanded its fluorocarbon business through the acquisition of the
U.S. sterilant gas business of Praxair Inc. and by more than doubling, from 20
to 50 million pounds per year, the Company's hydrochlorofluorocarbons
(HCFC)-141b capacity at its El Segundo, California facility. Sterilant gases are
a mixture of ethylene oxide and chlorofluorocarbons (CFCs) used for infection
control by health care providers. HCFC is an environmentally-safer substitute
for CFCs which have been linked to the reduction of the earth's protective ozone
layer and are being phased out of production by the end of 1995. HCFC-141b is a
new blowing agent used in a variety of commercial and residential
rigid-insulating foam applications. Non-ozone-depleting refrigerants will also
be produced at a new $100 million plant being built in Geismar, Louisiana.
Production from the first phase of the plant, estimated to cost about $70
million, is expected by mid-1994.
   THE COMPANY'S COMMON STOCK WILL BE SPLIT 2-FOR-1. On March 14, 1994, each
shareowner of record on February 22, 1994 will receive one additional share for
each share owned. Sufficient authorized shares for the 100 percent stock
distribution will become available by the redemption of common stock purchase
rights. The rights redemption price of $0.05 a share will be paid to shareowners
on March 10, 1994 with the regular first quarter dividend of $0.29 per pre-split
share. Share and per share data throughout this discussion have been restated to
reflect the stock split.
   THE COMPANY EXPECTS TO RAISE THE REGULAR QUARTERLY DIVIDEND ON ITS COMMON
STOCK BY 16 PERCENT, FROM $0.145 TO $0.1675 PER POST-SPLIT SHARE, BEGINNING WITH
THE SECOND QUARTER PAYMENT OF 1994. The Company had also increased its regular
quarterly dividend by 16 percent in February 1993.
   THE COMPANY ADOPTED, EFFECTIVE JANUARY 1, 1993, AN ACCOUNTING CHANGE RELATED
TO POSTEMPLOYMENT BENEFITS. The Financial Accounting Standards Board (FASB) 
issued Statement No. 112 -- 'Employers' Accounting for Postemployment Benefits' 
(FASB No. 112) which requires the Company to accrue, over an employee's service
life, the cost of severance and health care benefits. The current year's impact 
of FASB No. 112 is an after-tax provision of $11 million, or $0.04 a share. As 
part of the adoption, the Company also recorded 'catch-up' after-tax charges 
totaling $245 million, or $0.86 a share. This one-time charge reduced the 
Company's shareowners' equity by 11 percent.

- - - - - ------------------------------------------------------------------------------
                                       20

- - - - - ------------------------------------------------------------------------------

[GRAPHIC   REPRESENTATION   of  Net  Sales  (Dollars   in   billions), expressed
numerically below.]

                                                      1991      1992      1993
                                                      ----      ----      ----
                                                                 
                                                      11.8      12.0      11.8

[GRAPHIC REPRESENTATION of Capital Expenditures/R&D (Dollars in millions),
expressed numerically below.]

                                                                1991      1992     1993
                                                                ----      ----     ----
                                                                         
Capital expenditures.......................................      668       691      718
Company-funded R&D.........................................      381       320      313
                                                              ------    ------   ------
     Total.................................................    1,049     1,011    1,031
                                                              ------    ------   ------

           RESULTS OF OPERATIONS. The Company's earnings grew to record levels
            in 1993 benefitting from productivity actions and only a slowly
            recovering U.S. economy, which more than offset the impact of a
            depressed aerospace industry and a recession in Europe.
   NET SALES in 1993 were $11,827 million, down 2 percent from last year. Of the
$215 million decrease, $206 million was the effect of the stronger dollar on
Automotive and $81 million was because of reduced sales volumes, reflecting the
recession in Europe and weakness in the aerospace industry offset in part by $72
million of price increases.
   COST OF GOODS SOLD, as a percent of sales, decreased from 82.4 percent in
1992 to 80.8 percent in 1993. This was the second consecutive yearly decrease.
The improvement was the result of productivity gains, including cycle-time
reductions and materials management initiatives throughout the Company. Overall,
productivity (the constant dollar basis relationship of sales to costs) grew by
5.8 percent over last year.
   NONRECURRING ITEMS consist of a net gain of $16 million from the formation of
the Knorr-Bremse venture offset mainly by the cost of several unusual items. See
Note 3 of Notes to Financial Statements for additional information.
   INCOME FROM OPERATIONS of $954 million in 1993 improved by $539 million.
Excluding the nonrecurring items in 1993 and the current year's impact of
adopting FASB No. 112 as well as charges for streamlining and restructuring in
1992 (special provisions), income from operations improved by $173 million, or
22 percent, reflecting significant earnings gains despite a generally slow world
economy. After excluding the special provisions, Aerospace's income increased 4
percent and Automotive's and Engineered Materials' income both increased 32
percent. Profit margins increased from 6.5 percent in 1992 to 8.1 percent mainly
as a result of improved productivity throughout the Company. See the discussion
of net income below for information by segment.
   EQUITY IN INCOME OF AFFILIATED COMPANIES of $122 million increased by $19
million, or 18 percent, reflecting higher earnings in the UOP process technology
joint venture (UOP). The Paxon high-density polyethylene joint venture (Paxon),
however, had lower income as industry overcapacity depressed prices, mainly in
the first half of the year.
   EARNINGS FROM UNION TEXAS INVESTMENT reflects the disposition of the
Company's common stock holdings in 1992 as discussed in Note 21 of Notes to
Financial Statements.
   OTHER INCOME (EXPENSE), a $9 million loss, compares to a gain of $9 million
in 1992 reflecting increased foreign exchange losses in Europe and Brazil partly
offset by higher interest income from investments in short-term securities.
   INTEREST AND OTHER FINANCIAL CHARGES of $157 million decreased $63 
million, or 29 percent, from last year because of a lower average level of total
debt outstanding, reflecting in part, the redemption of three debt issues and 
lower interest rates.
   THE EFFECTIVE TAX RATE in 1993 was 27.9 percent compared to 23.8 percent in
1992. Excluding the impact in 1992 of streamlining and restructuring charges and
the gain relating to Union Texas Petroleum Holdings, Inc. (Union Texas), the
effective tax rate for 1992 was 24.1 percent. The 3.8 percentage point increase
was due to a higher level of earnings taxed at the new higher U.S. tax rate and
the absence of preferentially taxed Union Texas dividends. A partial offset
resulted from an adjustment to deferred tax balances because of the 1993 tax
rate change. Net income for 1993 benefited by about $0.02 a share from the net
effect of the 1993 tax law changes. See Note 7 of Notes to Financial Statements
for further information on income taxes.
   INCOME BEFORE THE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES of
$656 million, or $2.31 a share, in 1993 was favorable by $121 million, or $0.41
a share, compared to $535 million, or $1.90 a share, last year.
   NET INCOME (LOSS) in 1993 was income of $411 million, or $1.45 a share. In
1992 the Company reported a loss of $712 million, or $2.52 a share. However,
both periods were impacted by the cumulative effect of adopting accounting
changes as well as unusual items. 1993 results included the current year's
charge for adopting FASB No. 112, a net nonrecurring gain and the impact of the
U.S. tax increase. Results in 1992 include streamlining and restructuring
charges and the gain on the disposition of the Company's interest in Union
Texas. Excluding these items from both years, current year's net income was $659
million, or $2.33 a share, which compares with net income of $541 million, or
$1.92 a share, in 1992. The higher income was the result of significant
increases for Automotive and Engineered Materials.
   A DISCUSSION OF THE OPERATIONS OF THE BUSINESS SEGMENTS, before the
cumulative impact of accounting changes on net income, follows. Adjusted net
income excludes the impact of the 1993 nonrecurring items and the 1992 
streamlining and restructuring provision. (Dollars in millions)

                                                         Adjusted
AEROSPACE                    Net Sales    Net Income   Net Income
                             ---------    ----------   ----------
                                             
1993                            $4,530          $224         $228
1992                             4,937           105          227
                                ------          ----         ----
Increase/(Decrease)             $ (407)         $119         $  1
                                ------          ----         ----

   Aerospace sales decreased 8 percent because of continued significant volume
reductions in military, commercial and general aviation markets. Lower
production of general aviation aircraft resulted in fewer propulsion engine
deliveries.

- - - - - --------------------------------------------------------------------------------
                                       21

- - - - - --------------------------------------------------------------------------------

[GRAPHIC REPRESENTATION of Income  (Loss) Before Cumulative Effect of Changes in
Accounting Principles (Dollars in millions)  --  Chart gives the actual  amounts
as  well as  calculates  the  amounts excluding the impact of  streamlining  and
restructuring  charges  and  gains relating to Union Texas, an equity subsidiary
(expressed numerically below).]

                                                                   1991   1992     1993
                                                                   ----   ----     ----
                                                                          
Actual..........................................................   (273)   535      656
Calculation -- Excludes streamlining and restructuring and gains
  relating to Union Texas.......................................    342    541     NONE

[GRAPHIC REPRESENTATION of Earnings (Loss) Per Share Before Cumulative Effect of
Changes in Accounting Principles (Dollars per  share) --  Chart gives the actual
amounts  as  well  as calculates  the  amounts  excluding  the impact of stream-
lining  and restructuring  charges and  gains relating to Union Texas, an equity
subsidiary (expressed numerically below).]

                                                                    1991    1992    1993
                                                                    ----    ----    ----
                                                                           
Actual..........................................................   (1.00)   1.90    2.31
Calculation -- Excludes streamlining and restructuring and gains
  relating to Union Texas.......................................    1.25    1.92    NONE

Aftermarket sales were significantly lower in the auxiliary power
unit product line. Mainly because of a reduction in the number of aircraft
built, sales of controls and accessories and fluid systems as well as avionics
and communications systems were materially lower. Technical service contracts
awarded by various government agencies and sales of ocean systems increased
moderately. Sales of aircraft landing systems increased slightly, and
aftermarket sales related to propulsion engines were higher. The acquisition of
Sundstrand's data control business in the fourth quarter of 1993 contributed $24
million to sales.
   Overall, the Company's 1993 sales to the Department of Defense (DOD), as a
prime contractor and subcontractor, declined by 11 percent compared to 1992
because of reduced defense spending. Sales to the commercial and foreign
government markets declined by 9 percent, while sales to the National
Aeronautics and Space Administration (NASA) and other U.S. government agencies
increased by 6 percent in 1993. Sales to the DOD accounted for 31 percent of
Aerospace's total sales, a decrease of 1 percent compared to 1992.
   Although total sales were lower and 1993 results included an after-tax charge
of $5 million reflecting the current year's impact of adopting FASB No. 112,
Aerospace's adjusted net income improved slightly compared to last year.
Continuing productivity improvements and sales increases in several product
lines were the principal offsets. Significant cost savings were realized at
every operating business unit. Aerospace Systems and Equipment had substantially
higher earnings. Higher aftermarket sales related to aircraft landing systems,
propulsion engines and guidance and control systems as well as higher sales of
ocean systems and technical services also contributed to the favorable earnings.
Earnings were lower for avionics and auxiliary power and communications systems
because of reduced sales.
   Changing defense priorities and severe federal budget pressures are expected
to continue to restrain funding for DOD-related aerospace products over the next
few years. As a result, a number of the Company's military and space programs
may be stretched out, curtailed or cancelled.
   The commercial airline industry continues to be in a cyclical downturn
brought on in part by the recession. Many airline carriers have cancelled new
aircraft orders reflecting the excess capacity of the world airline fleet and
the reluctance of commercial carriers to finance new aircraft purchases. With
improved economic conditions, air traffic should continue to rebound and, over
the long-term, drive the demand for new aircraft and mitigate the impact of
continued reductions in defense spending.
   The Company continues to receive significant contracts from the commercial
aviation industry, DOD and NASA and earnings are expected to remain strong. The
strength reflects the broad diversification of the Company's aerospace
businesses and the quality of its products and services. Among the Company's
contracts are a number of priority development programs and system upgrades
which are believed to be vital to the nation's defense.
   The Company, as are other government contractors, is subject to government
investigations of business practices and compliance with government procurement
regulations. Although such regulations provide that a contractor may be
suspended or debarred from government contracts under certain circumstances and
the outcome of pending government investigations cannot be determined,
management is not presently aware of any such investigation which it expects
will have a material adverse effect on the Company.
   Funded backlog of $1,283 and $1,557 million at December 31, 1993 and 1992,
respectively, consists of unfilled firm orders from the U.S. and foreign
governments for the Company's aerospace products for which funding has been both
authorized and appropriated by the customer. Total negotiated backlog of $4,773
and $4,859 million at year-end 1993 and 1992, respectively, also includes firm
orders for which funding has not yet been appropriated as well as commercial
contracts. The Company anticipates that approximately $2,335 million of the
total 1993 backlog will be filled during 1994.

                                                         Adjusted
AUTOMOTIVE                   Net Sales    Net Income   Net Income
                             ---------    ----------   ----------
                                             
1993                            $4,506          $226         $184
1992                             4,499            76          141
                                ------          ----         ----
Increase                        $    7          $150         $ 43
                                ------          ----         ----

   Automotive sales were essentially level with last year despite the negative
impact, totaling $206 million, of translating mainly weakened European
currencies to the U.S. dollar. Sales of all products in the North American
market were higher. Original equipment (OE) sales for passenger cars, light
trucks and heavy trucks rebounded. The Company has significant product content
on light trucks. Sales of passenger-side air bags were especially strong and
sales of seat belts, aftermarket products, turbocharging systems and anti-lock
braking systems (ABS) also improved. Sales by the Company's Brazilian operations
improved after a number of disappointing years because of poor economic
conditions in that country. OE and aftermarket product sales were materially
lower in Europe reflecting the impact of the recession.
   Automotive's adjusted net income increased significantly, reflecting higher
sales to the North American OE manufacturers and the aftermarket and strong
productivity gains. Rationalization and enhanced productivity programs
continued, mainly in Europe, where sales are down materially due to the

- - - - - --------------------------------------------------------------------------------
                                       22

- - - - - --------------------------------------------------------------------------------

poor economy. In the North American market, automotive and truck brakes, safety
restraints, aftermarket products and turbochargers had substantial earnings
growth. Productivity improvements and higher sales volumes substantially reduced
prior year losses in Brazil. The 1993 results include an after-tax charge of $3
million reflecting the current year's impact of adopting FASB No. 112.
   The Company introduced new ABS products in Europe and the U.S. in 1993 which
strengthened its position in braking systems for new vehicle production.
Although its market share remains less than 10 percent, the Company is
developing more advanced technology that should strengthen its competitive
position by 1996.
   Increased competitive activity across all product lines and increasing
product and cost demands from customers will continue to put pressure on the
Company's automotive business. However, the Company believes it will more than
offset these market conditions through product innovation, aggressive
productivity actions to reduce costs and by accelerating the process of
supplying integrated automotive systems to the global marketplace. To improve
operating efficiencies, the Company initiated plans in 1991 and 1992 to
significantly reduce the number of its worldwide locations. By the end of 1993,
20 operating plants had been closed. Sales offices, distribution centers and
research and development facilities are also being consolidated.

                                                         Adjusted
ENGINEERED MATERIALS         Net Sales    Net Income   Net Income
                             ---------    ----------   ----------
                                             
1993                            $2,791          $269         $272
1992                             2,601           190          215
                                ------          ----         ----
Increase                         $ 190          $ 79         $ 57
                                ------          ----         ----

   Engineered Materials had a 7 percent sales increase. Sales of fluorine
products, including environmentally-safer substitutes for CFCs, grew
substantially and sales of laminate systems, oximes, performance additives and
tar products were materially higher. Sales of carpet and industrial fibers also
improved, but sales of intermediate chemicals and environmental catalysts were
lower because of weak market conditions.
   Engineered Materials' adjusted net income was significantly higher in 1993
because of strong productivity gains and improved revenues for fluorine
products, industrial fibers, performance additives and tar products. Results
also improved for UOP. Partially offsetting these gains were higher operating
costs for laminate systems, reduced demand for intermediate chemicals and lower
earnings for Paxon. 1993 results include an after-tax charge of $2 million
reflecting the current year's impact of adopting FASB No. 112.
   REGARDING ENVIRONMENTAL MATTERS, the Company is subject to various federal,
state and local requirements relating to the protection of the environment. The
Company believes that, as a general matter, its policies, practices and
procedures are properly designed to prevent unreasonable risk of environmental
damage and that its handling, manufacture, use and disposal of hazardous or
toxic substances are in accord with environmental laws and regulations. However,
mainly because of past operations and operations of predecessor companies, the
Company is a party to lawsuits and claims and has incurred remedial response and
voluntary cleanup costs associated with environmental matters. Additional
lawsuits, claims and costs involving environmental matters are likely to
continue to arise in the future. The Company continually conducts studies,
individually at Company-owned sites, and jointly as a member of industry groups
at non-owned sites, to determine the feasibility of various remedial techniques
to address environmental matters. The Company records appropriate liabilities
for such matters when environmental assessments are made or remedial efforts are
probable and the costs can be reasonably estimated. The timing of these accruals
is generally on the completion of feasibility studies or the settlement of
claims, but in no event later than the Company's commitment to a plan of action.
   Remedial response and voluntary cleanup expenditures were $65 and $69 million
in 1993 and 1992, respectively, and are currently estimated to increase to
approximately $96 million in 1994. While annual expenditures have generally
increased from year-to-year, and may continue to increase over time, the Company
expects it will be able to fund such expenditures from cash flow from
operations. The timing of expenditures depends on a number of factors, including
regulatory approval of cleanup projects, remedial techniques to be utilized and
agreements with other parties.
   During 1993 the Company charged $41 million against income for remedial
response and voluntary cleanup costs. At December 31, 1993 the recorded
liability for environmental matters was $480 million. In addition, the Company
incurred ongoing operating costs, and made capital expenditures of $39 million,
relating to compliance with environmental regulations.
   Although the Company does not currently possess sufficient information to
reasonably estimate the amounts of liabilities to be recorded upon future
completion of studies or settlements, and neither the timing nor the amount of
the ultimate costs associated with environmental matters can be determined, they
may be significant to the Company's consolidated results of operations.
Management does not expect that environmental matters will have a material
adverse effect on the consolidated financial position of the Company.
   See Note 19 of Notes to Financial Statements for a discussion of the
Company's commitments and contingencies, including those related to
environmental matters.
   INFLATION has not been a significant factor for the Company in recent years.
Cost increases for labor and material have generally been low, and any impact
has been offset by productivity enhancement programs.
 
         FINANCIAL CONDITION. Cash flow from operating activities was materially
          higher  as  a result  of strong  earnings  growth and  a strengthening
          balance  sheet  which  reflects  greatly  improved  operating  working
          capital and a significant customer advance.
   TOTAL ASSETS at December 31, 1993 were $10,829 million, an increase of $73
million from December 31, 1992. Cash and cash equivalents at year-end 1993 were
$892 million, a decrease of $39 million, however, cash investments classified as
long-term increased $40 million, to $90 million, at December 31, 1993. Cash
flows from operating activities, provided by significantly improved earnings for
1993 and a reduction in working capital, increased by $111 million. The current
ratio at year-end 1993 was 1.3x, down slightly from 1.4x at December 31, 1992.
Mainly through a reduction in accounts receivable and inventories, the Company's
working capital turnover was improved to 4.8x at December 31, 1993 from 4.5x a
year earlier.

- - - - - --------------------------------------------------------------------------------
                                       23

- - - - - --------------------------------------------------------------------------------

 

[GRAPHIC  REPRESENTATION  of  Long-term  Debt  as  a  Percent  of  Total Capital
(Percent), expressed numerically below.]

                                                                 1991     1992      1993
                                                                 ----     ----      ----
                                                                           
                                                                 34.9     40.5*     37.9*

- - - - - ------------
 
*  Includes impact of cumulative effect of adoption of accounting changes.
 
[GRAPHIC REPRESENTATION of Return on Shareowners' Equity  (After-tax percent) --
Chart  gives  the actual return as  well as calculates  the return excluding the
impact  of  streamlining  and  restructuring charges and gains relating to Union
Texas, an equity subsidiary (expressed numerically below).]

                                                                    1991    1992    1993
                                                                    ----    ----    ----
                                                                           
Actual...........................................................   (8.4)   26.4*   30.6*
Calculation -- Excludes streamlining and restructuring and gains
  relating to Union Texas........................................   10.5    26.7*   NONE

- - - - - ------------
 
*  Includes impact of cumulative effect of adoption of accounting changes.

   THE MAXIMUM AMOUNT OF BORROWING available under the Company's revolving
credit agreements (Credit Agreement) was reduced by the Company in July 1993
from $1.11 billion to $900 million, reflecting the Company's strong cash
position, significantly higher earnings and current credit requirements. The
Credit Agreement supports the issuance of commercial paper as well as
outstanding floating rate Employee Stock Ownership Plan (ESOP) notes. There was
$164 million of commercial paper outstanding at year-end 1993 and $4 million at
the end of 1992. Commercial paper borrowing reached a high of $484 million
during 1993. Outstanding ESOP notes, at favorable floating interest rates,
totaled $259 million at December 31, 1993 and 1992.
   TOTAL DEBT at year-end 1993 was $1,960 million, a decrease of $153 million.
Long-term debt was reduced by $175 million mainly from the redemption of various
debt issues. The Company's total debt as a percent of capital, after the
adoption of FASB No. 112, was 42.7 percent at December 31, 1993, down from 44.7
percent at year-end 1992. The long-term debt to capital ratio was 37.9 percent
at year-end 1993, down from 40.5 percent at year-end 1992. See Note 14 of Notes
to Financial Statements for details of long-term debt and a discussion of the
Credit Agreement. In January 1993, Moody's upgraded the Company's long-term debt
from A3 to A2 and its commercial paper from P-2 to P-1. This followed a
comparable upgrading from Standard & Poor's in December 1992.
   The adoption of FASB No. 112 does not impact the Company under the terms of
its outstanding debt and its existing Credit Agreement or the payment of
dividends to shareowners, in part because the accounting change has no effect on
cash.
   THE COMPANY REPURCHASED 6.7 MILLION SHARES OF COMMON STOCK for $220 million
in 1993. Common stock was repurchased in 1993 to offset the issuance of shares
for employee benefit plans and a shareowner dividend reinvestment plan. At
year-end, the Company had 74.4 million shares of common stock held in treasury
carried at $1,437 million. As of year-end 1993, the Company had remaining
authority to repurchase 16.5 million shares of common stock.
   CAPITAL EXPENDITURES during 1993 were $718 million, an increase of $27
million from the $691 million spent in 1992. Spending by the segments and
Corporate since 1991 is shown in Note 25 of Notes to Financial Statements. The
Company's total capital expenditures in 1994 are currently projected at about
$610 million. The expenditures are expected to be financed by internally
generated funds. Approximately 58 percent of the projected 1994 expenditures are
planned for expansion and cost reduction, 31 percent for replacement and
maintenance and 11 percent for environmental and other projects.
1992 Compared with 1991
    IN 1991 AND 1992, THE COMPANY TOOK A SERIES OF BOLD INITIATIVES TO ESTABLISH
     THE FOUNDATION FOR SUSTAINED BUSINESS GROWTH. The Company substantially
     reduced its layers of management, improved cycle time, dramatically
     enhanced customer responsiveness, increased productivity, consolidated
     businesses and closed unproductive plants, and significantly improved
overall competitiveness. The Company estimates that these programs contributed
significantly to the improved 1992 operating income.
   IN 1992 THE COMPANY DISPOSED OF ITS HOLDINGS IN UNION TEXAS FOR $940 MILLION.
The Company realized a pretax gain of $357 million (after-tax $221 million, or
$0.78 a share).
   IN 1992 THE COMPANY ESTABLISHED A PROVISION OF $368 MILLION (AFTER-TAX $227
MILLION, OR $0.80 A SHARE) FOR STREAMLINING AND RESTRUCTURING PROGRAMS TO
IMPROVE THE COMPANY'S OVERALL PRODUCTIVITY. These programs include the
consolidation of facilities, further streamlining of operations and
administration, and the cost of product modifications to improve customer
satisfaction.
   THE COMPANY ADOPTED, EFFECTIVE JANUARY 1, 1992, TWO ACCOUNTING CHANGES
RELATED TO RETIREE HEALTH BENEFITS AND INCOME TAXES. FASB Statement No. 106 --
'Employers' Accounting for Postretirement Benefits Other Than Pensions' (FASB
No. 106) requires the Company to accrue the estimated cost of retiree medical
and life insurance payments during an employee's active service life. FASB
Statement No. 109 -- 'Accounting for Income Taxes' (FASB No. 109) requires an
asset and liability approach to taxes. The current year's impact of FASB Nos.
106 and 109 is an after-tax provision of $23 million, or $0.08 a share, and an
after-tax provision of $2 million, or $0.01 a share, respectively. As part of
the adoption, the Company recorded 'catch-up' after-tax charges totaling $1.25
billion, or $4.42 a share. A charge of $1.1 billion relating to FASB No. 106
reflects a number of steps taken by management, including one which limits
future retiree medical benefits at approximately twice the level of 1992. A
charge of $148 million relates to FASB No. 109. These one-time charges reduced
the Company's shareowners' equity by 42 percent. As a result of adopting these
accounting changes, the Company reported a net loss of $712 million, or $2.52 a
share, in 1992.

- - - - - --------------------------------------------------------------------------------
                                       24

- - - - - --------------------------------------------------------------------------------
 
          RESULTS OF OPERATIONS. The Company's profits
           increased dramatically in 1992 in each of its core businesses despite
           relatively disappointing economies in the U.S. and other countries.
           NET SALES in 1992 were $12,042 million, an increase of $211 million,
           compared to the prior year. Of this increase, $134 million was due to
increased prices, $27 million was the result of volume growth and $50 million
was due to favorable foreign exchange fluctuations at Automotive.
   COST OF GOODS SOLD, as a percent of sales, declined from 83.8 percent in 1991
to 82.4 percent in 1992. The improved performance was principally the result of
enhanced productivity actions as well as lower research and development expense.
The results for 1992 include a charge of $51 million reflecting the impact of
adopting FASB Nos. 106 and 109. Overall, productivity grew by 5.6 percent over
last year.
   STREAMLINING AND RESTRUCTURING CHARGES in 1992 and 1991 are discussed in Note
4 of Notes to Financial Statements.
   INCOME FROM OPERATIONS of $415 million in 1992 compares to a loss from
operations of $291 million in 1991. Excluding charges for streamlining and
restructuring for both years and the current year's impact of adopting FASB Nos.
106 and 109 (special provisions), income improved by $278 million, or 50
percent, reflecting strong performance by all segments, despite a generally
sluggish world economy. After excluding the special provisions, Aerospace's
income increased 10 percent, Automotive's more than doubled and Engineered
Materials' increased 56 percent. Profit margins, excluding the special
provisions, increased from 4.7 percent in 1991 to 6.9 percent in 1992 mainly as
a result of improved productivity throughout the Company. See the discussion of
net income below for information by segment.
   EQUITY IN INCOME OF AFFILIATED COMPANIES of $103 million increased $57 
million. Included in last year's amount was a $60 million write-down of a UOP 
business. Earnings in 1992, on a comparable basis, were higher from UOP 
reflecting improved licensing revenues and equipment sales, but lower from Paxon
because of reduced sales and margins reflecting competitive conditions.
   EARNINGS FROM UNION TEXAS INVESTMENT, including the gain on the disposition
as well as equity and dividend income, of $395 million increased $274 million.
The 1992 results include a pretax gain of $357 million on the disposition of the
Company's common stock in Union Texas, while 1991 included pretax income of $69
million on the sales of Union Texas' domestic oil and gas businesses.
   OTHER INCOME (EXPENSE) of $9 million grew by $18 million principally because
of higher interest income on short-term securities and lower foreign exchange
losses.
   INTEREST AND OTHER FINANCIAL CHARGES of $220 million declined by $37 million,
or 14 percent, from last year mainly because of a reduced level of debt
outstanding and lower rates on floating rate borrowings.
   THE EFFECTIVE TAX RATE (BENEFIT) for 1992 was 23.8 percent. The 1991 tax rate
benefit was 30.0 percent. Excluding the streamlining and restructuring charges
and gains relating to Union Texas, the effective tax rates for 1992 and 1991
were 24.1 and 23.7 percent, respectively. See Note 7 of Notes to Financial
Statements for further information on income taxes.
   INCOME BEFORE THE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES of
$535 million, or $1.90 a share, in 1992 was favorable by $808 million, or $2.90
a share, compared to last year's loss of $273 million, or $1.00 a share.
Excluding the impact of adopting FASB Nos. 106 and 109, the 1992 provision for
streamlining and restructuring and the gain on the disposition of Union Texas,
current year's net income was $566 million, or $2.01 a share. The favorable
income was the result of significant increases for Aerospace, Automotive and
Engineered Materials. After the cumulative effect of the accounting changes and
the special items above, the Company had a net loss of $712 million, or $2.52 a
share, in 1992.
   A DISCUSSION OF THE OPERATIONS OF THE BUSINESS SEGMENTS, before the
cumulative impact of accounting changes on net income, follows. Adjusted net
income excludes the impact of the streamlining and restructuring provisions.
(Dollars in millions)

                                                         Adjusted
AEROSPACE                    Net Sales    Net Income   Net Income
                             ---------    ----------   ----------
                                             
1992                            $4,937          $105         $227
1991                             5,269            87          188
                                ------          ----         ----
Increase/(Decrease)             $ (332)         $ 18         $ 39
                                ------          ----         ----

   The Company's aerospace business had a 6 percent drop in sales because of the
dual impact of significant reductions in military spending and the effect of the
lackluster economy on both the general aviation and commercial airline
industries. The impact of fewer engine deliveries, reduced sales of military
aircraft ground test equipment and flight controls, and lower sales of OE
auxiliary power units and environmental control systems were offset partly by
higher prices, and greater repair and overhaul services for the airline
industry. Overall, the Company's 1992 sales to the DOD, as a prime contractor
and subcontractor, declined by 12 percent mainly as a result of reduced defense
spending. Sales to the commercial and foreign government markets declined by 6
percent, while sales to NASA and other U.S. government agencies increased by 20
percent. Sales to the DOD accounted for 32 percent of Aerospace's total sales, a
decrease of 2 percent compared to 1991.
   Despite lower sales, the Aerospace segment had significant growth in its
adjusted net income. Significant improvements in productivity, reflecting in
part reduced cycle time, contributed to higher margins for airline services,
landing systems, fluid systems and controls and accessories. This improved
performance was only partly offset by lower sales of propulsion engines and
auxiliary power units. 1992 net income includes an after-tax charge of $9
million reflecting the current year's impact of adopting FASB Nos. 106 and 109.
   Funded backlog of $1,557 and $2,619 million at December 31, 1992 and 1991,
respectively, consists of unfilled firm orders from the U.S. and foreign
governments for the Company's aerospace products for which funding has been both
authorized and appropriated by the customer. Total negotiated backlog of $4,859
and $5,190 million at year-end 1992 and 1991, respectively, also includes firm
orders for which funding has not yet been appropriated as well as commercial
contracts.

                           Net Income      Adjusted
AUTOMOTIVE     Net Sales       (Loss)    Net Income
               ---------   ----------    ----------
                               
1992              $4,499         $ 76          $141
1991               4,095         (203)           54
                   -----         ----          ----
Increase           $ 404         $279          $ 87
                   -----         ----          ----

   Sales of automotive products rose by 10 percent in 1992. Automotive and truck
brake systems to the North American and European vehicle manufacturers and
aftermarket, safety restraints, friction materials, turbochargers, filters and
spark plugs all had material growth. The improved sales reflected new business
and solid market recovery in the Company's

- - - - - --------------------------------------------------------------------------------
                                       25

- - - - - --------------------------------------------------------------------------------

core product lines. Light truck sales in the North American market, in which the
Company has significant product content, were especially strong. Sales in
Brazil, where the Company has several plants, were sharply lower as a result of
the economic turmoil in that country.
   Automotive substantially improved its adjusted net income through higher
sales volumes and substantial productivity gains. During 1992, management
implemented various rationalization and census reduction programs to achieve the
productivity gains. The 1992 increase was led by strong performances in
passenger car and North American light truck brakes, turbochargers, friction
materials, aftermarket and heavy vehicle businesses, filters, spark plugs and
safety restraints. The Company's Brazilian operations, however, incurred
substantially higher losses on lower sales volume reflecting the continuing poor
economic conditions in that country. The Company is implementing numerous
productivity improvements in Brazil which are expected to mitigate the operating
loss. Automotive's 1992 net income includes an after-tax charge of $6 million
reflecting the current year's impact of adopting FASB Nos. 106 and 109.

                                                              Adjusted
ENGINEERED MATERIALS            Net Sales    Net Income     Net Income
                                ---------    ----------     ----------
                                                  
1992                               $2,601          $190           $215
1991                                2,459            14            163
                                   ------          ----           ----
Increase                            $ 142          $176           $ 52
                                   ------          ----           ----

   Engineered Materials had a 6 percent increase in sales. Sales of carpet
fibers were materially higher as a result of an increase in market share and
improving business conditions. Sales of engineering plastics, environmental
catalysts, oximes and industrial fibers also increased materially. Sales of
circuit board laminates were higher as a result of an acquisition in August
1992. Prices for acetone, a by-product of the fibers process, were lower due to
weak market conditions.
   Engineered Materials' adjusted net income increased substantially because of
productivity gains, which resulted in lower costs throughout the segment, and
because of strong performance by carpet fibers and engineering plastics as well
as favorable margins for fluorine products and circuit board laminates. UOP also
reported higher income. Paxon had lower earnings because of increased
competition.
   REGARDING ENVIRONMENTAL MATTERS, remedial response and voluntary cleanup
expenditures were $69 and $58 million in 1992 and 1991, respectively. At
December 31, 1992 the total amount of recorded liabilities for environmental
costs was $476 million.
 
         FINANCIAL CONDITION. Greatly improved cash flow resulted from higher
          earnings and more efficient use of the Company's assets as well as the
          disposition of the Company's holdings in Union Texas.
          TOTAL ASSETS at December 31, 1992 were $10,756 million, an increase of
          $374 million, from December 31, 1991. Cash and cash equivalents were
$931 million, an increase of $693 million over the balance at December 31, 1991.
Cash flow provided by substantially higher operating activities for 1992 grew by
$404 million to $1,069 million. The current ratio was 1.4x, up from 1.1x at
December 31, 1991. The Company's working capital turnover was 4.5x, an
improvement mainly in managing its product inventory, compared to 4.2x at
December 31, 1991.
   In September 1992 the Company received $355 million from the redemption, at
face value, of $200 million in preferred shares and $155 million in warrants by
Union Texas. In November the Company sold its 33.3 million common share interest
in Union Texas through a secondary public offering. Net proceeds were $585
million. Total proceeds of $940 million from the two transactions were used to
reduce short-term debt, with the balance invested as of December 31, 1992,
mainly in short-term marketable securities.
   THE MAXIMUM AMOUNT OF BORROWING available under the Company's Credit
Agreement was reduced by the Company in July 1992 from $1.35 billion to $1.11
billion, reflecting the Company's strong earnings and cash flow position.
   The Credit Agreement serves as support for the issuance of commercial paper
as well as ESOP notes. There was $4 million in commercial paper outstanding at
year-end 1992, while at the end of 1991 there was $263 million outstanding.
Commercial paper borrowing reached a high of $563 million during 1992. Supported
ESOP notes, at favorable floating interest rates, totaling $259 and $182
million, were outstanding at December 31, 1992 and 1991, respectively.
   TOTAL DEBT at year-end 1992 of $2,113 million decreased by $682 million as a
result of reduced short-term borrowings, commercial paper and various long-term
debt issues, offset in part by higher borrowings under the ESOP Program. Long-
term debt of $1,777 million decreased by $137 million. The Company's total debt
as a percent of capital, including the cumulative impact of the one-time 1992
accounting changes, was 44.7 percent at December 31, 1992, up from 43.9 percent
at year-end 1991. The long-term debt to capital ratio was 40.5 percent at
December 31, 1992, an increase from 34.9 percent at year-end 1991.
   THE COMPANY REPURCHASED 5.3 MILLION SHARES OF COMMON STOCK for $152 million
in 1992 to partially offset the issuance of shares for employee benefit plans
and a shareowner dividend reinvestment plan.
   CAPITAL EXPENDITURES during 1992 were $691 million, an increase of $23
million from the $668 million spent in 1991. Spending by the segments and
Corporate since 1991 is shown in Note 25 of Notes to Financial Statements.
 
- - - - - --------------------------------------------------------------------------------
                                       26

- - - - - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME                               AlliedSignal Inc.
(Dollars in millions except per share amounts)
- - - - - --------------------------------------------------------------------------------

                                                                                                 
Years ended December 31                                                                   1993      1992      1991
- - - - - -----------------------                                                                   ----      ----      ----
                        Net sales                                                     $ 11,827  $ 12,042  $ 11,831
                                                                                      --------  --------  --------
                        Cost of goods sold                                               9,551     9,923     9,912
                        Selling, general and administrative expenses                     1,338     1,336     1,363
                        Streamlining and restructuring                                      --       368       847
                        Nonrecurring items                                                 (16)       --        --
                                                                                      ---------   ------    ------
                        Total costs and expenses                                        10,873    11,627    12,122
                                                                                      ---------   ------    ------
                        Income (loss) from operations                                      954       415      (291)
                        Equity in income of affiliated companies                           122       103        46
                        Earnings from Union Texas investment                                --       395       121
                        Other income (expense)                                              (9)        9        (9)
                        Interest and other financial charges                              (157)     (220)     (257)
                                                                                      ---------   -------   -------
                        Income (loss) before taxes on income                               910       702      (390)
                        Taxes (benefit) on income                                          254       167      (117)
                                                                                      ---------   -------   -------
                        Income (loss) before cumulative effect of changes in
                          accounting principles                                            656       535      (273)
                        Cumulative effect of changes in accounting principles:
                             Accounting for income taxes                                    --      (148)       --
                             Accounting for postemployment benefits, net of income
                               taxes                                                      (245)       --        --
                             Accounting for postretirement benefits other than
                               pensions, net of income taxes                                --    (1,099)       --
                                                                                      ---------  --------   -------
                        Net income (loss)                                             $    411  $   (712)   $ (273)
                                                                                       --------   -------   -------
                        Earnings (loss) per share of common stock: (a)
                        Before cumulative effect of changes in accounting principles  $   2.31  $   1.90    $(1.00)
                        Cumulative effect of changes in accounting principles:
                             Accounting for income taxes                                    --      (.52)       --
                             Accounting for postemployment benefits, net of income
                               taxes                                                      (.86)       --        --
                             Accounting for postretirement benefits other than
                               pensions, net of income taxes                                --     (3.90)       --
                                                                                       -------   --------   -------
                        Net earnings (loss)                                           $   1.45  $  (2.52)   $(1.00)
                                                                                       -------   --------   -------
                    (a) Earnings  per  share  of  common  stock  are  based  upon the
                        following  weighted   average   number   of   shares:   1993,
                        283,233,078  shares;  1992,  281,973,006  shares;  and  1991,
                        273,167,752 shares.  No  dilution  results  from  outstanding
                        common stock equivalents.

 
- - - - - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(Dollars in millions except per share amounts)
- - - - - --------------------------------------------------------------------------------

                                                                               
Years ended December 31                                                  1993      1992       1991
- - - - - -----------------------                                                  ----      ----       ----

                        Balance at beginning of year                 $    747  $  1,594   $  2,113
                        Net income (loss)                                 411      (712)      (273)
                        Other                                              27         8        (28)
                        Common stock dividends (1993 -- $.58 per
                          share;
                          1992 -- $.50 per share; 1991 -- $.80 per
                          share)                                         (162)     (143)      (218)
                                                                     --------  --------    ------- 
                        Balance at end of year                       $  1,023  $    747   $  1,594
                                                                     --------  --------   --------
                        The 'Notes to Financial Statements' are an integral
                          part of these statements.

- - - - - --------------------------------------------------------------------------------
                                       27

- - - - - --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET                                     AlliedSignal Inc.
(Dollars in millions)
- - - - - --------------------------------------------------------------------------------

December 31                                                                       1993      1992
- - - - - -----------                                                                       ----      ----
                                                                               
ASSETS                Current assets:
                      Cash and cash equivalents                               $    892  $    931
                      Accounts and notes receivable                              1,343     1,529
                      Inventories                                                1,745     1,871
                      Other current assets                                         587       588
                                                                              --------   -------
                      Total current assets                                       4,567     4,919

                      Investments and long-term receivables                        553       446
                      Property, plant and equipment -- net                       4,094     3,897
                      Cost in excess of net assets of acquired
                        companies -- net                                         1,087     1,048
                      Other assets                                                 528       446
                                                                              --------   -------
                      Total assets                                            $ 10,829  $ 10,756
                                                                              --------   -------
LIABILITIES           Current liabilities:
                      Accounts payable                                        $  1,207  $  1,221
                      Short-term borrowings                                         57       150
                      Commercial paper                                             164         4
                      Current maturities of long-term debt                         137       182
                      Accrued liabilities                                        1,924     1,948
                                                                              --------   -------
                      Total current liabilities                                  3,489     3,505

                      Long-term debt                                             1,602     1,777
                      Deferred income taxes                                        339       412
                      Postretirement benefit obligations other than pensions     1,689     1,663
                      Other liabilities                                          1,320     1,148
SHAREOWNERS'          Capital -- common stock -- Authorized 500,000,000
EQUITY                  shares
                        (par value $1 per share); issued: 1993 -- 358,228,742
                        shares;
                          1992 -- 358,228,742 shares                               358       358
                              -- additional paid-in capital                      2,453     2,424
                      Common stock held in treasury, at cost:
                        1993 -- 74,395,236 shares;
                        1992 -- 74,462,188 shares                               (1,437)   (1,336)
                      Cumulative foreign exchange translation adjustment            (7)       58
                      Retained earnings                                          1,023       747
                                                                              --------   -------
                      Total shareowners' equity                                  2,390     2,251
                                                                              --------   -------
                      Total liabilities and shareowners' equity               $ 10,829  $ 10,756
                                                                              --------   -------
                      The  'Notes  to Financial  Statements' are  an integral
                        part of this statement.

- - - - - --------------------------------------------------------------------------------
                                       28

- - - - - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS                           AlliedSignal Inc.
(Dollars in millions)
- - - - - --------------------------------------------------------------------------------

Years ended December 31                                                                    1993    1992    1991
- - - - - -----------------------                                                                    ----    ----    ----

CASH FLOWS FROM      Net income (loss)                                                   $  411   $(712)  $(273)
OPERATING ACTIVITIES Adjustments to reconcile net income (loss) to net cash flows from
                       operating activities:
                       Cumulative effect of change in accounting for:
                          Income taxes                                                       --     148      --
                          Postemployment benefits                                           245      --      --
                          Postretirement benefits other than pensions                        --   1,099      --
                       Nonrecurring items                                                   (59)     --      --
                       Gain on disposition of Union Texas                                    --    (357)     --
                       Streamlining and restructuring (includes affiliated company)        (217)    133     852
                       Depreciation and amortization (includes goodwill)                    547     529     504
                       Undistributed earnings of equity affiliates (includes Union
                       Texas)                                                               (34)    (47)   (144)
                       Deferred taxes                                                       110      83    (196)
                       Decrease (increase) in accounts and notes receivable                  91    (104)     17
                       Decrease in inventories                                              123     130     153
                       Decrease (increase) in other current assets                           14      31    (136)
                       Increase (decrease) in accounts payable                               20     157    (168)
                       Increase (decrease) in accrued liabilities                           151     167     (62)
                       Other                                                               (222)   (188)    118
                                                                                          -----   -----    ----
                     Net cash flow provided by operating activities                       1,180   1,069     665
                                                                                          -----   -----    ----
CASH FLOWS FROM      Expenditures for property, plant and equipment                        (718)   (691)   (668)
INVESTING ACTIVITIES Proceeds from disposals of property, plant and equipment                37      42      15
                     Decrease in investments and long-term receivables                       48      59      27
                     (Increase) in other investments                                        (31)    (18)    (17)
                     Cash paid for acquisitions                                            (244)   (113)    (83)
                     Proceeds from sales of investments and businesses                      129   1,044       4
                     (Increase) in marketable securities                                    (40)    (50)     --
                                                                                          -----   -----    ----
                     Net cash flow provided by (used for) investing activities             (819)    273    (722)
                                                                                          -----   -----    ----
CASH FLOWS FROM      Net increase (decrease) in commercial paper                            160    (259)    181
FINANCING            Net (decrease) in short-term borrowings                                (88)   (307)    (12)
ACTIVITIES           Proceeds from issuance of common stock                                 143     244     115
                     Proceeds from issuance of long-term debt                               131     121     120
                     Repurchases of long-term debt (including current maturities)          (355)   (163)   (273)
                     Repurchases of common stock                                           (229)   (142)     --
                     Cash dividends on common stock                                        (162)   (143)   (218)
                                                                                         ------   -----    ----
                     Net cash flow (used for) financing activities                         (400)   (649)    (87)
                                                                                         ------   -----    ----
                     Net increase (decrease) in cash and cash equivalents                   (39)    693    (144)
                                                                                
                     Cash and cash equivalents at beginning of year                         931     238     382
                                                                                         ------   -----    -----
                     Cash and cash equivalents at end of year                            $  892  $  931  $  238
                                                                                         ------   -----    -----
                     The 'Notes to Financial Statements' are an integral part of this
                       statement.

- - - - - --------------------------------------------------------------------------------
                                       29

- - - - - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS                                  AlliedSignal Inc.
(Dollars in millions except per share amounts)
- - - - - --------------------------------------------------------------------------------
 
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
- - - - - -------------------------------
 
SUBSEQUENT EVENTS
*The Board of Directors determined on February 7, 1994 to redeem the common
 stock purchase rights for all rights outstanding on February 18, 1994 at $0.05
 per right.
*The Board of Directors also declared a two-for-one common stock split for
 shareowners of record on February 22, 1994. The stock split is payable on March
 14, 1994 and all stock related data in the financial statements reflect the
 stock split for all periods presented.
 
CONSOLIDATED FINANCIAL STATEMENTS include the accounts of AlliedSignal Inc. and
majority-owned subsidiaries.
 
INVENTORIES are valued at the lower of cost or market using the last-in,
first-out (LIFO) method for certain qualifying domestic inventories and the
first-in, first-out (FIFO) or the average cost method for other inventories.
 
INVESTMENTS AND LONG-TERM RECEIVABLES are carried at the lower of cost or
market, and in the case of affiliates over which significant influence is
exercised, using the equity method of accounting.
 
PROPERTY, PLANT AND EQUIPMENT are carried at cost and are generally depreciated
using estimated service lives, which range from 3 to 40 years. For the financial
statements, depreciation is computed principally on the straight-line method.
 
COST IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES is being amortized on a
straight-line basis over 25-or 40-year periods. The cumulative amount of
goodwill amortized at December 31, 1993 and December 31, 1992 is $315 and $287
million, respectively.
 
POSTEMPLOYMENT BENEFITS for former or inactive employees, excluding retirement
benefits, are accounted for under the provisions of Financial Accounting
Standards Board (FASB) Statement No. 112 -- 'Employers' Accounting for
Postemployment Benefits' (FASB No. 112), effective January 1, 1993. FASB No. 112
requires the Company to accrue the cost of certain benefits, including
severance, workers' compensation, and health care coverage, over an employee's
service life. A one-time charge for the adoption of FASB No. 112 of $396 million
(after-tax $245 million, or $0.86 a share) was recognized as the cumulative
effect of a change in accounting principle in 1993. The 1993 ongoing expense was
$18 million (after-tax $11 million, or $0.04 a share). The Company uses the
services of an enrolled actuary to calculate the expense. The Company previously
expensed the cost of such benefits on a pay-as-you-go basis or recognized the
impact at the time of a specific event.
 
POSTRETIREMENT  BENEFITS  OTHER  THAN  PENSIONS  are  accounted  for  under the
provisions  of  FASB  Statement  No. 106 -- 'Employers'  Accounting  for 
Postretirement Benefits Other Than Pensions' (FASB No. 106), effective January
1, 1992. FASB  No. 106  requires  the  Company  to accrue the estimated cost of
retiree benefit payments during an employee's active service life. The  Company
previously expensed the cost of these benefits on a pay-as-you-go basis.
 
RECOGNITION OF CONTRACT REVENUES primarily relates to Aerospace operations.
Under fixed-price contracts, sales and related costs are recorded as deliveries
are made. Sales and related costs under cost-reimbursable contracts are recorded
as costs are incurred. Anticipated future losses on contracts are charged to
income when identified. Contracts which are part of a program are evaluated on
an overall program basis.
 
ENVIRONMENTAL expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental
assessments are made or remedial efforts are probable and the costs can be
reasonably estimated. The timing of these accruals is generally on the
completion of feasibility studies or the settlement of claims, but in no event
later than the Company's commitment to a plan of action. The liabilities for
environmental costs recorded in Accrued Liabilities and Other Liabilities at
December 31, 1993 and 1992 were $66 and $414 million and $71 and $405 million,
respectively.
 
INTEREST RATE SWAP AND FOREIGN CURRENCY FORWARD EXCHANGE, OPTIONS AND SWAP
AGREEMENTS are entered into to manage the Company's exposure to changes in
interest and foreign currency exchange rates.
*Changes in the amount to be received or paid under interest rate swap
 agreements are recognized in Interest and Other Financial Charges.
*Changes in the market value of foreign currency forward exchange, options (put
 and call) and swap agreements are recognized in Other Income (Expense) or
 Cumulative Foreign Exchange Translation Adjustment, as appropriate, when
 foreign currency exchange rates fluctuate. Such changes mitigate the impact of
 foreign exchange fluctuations on foreign currency denominated transactions,
 assets and liabilities.
 
INCOME TAXES are based on the asset and liability approach embodied in FASB
Statement No. 109 -- 'Accounting for Income Taxes' (FASB No. 109), effective
January 1, 1992. Under FASB No. 109, deferred tax liabilities or assets reflect
the impact of temporary differences between amounts of assets and liabilities
for financial and tax reporting. Such amounts are subsequently adjusted, as
appropriate, to reflect changes in tax rates expected to be in effect when the
temporary differences reverse. A valuation allowance is established for any
deferred tax asset for which realization is not likely. Prior years' financial
statements have not been restated to apply the provisions of FASB No. 109.
Income taxes for 1991 are based on pretax financial statement income in
accordance with Accounting Principles Board Opinion No. 11 (APB No. 11). An
appropriate deferred tax was provided for the tax effect of timing differences
between pretax financial statement income and taxable income per the tax return.
Deferred income taxes have not been provided on approximately $112 million of
undistributed earnings of foreign affiliated
compa-
- - - - - --------------------------------------------------------------------------------
                                       30

- - - - - --------------------------------------------------------------------------------
nies, which are considered to be permanently reinvested. Any U.S. taxes payable
on foreign earnings which may be remitted, however, will be substantially offset
by foreign tax credits.
 
NOTE 2. ACQUISITIONS
- - - - - -------------------------------
 
In 1993 the Company acquired the data control business (Data Controls) of
Sundstrand Corporation for $195 million in cash. The business had sales of $194
million in 1992. Data Controls manufactures a wide range of avionics such as
ground proximity warning systems, reactive windshear detection systems, flight
data and voice recorders, general aviation in-flight phone systems and aircraft
condition monitoring systems. The Company also made a number of small
acquisitions in 1993.
 
NOTE 3. NONRECURRING ITEMS
- - - - - -------------------------------
 
The 1993 nonrecurring items consist of a gain of $89 million (after-tax $50
million or $0.17 a share) from the formation of an alliance of the Company's
air-brake control and related product operations for heavy trucks with those of
Knorr-Bremse AG, partly offset by a provision totaling $73 million (after-tax
$49 million, or $0.17 a share) covering transaction and other costs including
formation costs relating to Knorr-Bremse and other business ventures as well as
the cost of several legal actions.

NOTE 4. STREAMLINING AND RESTRUCTURING
- - - - - -------------------------------
 
The 1992 provision reflects a pretax charge of $368 million (after-tax $227
million, or $0.80 a share) covering programs to improve the Company's overall
productivity. These programs include the consolidation of facilities, further
streamlining of operations and administration and the cost of product
modifications to improve customer satisfaction.
  The 1991 provision reflects a pretax charge of $907 million (after-tax $661
million, or $2.42 a share) covering streamlining, restructuring and
environmental charges and costs for the rationalization of facilities. Of this
provision, $60 million was included on the 'Equity in Income of Affiliated
Companies' line since it relates to a business of the UOP process technology
joint venture (UOP). The provision includes costs for the elimination of about
5,600 salaried jobs, mainly through severance programs, the consolidation of
production facilities and administrative functions and the rationalization of
several product lines as well as the disposition of nine non-strategic business
units. Also included in the provision is $190 million for environmental costs of
previously sold or shutdown facilities, as a result of revisions in estimates or
the completion of studies, as well as facilities to be disposed of in connection
with the restructuring.
 
NOTE 5. OTHER INCOME (EXPENSE)
- - - - - -------------------------------

Years ended December 31                                       1993    1992  1991
- - - - - -----------------------                                       ----    ----  ----
                                                                   
Interest income and other                                     $ 35     $17   $10
Repurchase of debentures                                        (1)     (1)   (5)
Foreign exchange (loss) (a)                                    (43)     (7)  (14)
                                                               ----    ----  ----
                                                               $(9)    $ 9   $(9)
                                                               ----    ----  ----

(a)  Includes the amortization of premiums for foreign currency forward exchange
contracts of $(38), $(28) and $(12) million, in each of the respective years. In
part, the contracts, in conjunction  with domestic borrowings, were utilized  to
finance  certain  foreign operations  and contributed  to  lower expense  on the
'Interest and Other Financial Charges' line.
 
The Company had forward exchange contracts, maturing through 1994, to purchase
and sell foreign currencies aggregating $210 and $117 million at December 31,
1993 and $439 and $597 million at December 31, 1992, respectively. These amounts
are all based upon spot rates in effect at the end of each respective year. The
Company also had foreign currency options hedging anticipated transactions,
maturing through 1994, aggregating $117 and $293 million at December 31, 1993
and 1992, respectively.
 
NOTE 6. INTEREST AND OTHER FINANCIAL CHARGES
- - - - - -------------------------------

Years ended December 31                                       1993   1992   1991
- - - - - -----------------------                                       ----   ----   ----
                                                                  
Total interest and other financial charges                   $ 186  $ 247  $ 283
Less -- Capitalized interest                                   (29)   (27)   (26)
                                                             -----  -----  -----
                                                             $ 157  $ 220  $ 257
                                                             -----  -----  -----

At December 31, 1993 and 1992 the Company had interest rate swap agreements,
maturing through 1999, amounting to a total notional principal of $455 and $347
million, respectively. At December 31, 1993 these agreements effectively changed
$373 million of fixed rate debt (average 9.66 percent) to London Interbank Offer
Rate (LIBOR) based floating rate debt (average 5.30 percent) and $82 million of
LIBOR based floating rate debt (average 3.11 percent) to fixed rate debt
(average 7.24 percent). At December 31, 1992 these agreements effectively
changed $265 million of fixed rate debt (average 9.79 percent) to LIBOR based
floating rate debt (average 4.68 percent) and $82 million of LIBOR based
floating rate debt (average 3.42 percent) to fixed rate debt (average 7.43
percent).
 
NOTE 7. TAXES (BENEFIT) ON INCOME
- - - - - -------------------------------
 
In the fourth quarter 1992 the Company adopted FASB No. 109, 'Accounting for
Income Taxes', retroactive to January 1, 1992. The adoption of FASB No. 109
changes the Company's method of accounting for income taxes to an asset and
liability approach from the deferred method under APB No. 11.
 
INCOME (LOSS) BEFORE TAXES ON INCOME

Years ended December 31                                       1993   1992   1991
- - - - - -----------------------                                       ----   ----   ---- 
                                                                  
United States                                                $ 799  $ 634  $(240)
Foreign                                                        111     68   (150)
                                                             -----  -----  -----
                                                             $ 910  $ 702  $(390)
                                                             -----  -----  -----

 
- - - - - --------------------------------------------------------------------------------
                                       31
- - - - - --------------------------------------------------------------------------------
TAXES (BENEFIT) ON INCOME

Years ended December 31                                       1993   1992   1991
- - - - - -----------------------                                       ----   ----   ----
                                                                  
United States                                                $ 244  $ 160  $(100)
Foreign                                                         10      7    (17)
                                                             -----  -----  ------
                                                             $ 254  $ 167  $(117)
                                                             -----  -----  -----

 

Years ended December 31                                       1993   1992   1991
- - - - - -----------------------                                       ----   ----   ----

Taxes (benefit) on income consist of:
Current:
    United States                                             $  95  $  55  $  48
    State                                                        25     15     16
    Foreign                                                      24     14     15
                                                              -----  -----  -----
                                                                144     84     79
                                                              -----  -----  -----
Deferred:
    United States                                                99     92   (148)
    State                                                        25     (2)   (16)
    Foreign                                                     (14)    (7)   (32)
                                                              -----  -----   -----
                                                                110     83   (196)
                                                              -----  -----   -----
                                                              $ 254  $ 167  $(117)
                                                              -----  -----   -----

Years ended December 31                             1993     1992     1991
- - - - - -----------------------                             ----     ----     ----
                                                            
The principal items accounting for the difference
  in taxes (benefit) on income (loss) computed at
  the U.S. statutory rate and as recorded on an
  overall basis are as follows:
Statutory U.S. federal income tax rate              35.0%    34.0%   (34.0)%
Taxes on foreign earnings over (under) U.S. tax
  rate                                              (2.4)    (3.6)     7.2
Asset basis differences                             (1.7)      --      2.6
Nondeductible amortization and depreciation          1.2      1.5      4.7
State income taxes                                   3.3       .4     (1.4)
Tax benefits of Foreign Sales Corporation           (1.9)    (2.9)    (4.5)
Dividends received deduction                         (.2)    (1.5)    (3.5)
ESOP dividend tax benefit                            (.9)    (1.1)      --
Impact of rate change on beginning of-the-year
  deferred tax balances                             (1.5)      --       --
All other items -- net                              (3.0)    (3.0)    (1.1)
                                                    -----    -----   ------
                                                    27.9%    23.8%   (30.0)%
                                                    -----    -----   ------

Year ended December 31                              1991
- - - - - ----------------------                              ----
                                                
The principal items in the deferred tax provision
  are as follows:
Accelerated depreciation and amortization          $  33
Nonrecurring items and acquisitions                    8
Streamlining and restructuring                      (198)
Pension and savings plans                            (14)
Long-term contracts                                   12
Alternative minimum tax credit carryforward          (31)
State income taxes                                   (16)
All other items -- net                                10
                                                   ------
                                                   $(196)
                                                   ------

DEFERRED INCOME TAXES

Years ended December 31                             1993     1992
- - - - - -----------------------                             ----     ----
                                                      
Included in the following balance sheet accounts:
Other current assets                               $ 468    $ 482
Other assets                                         104       47
Deferred income taxes                               (339)    (412)
                                                   -----    -----
                                                   $ 233    $ 117
                                                   -----    -----

 
DEFERRED TAX ASSETS/(LIABILITIES)

December 31                                         1993     1992
- - - - - -----------                                         ----     ----

The temporary differences and carryforwards which
  give rise to deferred tax assets and liabilities
  are as follows:
Property, plant and equipment basis differences    $(742)   $(706)
Postretirement benefits other than pensions          716      699
Postemployment benefits                              158       --
Investment and other asset basis differences        (465)    (477)
Streamlining, restructuring and other nonrecurring
  items                                              290      380
Other accrued items                                  334      299
Foreign net operating losses                         118      105
Alternative minimum tax credit                        60       68
Other tax credits                                     41       44
U.S. capital loss                                     43       43
All other items -- net                              (239)    (241)
                                                   -----    -----
Sub-total                                            314      214
Valuation allowance                                  (81)     (97)
                                                   -----    -----
                                                   $ 233    $ 117
                                                   -----    ----- 

 
  Other tax credits relate primarily to U.S. general business tax credits which
are available to reduce income tax payments through the year 2007. The
alternative minimum tax credit is available to reduce regular income tax
payments for an indefinite period of time. The foreign net operating losses
relate to several countries and such benefits are available to reduce income tax
payments for periods which range from five years to an indefinite period. The
U.S. capital loss is available to offset income tax payments on capital gains
through 1997.
 
NOTE 8. ACCOUNTS AND NOTES RECEIVABLE
- - - - - -------------------------------

December 31                                         1993     1992
- - - - - -----------                                         ----     ----

Trade                                             $1,245   $1,343
Other                                                126      223
                                                   -----    -----
                                                   1,371    1,566
Less -- Allowance for doubtful accounts and
  refunds                                            (28)     (37)
                                                  ------   ------
                                                  $1,343   $1,529
                                                  ------   ------

The Company is a party to agreements under which it can sell undivided interests
in designated pools of trade accounts receivable up to $500 million (average
outstanding was $492 and $496 million during 1993 and 1992, respectively). New
receivables are sold under the agreements as previously sold receivables are
collected. During 1993, this represented an average collection period of 47 days
or a replacement of receivables of approximately eight times. At both December
31, 1993 and 1992, customer accounts receivable on the Consolidated Balance
Sheet have been reduced by $500 million reflecting the sales. The Company acts
as an agent for the purchaser in the collection and administration of the
receivables.
 
- - - - - --------------------------------------------------------------------------------
                                       32

- - - - - --------------------------------------------------------------------------------
 
NOTE 9. INVENTORIES
- - - - - -------------------------------

December 31                                         1993     1992
- - - - - -----------                                         ----     ----
                                                      
Raw materials                                      $ 504    $ 614
Work in process                                      635      619
Finished products                                    824      904
Supplies and containers                               51       54
                                                   -----    -----
                                                   2,014    2,191
Less --
Progress payments                                   (154)    (201)
Reduction to LIFO cost basis                        (115)    (119)
                                                  ------   ------
                                                  $1,745   $1,871
                                                  ------   ------

 
Inventories valued at LIFO amounted to $316 million at December 31, 1993 and
$298 million at December 31, 1992, which amounts were below estimated
replacement cost by $115 and $119 million, respectively.
 
NOTE 10. OTHER CURRENT ASSETS
- - - - - -------------------------------

December 31                                         1993     1992
- - - - - -----------                                         ----     ----
                                                      
Current - deferred taxes                           $ 468    $ 482
Other                                                119      106
                                                   -----    -----
                                                   $ 587    $ 588
                                                   -----    -----

 
NOTE 11. INVESTMENTS AND LONG-TERM RECEIVABLES
- - - - - -------------------------------

December 31                                         1993     1992
- - - - - -----------                                         ----     ----
                                                      
Affiliates                                         $ 395    $ 326
Marketable securities                                 90       50
Long-term receivables                                 68       70
                                                   -----    -----
                                                   $ 553    $ 446
                                                   -----    -----

 
The Company has a 50 percent partnership interest in two joint ventures
accounted for under the equity method, UOP and Paxon Polymer Company (Paxon).
The UOP joint venture is in the process technology and catalyst business while
the Paxon joint venture manufactures and sells high-density polyethylene resins.
During 1991 UOP recorded a Streamlining and Restructuring provision of $120
million for the write-down to realizable value of the assets of the fluid
catalytic cracking business. The Company's share of the equity of the joint
ventures exceeds its carrying value for these investments by $127 million, which
is being amortized over the remaining useful lives of the related assets.
  Combined selected financial data for these two entities are summarized as
follows:

Years ended December 31                             1993     1992     1991
- - - - - -----------------------                             ----     ----     ----

Net sales                                          $1,238   $1,225   $1,288
Streamlining and restructuring                        --       --       120
Income from operations                                151      142       26
Income before cumulative effect of
  changes in accounting principles (a)                149      149       43
Net income (a)(b)                                      90      149       43

December 31                                         1993     1992
- - - - - -----------                                         ----     ----

Current assets                                     $  819   $  800
Total assets                                        1,505    1,741
Current liabilities                                   224      226
Noncurrent liabilities                                350      260
Preferred capital                                      --      238
Equity                                                931    1,017

(a) No U.S. taxes have been provided by the entities on partnership income as
the individual partners are responsible for their proportionate share of U.S.
taxes payable.
(b) Reflects the adoption of FASB No. 106 ($37 million) and the adoption of FASB
No. 112 ($22 million).
 
NOTE 12. PROPERTY, PLANT & EQUIPMENT
- - - - - -------------------------------

December 31                                         1993     1992
- - - - - -----------                                         ----     ----

Land and land improvements                         $  321    $  301
Machinery and equipment                             5,296     4,982
Buildings                                           1,241     1,173
Office furniture and equipment                        634       594
Transportation equipment                              145       146
Construction in progress                              531       433
                                                  -------    ------
                                                    8,168     7,629
Less -- Accumulated depreciation and
  amortization                                     (4,074)   (3,732)
                                                  -------    ------
                                                  $ 4,094    $3,897
                                                  -------    ------

 
NOTE 13. ACCRUED LIABILITIES
- - - - - -------------------------------

December 31                                          1993     1992
- - - - - -----------                                          ----     ----

Customer advance payments/deposits                 $  244    $ 130
Insurance                                             163      168
Postemployment benefits                               166       --
Retiree medical benefits                              125      121
Streamlining and restructuring                        170      498
Wages                                                 296      295
Other                                                 760      736
                                                   ------   ------
                                                   $1,924   $1,948
                                                   ------   ------

NOTE 14. LONG-TERM DEBT AND CREDIT AGREEMENTS
- - - - - -------------------------------

December 31                                           1993       1992
- - - - - -----------                                           ----       ----
                                                        
Employee stock ownership refunding notes,
  7.02% and 7.19%, due 1995 - 1997                 $   200    $   200
Employee stock ownership floating rate notes,
  2.876% - 3.70%, due 1994 - 1999                      218        260
9 7/8% debentures due June 1, 2002                     250        250
9.20% debentures due February 15, 2003                 100        100
Medium term notes, 8.28% - 9.28%, due 1995 - 2001      153        153
Zero coupon bonds and money multiplier notes,
  12.95% - 13.518%, due 1995 - 2009                    257        238
9 1/2% debentures due June 1, 2016                     100        100
                                                    ------     ------
                                                     1,278      1,301
                                                    ------     ------

Capitalized lease obligations, 3.5% - 14.38%,
  maturing at various dates through 2016                49         47
                                                   -------    -------

Foreign currency bonds:
  Deutsche Mark 125,000,000 7 1/2% bonds due 1994
    (a)                                                 --         77
  Swiss Franc 85,000,000 6% bonds due 1994 (b)          --         58
                                                    ------     ------
                                                        --        135
                                                    ------     ------

Industrial development bond obligations, 2.63%
   - 6.85%, maturing at various dates through 2017     112        116
                                                   -------     ------

Other long-term debt, 2.0% - 14.75%, maturing at
  various dates through 2006                           165        180
                                                   -------    -------

Sub-total                                            1,604      1,779
Less -- Unamortized discount                            (2)        (2)
                                                   -------    -------

                                                   $ 1,602    $ 1,777
                                                   -------    -------

(a) The Company has foreign currency and interest rate swap agreements to hedge
principal and interest payments, which result in a 67 million Dutch Guilder ($39
million) obligation with an effective floating interest rate of 9.68 percent at
December 31, 1992 and a $41 million obligation with an effective floating
interest rate of 3.5 percent at December 31, 1993 and 3.625 percent at December
31, 1992.
(b) The Company had a foreign currency and interest rate swap agreement to hedge
principal and interest payments, which, net of related foreign currency forward
exchange contracts, resulted in a Dutch Guilder obligation of 113 million ($62
million) with an effective floating interest rate of 9.51 percent at December
31, 1992.
 
- - - - - --------------------------------------------------------------------------------
                                       33

- - - - - --------------------------------------------------------------------------------
 
The schedule of principal payments on long-term debt is as follows:

                                                    Long-term
                                                     Debt (1)
                                                    ----------
                                                
At December 31, 1993                                 
- - - - - --------------------
1994                                                    $ 137
1995                                                      203
1996                                                      175
1997                                                      111
1998                                                      195
Thereafter                                                918
                                                       ------
                                                        1,739
Less -- Current portion                                  (137)
                                                       ------
                                                       $1,602
                                                       ------

 
(1) Amounts are net of repurchases.
 
  The only material financial instruments which are not carried in the
Consolidated Balance Sheet at amounts which approximate fair values are certain
debt instruments. The carrying value of long-term debt and related current
maturities (excluding capitalized lease obligations), is $1,687 and $1,906
million and the fair value is $1,945 and $2,100 million at December 31, 1993 and
1992, respectively. The fair value of the long-term debt is estimated based on
the quoted market price for the issues (if traded) or based on the current rates
offered to the Company for debt of the same remaining maturity and
characteristics.
  The Company entered into two new credit agreements (3 Year and 364 Day Credit
Agreements) dated July 7, 1993, with commitments aggregating $900 million, with
a group of 21 banks. These agreements replaced a $1.11 billion arrangement. The
funds available under the Credit Agreements may be used for any corporate
purpose. Loans under the $450 million 3 Year Credit Agreement are required to be
repaid no later than July 7, 1996. Annually, the Company may request that the
maturity of the 3 Year Credit Agreement be extended by another year. The Company
intends to request an extension of the agreement in 1994. The banks' commitments
to lend under the $450 million 364 Day Credit Agreement terminate on July 5,
1994 and any loans then outstanding will be converted to term loans maturing on
July 5, 1995. The Company intends to renegotiate this agreement in 1994. The
Company has agreed to pay facility fees of .10 percent per annum and .15 percent
per annum on the aggregate commitments for the 364 Day and 3 Year Credit
Agreements, respectively, subject to increase or decrease in the event of
changes in the Company's long-term debt ratings. The Credit Agreements do not
contain restrictions on the Company's ability to pay dividends or requirements
that the Company maintain a specific net worth. They do contain other customary
conditions and events of default, the failure to comply with, or occurrence of
which, would prevent any further borrowings and would generally require the
settlement of any outstanding borrowings under either Credit Agreement. Such
conditions include the absence of any material adverse change in the ability of
the Company to pay its indebtedness when due, and such events of default include
(a) non-payment of Credit Agreement debt and interest thereon, (b)
non-compliance with the terms of the covenants, (c) cross-default with other
debt in certain circumstances, (d) bankruptcy and (e) defaults upon obligations
under the Employee Retirement Income Security Act.
  Interest on borrowings under the Credit Agreements would be determined, at the
Company's option, by (a) an auction bidding procedure; (b) the highest of the
average floating base rate of two reference banks, one-half percent above the
average CD rate, or one-half percent above the Federal funds rate; or (c) .225
and .275 percent for the 3 Year and 364 Day Credit Agreements, respectively, and
if either Credit Agreement is drawn down in excess of 50 percent of its total
amount, .2875 and .3375 percent for the 3 Year and 364 Day Credit Agreements,
respectively, over the average LIBOR or CD rate of three reference banks. The
spreads over the LIBOR or CD rates are subject to increase or decrease if the
Company's long-term debt ratings change. The Company had no balance outstanding
under the Credit Agreements at December 31, 1993. They have also served as
support for the issuance of commercial paper and certain notes under the
Company's Employee Stock Ownership funding program. At December 31, 1993 the
Company had outstanding $164 million of commercial paper and $259 million of
notes supported by the Credit Agreements.
 
NOTE 15. LEASE COMMITMENTS
- - - - - -------------------------------
 
Future minimum lease payments under operating leases having initial or remaining
noncancellable lease terms in excess of one year are as follows:

                                                     Lease
At December 31, 1993                               Payments
- - - - - --------------------                               --------
                                                
1994                                                  $ 83
1995                                                    62
1996                                                    45
1997                                                    35
1998                                                    31
Thereafter                                             229
                                                      ----
Total                                                 $485
                                                      ----

  Rent expense of $128, $131 and $146 million was included in costs and expenses
for 1993, 1992 and 1991, respectively.
 
NOTE 16. CAPITAL STOCK
- - - - - -------------------------------
 
The Company is authorized to issue up to 20,000,000 shares of preferred stock
without par value and may establish series of preferred stock having such number
of shares and such terms as it may determine.
  The Company is authorized to issue up to 500,000,000 shares of common stock,
with a par value of one dollar. Common shareowners are entitled to receive such
dividends as may be declared by the Board of Directors (the Board), are entitled
to one vote per share, and are entitled, in the event of liquidation, to share
ratably in all the assets of the Company which are available for distribution to
the common shareowners. Common shareowners do not have preemptive or conversion
rights. Shares of common stock issued and outstanding or held in the treasury
are not liable to further calls or assessments. There is no restriction on
dividends or the repurchase or redemption of common stock by the Company. The
Company has remaining authority to repurchase from time to time up to 16.5
million shares of common stock.
  Each share of common stock is accompanied by a share purchase right (a Right)
which entitles shareowners to buy one newly issued share of common stock at an
exercise price of $150, subject to adjustment. The Rights will be exercisable
only if a person or group acquires stock representing 20 percent or more of the
power to vote generally in the election of directors (becomes an acquiring
person) or announces a tender or exchange offer which would result in such
person or group becoming an acquiring person. Upon exercise after a person or a
group becomes an acquiring person, each Right (other than Rights held by the
acquiring person) will entitle the holder to purchase a number of shares of
common stock
 
- - - - - --------------------------------------------------------------------------------
                                       34

- - - - - --------------------------------------------------------------------------------
of the Company having a market value of two times the exercise price. If the
Company is acquired in a merger or other business combination, each Right will
entitle the holder to purchase, at the then exercise price, a number of shares
of common stock of the acquiring company having a market value of two times such
exercise price. If circumstances warrant, the Board may decrease from 20 percent
to as low as 15 percent the threshold used in determining when a person or group
becomes an acquiring person or the conditions of exercise of the Rights,
provided that the Board may not reduce the thresholds to or below the existing
level of ownership of a shareowner. On February 7, 1994 the Board determined to
redeem the Rights at $0.05 a Right.

                                                                Common
                                                        Shares  Stock/
                                                   Outstanding  Paid-in  Treasury
                                                 (in millions)  Capital    Stock
                                                 -------------  -------   -------
                                                               
Balance December 31, 1990                                269.4  $2,747   $(1,578)
  Used for Dividend Reinvestment Plan                       .4      --        10
  Used for employee benefit plans                          6.3      --       140
  Other                                                     .2      --         5
                                                         -----   -----    -------
Balance December 31, 1991                                276.3   2,747    (1,423)
  Purchased under repurchase programs                     (5.3)     --      (152)
  Used for Dividend Reinvestment Plan                       .2      --         3
  Used for employee benefit plans (including
    related tax benefits)                                 12.6      35       236
                                                         -----   -----    -------
Balance December 31, 1992                                283.8   2,782    (1,336)
  Purchased under repurchase programs                     (6.7)     --      (220)
  Used for Dividend Reinvestment Plan                       .1      --         3
  Used for employee benefit plans (including
    related tax benefits)                                  6.6      29       116
                                                         -----   -----   -------
Balance December 31, 1993                                283.8  $2,811   $(1,437)
                                                         -----   -----   -------

NOTE 17. STOCK OPTIONS AND AWARDS
- - - - - -------------------------------
 
In April 1993 shareowners at the Annual Meeting approved a new 10-year stock
plan for employees of the Company and affiliates (1993 Stock Plan). In addition,
the Company has a 1985 Stock Plan for employees. Under both plans, the Company
may grant incentive and non-qualified stock options, stock appreciation rights
(SARs), restricted shares and restricted units (Units) to officers and other
employees. SARs entitle an optionee to surrender unexercised stock options for
cash or stock equal to the excess of the fair market value of the surrendered
shares over the option value of such shares. The 1993 Stock Plan provides for
the annual grant of awards in an amount not in excess of 1.5 percent of the
total shares issued (includes shares held in treasury) on December 31 of the
year preceding the year of the award. Any shares that are available for awards
that are not utilized in a given year will be available for use in subsequent
years. Units have been granted to certain employees, which entitle the holder to
receive shares of common stock. At December 31, 1993 there were 1,097,076 Units
outstanding, including 138,002 Units granted in 1993, the restrictions on which
generally lapse over periods not exceeding nine years from date of grant.
Incentive stock options have a term determined by the Management Development and
Compensation Committee of the Board (Committee), but not in excess of ten years.
Non-qualified stock options have been granted with terms of up to ten years and
one day. An option becomes exercisable at such times and in such installments as
set by the Committee. Options generally become exercisable over a three-year
period.

Stock options                                      Number of Shares
- - - - - -------------                                      ----------------
                                                
Outstanding at December 31, 1990                         18,313,580
Granted at $14.35 - $20.66 per share                      5,843,500
Less --
Exercised at $10.12 - $18.69 per share                      986,804
Lapsed or cancelled                                         675,090
Surrendered upon exercise of SARs                           219,062
                                                         ----------

Outstanding at December 31, 1991                         22,276,124
Granted at $22.07 - $27.82 per share                      5,934,198
Less --
Exercised at $10.12 - $23.41 per share                    8,823,506
Lapsed or cancelled                                         286,290
Surrendered upon exercise of SARs                           270,262
                                                         ----------

Outstanding at December 31, 1992                         18,830,264
Granted at $29.13 - $36.94 per share                      5,949,990
Less --
Exercised at $10.34 - $34.35 per share                    4,986,618
Lapsed or cancelled                                         145,190
Surrendered upon exercise of SARs                            30,000
                                                         ----------

Outstanding at December 31, 1993,
  $13.75 - $36.94 per share                              19,618,446
                                                         ----------

Exercisable at December 31, 1993                          8,648,464
                                                         ----------

Available for grant at December 31, 1992                  6,098,790
                                                         ----------

Available for grant at December 31, 1993                  5,540,800
                                                         ----------

 
  All options were granted at not less than fair market value at dates of grant.
  Treasury shares of common stock have been used upon exercise of stock options.
Differences between the cost of treasury stock used and the total option price
of shares exercised have been reflected in retained earnings.
  The Company also has a Restricted Stock Plan for Non-Employee Directors, under
which each non-employee director receives a one-time grant of 3,000 shares of
common stock, subject to certain restrictions.
 
NOTE 18. CUMULATIVE FOREIGN EXCHANGE TRANSLATION ADJUSTMENT
- - - - - -------------------------------

December 31                                       1993   1992   1991
- - - - - -----------                                       ----   ----   ----
                                                        
Balance at beginning of year                       $58    $65    $98
Translation adjustment and impact of hedges
  and intercompany balances                        (65)    (7)   (33)
                                                   ---    ---    ---
                                                   $(7)   $58    $65
                                                   ---    ---    ---

NOTE 19. COMMITMENTS AND CONTINGENCIES
- - - - - -------------------------------
 
The Company is subject to a number of lawsuits, investigations and claims (some
of which involve substantial amounts) arising out of the conduct of its
business, including those relating to commercial transactions, government
contracts, product liability and environmental, safety and health matters. In
accordance with the Company's accounting policy described in Note 1 of Notes to
Financial Statements, liabilities are recorded for environmental matters
generally on the completion of feasibility studies or the settlement of claims,
but in no event later than the Company's commitment to a plan of action.
Although the Company does not currently possess sufficient information to
reasonably estimate the amounts of the liabilities to be recorded upon future
comple-
- - - - - --------------------------------------------------------------------------------
                                       35

- - - - - --------------------------------------------------------------------------------
tion of studies, they may be significant to the consolidated results of
operations.
  On September 19, 1991, The B.F. Goodrich Company (Goodrich) filed a lawsuit
against the Company in the U.S. District Court for Delaware alleging
infringement by the Company of two patents relating to aircraft brakes and
seeking injunctive relief and damages. The allegation against the Company
relates only to brakes for the Boeing 777, which is to be introduced in 1995,
and not to any other brake program of the Company. The Company received an
opinion of outside patent counsel that the Goodrich patents are invalid. The
Company believes it will prevail in the litigation. In any event, the Company
would be able to compete for 777 business with an alternative design clearly not
covered by the patents. At trial in October 1993, Goodrich claimed damages of
approximately $350 million before trebling. The Company believes this damage
claim is without merit. Post trial briefing and argument will not be completed
until at least the end of March 1994.
  While the ultimate results of the Goodrich litigation and the other lawsuits,
investigations and claims described above cannot be determined, management does
not expect that these matters will have a material adverse effect on the
consolidated financial position of the Company.
  The Company has issued or is a party to various direct and indirect
guarantees, bank letters of credit and customer guarantees. Additionally, the
Company has issued financial and contract performance guarantees with respect to
several refuse-to-energy projects owned or operated by Resco Holdings Inc., a
subsidiary of Wheelabrator Technologies, Inc. The Company is indemnified by
Resco Holdings Inc. for any payments which the Company may be required to make
under these obligations. Management does not expect these guarantees will have a
material adverse effect on the consolidated results of operations or the
financial position of the Company.
 
NOTE 20. SUPPLEMENTAL CASH FLOW INFORMATION
- - - - - -------------------------------
 
Cash and cash equivalents includes cash on hand and on deposit and highly liquid
debt instruments with maturities generally of three months or less. Cash
payments during the years 1993, 1992 and 1991 included interest of $180, $241
and $233 million and income taxes of $130, $115 and $118 million, respectively.
  In October 1993, the Company and Knorr-Bremse AG formed an alliance to which
both companies contributed their European operations which provide air-brake
controls and related products to the heavy truck industry. The Company owns 35
percent of the venture and Knorr-Bremse owns the balance and manages the
operations. The transaction had the following non-cash impact on the Company's
1993 balance sheet:

                                                   Amount
                                                   ------
                                                
Current assets                                       $(49)
Property, plant and equipment -- net                  (28)
Investments and long-term receivables                  51
Other noncurrent assets                               (13)
Current liabilities                                    29
Noncurrent liabilities                                 10

NOTE 21. OIL AND GAS INVESTMENT
- - - - - -------------------------------
 
During 1992 the Company disposed of its remaining investments in Union Texas
Petroleum Holdings, Inc. (Union Texas) resulting in a pretax gain of $357
million (after-tax $221 million, or $0.78 a share). The Company received
approximately $585 million, after underwriters' discount, from the disposition
of its approximate 39 percent interest in the common stock of Union Texas. In
addition, the Company received $355 million from the redemption at face value of
$200 million of preferred shares and $155 million of warrants of Union Texas.
The Company received dividends from its preferred investment in Union Texas of
$30 million in 1992 and $41 million in 1991.
  In 1991 Union Texas completed the sales of its U.S. offshore oil and gas
business for $476 million, as well as its North American onshore oil and gas and
U.S. gas processing businesses for $395 million which sales resulted in the
Company recording a gain of $69 million (after-tax $46 million, or $0.17 a
share).
  Selected financial data for Union Texas are summarized as follows:

Year ended December 31                                1991
- - - - - ----------------------                                ----
                                                
Net sales                                             $977
Income from operations                                 184
Income before extraordinary item                       280
Net income                                             333

NOTE 22. POSTRETIREMENT BENEFITS OTHER THAN
PENSIONS
- - - - - -------------------------------
 
The Company's U.S. retiree medical programs cover employees who retire, with
pension eligibility, for hospital, professional and other medical services
(programs). Most of the programs require deductibles and copayments and
virtually all are integrated with Medicare. Retiree contributions are generally
required based on coverage type, plan and Medicare eligibility. The Company also
sponsors retiree life insurance programs which generally provide a flat benefit
of at least $2 thousand or a benefit as a percent of pay. The retiree medical
and life insurance programs are not funded. Claims and expenses are paid from
the general assets of the Company.
  For most non-union employees retiring after July 1, 1992, the Company has
implemented an approach which bases the Company's contribution to retiree
medical premiums on years of service and also establishes a maximum Company
contribution in the future at approximately twice the current level at the date
of implementation.
  In 1993, 1992 and 1991 the Company's cost for providing other postretirement
benefits aggregated $153, $166 and $120 million, respectively, excluding the
cumulative impact of adopting FASB No. 106 in 1992. Effective January 1, 1992,
the Company adopted the provisions of FASB No. 106 for its U.S. medical and life
insurance programs which increased expense by $38 million, which is included in
the 1992 cost. The Company uses the services of an enrolled actuary to calculate
such amounts.
  For measurement purposes, the assumed annual rate of increase in the per
capita cost of covered health care benefits was 13 percent for 1992, decreasing
to 12 percent in 1993 and reducing gradually to 6 percent in 2000 and remaining
at that level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates
 
- - - - - --------------------------------------------------------------------------------
                                       36

- - - - - --------------------------------------------------------------------------------
by 1 percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1993 by $130 million and the aggregate of
the service and interest cost component of net periodic postretirement benefit
cost for the year then ended by $11 million. The weighted-average discount rate
used in determining the accumulated postretirement benefit obligation was 7.25
percent and 8.25 percent at December 31, 1993 and 1992, respectively.
  Net periodic  postretirement  benefit cost  for  1993 and  1992  included  the
following components:

Years ended December 31                            1993   1992
- - - - - -----------------------                            ----   ----
                                                   
Service cost-benefits attributed to service
  during the period                                $23    $ 22
Interest cost on accumulated postretirement
  benefit obligation                               137     143
Net amortization                                    (7)    --
                                                  ----    ----
                                                   153     165
Foreign plans                                       --       1
                                                  ----    ----
Net periodic postretirement benefit cost          $153    $166
                                                  ----    ----

  Presented below are the plans' status and amounts recognized in the Company's
Consolidated Balance Sheet at December 31, 1993 and 1992:

December 31                                          1993     1992
- - - - - -----------                                          ----     ----
                                                      
Accumulated postretirement benefit obligation:
  Retirees                                         $1,279   $1,224
  Fully eligible active plan participants             200      155
  Other active plan participants                      418      343
                                                   ------   ------
                                                    1,897    1,722
Unrecognized prior service cost                       132      105
Unrecognized net loss                                (215)     (43)
                                                   ------   ------
Accrued postretirement benefit cost                $1,814   $1,784
                                                   ------   ------

NOTE 23. PENSIONS
- - - - - -------------------------------
 
The Company's pension plans, most of which are defined benefit plans and almost
all of which are noncontributory, cover substantially all employees. Benefits
under the plans are generally based on years of service and employees'
compensation during the last years of employment or a flat dollar benefit.
Benefits are generally paid from funds previously provided to trustees. In the
Company's principal U.S. plans, funds are contributed to a trustee as necessary
to provide for current service and for any unfunded projected benefit obligation
over a reasonable period. To the extent that these requirements are fully
covered by assets on hand for a plan, a contribution may not be made in a
particular year. As of year-end 1993 approximately 55 percent of the assets of
U.S. plans were held in equity securities, with the balance primarily in fixed
income-type securities.
  Pension expense in 1993, 1992 and 1991 was $104, $102 and $94 million,
respectively. The Company uses the services of an enrolled actuary to calculate
the amount of pension expense and contributions to trustees of the various
pension plans.
  Net periodic pension cost for 1993, 1992 and 1991 included the following
components:

Years ended December 31                            1993   1992   1991
- - - - - -----------------------                            ----   ----   ----
                                                       
Service cost-benefits earned during the
  period                                           $115   $113   $105
Interest cost on projected benefit obligation       369    360    340
Actual return on plan assets                       (663)  (320)  (824)
Net amortization and deferral                       269    (69)   456
                                                   ----   ----   ----
Net periodic pension cost for defined benefit
  plans                                              90     84     77
Foreign plans and other                              14     18     17
                                                   ----   ----   ----
Net periodic pension cost                          $104   $102   $ 94
                                                   ----   ----   ----

  The assumed rate of return for the Company's U.S. defined benefit pension
plans was 9 percent in 1993, 1992 and 1991. The assumed discount rate used in
calculating the projected benefit obligations at December 31, 1993, 1992 and
1991 was 7.25 percent, 8.25 percent and 8.5 percent, respectively. In addition,
the assumed annual increase in compensation over employee's estimated remaining
working lives was 5.5 percent for each of the respective years.
 
  Presented  below are  the plans' funded  status and amounts  recognized in the
Company's Consolidated  Balance Sheet  at December  31, 1993  and 1992  for  its
significant defined benefit pension plans:

                                                                            1993                            1992
                                                   -----------------------------   -----------------------------
                                                   ASSETS EXCEED     ACCUMULATED   Assets Exceed     Accumulated
                                                     ACCUMULATED        BENEFITS     Accumulated        Benefits
December 31                                             BENEFITS   EXCEED ASSETS        Benefits   Exceed Assets
- - - - - -----------                                         ------------   -------------   --------------  -------------
                                                                                       
Actuarial present value of benefit obligation:
Vested                                                    $3,471           $ 731          $3,038           $ 682
Nonvested                                                    256              74             247              57
                                                          ------           -----          ------           -----
Accumulated benefit obligation                            $3,727           $ 805          $3,285           $ 739
                                                          ------           -----          ------           -----
Projected benefit obligation                              $4,396           $ 857          $3,847           $ 782
Less -- Fair value of assets                               4,227             678           3,934             639
                                                          ------           -----          ------           -----
Over (under) funded plans                                   (169)           (179)(a)          87            (143)
Unrecognized transition (asset)                              (11)             (7)            (13)            (20)
Unrecognized net (gain) loss                                 360               2             158             (30)
Unrecognized prior service cost                               (2)             63              (1)             58
                                                          ------           -----          ------           -----
Prepaid (accrued) pension cost                             $ 178           $(121)          $ 231           $(135)
                                                          ------           ------         ------           -----

(a) Included in this amount is $(134) million for unfunded foreign and
supplemental domestic pension plans.
 
- - - - - --------------------------------------------------------------------------------
                                       37

- - - - - --------------------------------------------------------------------------------
 
NOTE 24. GEOGRAPHIC AREAS -- FINANCIAL DATA
- - - - - -------------------------------

                                                                           
                                                                                          Adjust.
                                                         United                    Other     and
                                                         States(1) Canada  Europe  Int'l.   Elim.    Total
                                                         --------  ------  ------  ------  ------    -----
Net sales (2)                                      1993  $9,220      $225  $1,897   $485   $ --    $11,827
                                                   1992   8,978       331   2,295    438     --     12,042
                                                   1991   8,908       350   2,079    494     --     11,831

Income (loss) before cumulative effect of changes  1993     570        26      55      5     --        656
in accounting principles (3)                       1992     512        32       6    (15)    --        535
                                                   1991    (115)      (29)    (91)   (38)    --       (273)

Assets                                             1993   9,045       199   1,439    548   (402)    10,829
                                                   1992   8,677       177   1,940    501   (539)    10,756
                                                   1991   8,273       191   1,913    481   (476)    10,382

Liabilities                                        1993   7,703        98     707    333   (402)     8,439
                                                   1992   7,374       113   1,293    264   (539)     8,505
                                                   1991   6,130       149   1,390    206   (476)     7,399

Sales between geographic areas approximate market and are not significant.
(1) Corporate Office income, expenses, assets and liabilities are included in
the United States column.
(2) Included in United States net sales are export sales of $1,699, $1,810 and
$1,729 million for each of the respective years.
(3) Includes in 1993 after-tax nonrecurring items of a gain for the United
States of $13 million and a loss for Europe of $12 million. Includes in 1992 an
after-tax provision to cover Streamlining and Restructuring charges for the
United States of $163, Europe of $56 and Other Int'l. of $8 million. Also
included in the United States column in 1992 is the after-tax gain on the
disposition of the Union Texas common stock of $221 million. Includes in 1991 an
after-tax provision to cover Streamlining and Restructuring charges for the
United States of $486, Canada of $41, Europe of $101 and Other Int'l. of $33
million. Also included in the United States column in 1991 is the after-tax gain
on the sale of assets by Union Texas of $46 million.
 
NOTE 25. SEGMENT FINANCIAL DATA
- - - - - -------------------------------

                                                                                       
                                                                                              Corporate
                                                                                Engineered          and
                                                         Aerospace  Automotive   Materials  Unallocated(1)   Total
                                                         ---------  ----------  ----------  --------------   -----
Net sales (2)                                      1993     $4,530      $4,506      $2,791        $  --    $11,827
                                                   1992      4,937       4,499       2,601            5     12,042
                                                   1991      5,269       4,095       2,459            8     11,831

Research and development                           1993        127          63         113           10        313
expense                                            1992        122          64         124           10        320
                                                   1991        151          97         124            9        381

Depreciation and amortization                      1993        184         156         153           21        514
                                                   1992        186         162         135           13        496
                                                   1991        167         160         127           16        470

Income (loss) from operations (3)                  1993        402         432         309         (189)       954
                                                   1992        187         174         201         (147)       415
                                                   1991        272        (207)          9         (365)      (291)

Income (loss) before cumulative effect of changes  1993        224         226         269          (63)       656
in accounting principles (3)(4)                    1992        105          76         190          164        535
                                                   1991         87        (203)         14         (171)      (273)

Capital expenditures                               1993        139         205         354           20        718
                                                   1992        162         202         301           26        691
                                                   1991        216         184         262            6        668

Identifiable assets                                1993      4,502       2,838       2,502          987     10,829
                                                   1992      4,380       3,082       2,295          999     10,756
                                                   1991      4,146       2,782       1,949        1,505     10,382

Intersegment sales approximate market and are not significant.
(1) The 'Corporate and Unallocated' column includes amounts for businesses sold
and Corporate items. Income (loss) before cumulative effect of changes in
accounting principles includes amounts (including preferred dividends) for Union
Texas, accounted for on the equity basis, of $ -- , $261 and $103 million for
each of the respective years. Income (loss) before cumulative effect of changes
in accounting principles for 1992 reflects the gain on the disposition of the
common stock of Union Texas of $221 million, or $0.78 a share. Identifiable
assets include an investment in Union Texas of $ -- , $ -- and $591 million, and
other Corporate assets of $987, $999 and $914 million for each of the respective
years.
(2) Sales to the U.S. Government and its agencies, mainly for the Aerospace
segment, were $1,096, $1,170 and $1,317 million for each of the respective
years.
(3) Includes in 1993 a pre-and after-tax provision to cover the current year's
impact of the adoption of FASB No. 112 for Aerospace of $8 and $5 million,
Automotive of $5 and $3 million, Engineered Materials of $4 and $2 million and
Corporate and Unallocated of $1 and $1 million, respectively. Includes in 1993
pre-and after-tax impact of nonrecurring items for Aerospace of a charge of $6
and $4 million, a gain of $81 and $42 million for Automotive, a charge of $5 and
$3 million for Engineered Materials and a charge of $54 and $34 million for
Corporate and Unallocated, respectively. Includes in 1992 a pre-and after-tax
provision to cover the current year's impact of the adoption of FASB No. 106 and
FASB No. 109 for Aerospace of $44 and $9 million, Automotive of $13 and $6
million, Engineered Materials of $4 and $ -- million and Corporate and
Unallocated of $(10) and $10 million, respectively. Includes in 1992 a pre-and
after-tax provision to cover Streamlining and Restructuring charges for
Aerospace of $213 and $122 million, Automotive of $95 and $65 million,
Engineered Materials of $40 and $25 million and Corporate and Unallocated of $20
and $15 million, respectively. In 1993, a reclassification of the reported 1992
pre-and after-tax provision for Streamlining and Restructuring of $48 and $30
million was made reducing Corporate and Unallocated and increasing Aerospace.
Includes in 1991 a pre-and after-tax provision to cover Streamlining and
Restructuring charges for Aerospace of $133 and $101 million, Automotive of $334
and $257 million, Engineered Materials of $148 and $149 million and Corporate
and Unallocated of $232 and $154 million, respectively.
(4) A finance charge is made by Corporate Office to the segments on the basis of
relative capitalization, taxes on income are generally included in the segments
which gave rise to the tax effects and equity in income of affiliated companies
is included in the segments in which these companies operate.
 
- - - - - --------------------------------------------------------------------------------
                                       38

- - - - - --------------------------------------------------------------------------------
 
NOTE 26. UNAUDITED QUARTERLY FINANCIAL INFORMATION
- - - - - -------------------------------

                                                                                                1993
                                                   -------------------------------------------------  -----------------------------
                                                                                                  
                                                    MAR. 31   JUNE 30   SEPT. 30   DEC. 31      YEAR   Mar. 31   June 30   Sept. 30
                                                    -------   -------   --------   --------     -----  -------   -------  ---------
                                                                                                  
Net sales                                            $2,901    $3,055     $2,812    $3,059   $11,827    $2,979    $3,075     $2,936
As originally reported: (a)
  Gross profit                                          548       590        555       585                 523       560        537
  Net income                                            149       170        168       178                 127       145        140
  Per share                                             .52       .60        .59       .63                 .46       .52        .50
1993 and 1992 restatements of changes in
    accounting
    principles: (a)
  Gross profit                                           (1)       (1)        --        --                 (12)      (11)       (11)
  Cumulative after-tax effect                          (245)       --         --        --              (1,247)       --        --
  Per share                                            (.86)       --         --        --               (4.47)       --        --
  Quarterly after-tax effect                           (248)       (3)        (3)       --              (1,252)       (5)        (5)
  Per share                                            (.87)     (.01)      (.01)       --               (4.49)     (.02)      (.02)
As restated: (a)
  Gross profit                                          547       589        555       585     2,276       511       549        526
  Income before cumulative
    effect of changes in
    accounting principles                               146       167        165       178       656       122       140        135
  Per share                                             .51       .59        .58       .63      2.31       .44       .50        .48
  Net income (loss)                                     (99)      167        165       178       411    (1,125)      140        135
  Per share                                            (.35)      .59        .58       .63      1.45     (4.03)      .50        .48
Dividends paid                                          .145      .145       .145      .145      .58       .125      .125      .125
Market price (c)
High                                                  34.63     35.25      37.50     40.13     40.13     27.38     30.63      28.25
Low                                                   28.75     30.88      32.13     34.88     28.75     20.50     24.88      25.13

                                                                  1992
                                                   -------------------
                                                     Dec. 31      Year
                                                     -------      ----
                                                         
Net sales                                             $3,052   $12,042
As originally reported: (a)
  Gross profit                                           533
  Net income                                             138(b)
  Per share                                              .49(b)
1993 and 1992 restatements of changes in
    accounting
    principles: (a)
  Gross profit                                            --
  Cumulative after-tax effect                             --
  Per share                                               --
  Quarterly after-tax effect                              --
  Per share                                               --
As restated: (a)
  Gross profit                                           533     2,119
  Income before cumulative
    effect of changes in
    accounting principles                                138(b)    535
  Per share                                              .49(b)   1.90
  Net income (loss)                                      138(b)   (712)
  Per share                                              .49(b)  (2.52)
Dividends paid                                           .125      .50
Market price (c)
High                                                   31.00     31.00
Low                                                    25.00     20.50

(a) FASB No. 112 was adopted in the fourth quarter of 1993, effective as of
January 1, 1993. FASB Nos. 106 and 109 were adopted in the fourth quarter of
1992, effective as of January 1, 1992. As a result, the first three quarters of
both years were restated. For further information, such accounting changes are
discussed in Notes 1 and 22 of Notes to Financial Statements.
(b) Includes a provision of $368 million (after-tax $227 million, or $0.80 a
share) covering costs for Streamlining and Restructuring. Also includes an
after-tax gain of $221 million, or $0.78 a share, on the sale of common stock of
Union Texas. See Notes 4 and 21 of Notes to Financial Statements for further
information.
(c) From composite tape -- stock is primarily traded on The New York Stock
Exchange.
 
- - - - - --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- - - - - --------------------------------------------------------------------------------
 
                              [Logo]                              Morristown, NJ
                                                     February 3, 1994 except for
                                                     Note 1 (Subsequent Events),
                                                 which is as of February 7, 1994
To the Shareowners and Directors
of AlliedSignal Inc.
 
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of retained earnings and of cash flows
present fairly, in all material respects, the financial position of AlliedSignal
Inc. and its consolidated subsidiaries at December 31, 1993 and 1992, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1993, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable 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 in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
 
In 1993, as discussed in Note 1 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 112, 'Employers'
Accounting for Postemployment Benefits' effective as of January 1, 1993. In
1992, as further discussed in Note 1, the Company adopted Statement of Financial
Accounting Standards No. 106, 'Employers' Accounting for Postretirement Benefits
Other Than Pensions' and Statement of Financial Accounting Standards No. 109,
'Accounting for Income Taxes' effective as of January 1, 1992.
 
                                                 /s/  PRICE WATERHOUSE
 
- - - - - --------------------------------------------------------------------------------
                                       39

- - - - - --------------------------------------------------------------------------------
SELECTED FINANCIAL DATA                                        AlliedSignal Inc.
(Dollars in millions except per share amounts)
- - - - - --------------------------------------------------------------------------------

Years ended December 31                                   1993       1992       1991       1990       1989       1988       1987
- - - - - -----------------------                                   ----       ----       ----       ----       ----       ----       ----
                                                                                                      
FOR THE YEAR(a)
Net sales                                              $11,827    $12,042    $11,831    $12,343    $11,942    $11,909    $11,116
Income (loss) from continuing operations                   656(b)     535 (c)   (273)(c)    462        528        463(c)     515(c)
Net income (loss)                                          411(d)    (712)(d)   (273)       462        528        463        656
Per share of common stock:
Earnings (loss) from continuing operations                2.31       1.90      (1.00)      1.67       1.78       1.55       1.53
Net earnings (loss)                                       1.45      (2.52)     (1.00)      1.67       1.78       1.55       1.95
Dividends                                                  .58        .50        .80        .90        .90        .90        .90
AT YEAR-END(a)
Net working capital                                    $ 1,078    $ 1,414    $   526    $   892    $ 1,065    $ 1,040    $   722
Property, plant and equipment -- net                     4,094      3,897      3,638      3,584      3,321      3,214      3,330
Total assets                                            10,829     10,756     10,382     10,456     10,342     10,069     10,321
Long-term debt                                           1,602      1,777      1,914      2,051      1,903      2,044      2,017
Shareowners' equity                                      2,390      2,251      2,983      3,380      3,412      3,268      3,129
Book value per share of common stock                      8.42       7.93      10.79      12.55      11.77      11.05      10.44
Average investment(e)                                    4,506      4,939      6,771      6,723      6,520      6,629      6,859
Common shares outstanding (in millions)                  283.8      283.8      276.3      269.4      290.0      295.9      299.9
Common shareowners of record                            84,248     84,254     91,492     97,210    102,042    111,402    109,322
Employees(f)                                            86,400     89,300     98,300    105,800    107,100    109,550    115,300
FINANCIAL STATISTICS(g)
Return on sales (income from operations)                   8.1        3.4       (2.5)       5.9        8.0        5.7        6.8
Return on sales (after-tax)                                5.5        4.4       (2.3)       3.7        4.4        3.9        4.6
Return on average investment (after-tax)                  15.7       13.5       (1.3)       9.6       11.0       10.3       10.1
Return on average shareowners' equity (after-tax)         30.6       26.4       (8.4)      13.9       15.6       14.5       14.5
Interest coverage ratio                                    5.1        3.3        (.9)       2.6        3.0        2.8        3.6
Long-term debt as a percent of total capital              37.9       40.5       34.9       33.6       30.8       33.2       33.9
Total debt as a percent of total capital                  42.7       44.7       43.9       40.4       35.7       35.9       39.0
FINANCIAL STATISTICS(g)(h)
Return on sales (income from operations)                   7.9        6.5        4.7        5.9        8.0        7.4        6.8
Return on sales (after-tax)                                5.5        4.5        2.9        3.7        4.4        4.3        3.9
Return on average investment (after-tax)                  15.6       13.6        7.8        9.6       11.0       10.9        8.9
Return on average shareowners' equity (after-tax)         30.5       26.7       10.5       13.9       15.6       15.9       12.2
Interest coverage ratio                                    5.0        3.3        2.1        2.6        3.0        2.9        3.2
Long-term debt as a percent of total capital              37.9       40.5       34.9       33.6       30.8       33.2       33.9
Total debt as a percent of total capital                  42.7       44.7       43.9       40.4       35.7       35.9       39.0

 
(a) Share and per share data have been restated to reflect the two-for-one stock
split described in Note 1 of Notes to Financial Statements.
(b) Includes in 1993 the current year's after-tax provision for the adoption of
FASB No. 112 of $11 million, or $0.04 a share.
(c) Includes in 1992 the effect of a provision for Streamlining and
Restructuring as well as a gain on the sale of common stock of Union Texas
resulting in a net charge of $11 million (after-tax $6 million, or $0.02 a
share) as discussed in Notes 4 and 21 of Notes to Financial Statements,
respectively. In 1991, includes the effect of a provision for Streamlining and
Restructuring as well as gains on asset sales by Union Texas resulting in a net
charge of $838 million (after-tax $615 million, or $2.25 a share) as discussed
in Notes 4 and 21 of Notes to Financial Statements, respectively. In 1988,
includes an after-tax provision of $125 million, or $0.42 a share, to cover
Streamlining and Restructuring charges, an after-tax gain of $36 million, or
$0.12 a share, from the sale of the Company's investment in Akebono Brake
Industry Company Ltd. and an after-tax gain of $81 million, or $0.27 a share,
from nonrecurring items. Includes in 1987 the effect of the sale of common stock
by Union Texas which resulted in the Company recording a gain of $108 million
(after-tax $82 million, or $0.24 a share), reflecting the Company's share of an
increase in Union Texas' equity.
(d) Includes in 1993 the cumulative after-tax provision for the adoption of FASB
No. 112 of $245 million, or $0.86 a share. Includes in 1992 the cumulative
after-tax provision for the adoption of FASB Nos. 106 and 109 of $1,247 million,
or $4.42 a share. Such accounting changes are discussed in Note 1 of Notes to
Financial Statements.
(e) Investment is defined as shareowners' equity and non-current deferred
taxes-net plus total debt.
(f) Includes employees at facilities operated for the U.S. Department of Energy.
(g) The returns and interest coverage ratio exclude the impact of the cumulative
effect of changes in accounting principles on income.
(h) The returns and interest coverage ratio exclude the impact of nonrecurring
items in 1993, provisions for Streamlining and Restructuring charges in 1992,
1991 and 1988, gain on sale of common stock of Union Texas in 1992, gains on
asset sales by Union Texas in 1991, nonrecurring income in 1988 and Union Texas'
equity transaction in 1987.
 
- - - - - --------------------------------------------------------------------------------
                                       40

                                                                      EXHIBIT 21
 
                         SUBSIDIARIES OF THE REGISTRANT
 
SUBSIDIARIES OF REGISTRANT:

                                                                                         SECURITIES OWNED
                                                                     COUNTRY OR      -------------------------
                                                                      STATE OF                        PERCENT
                              NAME                                  INCORPORATION        CLASS       OWNERSHIP
- - - - - -----------------------------------------------------------------   -------------    -------------   ---------
                                                                                            
AlliedSignal International Finance Corporation...................    Delaware         Common Stock     100
     AlliedSignal Canada Inc.....................................    Canada           Common Stock     100
     AlliedSignal Automotive Europe, S.A.........................    France           Common Stock      99.9
AlliedSignal Laminate Systems Inc................................    Delaware         Common Stock     100
EM Sector Holdings Inc...........................................    Delaware         Common Stock     100
HD Polymer Corporation...........................................    Delaware         Common Stock     100

- - - - - ----------------------------------------------------------
     The  names of the  Registrant's other consolidated  subsidiaries, which are
primarily totally-held  by  the Registrant,  are  not listed  because  all  such
subsidiaries,  considered in  the aggregate  as a  single subsidiary,  would not
constitute a significant subsidiary.

                                                                      EXHIBIT 23
 
                       CONSENT OF INDEPENDENT ACCOUNTANTS
 
We hereby  consent  to  the  incorporation  by  reference  in  the  Prospectuses
constituting  part of AlliedSignal  Inc.'s Registration Statements  on Forms S-8
(Nos. 33-09896, 33-30885, 33-50314, 33-55410, 33-51031, 33-51455 and  33-65792),
on Forms S-3 (Nos. 33-00631, 33-13211 and 33-14071) and on Form S-8 (filed as an
amendment  to Form S-14,  No. 2-99416-01) of  our report dated  February 3, 1994
except for Note 1 (Subsequent Events), which is as of February 7, 1994 appearing
on page 39 of the 1993 Annual Report to Shareowners of AlliedSignal Inc.,  which
is  incorporated by reference  in this Annual  Report on Form  10-K for the year
ended December 31, 1993.  We also consent to  the incorporation by reference  of
our  report on the Consolidated Financial  Statement Schedules, which appears on
page 20 of this Annual Report on Form 10-K.
 
/s/ PRICE WATERHOUSE
 
Morristown, New Jersey
March 15, 1994

                               POWER OF ATTORNEY
 
     KNOW ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal  Inc.
(the  'Company'), a Delaware corporation, hereby constitute and appoint Lawrence
A. Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true  and
lawful  attorneys-in-fact and agents, and  each of them (with  full power to act
without the others), my  true and lawful attorney-in-fact  and agent, with  full
power  of substitution  and resubstitution,  for me  and in  my name,  place and
stead, in any and all capacities,
 
     (i) to sign the Company's Annual  Report on Form 10-K under the  Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii)  to sign any amendment to the  Annual Report referred to in (i) above,
and
 
     (iii) to  file  the documents  described  in (i)  and  (ii) above  and  all
exhibits thereto and any and all other documents in connection therewith,
 
granting  unto said attorneys and agents, and each of them, full power to do and
perform every act  and thing  requisite, necessary or  desirable to  be done  in
connection  therewith, as fully to all intents  and purposes as I might or could
do in person, hereby  ratifying and confirming  all that said  attorneys-in-fact
and  agents, or  any of  them, or  their or  his substitutes  or substitute, may
lawfully do or cause to be done by virtue hereof.
 
     IN WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set  forth
below.
 
                                                  /s/ LAWRENCE A. BOSSIDY
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW  ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal Inc.
(the 'Company'), a Delaware corporation, hereby constitute and appoint  Lawrence
A.  Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true and
lawful attorneys-in-fact and agents,  and each of them  (with full power to  act
without  the others), my  true and lawful attorney-in-fact  and agent, with full
power of  substitution and  resubstitution, for  me and  in my  name, place  and
stead, in any and all capacities,
 
     (i)  to sign the Company's Annual Report  on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii) to sign any amendment to the  Annual Report referred to in (i)  above,
and
 
     (iii)  to  file the  documents  described in  (i)  and (ii)  above  and all
exhibits thereto and any and all other documents in connection therewith,
 
granting unto said attorneys and agents, and each of them, full power to do  and
perform  every act  and thing  requisite, necessary or  desirable to  be done in
connection therewith, as fully to all intents  and purposes as I might or  could
do  in person, hereby  ratifying and confirming  all that said attorneys-in-fact
and agents, or  any of  them, or  their or  his substitutes  or substitute,  may
lawfully do or cause to be done by virtue hereof.
 
     IN  WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set forth
below.
 
                                                   /s/ HANS W. BECHERER
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW  ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal Inc.
(the 'Company'), a Delaware corporation, hereby constitute and appoint  Lawrence
A.  Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true and
lawful attorneys-in-fact and agents,  and each of them  (with full power to  act
without  the others), my  true and lawful attorney-in-fact  and agent, with full
power of  substitution and  resubstitution, for  me and  in my  name, place  and
stead, in any and all capacities,
 
     (i)  to sign the Company's Annual Report  on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii) to sign any amendment to the  Annual Report referred to in (i)  above,
and
 
     (iii)  to  file the  documents  described in  (i)  and (ii)  above  and all
exhibits thereto and any and all other documents in connection therewith,
 
granting unto said attorneys and agents, and each of them, full power to do  and
perform  every act  and thing  requisite, necessary or  desirable to  be done in
connection therewith, as fully to all intents  and purposes as I might or  could
do  in person, hereby  ratifying and confirming  all that said attorneys-in-fact
and agents, or  any of  them, or  their or  his substitutes  or substitute,  may
lawfully do or cause to be done by virtue hereof.
 
     IN  WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set forth
below.
 
                                                  /s/ JEWEL PLUMMER COBB
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal  Inc.
(the  'Company'), a Delaware corporation, hereby constitute and appoint Lawrence
A. Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true  and
lawful  attorneys-in-fact and agents, and  each of them (with  full power to act
without the others), my  true and lawful attorney-in-fact  and agent, with  full
power  of substitution  and resubstitution,  for me  and in  my name,  place and
stead, in any and all capacities,
 
     (i) to sign the Company's Annual  Report on Form 10-K under the  Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii)  to sign any amendment to the  Annual Report referred to in (i) above,
and
 
     (iii) to  file  the documents  described  in (i)  and  (ii) above  and  all
exhibits thereto and any and all other documents in connection therewith,
 
granting  unto said attorneys and agents, and each of them, full power to do and
perform every act  and thing  requisite, necessary or  desirable to  be done  in
connection  therewith, as fully to all intents  and purposes as I might or could
do in person, hereby  ratifying and confirming  all that said  attorneys-in-fact
and  agents, or  any of  them, or  their or  his substitutes  or substitute, may
lawfully do or cause to be done by virtue hereof.
 
     IN WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set  forth
below.
 
                                                   /s/ EUGENE E. COVERT
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW  ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal Inc.
(the 'Company'), a Delaware corporation, hereby constitute and appoint  Lawrence
A.  Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true and
lawful attorneys-in-fact and agents,  and each of them  (with full power to  act
without  the others), my  true and lawful attorney-in-fact  and agent, with full
power of  substitution and  resubstitution, for  me and  in my  name, place  and
stead, in any and all capacities,
 
     (i)  to sign the Company's Annual Report  on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii) to sign any amendment to the  Annual Report referred to in (i)  above,
and
 
     (iii)  to  file the  documents  described in  (i)  and (ii)  above  and all
exhibits thereto and any and all other documents in connection therewith,
 
granting unto said attorneys and agents, and each of them, full power to do  and
perform  every act  and thing  requisite, necessary or  desirable to  be done in
connection therewith, as fully to all intents  and purposes as I might or  could
do  in person, hereby  ratifying and confirming  all that said attorneys-in-fact
and agents, or  any of  them, or  their or  his substitutes  or substitute,  may
lawfully do or cause to be done by virtue hereof.
 
     IN  WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set forth
below.
 
                                                     /s/ ANN M. FUDGE
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal  Inc.
(the  'Company'), a Delaware corporation, hereby constitute and appoint Lawrence
A. Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true  and
lawful  attorneys-in-fact and agents, and  each of them (with  full power to act
without the others), my  true and lawful attorney-in-fact  and agent, with  full
power  of substitution  and resubstitution,  for me  and in  my name,  place and
stead, in any and all capacities,
 
     (i) to sign the Company's Annual  Report on Form 10-K under the  Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii)  to sign any amendment to the  Annual Report referred to in (i) above,
and
 
     (iii) to  file  the documents  described  in (i)  and  (ii) above  and  all
exhibits thereto and any and all other documents in connection therewith,
 
granting  unto said attorneys and agents, and each of them, full power to do and
perform every act  and thing  requisite, necessary or  desirable to  be done  in
connection  therewith, as fully to all intents  and purposes as I might or could
do in person, hereby  ratifying and confirming  all that said  attorneys-in-fact
and  agents, or  any of  them, or  their or  his substitutes  or substitute, may
lawfully do or cause to be done by virtue hereof.
 
     IN WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set  forth
below.
 
                                                  /s/ WILLIAM R. HASELTON
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW  ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal Inc.
(the 'Company'), a Delaware corporation, hereby constitute and appoint  Lawrence
A.  Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true and
lawful attorneys-in-fact and agents,  and each of them  (with full power to  act
without  the others), my  true and lawful attorney-in-fact  and agent, with full
power of  substitution and  resubstitution, for  me and  in my  name, place  and
stead, in any and all capacities,
 
     (i)  to sign the Company's Annual Report  on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii) to sign any amendment to the  Annual Report referred to in (i)  above,
and
 
     (iii)  to  file the  documents  described in  (i)  and (ii)  above  and all
exhibits thereto and any and all other documents in connection therewith,
 
granting unto said attorneys and agents, and each of them, full power to do  and
perform  every act  and thing  requisite, necessary or  desirable to  be done in
connection therewith, as fully to all intents  and purposes as I might or  could
do  in person, hereby  ratifying and confirming  all that said attorneys-in-fact
and agents, or  any of  them, or  their or  his substitutes  or substitute,  may
lawfully do or cause to be done by virtue hereof.
 
     IN  WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set forth
below.
 
                                                    /s/ PAUL X. KELLEY
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal  Inc.
(the  'Company'), a Delaware corporation, hereby constitute and appoint Lawrence
A. Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true  and
lawful  attorneys-in-fact and agents, and  each of them (with  full power to act
without the others), my  true and lawful attorney-in-fact  and agent, with  full
power  of substitution  and resubstitution,  for me  and in  my name,  place and
stead, in any and all capacities,
 
     (i) to sign the Company's Annual  Report on Form 10-K under the  Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii)  to sign any amendment to the  Annual Report referred to in (i) above,
and
 
     (iii) to  file  the documents  described  in (i)  and  (ii) above  and  all
exhibits thereto and any and all other documents in connection therewith,
 
granting  unto said attorneys and agents, and each of them, full power to do and
perform every act  and thing  requisite, necessary or  desirable to  be done  in
connection  therewith, as fully to all intents  and purposes as I might or could
do in person, hereby  ratifying and confirming  all that said  attorneys-in-fact
and  agents, or  any of  them, or  their or  his substitutes  or substitute, may
lawfully do or cause to be done by virtue hereof.
 
     IN WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set  forth
below.
 
                                                 /s/ ROBERT D. KILPATRICK
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW  ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal Inc.
(the 'Company'), a Delaware corporation, hereby constitute and appoint  Lawrence
A.  Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true and
lawful attorneys-in-fact and agents,  and each of them  (with full power to  act
without  the others), my  true and lawful attorney-in-fact  and agent, with full
power of  substitution and  resubstitution, for  me and  in my  name, place  and
stead, in any and all capacities,
 
     (i)  to sign the Company's Annual Report  on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii) to sign any amendment to the  Annual Report referred to in (i)  above,
and
 
     (iii)  to  file the  documents  described in  (i)  and (ii)  above  and all
exhibits thereto and any and all other documents in connection therewith,
 
granting unto said attorneys and agents, and each of them, full power to do  and
perform  every act  and thing  requisite, necessary or  desirable to  be done in
connection therewith, as fully to all intents  and purposes as I might or  could
do  in person, hereby  ratifying and confirming  all that said attorneys-in-fact
and agents, or  any of  them, or  their or  his substitutes  or substitute,  may
lawfully do or cause to be done by virtue hereof.
 
     IN  WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set forth
below.
 
                                                   /s/ ROBERT P. LUCIANO
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal  Inc.
(the  'Company'), a Delaware corporation, hereby constitute and appoint Lawrence
A. Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true  and
lawful  attorneys-in-fact and agents, and  each of them (with  full power to act
without the others), my  true and lawful attorney-in-fact  and agent, with  full
power  of substitution  and resubstitution,  for me  and in  my name,  place and
stead, in any and all capacities,
 
     (i) to sign the Company's Annual  Report on Form 10-K under the  Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii)  to sign any amendment to the  Annual Report referred to in (i) above,
and
 
     (iii) to  file  the documents  described  in (i)  and  (ii) above  and  all
exhibits thereto and any and all other documents in connection therewith,
 
granting  unto said attorneys and agents, and each of them, full power to do and
perform every act  and thing  requisite, necessary or  desirable to  be done  in
connection  therewith, as fully to all intents  and purposes as I might or could
do in person, hereby  ratifying and confirming  all that said  attorneys-in-fact
and  agents, or  any of  them, or  their or  his substitutes  or substitute, may
lawfully do or cause to be done by virtue hereof.
 
     IN WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set  forth
below.
 
                                                   /s/ RUSSELL E. PALMER
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW  ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal Inc.
(the 'Company'), a Delaware corporation, hereby constitute and appoint  Lawrence
A.  Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true and
lawful attorneys-in-fact and agents,  and each of them  (with full power to  act
without  the others), my  true and lawful attorney-in-fact  and agent, with full
power of  substitution and  resubstitution, for  me and  in my  name, place  and
stead, in any and all capacities,
 
     (i)  to sign the Company's Annual Report  on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii) to sign any amendment to the  Annual Report referred to in (i)  above,
and
 
     (iii)  to  file the  documents  described in  (i)  and (ii)  above  and all
exhibits thereto and any and all other documents in connection therewith,
 
granting unto said attorneys and agents, and each of them, full power to do  and
perform  every act  and thing  requisite, necessary or  desirable to  be done in
connection therewith, as fully to all intents  and purposes as I might or  could
do  in person, hereby  ratifying and confirming  all that said attorneys-in-fact
and agents, or  any of  them, or  their or  his substitutes  or substitute,  may
lawfully do or cause to be done by virtue hereof.
 
     IN  WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set forth
below.
 
                                                   /s/ JOHN R. STAFFORD
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal  Inc.
(the  'Company'), a Delaware corporation, hereby constitute and appoint Lawrence
A. Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true  and
lawful  attorneys-in-fact and agents, and  each of them (with  full power to act
without the others), my  true and lawful attorney-in-fact  and agent, with  full
power  of substitution  and resubstitution,  for me  and in  my name,  place and
stead, in any and all capacities,
 
     (i) to sign the Company's Annual  Report on Form 10-K under the  Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii)  to sign any amendment to the  Annual Report referred to in (i) above,
and
 
     (iii) to  file  the documents  described  in (i)  and  (ii) above  and  all
exhibits thereto and any and all other documents in connection therewith,
 
granting  unto said attorneys and agents, and each of them, full power to do and
perform every act  and thing  requisite, necessary or  desirable to  be done  in
connection  therewith, as fully to all intents  and purposes as I might or could
do in person, hereby  ratifying and confirming  all that said  attorneys-in-fact
and  agents, or  any of  them, or  their or  his substitutes  or substitute, may
lawfully do or cause to be done by virtue hereof.
 
     IN WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set  forth
below.
 
                                                  /s/ THOMAS P. STAFFORD
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW  ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal Inc.
(the 'Company'), a Delaware corporation, hereby constitute and appoint  Lawrence
A.  Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true and
lawful attorneys-in-fact and agents,  and each of them  (with full power to  act
without  the others), my  true and lawful attorney-in-fact  and agent, with full
power of  substitution and  resubstitution, for  me and  in my  name, place  and
stead, in any and all capacities,
 
     (i)  to sign the Company's Annual Report  on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii) to sign any amendment to the  Annual Report referred to in (i)  above,
and
 
     (iii)  to  file the  documents  described in  (i)  and (ii)  above  and all
exhibits thereto and any and all other documents in connection therewith,
 
granting unto said attorneys and agents, and each of them, full power to do  and
perform  every act  and thing  requisite, necessary or  desirable to  be done in
connection therewith, as fully to all intents  and purposes as I might or  could
do  in person, hereby  ratifying and confirming  all that said attorneys-in-fact
and agents, or  any of  them, or  their or  his substitutes  or substitute,  may
lawfully do or cause to be done by virtue hereof.
 
     IN  WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set forth
below.
 
                                                   /s/ DELBERT C. STALEY
                                           .....................................
 
Date: February 28, 1994

                               POWER OF ATTORNEY
 
     KNOW ALL MEN BY THESE PRESENTS, that I, as a director of AlliedSignal  Inc.
(the  'Company'), a Delaware corporation, hereby constitute and appoint Lawrence
A. Bossidy, Peter M. Kreindler, John W. Barter and G. Peter D'Aloia my true  and
lawful  attorneys-in-fact and agents, and  each of them (with  full power to act
without the others), my  true and lawful attorney-in-fact  and agent, with  full
power  of substitution  and resubstitution,  for me  and in  my name,  place and
stead, in any and all capacities,
 
     (i) to sign the Company's Annual  Report on Form 10-K under the  Securities
Exchange Act of 1934 for the year ended December 31, 1993,
 
     (ii)  to sign any amendment to the  Annual Report referred to in (i) above,
and
 
     (iii) to  file  the documents  described  in (i)  and  (ii) above  and  all
exhibits thereto and any and all other documents in connection therewith,
 
granting  unto said attorneys and agents, and each of them, full power to do and
perform every act  and thing  requisite, necessary or  desirable to  be done  in
connection  therewith, as fully to all intents  and purposes as I might or could
do in person, hereby  ratifying and confirming  all that said  attorneys-in-fact
and  agents, or  any of  them, or  their or  his substitutes  or substitute, may
lawfully do or cause to be done by virtue hereof.
 
     IN WITNESS WHEREOF,  I have  hereunto set  my hand  on the  date set  forth
below.
 
                                                   /s/ ROBERT C. WINTERS
                                           .....................................
 
Date: February 28, 1994