SCHEDULE 14A INFORMATION 

             Proxy Statement Pursuant to Section 14(a) of the Securities
                       Exchange Act of 1934 (Amendment No.    )

          Filed by the Registrant [X]
          Filed by a Party other than the Registrant [ ]

          Check the appropriate box:

          [ ]  Preliminary Proxy Statement
          [ ]  Confidential, for Use of the Commission Only (as permitted by
               Rule 14a-6(e)(2))
          [X]  Definitive Proxy Statement
          [ ]  Definitive Additional Materials
          [ ]  Soliciting Material Pursuant to Section 240.14a-11(c) or
               Section 240.14a-12

                                AlliedSignal Inc.
          .................................................................
                   (Name of Registrant as Specified In Its Charter)

          .................................................................
       (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

          Payment of Filing Fee (Check the appropriate box):

          [X]  $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
               14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
          [ ]  $500 per each party to the controversy pursuant to Exchange
               Act Rule 14a-6(i)(3).
          [ ]  Fee computed on table below per Exchange Act Rules 
               14a-6(i)(4) and 0-11.

               1)  Title of each class of securities to which transaction
          applies:
                    
          .................................................................

               2)  Aggregate number of securities to which transaction
          applies:
                    
          .................................................................

               3)  Per unit price or other underlying value of transaction
          computed   pursuant to Exchange Act Rule 0-11 (Set forth the
          amount on which the filing fee is calculated and state how it was
          determined):
                     
          .................................................................

               4)  Proposed maximum aggregate value of transaction:
                    
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               5)  Total fee paid:
                  
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          [ ]  Fee paid previously with preliminary materials.
          [ ]  Check box if any part of the fee is offset as provided by
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               previous filing by registration statement number, or the
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[Logo]                                                 AlliedSignal Inc.
                                                       P.O. Box 3000
                                                       Morristown, NJ 07962-2496
 
LARRY BOSSIDY
Chairman and
Chief Executive Officer
 
                                                        March 11, 1996
 
Dear Shareowner:
 
It  is my pleasure to invite you to attend AlliedSignal's 1996 Annual Meeting of
Shareowners. The meeting will be  held on Monday, April  22, 1996 at 10:00  a.m.
local  time at the  Company's headquarters, 101  Columbia Road, Morris Township,
New Jersey. The Notice of Annual  Meeting and Proxy Statement accompanying  this
letter describe the business to be transacted at the meeting.
 
During  the meeting, I will report to you on the Company's progress in achieving
both sales and earnings growth in 1995 and on how we plan to reach new goals  in
1996.  We welcome this opportunity  to have a dialogue  with our shareowners and
look forward to your comments and questions.
 
If you are a shareowner of record  who plans to attend the meeting, please  mark
the  appropriate box on  your proxy card. If  your shares are  held by a broker,
bank or  other  intermediary  and  you  plan  to  attend,  please  send  written
notification  to the Company's Shareholder Relations Department, P.O. Box 50000,
Morristown, New Jersey 07962, and enclose evidence of your ownership (such as  a
bank  or brokerage  firm account statement).  The names of  all those indicating
they plan to attend will be placed on an admission list held at the registration
desk at the entrance to the meeting.
 
It is important that  your shares be represented  at the meeting, regardless  of
the  number you may hold.  Whether or not you plan  to attend, please sign, date
and return your proxy card as soon  as possible. This will not prevent you  from
voting your shares in person if you are present.
 
A  map and  directions to the  Company's headquarters  appear at the  end of the
Proxy Statement. I look forward to seeing you on April 22.
 
                                            Sincerely,
 
                                            LARRY BOSSIDY

                            NOTICE OF ANNUAL MEETING
 
     The Annual Meeting of Shareowners of AlliedSignal Inc. (the 'Company') will
be  held on Monday, April 22, 1996 at  10:00 a.m. local time at the headquarters
of the Company, 101 Columbia Road, Morris Township, New Jersey, to consider  and
take  action  upon the  following matters  described  in the  accompanying Proxy
Statement:
 
     (1) Election of four directors;
 
     (2) Appointment  of Price  Waterhouse LLP  as independent  accountants  for
         1996;
         
     (3) A shareowner proposal regarding the Company's maquiladora operations;
 
     (4) A shareowner proposal regarding a global set of standards;
 
     (5) A shareowner proposal regarding the annual election of directors; and
 
     (6) The transaction of such other business as may properly come before the
         meeting.
 
     The Board  of  Directors  has  determined that  owners  of  record  of  the
Company's  Common Stock at the close of  business on March 1, 1996, are entitled
to notice of and to vote at the meeting.
 
                                     By Order of the Board of Directors
 
                                        PETER M. KREINDLER
                                        Senior Vice President,
                                          General Counsel and Secretary
 
AlliedSignal Inc.
101 Columbia Road
Morris Township, NJ 07962
March 11, 1996
 
                             YOUR VOTE IS IMPORTANT
           To vote your  shares, please indicate  your choices,  sign
           and  date the  proxy card, and  return it  in the enclosed
           postage-paid envelope.  You  may  vote in  person  at  the
           meeting even though you send in your proxy.

 

Table of Contents                                                                                   Page
                                                                                                 
- --------------------------------------------------------------------------------------------------------
 
General Information...............................................................................    1
 
1 -- Election of Directors........................................................................    2
 
     The Board of Directors and Committees of the Board...........................................    7
 
     Compensation of Directors....................................................................    8
 
Voting Securities.................................................................................   10
 
Executive Compensation............................................................................   11
 
2 -- Appointment of Independent Accountants.......................................................   20
 
Shareowner Proposals..............................................................................   21
 
     3 -- Proposal regarding the Company's Maquiladora Operations.................................   21
 
     4 -- Proposal regarding a Global Set of Standards............................................   23
 
     5 -- Proposal regarding the Annual Election of Directors.....................................   25
 
Additional Information............................................................................   27
 
Directions to Company Headquarters................................................................  A-1

                                PROXY STATEMENT
 
                              GENERAL INFORMATION
 
     This  Proxy Statement is  furnished in connection  with the solicitation of
proxies by the Board of Directors  of AlliedSignal Inc. (the 'Company') for  use
at  the Annual Meeting of Shareowners to be  held on Monday, April 22, 1996, and
at any adjournment thereof. The solicitation of proxies provides all shareowners
who are  entitled to  vote  on matters  that come  before  the meeting  with  an
opportunity  to do  so whether  or not they  are able  to attend  the meeting in
person. This Proxy Statement and the related proxy card are first being sent  to
the Company's shareowners on or about March 11, 1996.
 
     Owners  of record of the Company's Common Stock (the 'Common Stock') at the
close of business on March 1, 1996, are entitled to notice of and to vote at the
Annual Meeting. At February  20, 1996, there were  283,772,796 shares of  Common
Stock  outstanding. The  owners of  a majority of  the shares  entitled to vote,
present in person  or represented  by proxy, will  constitute a  quorum for  the
transaction of business at the meeting. Shareowners are entitled to one vote for
each  share held.  If a  shareowner is a  participant in  the Company's Dividend
Reinvestment and Share  Purchase Plan  (the 'Dividend  Reinvestment Plan'),  the
proxy  card  represents shares  in the  participant's plan  account, as  well as
shares held of record in the participant's name.
 
     The shares represented by a properly signed and returned proxy card will be
voted as specified by the shareowner. If a proxy card is signed and returned but
no specification is  made, the  shares will  be voted  FOR the  election of  all
nominees   for  director  (Proposal  1)   and  the  appointment  of  independent
accountants (Proposal 2), and AGAINST the shareowner proposals described in this
Proxy Statement (Proposals 3, 4 and 5).  A proxy may be revoked by a  shareowner
at  any time before it is voted by notice in writing delivered to the Secretary,
by submission of another proxy  bearing a later date or  by voting in person  at
the Annual Meeting.
 
     Abstentions are not counted as votes 'for' or 'against' a proposal, but are
counted  in  determining  the  number  of shares  present  or  represented  on a
proposal. Therefore,  since  approval of  Proposals  2 through  5  requires  the
affirmative  vote  of  a majority  of  the  shares of  Common  Stock  present or
represented, abstentions  have  the  same  effect  as  a  vote  'against'  those
proposals.  New  York  Stock  Exchange rules  prohibit  brokers  from  voting on
Proposals 3, 4 and 5 without receiving instructions from the beneficial owner of
the shares.  In the  absence of  instructions, shares  subject to  such  'broker
non-votes'  will not be counted  as voted or as  present or represented on those
proposals.
 
     It is the  policy of the  Company that  any proxy, ballot  or other  voting
material  that identifies the particular vote of a shareowner will, if requested
thereon by  the shareowner,  be kept  confidential,  except in  the event  of  a
contested  proxy solicitation or as  may be required by  law. The Company may be
informed whether or not a particular  shareowner has voted and will have  access
to  any comment written on a proxy, ballot or other material and to the identity
of the commenting shareowner.  Under the policy, the  inspectors of election  at
any meeting will be independent parties unaffiliated with the Company.
 
                                       1

                           1 -- ELECTION OF DIRECTORS
 
     The  Company's Board of Directors is  divided into three classes that serve
staggered three-year terms and  are as nearly equal  in number as possible.  The
Board  has nominated four candidates for election as directors for a term ending
at the 1999  Annual Meeting. The  vote of a  plurality of the  shares of  Common
Stock  present or  represented and  entitled to  vote at  the Annual  Meeting is
required for election as a director.
 
     All of the nominees are currently  directors who were elected prior to  the
last  Annual Meeting, except Robert  B. Palmer, who was  elected by the Board in
October 1995. Eugene E. Covert has  reached retirement age and will serve  until
the  Annual Meeting pursuant to the  directors' retirement policy. The resulting
temporary vacancy may be  filled by the Board  in accordance with the  Company's
By-laws.
 
     Each  nominee has consented  to being named  in the Proxy  Statement and to
serve if  elected. If  prior to  the Annual  Meeting any  nominee should  become
unavailable  to serve, the shares represented  by a properly signed and returned
proxy card  will be  voted for  the  election of  such other  person as  may  be
designated  by the Board of  Directors, or the Board  may determine to leave the
vacancy temporarily  unfilled. All  directors serve  subject to  the  retirement
policy described on page 7.
 
     Certain  information regarding each nominee and each director continuing in
office after the Annual Meeting is set forth below, including age and  principal
occupation, a brief account of business experience during at least the last five
years,  certain other  directorships currently  held and  the year  in which the
individual was first elected a director of the Company or one of its predecessor
companies.
 
                NOMINEES FOR ELECTION FOR TERM EXPIRING IN 1999

                   
[PHOTO OF            HANS  W.  BECHERER,   Chairman  and  Chief   Executive  Officer  of   Deere  &   Company
HANS W. BECHERER]    Mr.  Becherer began his business  career with Deere &  Company, a manufacturer of mobile
                     power machinery  and a  supplier of  financial services,  in 1962.  After serving  in  a
                     variety of managerial and executive positions, he became a director of Deere in 1986 and
                     was elected President and Chief Operating Officer in 1987, President and Chief Executive
                     Officer  in 1989 and Chairman and  Chief Executive Officer in 1990.  He is a director of
                     Schering-Plough Corporation.
 
                     Director since 1991                          Age 60
                     ----------------------------------------------------------------------------------------

                                       2

 

[PHOTO OF            ROBERT  P.   LUCIANO,   Chairman   of   the   Board   of   Schering-Plough   Corporation
ROBERT P. LUCIANO]   Mr.   Luciano  joined  Schering-Plough  Corporation,  a  manufacturer  and  marketer  of
                     pharmaceuticals and consumer products, in 1978. He served as President from 1980 to 1986
                     and Chief Executive Officer from  1982 through 1995. He has  been Chairman of the  Board
                     since 1984. He is a director of C.R. Bard, Inc. and Merrill Lynch & Co.
 
                     Director since 1989                          Age 62
                     ----------------------------------------------------------------------------------------
 
[PHOTO OF            ROBERT  B. PALMER, Chairman, President and  Chief Executive Officer of Digital Equipment
ROBERT  B. PALMER]   Corporation
                     Mr. Palmer  joined  Digital Equipment  Corporation,  a provider  of  networked  computer
                     systems,  software and  services, in  1985. He  advanced through  a series  of executive
                     positions until he became President and Chief Executive Officer in 1992 and Chairman  of
                     the Board in 1995.
 
                     Director since 1995                          Age 55
                     ----------------------------------------------------------------------------------------
 
[PHOTO OF            JOHN  R.  STAFFORD, Chairman,  President and  Chief Executive  Officer of  American Home
JOHN R. STAFFORD]    Products Corporation
                     Mr. Stafford has held a number of positions with American Home Products, a  manufacturer
                     of  pharmaceutical, health  care, animal health,  agricultural and  food products, since
                     joining that company in 1970. He served as General Counsel, Vice President, Senior  Vice
                     President  and Executive Vice President before becoming  President in 1981, an office he
                     held until 1990 and which he resumed in early 1994. Mr. Stafford was elected Chairman of
                     the Board and  Chief Executive Officer  in 1986. He  is a director  of Chemical  Banking
                     Corporation, Metropolitan Life Insurance Company and NYNEX Corporation.
 
                     Director since 1993                          Age 58
                     ----------------------------------------------------------------------------------------

                                       3

 
       INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1997

                   
[PHOTO OF            LAWRENCE  A. BOSSIDY, Chairman of  the Board and Chief  Executive Officer of the Company
LAWRENCE A. BOSSIDY] Mr. Bossidy became Chief Executive Officer of  the Company in July 1991 and Chairman  of
                     the  Board in January 1992. He previously served  in a number of executive and financial
                     positions with  General  Electric  Company, a  diversified  services  and  manufacturing
                     company,  which he joined  in 1957. Mr.  Bossidy was Chief  Operating Officer of General
                     Electric Credit  Corporation (now  General Electric  Capital Corporation)  from 1979  to
                     1981,  Executive  Vice President  and Sector  Executive of  GE's Services  and Materials
                     Sector from 1981 to 1984, and Vice Chairman and Executive Officer of GE from 1984  until
                     he  joined the Company. He is a director of Champion International Corporation and Merck
                     & Co., Inc.
 
                     Director since 1991                          Age 61
                     ----------------------------------------------------------------------------------------
 
[PHOTO OF            ANN M. FUDGE, Executive Vice President of Kraft Foods, Inc.
ANN M. FUDGE]        Ms. Fudge joined  General Foods  USA in  1986 and  held several  planning and  marketing
                     positions  before being  appointed Executive Vice  President and General  Manager of the
                     Dinners and Enhancers  Division in 1991.  In 1994,  she was named  President of  General
                     Foods'  Maxwell House  Coffee Company.  In early 1995,  Ms. Fudge  became Executive Vice
                     President of Kraft Foods,  Inc. (the successor  to Kraft General  Foods, Inc., of  which
                     General  Foods USA was  an operating unit),  while continuing to  head the Maxwell House
                     Coffee Division as General Manager. Kraft  is the multinational food business of  Philip
                     Morris Companies Inc. Ms. Fudge is a director of Liz Claiborne, Inc.
 
                     Director since 1993                          Age 44
                     ----------------------------------------------------------------------------------------

                                       4

 

[PHOTO OF            PAUL   X.  KELLEY,  Vice  Chairman  for  Corporate  Strategy  of  Cassidy  &  Associates
PAUL X. KELLEY]      General Kelley served as Commandant of the  Marine Corps from 1983 until his  retirement
                     in  1987. He assumed his current position  with Cassidy & Associates, a Washington-based
                     government relations firm, in 1989. General Kelley is a director of GenCorp Inc., London
                     Insurance Group Inc., PHH Corporation, Saul Centers, Inc., Sturm, Ruger & Company, Inc.,
                     UST Inc. and The Wackenhut Corporation.
 
                     Director since 1987                          Age 67
                     ----------------------------------------------------------------------------------------
 
[PHOTO OF            ROBERT C. WINTERS,  Chairman Emeritus  of The  Prudential Insurance  Company of  America
ROBERT C. WINTERS]   Mr.  Winters joined Prudential, a provider of insurance and financial services, in 1953.
                     During his career  with Prudential, he  held various managerial  positions prior to  his
                     election  as Executive Vice  President in 1978,  Vice Chairman in  1984 and Chairman and
                     Chief Executive Officer in 1987. He retired as Chairman and Chief Executive Officer  and
                     became Chairman Emeritus in December 1994.
 
                     Director since 1989                          Age 64
                     ----------------------------------------------------------------------------------------

       INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1998
 
[PHOTO OF            RUSSELL   E.  PALMER,  Chairman  and  Chief   Executive  Officer  of  The  Palmer  Group
RUSSELL E. PALMER]   After serving  seven  years  as  Dean  of  The  Wharton  School  of  the  University  of
                     Pennsylvania,  Mr. Palmer  in 1990  established The  Palmer Group,  a private investment
                     firm. He previously served  as Managing Director and  Chief Executive Officer of  Touche
                     Ross International and Managing Partner and Chief Executive Officer of Touche Ross & Co.
                     (USA)  (now Deloitte  and Touche). He  is a  director of Bankers  Trust Company, Bankers
                     Trust New York  Corporation, Federal  Home Loan Mortgage  Corporation, GTE  Corporation,
                     Imasco Limited, The May Department Stores Company and Safeguard Scientifics, Inc.
 
                     Director since 1987                          Age 61
                     ----------------------------------------------------------------------------------------

                                       5

 

[PHOTO OF            IVAN   G.  SEIDENBERG,  Chairman  and  Chief  Executive  Officer  of  NYNEX  Corporation
IVAN G. SEIDENBERG]  Mr. Seidenberg joined NYNEX Corporation,  a telecommunications and information  services
                     provider,  in 1983 after  holding various positions  with AT&T since  1966. He served in
                     several senior  management  positions at  NYNEX  before  becoming a  director  and  Vice
                     Chairman  of  the Board  in 1991,  President and  Chief Operating  Officer in  1994, and
                     Chairman and Chief Executive Officer in 1995.  He is a director of Melville  Corporation
                     and Viacom Inc.
 
                     Director since 1995                          Age 49
                     ----------------------------------------------------------------------------------------
 
[PHOTO OF            ANDREW  C.  SIGLER,  Chairman  and Chief  Executive  Officer  of  Champion International
ANDREW C. SIGLER]    Corporation
                     Mr. Sigler began his  career at Champion International  Corporation, a paper and  forest
                     products  company, in 1956. He was elected President and Chief Executive Officer in 1974
                     and Chairman and  Chief Executive Officer  in 1979.  He is a  director of  Bristol-Myers
                     Squibb Company, Chemical Banking Corporation and General Electric Company.
 
                     Director since 1994                          Age 64
                     ----------------------------------------------------------------------------------------
 
[PHOTO OF            THOMAS P. STAFFORD, Consultant, General Technical Services, Inc.
THOMAS P. STAFFORD]  Lt.  Gen. Stafford  joined the  consulting firm of  General Technical  Services, Inc. in
                     1984. He is also  Vice Chairman and  co-founder of Stafford, Burke  and Hecker, Inc.,  a
                     Washington-based  consulting firm. After serving as an  astronaut for a number of years,
                     he retired in 1979 from the Air Force as Deputy Chief of Staff for Research, Development
                     and Acquisition and served as Vice Chairman of Gibraltar Exploration Limited until 1984.
                     Lt. Gen. Stafford is also  Chairman of the Board of  Omega Watch Corporation of  America
                     and  is a  director of  CMI Corporation,  Fisher Scientific  International Inc., Pacific
                     Scientific Company,  Seagate Technology  Inc., Tracor,  Inc., Tremont  Corporation,  The
                     Wackenhut Corporation and Wheelabrator Technologies Inc.
 
                     Director since 1981                          Age 65
                     ----------------------------------------------------------------------------------------

                                       6

THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
 
     The  business of the Company is managed under the direction of the Board of
Directors. There  were nine  meetings  of the  Board  in 1995,  with  individual
attendance  averaging  98%  of  the meetings.  Average  attendance  by incumbent
directors at all meetings of the Board and Committees of the Board on which they
served was also 98%.
 
     The Board of Directors' retirement policy establishes 70 as the  retirement
age  for non-employee directors, as well as for  any director who is or has been
the Company's Chief  Executive Officer.  A director who  reaches retirement  age
shall  serve  until  the next  Annual  Meeting.  The policy  also  provides that
non-employee directors who discontinue the principal position or  identification
which  prevailed  at the  time  of their  election (other  than  by virtue  of a
promotion) shall offer to tender their resignations as directors. The Board  has
discretion to make exceptions to the policy.
 
     Because of the number of matters requiring Board consideration, and to make
the  most effective use of individual  Board members' capabilities, the Board of
Directors has established  Committees to devote  attention to specific  subjects
and  to assist  it in  the discharge of  its responsibilities.  The functions of
these Committees, their current members and  the number of meetings held  during
1995  are described below.  A non-employee director may  also attend a Committee
meeting as an alternate  member at the request  of the Committee Chairman  (with
the concurrence of the Chairman of the Board).
 
     The  Audit Committee  recommends the  firm to  be appointed  as independent
accountants to audit the Company's financial statements and to perform  services
related  to  the audit;  reviews the  scope and  results of  the audit  with the
independent accountants; reviews with management and the independent accountants
the Company's interim and year-end operating results; considers the adequacy  of
the  internal accounting and  auditing procedures of  the Company; and considers
the accountants' independence.  The members  of the Audit  Committee, which  met
five  times in 1995, are Messrs. R.  E. Palmer (Chairman), Becherer, J. Stafford
and Winters, Ms. Fudge and Gen. Kelley.
 
     The Corporate Responsibility  Committee reviews the  policies and  programs
that  are designed  to assure  the Company's  compliance with  legal and ethical
standards and that affect its role as a responsible corporate citizen, including
those relating to human resources  issues such as equal employment  opportunity,
to  health, safety and environmental matters,  and to proper business practices.
The members of the Committee are Gen. Kelley (Chairman), Dr. Covert, Ms.  Fudge,
Messrs.  R. B. Palmer and Sigler and Lt.  Gen. T. Stafford. It met four times in
1995.
 
     The Executive Committee  possesses the powers  of the Board  to manage  and
direct the business and affairs of the Company during the interval between Board
meetings,  except  as provided  by  Delaware law  and  except for  those matters
assigned to the  Audit and Management  Development and Compensation  Committees.
The  members of the Executive Committee, which did not meet in 1995, are Messrs.
Bossidy (Chairman), Luciano and Winters.
 
     The  Management  Development   and  Compensation   Committee  reviews   and
recommends   the   compensation   arrangements  for   officers;   approves  such
arrangements for  other senior  level employees;  considers matters  related  to
management development and succession and
 
                                       7

recommends individuals for election as officers; and reviews or takes such other
action  as may be required in connection with the bonus, stock and other benefit
plans of  the Company  and its  subsidiaries. It  met five  times in  1995.  The
Committee  members are Messrs.  Luciano (Chairman), Becherer,  Seidenberg and J.
Stafford.
 
     The Nominating and Board  Affairs Committee has as  its principal role  the
consideration and recommendation of individuals for nomination as directors. The
names  of  potential director  candidates are  drawn from  a number  of sources,
including recommendations from members of the Board, management and shareowners.
Shareowners  wishing   to  recommend   Board   nominees  should   submit   their
recommendations  in writing to the Secretary,  AlliedSignal Inc., P.O. Box 4000,
Morristown, New Jersey 07962, with the submitting shareowner's name and  address
and  pertinent information about the proposed  nominee similar to that set forth
in  this  Proxy  Statement  for  Board  nominees,  including  current  principal
occupation  and employment, principal positions held  during the last five years
and a list of all companies which the individual serves as a director. (See  the
heading 'Additional Information -- Other Action at the Meeting' for a summary of
the  procedure applicable to a shareowner nomination at an annual meeting.) This
Committee also reviews and  makes recommendations to the  Board with respect  to
the  composition of Board Committees  and other Board-related matters, including
its  organization,  size,   composition  and  compensation,   as  well  as   the
responsibilities,  functions  and  talents of  the  Board and  its  members. The
members of the Nominating and Board Affairs Committee, which met twice in  1995,
are Messrs. Becherer (Chairman), Luciano, R. E. Palmer, Seidenberg and Winters.
 
     The  Retirement Plans Committee  appoints the trustees  for funds under the
employee pension benefit plans of the Company and certain subsidiaries;  reviews
funding  strategies; sets  investment policy for  fund assets;  and oversees and
appoints members of other committees  investing fund assets. This Committee  met
three  times in 1995. Its members are Messrs. Winters (Chairman), Luciano, R. E.
Palmer, Sigler and J. Stafford and Ms. Fudge.
 
     The Technology Committee has  responsibility for corporate-wide  technology
matters,  including  research,  development  and  engineering,  and  advises the
Company with respect to its technology  program and budget, proposed changes  in
corporate  strategy  where  technology  is  a  significant  component,  and  new
technologies of importance to the Company's existing business areas. The members
of this Committee are Lt. Gen.  T. Stafford (Chairman), Dr. Covert, Gen.  Kelley
and Messrs. R. B. Palmer and Seidenberg. It met twice in 1995.
 
COMPENSATION OF DIRECTORS
 
     Non-employee  directors receive an  annual Board retainer  of $35,000 and a
fee of $1,500 for Board  meetings attended on any  day (nine during 1995).  They
also  receive an annual retainer of $5,400 for each Board Committee served, with
Committee Chairmen receiving an additional retainer of $4,000 for the Audit  and
Management  Development  and Compensation  Committees and  $2,000 for  all other
Board Committees. While  no meeting fees  are generally paid  for attendance  at
Committee  meetings, a non-employee  director who attends  one or more Committee
meetings on  any  day as  an  alternate member  receives  a fee  of  $1,500.  In
addition,  a $1,000 fee  is paid to  non-employee directors for  attendance at a
Committee meeting, or  other extraordinary  meeting related  to Board  business,
which occurs apart from a Board meeting, and a
 
                                       8

$1,000  per day fee is paid  for special assignments. Non-employee directors are
also provided  with  $350,000 in  business  travel accident  insurance  and  are
eligible to elect, without contribution by them, $100,000 in term life insurance
and  medical and dental  coverage for themselves  and their eligible dependents.
All directors are reimbursed for expenses incurred in attending meetings.
 
     Under  the  Deferred  Compensation  Plan  for  Non-Employee  Directors,   a
non-employee  director may  elect to defer,  until a specified  calendar year or
retirement from the Board, all or any portion of the director's compensation and
to have such compensation credited  to a deferred account  in cash or shares  of
Common  Stock.  Amounts credited  accrue amounts  equivalent  to interest  or to
dividends. The rate of interest on amounts deferred in cash is the same as  that
determined  by the Management Development and Compensation Committee for amounts
deferred during the same  year under the  Company's Incentive Compensation  Plan
(10%  for  1996).  Upon  a  change in  control,  all  deferred  amounts  will be
considered cash equivalents and a director  who has so elected will be  entitled
to a lump sum payment of such amounts.
 
     Pursuant  to the Retirement Plan  for Non-Employee Directors, directors who
retire from the Board at age 60 or above with at least five years of service  as
a  non-employee director are eligible for a retirement benefit at an annual rate
equal to the annual Board retainer in effect at retirement. A director  retiring
between  ages 60 and 70 is entitled to such benefit for a number of months equal
to the number of months served, while a director who retires at age 70 or  above
is  entitled to  such benefit  for life.  In the  event of  the director's death
following retirement, benefits will continue to be paid to any surviving  spouse
until  the total number of  payments made to the  director and spouse equals the
lesser of the number of months served or 120 months. A director (or spouse)  who
is  entitled  to a  retirement benefit  during the  two-year period  following a
change in control will receive a lump sum payment equal to the present value  of
the benefit, if the director has so elected.
 
     Under  the  Stock Plan  for Non-Employee  Directors, each  new non-employee
director receives a one-time  grant of 1,500 shares  of Common Stock, which  are
subject  to transfer restrictions  until the director's  service terminates with
the consent  of  a  majority  of  the  other  members  of  the  Board,  provided
termination  occurs  at  or after  age  65.  During the  restricted  period, the
director has the right to receive dividends on and the right to vote the shares.
At the end of the restricted period, a director is entitled to one-fifth of  the
shares  granted  for each  year  of service  (up to  five).  The shares  will be
forfeited if  the  director's  service  terminates  (other  than  for  death  or
disability)  prior to the end  of the restricted period.  The Plan also provides
for the grant to each non-employee director continuing in office after an Annual
Meeting of an option  to purchase 1,000  shares of Common Stock  at 100% of  the
fair  market value of the Common Stock on the date of grant. Each option becomes
fully vested at the earliest of the  director's retirement from the Board at  or
after  age 70, death, disability or April 1  of the third year after the date of
grant. Prior thereto, each option becomes exercisable in cumulative installments
of 40% of the shares subject to the option on April 1 of the year following  the
grant date and an additional 30% on April 1 of each of the next two years.
 
                                       9

                               VOTING SECURITIES
 
     As  of February 20, 1996,  State Street Bank &  Trust Company, 225 Franklin
Street, Boston, Massachusetts 02101 ('State Street'), held 33,492,720 shares, or
approximately 11.8%, of the outstanding Common Stock as trustee of the Company's
savings plans. Under the terms  of the plans, State  Street is required to  vote
shares  attributable to any participant in accordance with instructions received
from the participant and to vote all shares for which it shall not have received
instructions in the same ratio as the shares with respect to which  instructions
were  received.  State  Street  disclaims  beneficial  ownership  of  the shares
referred to above.  State Street  also held 2,946,674  shares, or  approximately
1.0%,  of the outstanding Common  Stock as trustee of  various trusts, with sole
voting power as to  2,530,785 shares, shared voting  power as to 11,360  shares,
sole  investment power as to 2,520,735 shares, and shared investment power as to
15,310 shares.
 
     J. P. Morgan & Co.  Incorporated, 60 Wall Street,  New York, NY 10260,  has
informed  the  Company that,  as  of February  20,  1996, it  beneficially owned
14,076,908 shares, or approximately 5.0%, of the outstanding Common Stock,  with
sole  voting power  as to  7,984,676 shares, shared  voting power  as to 286,010
shares, sole  investment power  as to  13,524,298 shares  and shared  investment
power as to 465,810 shares.
 
     Set forth below is certain information with respect to beneficial ownership
of  the Common Stock as of February 20, 1996 by each director, certain executive
officers and by all directors and executive officers of the Company as a group:

                                                                    Number of
                              Name                                 Shares(1)(2)
- ----------------------------------------------------------------   ------------
                                                                
John W. Barter..................................................       468,036(3)(4)
Hans W. Becherer................................................         3,700(3)
Lawrence A. Bossidy.............................................     1,205,436(3)(4)
Daniel P. Burnham...............................................       442,633(3)
Eugene E. Covert................................................         4,611(3)
Ann M. Fudge....................................................         3,700(3)
Paul X. Kelley..................................................         6,273(3)(4)
Peter M. Kreindler..............................................       219,806(3)(4)
Robert P. Luciano...............................................         4,700(3)
Robert B. Palmer................................................         1,500
Russell E. Palmer...............................................         4,700(3)
Frederic M. Poses...............................................       413,654(3)(4)
Ivan G. Seidenberg..............................................         1,900(3)
Andrew C. Sigler................................................         5,700(3)
John R. Stafford................................................         8,700(3)
Thomas P. Stafford..............................................         3,700(3)
Robert C. Winters...............................................        13,534(3)
All directors and executive officers as a group,
  including the above (29 in number)............................     3,925,305(3)(4)

                                                        (footnotes on next page)
 
                                       10

- ------------
 
(1) The total for each individual is less than 0.5%, and the total for the group
    is less than 1.4%, of the shares of Common Stock outstanding.
 
(2) Includes shares held individually, jointly with  others or in the name of  a
    family  member or of a bank, broker or nominee for the individual's account,
    as  well  as  shares  attributable   to  participants  under  the   Dividend
    Reinvestment   Plan  and  the  AlliedSignal   Savings  Plan.  Also  includes
    restricted shares  as to  which  directors have  sole  voting power  but  no
    investment power prior to the lapse of restrictions.
 
(3) Includes shares which the following have the right to acquire within 60 days
    through  the  exercise of  vested stock  options:  Mr. Barter,  454,400; Mr.
    Bossidy, 960,000; Mr. Burnham, 396,250;  Mr. Kreindler, 214,468; Mr.  Poses,
    391,900;  Mr. Seidenberg,  400; each other  indicated non-employee director,
    700; and all  directors and  executive officers  as a  group, 3,498,932.  No
    voting  or  investment power  exists with  respect to  such shares  prior to
    acquisition.
 
(4) Does not include the following amounts credited to deferred share  accounts,
    as  to which  no voting  or investment power  exists prior  to issuance: Mr.
    Barter, 45,090;  Mr.  Bossidy, 6,700;  Gen.  Kelley, 3,592;  Mr.  Kreindler,
    9,001;  Mr. Poses,  58,515; and  all directors  and executive  officers as a
    group, 184,250.
 
                            ------------------------
 
     The Company's directors and officers are required to file reports with  the
Securities  and Exchange Commission relating to their ownership of the Company's
equity securities. One transaction during 1995 by each of Paul R. Schindler  and
Richard  P. Schroeder, officers of the Company,  was reported after the due date
and a gift of shares  by Mr. Bossidy was inadvertently  omitted from his Form  5
report filed in 1995.
 
                             EXECUTIVE COMPENSATION
 
REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
 
     The  Management  Development and  Compensation  Committee of  the  Board of
Directors (the 'Committee'), subject to the approval of the Board of  Directors,
determines the compensation of the Company's executive officers and oversees the
administration  of executive  compensation programs.  The Committee  is composed
solely of independent directors.
 
Executive Compensation Policies and Programs
 
     The Company's executive compensation programs  are designed to attract  and
retain  highly qualified executives and to  motivate them to maximize shareowner
returns by  achieving  aggressive  goals. The  programs  link  each  executive's
compensation  directly to performance. A significant portion of each executive's
compensation is dependent upon the appreciation of the Common Stock and  meeting
financial goals and other individual performance objectives.
 
                                       11

     There are three basic components to this 'pay for performance' system: base
pay;  annual incentive bonus; and long-term, equity-based incentive compensation
(primarily stock  options).  Each  component  is addressed  in  the  context  of
competitive  conditions.  In  determining competitive  compensation  levels, the
Company analyzes  information from  several  independent surveys  which  include
information regarding comparably-sized industrial companies. Since the Company's
market  for executive talent extends beyond  its own industries, the survey data
include companies  outside the  industrial  classifications represented  in  the
Composite Group Index referred to below under 'Performance Graph.'
 
     Base  pay. Base pay is designed to be competitive within 20% above or below
median  salary  levels  at  other  large  industrial  companies  for  equivalent
positions.  The executive's actual salary relative to this competitive framework
varies based on individual performance  and the individual's skills,  experience
and background.
 
     Annual  incentive bonus. In 1995, each executive was eligible to receive an
annual cash bonus. The 'target' levels  for these bonuses, like the base  salary
levels,  were set with reference to  competitive conditions and were intended to
motivate the Company's  executives by providing  substantial bonus payments  for
the  achievement of aggressive  goals. The actual amount  paid was determined by
performance. Whether that  payment was  above or  below target  depended on  two
factors:  first, financial  performance, which  was measured  against objectives
established for net income,  cash flow and  productivity increases; and  second,
the   individual  executive's  performance  against  other  specific  management
objectives such  as improving  customer  satisfaction or  negotiating  strategic
business  alliances. Financial objectives  were given greater  weight than other
management objectives  in determining  bonus payments.  The types  and  relative
importance  of specific financial and other business objectives varied among the
Company's executives depending on their positions and the particular  operations
or functions for which they were responsible.
 
     Long-term, equity-based incentive compensation. The long-term, equity-based
compensation  program is  tied directly to  shareowner return.  The executive is
rewarded if the shareowners receive the benefit of appreciation in the price  of
the  Common Stock. Under the  program, long-term incentive compensation consists
of stock  option  grants  which  vest over  a  multi-year  period.  Options  for
executive officers are granted in tandem with limited stock appreciation rights,
which  are designed to provide the executive with an economic benefit comparable
to that available  to all shareowners  in the event  of a tender  offer for  the
Company's shares, a change in control or similar event. The Company periodically
grants  new  awards to  provide  continuing incentives  for  future performance,
without regard to the number of outstanding awards. Depending on the  executive,
grants  are  either made  annually, with  vesting over  a three-year  period, or
periodically, with vesting over a longer  period but subject to acceleration  if
specified  financial performance objectives are achieved. Like the annual bonus,
the target award  is set  with regard  to competitive  considerations, but  each
individual's  actual award is based upon the individual's performance, potential
for advancement,  leadership  ability  and commitment  to  the  Company's  total
quality efforts.
 
     The principal purpose of the long-term incentive compensation program is to
encourage  the Company's  executives to  enhance the  value of  the Company and,
hence, the price of the
 
                                       12

Common Stock and  the shareowners'  return. This component  of the  compensation
system  (through extended vesting)  also is designed to  create an incentive for
the individual to  remain with the  Company. In addition,  awards of  restricted
units may be made on a select basis to individual executives in order to enhance
the  retention incentive. These units vest over  an extended period of up to ten
years.
 
     The Company intends, to the  extent practicable, to preserve  deductibility
under  the Internal Revenue Code of  compensation paid to its executive officers
while maintaining compensation programs to  attract and retain highly  qualified
executives  in a  competitive environment. Accordingly,  compensation paid under
the Company's  1993 Stock  Plan  and Incentive  Compensation Plan  is  generally
deductible,  although certain  compensation paid to  some executives  may not be
deductible.
 
Annual Reviews
 
     Each year, the Committee reviews  the executive compensation policies  with
respect  to  the  linkage between  executive  compensation and  the  creation of
shareowner value, as well as the competitiveness of the programs. The  Committee
determines  what changes, if any, are  appropriate in the compensation programs.
In conducting these annual reviews, the Committee considers information provided
by the Chief Executive Officer and the Senior Vice President-Human Resources and
Communications and uses surveys and reports prepared by independent compensation
consultants. In 1995, the Committee reviewed  the levels of ownership in  shares
and  share-equivalents of  the Common  Stock for  each executive  officer. Since
ownership levels  for most  of the  officers are  well in  excess of  guidelines
established   at  other  large  industrial  companies,  the  Committee  has  not
instituted specific guidelines for executive stock ownership.
 
     The Committee  annually  reviews  with  the  Chief  Executive  Officer  the
individual  performance of  each of the  other executive officers  and the Chief
Executive Officer's recommendations with respect to the appropriate compensation
awards. With  Board authorization,  the Committee  approves salary  actions  and
determines  the amount of annual bonus and the number of long-term, equity-based
awards for each  officer. The Committee  also reviews with  the Chief  Executive
Officer  the financial  and other  objectives for  each of  the senior executive
officers for the following year.
 
     In 1995, awards  to executive  officers as  a group  reflected the  overall
financial performance of the Company, which included record sales and net income
and achievement of the Company's earnings per share goals. Awards to individuals
also reflected performance against their specific management objectives, as well
as  the  performance  of  the  operations  or  functions  for  which  they  were
responsible.
 
     In addition,  the  Committee  in  1995  approved  long-term  incentive  and
retention   awards  with  extended  vesting  and  performance  vesting  for  the
Presidents of the  Company's three  business sectors. The  Committee decided  to
make  a  significant, one-time  grant of  options and  restricted units  to each
Sector President. In order to promote long-term retention of critical management
talent and focus these key individuals  on long-term performance of the  Company
as a whole, each President received 500,000 options which vest ratably over nine
years.  Acceleration of vesting would occur following three consecutive years of
at least 15% growth in the Company's
 
                                       13

consolidated earnings per share. An  additional 150,000 options were granted  to
each  President, with 50,000 vesting  only if the Company  achieves at least 15%
annual growth in consolidated earnings per share for four consecutive years  and
100,000  vesting only if  the Company achieves such  growth for five consecutive
years. All of the options were granted in tandem with limited stock appreciation
rights. Each of the Presidents also received 30,000 restricted units which  vest
on  the tenth  anniversary of  the grant  or earlier  upon achievement  of three
consecutive years of  consolidated earnings per  share growth of  at least  15%.
These   special   awards   to   Sector   Presidents   are   aligned   with   the
performance-vesting and  long-term retention  focus of  the long-term  incentive
awards provided to the Chief Executive Officer in 1994.
 
     A  small group of other key  executives (including some executive officers)
who are  viewed  as critical  resources  for  enabling the  Company  to  realize
long-term  objectives  were granted  restricted  units. These  special retention
grants vest at the end of ten  years, with the same opportunity for  accelerated
vesting  as indicated above. The Committee  expects to provide special retention
grants of a similar nature to a small number of executives annually.
 
Chief Executive Officer
 
     In May 1994, the Board of  Directors, based upon the recommendation of  the
Committee,  approved an amended long-term employment agreement with Mr. Bossidy,
which extends until April 1, 2000. Under that agreement, Mr. Bossidy is entitled
to an annual salary of $2,000,000 and a minimum target incentive bonus of 80% of
base salary.  Based  on  the  Company's financial  performance  in  1995,  which
included a 12% increase in sales and 15% increase in net income, with both sales
and  earnings at record  levels, as well as  a 40% increase in  the price of the
Common Stock,  strategic and  globalization initiatives  and new  total  quality
initiatives,  including  operational  excellence and  technical  excellence, the
Committee awarded Mr. Bossidy a bonus of $2,350,000. In light of the significant
grant of options  and restricted units  made to  Mr. Bossidy in  1994 under  the
terms of his employment agreement, no further grants were made to him in 1995.
 
                            ------------------------
     Members of the Management Development and Compensation Committee:

                   Robert P. Luciano, Chairman
                   Hans W. Becherer
                   Ivan G. Seidenberg
                   John R. Stafford
 
                                       14

SUMMARY COMPENSATION TABLE
 
     The  following  table  contains  information  concerning  the  most  highly
compensated executive  officers of  the Company,  as required  under  applicable
rules of the Securities and Exchange Commission.
 
                           SUMMARY COMPENSATION TABLE

                                    Annual Compensation              Long-Term Compensation
                            ------------------------------------    -------------------------
                                                                                    Securities
 Name and Principal                                 Other Annual      Restricted    Underlying     All Other
      Position       Year     Salary      Bonus     Compensation    Unit Awards(1)  Options(#)  Compensation(2)
- -------------------- -----  ----------  ----------  ------------    --------------  ---------   ---------------
                                                                           
Lawrence A.          1995   $2,000,000  $2,350,000     $58,206(3)         --           --          $1,005,653
  Bossidy            1994    1,625,000   2,000,000       7,260          $8,756,250  1,800,000         858,589
  Chairman of the    1993    1,100,000   1,500,000      68,698(3)          343,450    300,000         412,590
  Board and Chief
  Executive Officer
Frederic M.          1995      475,000     625,000       2,710           1,072,500    650,000          61,254
  Poses              1994      450,000     525,000      18,717              82,925    120,000          55,305
  Executive Vice     1993      430,000     425,000        --               141,707    130,000          53,709
  President
  (Engineered
  Materials)
Daniel P.            1995      450,000     445,000          70           1,072,500    650,000          73,290
  Burnham            1994      416,670     390,000      65,903              82,925    120,000          70,485
  Executive Vice     1993      392,500     340,000      39,225             141,707    130,000         320,610
  President
  (Aerospace)
John W.              1995      450,000     400,000         767           1,072,500    650,000          52,991
  Barter             1994      412,500     390,000         937              49,600     72,000          49,285
  Executive Vice     1993      387,500     345,000        --                91,564     84,000          47,287
  President
  (Automotive)
Peter M.             1995      410,000     380,000         468             680,000     70,000          38,855
  Kreindler          1994      385,000     340,000         880              45,725     66,000          37,468
  Senior Vice        1993      367,500     305,000        --                76,104     70,000          36,766
  President, General
  Counsel and
  Secretary

- ------------
 
(1) Restricted  unit awards, valued on the date of the award, entitle the holder
    to receive one share of Common Stock  for each unit when the unit vests.  (A
    portion  of the  unit may be  paid in  cash to cover  applicable taxes.) All
    units reflected in the table vest in equal annual installments on January  1
    of  each of  the four  years following the  award, except  for 250,000 units
    included for Mr. Bossidy in 1994, which vest as described under  'Employment
    and  Termination Arrangements,' and all  restricted units included for 1995,
    which vest  as described  under 'Report  of the  Management Development  and
    Compensation  Committee.' The total number of  units held and their value at
    the end of 1995 were as  follows: Mr. Bossidy, 733,746 units  ($34,852,935);
    Mr.   Poses,   59,618  units   ($2,831,855);   Mr.  Burnham,   56,368  units
    ($2,677,480); Mr.  Barter, 54,343  units  ($2,581,293); and  Mr.  Kreindler,
    48,146  units ($2,286,935). Common Stock dividend equivalents are payable on
    each unit.
 
                                       15

(2) Amounts shown for 1995 consist of matching contributions made by the Company
    under the  savings plan  and  supplemental savings  plan: for  Mr.  Bossidy,
    $80,004;  Mr. Poses, $38,004; Mr. Burnham, $36,000; Mr. Barter, $36,000; and
    Mr. Kreindler,  $16,404;  the value  of  life insurance  premiums:  for  Mr.
    Bossidy,  $921,638; Mr.  Poses, $19,305;  Mr. Burnham,  $37,145; Mr. Barter,
    $16,285; and Mr. Kreindler, $22,060; and above-market interest earned during
    1995 on previously deferred  compensation but not paid  or payable in  1995:
    for  Mr. Bossidy, $4,011; Mr. Poses,  $3,945; Mr. Burnham, $145; Mr. Barter,
    $706; and Mr. Kreindler, $391.
 
(3) For 1995 and  1993, respectively,  includes $18,627 and  $27,420 for  estate
    planning and $23,690 and $20,143 for Company-provided transportation.
 
OPTION TABLES
 
     The  following tables contain information  concerning stock options, all of
which were granted with an exercise price equal to 100% of the fair market value
of the Common Stock on the date of grant.
 
                       OPTION GRANTS IN LAST FISCAL YEAR

                                        Number of       % of Total
                                        Securities       Options
                                        Underlying      Granted to     Exercise                  Grant Date
                                         Options       Employees in     Price      Expiration     Present
                Name                     Granted       Fiscal Year      ($/Sh)        Date        Value(1)
- ------------------------------------    ---------      ------------    --------    ----------    ----------
                                                                                  
Lawrence A. Bossidy.................       --                --            --          --            --
Frederic M. Poses...................     500,000(2)         7.8          $35.57      2/1/05      $5,450,000
                                          50,000(3)         0.8           35.57      2/1/05         545,000
                                         100,000(4)         1.6           35.57      2/1/05       1,090,000
Daniel P. Burnham...................     500,000(2)         7.8           35.57      2/1/05       5,450,000
                                          50,000(3)         0.8           35.57      2/1/05         545,000
                                         100,000(4)         1.6           35.57      2/1/05       1,090,000
John W. Barter......................     500,000(2)         7.8           35.57      2/1/05       5,450,000
                                          50,000(3)         0.8           35.57      2/1/05         545,000
                                         100,000(4)         1.6           35.57      2/1/05       1,090,000
Peter M. Kreindler..................      70,000(5)         1.1           35.57      2/1/05         763,000

- ------------
 
(1) Options are valued  using a  Black-Scholes option pricing  model. The  model
    assumes  a  historic  five-year  average  volatility  (23.0%),  the  average
    dividend yield for the three years  ended December 31, 1994 (1.8%), a  7.35%
    risk-free  rate of return  (based on the average  zero coupon five-year U.S.
    Treasury note yield for the month of grant), and an expected option life  of
    five  and one-half years  based on past experience.  No adjustments are made
    for risk of  forfeiture or, where  applicable, non-transferability.  Options
    will  have no  actual value unless,  and then  only to the  extent that, the
    Common Stock price appreciates from the grant date to the exercise date.  If
    the  named officers realize the grant  date present values, total shareowner
 
                                       16

    value will have appreciated by approximately $3.1 billion, and the value  of
    the  named officers' options will be less  than 0.8% of the total shareowner
    appreciation.
 
(2) These options vest  in cumulative  installments of  10% per  year for  eight
    years  commencing on January 1, 1996, and the final installment of 20% vests
    on January 1, 2004. They  are subject to earlier vesting  on April 1 of  the
    year  following  the  Company's  achievement  of  at  least  15%  growth  in
    consolidated earnings per share for three consecutive years. The options are
    accompanied by  tandem limited  stock appreciation  rights ('LSARs'),  which
    provide  that in  the event of  a tender  offer for the  Company's shares, a
    change in control or similar  event, a cash payment  will be made within  90
    days  equal to the difference between the  option exercise price and a price
    for the Common  Stock related to  the event, and  the corresponding  options
    will expire.
 
(3) These  options and  accompanying tandem  LSARs vest on  April 1  of the year
    following the Company's achievement  of four consecutive  years of at  least
    15%  annual growth in consolidated earnings per share; the earliest possible
    vesting date is April 1, 1999.
 
(4) These options and  accompanying tandem  LSARs vest on  April 1  of the  year
    following  the Company's achievement  of five consecutive  years of at least
    15% annual growth in consolidated earnings per share; the earliest  possible
    vesting date is April 1, 2000.
 
(5) These  options, which  are accompanied by  tandem LSARs,  vest in cumulative
    installments of 40% on January  1, 1996 and 30% on  each of January 1,  1997
    and 1998.
 
                            ------------------------
 
                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                           AND YEAR-END OPTION VALUES

                                                           Number of Securities        Value of Unexercised
                                 Shares                   Underlying Unexercised       In-the-Money Options
                               Acquired on                 Options at Year-End             at Year-End
                                Exercise      Value     --------------------------  --------------------------
Name                               (#)       Realized   Exercisable  Unexercisable  Exercisable  Unexercisable
- ----                           -----------  ----------  -----------  -------------  -----------  -------------

Lawrence A. Bossidy...........   150,000    $4,055,550    780,000      1,770,000    $12,161,640    $25,917,510
Frederic M. Poses.............   177,736     5,075,198    266,900        761,000      4,317,024      9,135,543
Daniel P. Burnham.............   130,264     2,498,391    271,250        761,000      5,766,111      9,135,543
John W. Barter................     6,736       150,907    357,600        718,400      8,592,349      8,688,739
Peter M. Kreindler............    25,000       533,877    120,668        155,600      1,839,302      2,142,203

                                       17

PERFORMANCE GRAPH
 
     The  following graph compares the five-year  cumulative total return on the
Common Stock to the total returns on the Standard & Poor's 500 Stock Index and a
composite index  of corporations  in the  same industries  as the  Company  (the
'Composite Group Index').

                               [PERFORMANCE GRAPH]

                                                       
                           1991      1992       1993       1994       1995

Company Common Stock       170.5     239.4      317.9      278.8      396.8
S&P 500                    130.5     140.4      154.6      156.6      215.4
Composite Group            131.0     142.6      164.7      176.9      252.2

In each case,  a $100 investment on  December 31, 1990  and reinvestment  of all
dividends are assumed. Returns are at December 31 of each year.
 
                            ------------------------
 
     The  Composite Group Index combines the  total returns on the published Dow
Jones indices  for  the  Aerospace  &  Defense,  Automobile  Parts  &  Equipment
Excluding  Tire and Rubber Makers, and Chemical Groups. The total return for the
Composite Group  Index  is  calculated  by adding  the  products  obtained  from
separately  multiplying the total return for each  of the three Dow Jones groups
by the total market capitalization of  the companies included in that group  and
dividing  by the  total market capitalization  of the companies  included in the
three groups.  This  calculation  is  made for  each  year  using  stock  market
capitalization  data as of the beginning of  the year provided to the Company by
Dow Jones. Shareowners  may obtain  this data from  the Secretary,  AlliedSignal
Inc., P.O. Box 4000, Morristown, New Jersey 07962.
 
                                       18

RETIREMENT BENEFITS
 
     The following table illustrates the estimated annual pension benefits which
would be provided on retirement at age 65 under the Company's Retirement Program
(the   'Pension  Plan')  and  an  unfunded  supplemental  retirement  plan  (the
'Supplemental Plan'), after applicable deductions for Social Security  benefits,
to  salaried employees having specified average annual remuneration and years of
service.
 
                                 PENSION TABLE

  Average                                 Years of Service
   Annual        ------------------------------------------------------------------
Remuneration        5            10            15             20          25 - 30
- ------------     --------     --------     ----------     ----------     ----------
                                                          
 $  500,000      $ 40,792     $ 90,792     $  140,792     $  190,792     $  240,792
    700,000        60,792      130,792        200,792        270,792        340,792
    900,000        80,792      170,792        260,792        350,792        440,792
  1,100,000       100,792      210,792        320,792        430,792        540,792
  1,500,000       140,792      290,792        440,792        590,792        740,792
  2,000,000       190,792      390,792        590,792        790,792        990,792
  2,800,000       270,792      550,792        830,792      1,110,792      1,390,792
  3,100,000       300,792      610,792        920,792      1,230,792      1,540,792
  3,500,000       340,792      690,792      1,040,792      1,390,792      1,740,792

     The benefit amounts shown in the  Pension Table are computed on a  straight
life  annuity  basis. At  January  1, 1996,  the  following individuals  had the
indicated number of years of credited service for pension purposes: Mr. Bossidy,
4.6; Mr. Poses, 26.33; Mr. Burnham, 13.67; Mr. Barter, 19.83; and Mr. Kreindler,
4.0.
 
     The amounts in  the Salary and  Bonus columns of  the Summary  Compensation
Table for 1995 would be included in computing remuneration for pension purposes.
Average  annual remuneration under  the Pension Plan is  calculated based on the
highest paid  60  consecutive  months  of  an  employee's  last  120  months  of
employment.
 
     Under  his  employment  agreement, Mr.  Bossidy  is entitled  to  receive a
retirement benefit, commencing on termination of employment at age 62 or  later,
equivalent  to 60% of his final average compensation (based on his highest three
years of salary and  bonus) payable annually  for his lifetime,  and 30% of  his
final  average compensation payable annually  thereafter to his surviving spouse
for her lifetime. If Mr. Bossidy dies prior to retirement, a benefit  equivalent
to 30% of his final average compensation will be paid for his surviving spouse's
lifetime. Benefits under the agreement will be reduced for retirement before age
62   and  by  any  retirement  benefits  payable  under  the  Pension  Plan  and
Supplemental Plan, any  survivor benefit payable  under the Company's  executive
life  insurance program and, under certain circumstances, benefits payable under
pension plans of his former employer.
 
EMPLOYMENT AND TERMINATION ARRANGEMENTS
 
     Mr. Bossidy's agreement with the Company, as amended in 1994, provides  for
his  employment through April 1, 2000 at a  salary of $2,000,000 per year, and a
target annual
 
                                       19

incentive bonus of at least 80% of  salary. The agreement also provided for  the
grant  in 1994 of 1,500,000 options, 10% of which vest annually beginning May 6,
1995, and  250,000 restricted  units. All  unvested options  and the  restricted
units  vest on the  earlier of Mr. Bossidy's  reaching age 65 or  April 1 of the
year following three  consecutive years  of at least  15% annual  growth in  the
Company's  consolidated earnings per share beginning with 1994. In addition, the
agreement provided  for the  grant of  an additional  125,000 restricted  units,
50,000  of which vest only if the Company achieves at least 15% annual growth in
consolidated earnings per share for four  consecutive years and 75,000 of  which
vest  only if the Company achieves such growth for five consecutive years. These
grants were designed to link  Mr. Bossidy's long-term incentive compensation  to
the  Company's performance  and further  align his  interests with  those of the
shareowners. The agreement also  provides for benefits  on retirement which  are
described  under 'Retirement Benefits.' The  Company has assumed obligations for
certain life insurance policies and will be reimbursed from the proceeds of  the
policies  for premiums it pays; the value  of these premiums is reflected in the
Summary Compensation Table.
 
     Under the Severance Plan for Senior Executives (the 'Plan'), the executives
named in the Summary Compensation Table would be entitled to payments equivalent
to base salary and annual incentive bonus (and continuation of certain benefits,
such as group life and medical insurance coverage) for a period of 36 months (or
a lump  sum  payment following  a  change in  control)  if their  employment  is
terminated  other  than for  'gross cause'  (which  includes fraud  and criminal
conduct). Payments would  not continue after  an executive reaches  age 65.  The
Plan  provides for an  additional payment sufficient to  eliminate the effect of
any applicable  excise  tax  on  severance  payments  in  excess  of  an  amount
determined  under Section 280G of the Internal Revenue Code. Payments subject to
the excise tax would not be deductible by the Company.
 
                  2 -- APPOINTMENT OF INDEPENDENT ACCOUNTANTS
 
     Upon the recommendation of the Audit Committee, which is composed  entirely
of  independent directors, the Board of Directors has appointed Price Waterhouse
LLP ('Price Waterhouse') as independent accountants for the Company to audit its
consolidated  financial  statements  for  1996  and  to  perform   audit-related
services,   including  review  of  the  Company's  quarterly  interim  financial
information and  periodic reports  and registration  statements filed  with  the
Securities  and Exchange Commission and  consultation in connection with various
accounting and  financial  reporting  matters. Price  Waterhouse  also  performs
non-audit services for the Company.
 
     The  Board  has  directed  that  the  appointment  of  Price  Waterhouse be
submitted to the shareowners for approval. The affirmative vote of a majority of
the shares of Common Stock  present or represented and  entitled to vote on  the
proposal  at the Annual Meeting is required  for approval. If the shareowners do
not approve, the Audit Committee and the Board will reconsider the appointment.
 
     Price Waterhouse has audited the  consolidated financial statements of  the
Company  and its  predecessor, Allied  Corporation, since  1969. Total  fees for
services  rendered  by  Price  Waterhouse  in  1995  to  the  Company  and   its
subsidiaries worldwide were approximately $13,700,000.
 
                                       20

     The  Company  has been  advised by  Price  Waterhouse that  it will  have a
representative present at the Annual Meeting who will be available to respond to
appropriate questions. The representative will also have the opportunity to make
a statement if he desires to do so.
 
     THE BOARD  OF  DIRECTORS  RECOMMENDS  THAT THE  SHAREOWNERS  VOTE  FOR  THE
APPROVAL OF THE APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT ACCOUNTANTS.
 
                              SHAREOWNER PROPOSALS
 
     Shareowners  have given the Company notice  of their intention to introduce
the following proposals for consideration and  action by the shareowners at  the
Annual  Meeting. The proposed resolutions  and accompanying statements have been
provided by the  respective proponents.  For the  reasons stated,  the Board  of
Directors  does not support these proposals.  The affirmative vote of a majority
of the shares of Common Stock present or represented and entitled to vote on the
proposals at the Annual Meeting is required for approval of each proposal.
 
                       3 -- SHAREOWNER PROPOSAL REGARDING
                      THE COMPANY'S MAQUILADORA OPERATIONS
 
     This proposal  has  been  submitted  by  the  Missionary  Oblates  of  Mary
Immaculate  of Texas, 7711 Madonna Drive, San Antonio, Texas 78216 (the owner of
2,500 shares of Common Stock); the  Sisters of Charity of Cincinnati, Mount  St.
Joseph,  Ohio 45051 (26,000 shares); the World  Division of the General Board of
Global Ministries of  the United  Methodist Church  of New  York, 475  Riverside
Drive,  New York, New York 10115 (31,900  shares); the Sisters of St. Francis of
Philadelphia, Our Lady  of Angels  Convent -- Glen  Riddle, Aston,  Pennsylvania
19014  (200 shares); the Maryknoll Fathers  and Brothers, PO Box 306, Maryknoll,
New York  10545 (5,400  shares); the  Society  of the  Divine Word,  5342  South
University, Chicago, Illinois 60615 (20,054 shares); and the Sisters of Loretto,
3001 S. Federal Blvd., Box 1113, Denver, Colorado 80236 (200 shares).
 
                            ------------------------
          'WHEREAS,  we believe U.S. companies  have the responsibility wherever
     they do business to pay employees a living sustainable wage, enabling  them
     to provide for themselves and their families.
 
          'The  economic crisis in Mexico,  precipitated by the peso devaluation
     in  December,  1994,  has  further  undermined  the  purchasing  power   of
     maquiladora  workers. Prior to the crisis, the average pay of a maquiladora
     worker was $30 to  $50 for a  48 hour week.  Today, as a  result of a  1995
     projected  annual  inflation rate  of  50%, workers'  purchasing  power has
     declined dramatically. We believe that the modest wage increases  suggested
     by  the Mexican government of  7% in January 1995 and  12% in April 1995 do
     not adequately address the workers' loss of purchasing power.
 
          'A 1994 market basket study,  using First Quarter, 1994 figures  prior
     to  the devaluation,  reveals a maquiladora  worker worked  69.0 minutes to
     purchase 5  lbs. of  rice, 113.2  minutes for  cooking oil  (48 oz.),  87.0
     minutes  for 1 lb. of chicken, 142.9 minutes for a gallon of milk, and 69.8
     minutes for one dozen eggs (Market Basket Survey, Ruth Rosenbaum, 1994).
 
                                       21

          'Pollution from  the maquiladora  industry  is a  bi-national  problem
     which  threatens  the health  of  citizens both  in  Mexico and  the United
     States. Hazardous  waste  pollutes  rivers and  aquifers  and  contaminates
     drinking  water. Accidental  chemical leaks  from plants  or transportation
     vehicles carrying hazardous materials impact both sides of the border.
 
          'RESOLVED: The shareholders request the Board of Directors to initiate
     a review of our company's maquiladora operations, including the adequacy of
     wage levels and environmental standards and practices. A summary report  of
     the  review  and  recommendations  for changes  in  policies,  programs and
     practices in light  of this  review to  be made  available to  shareholders
     within six months of the 1996 meeting.'
 
                              SUPPORTING STATEMENT
 
          'The  proponents of this resolution firmly believe there is a need for
     strict, enforceable standards of conduct for corporations operating  around
     the  world, including  Mexico. We  believe corporations  should protect the
     environment and  pay sustainable  community wages  which are  significantly
     higher than the marginal survival wages paid in the maquiladoras. We define
     a  sustainable community  wage as  one that allows  a worker  to meet basic
     needs, set aside money for  future purchases and earn enough  discretionary
     income  to participate in support of the development of small businesses in
     a local community (Market Basket Survey).
 
          'It is essential that our  company regularly review its  environmental
     performance,  as well as its wages and benefits policies, including average
     wages paid to employees, how these compare to the local cost of living  and
     poverty  level, and the level of profit sharing with employees (required by
     Mexican law). We propose that the reviews utilize an ongoing market  basket
     survey  to determine sustainable wage  purchasing power. Our company should
     consider additional  ways  to  support  environmentally  sound  sustainable
     development in the communities where it operates.'
 
BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
 
     The  Company for  a number of  years has responded  to shareowner inquiries
regarding  its  maquiladora  operations  in  Mexico  and  has  prepared  reports
describing  the  compensation  and  benefit arrangements  at  its  maquilas. The
Company regards maquilas as an integral part of its operations and is  committed
to  providing competitive  compensation and benefits  and good  and safe working
conditions to  its  employees. The  compensation  and benefit  programs  at  the
Company's  maquilas are reviewed regularly and  are designed to keep the Company
competitive with neighboring employers in Mexico.  As a result, the Company  has
been able to attract and retain the work force required to conduct operations in
Mexico by providing compensation and benefits which compare favorably with those
offered by others.
 
     The maquiladora operations comply with the Company's worldwide policies and
procedures  and  with all  applicable  Mexican laws.  The  Company has  a strong
commitment to environmental excellence and is recognized as a worldwide  pioneer
in  conducting health,  safety and environmental  audits of  its facilities. The
Company regularly reviews the health, safety and
 
                                       22

environmental performance  of its  maquilas and  works with  other companies  to
improve  industry environmental practices in  Mexico, including training Mexican
business and regulatory  officials and supporting  the development of  pollution
control infrastructure.
 
     The  Board believes that  in light of  the Company's ongoing  review of its
maquiladora operations, the actions called for by the proposal are unnecessary.
 
     FOR THE REASONS  STATED ABOVE,  THE BOARD  OF DIRECTORS  RECOMMENDS A  VOTE
AGAINST THIS PROPOSAL.
 
                       4 -- SHAREOWNER PROPOSAL REGARDING
                           A GLOBAL SET OF STANDARDS
 
     This  proposal has been submitted by the  Sisters of St. Francis, Mount St.
Francis, 3390 Windsor Avenue, Dubuque, Iowa 52001 (the owner of 2,300 shares  of
Common Stock).
 
                            ------------------------
 
          'WHEREAS,  our  company,  as  a  major  global  corporation,  faces an
     increasing number of complex  problems which also  affect our interests  as
     shareholders.  The international context within  which our company works is
     very different as we approach the year 2000 than it was in the past.
 
          'Companies operating in  the global economy  are faced with  important
     and  different  issues  arising  from diverse  cultures  and  political and
     economic contexts which  force management  to address  concerns beyond  the
     traditional  business focus. These issues  include human rights, just wages
     and safe working conditions, child  and forced labor, the environment,  and
     sustainable community development.
 
          'We  believe global companies  need to develop  comprehensive codes of
     conduct or standards to guide the formulation of company policies, programs
     and  practices  to  address  the  new  issues  they  face  in  the   global
     marketplace.  In fact many companies are doing just this and revising their
     traditional codes or guidelines to  meet these new realities. These  global
     standards  address  key  issues, such  as  wages and  benefits,  health and
     safety, working hours,  freedom of association,  discrimination, child  and
     forced  labor,  environmental  protection and  human  rights.  In addition,
     hundreds of companies have  created a special  set of global  environmental
     standards to guide their operations.
 
          'For  example,  our  company  needs  to  develop  and  implement clear
     guidelines for its  maquiladora operations in  Mexico, where its  employees
     are   receiving  marginal   survival  wages.  Our   company  should  assure
     shareholders that its employees are  paid a sustainable wage which  enables
     them to provide for themselves and their families.
 
          'RESOLVED,  the shareholders request the  Board of Directors to review
     and amend its  code or standards  for its international  operations and  to
     report a summary of this review to shareholders by September 1996.'
 
                                       23

                              SUPPORTING STATEMENT
 
          'The items we recommend be reviewed include the following topics:
 
          1.  To  provide wages to its employees at a sustainable community wage
              level, measured  in terms  of real  purchasing power,  and  paying
              equal  salaries for  equal work  regardless of  gender, age, race,
              class, or culture.
 
          2.  To operate  out  of a  global  standard governing  its  employment
              practices  and  industrial  relations  which  respects  employees'
              rights  to  freedom  of  association,  labor  organization,   free
              collective bargaining and is non-discriminatory in employment.
 
          3.  To devise ways to protect human rights -- civil, political, social
              and  economic  -- consistent  with respect  for human  dignity and
              international human rights standards.
 
          4.  To establish  high standards  for worker  health and  safety,  and
              promote a fair and dignified quality of life for workers and their
              communities.
 
          5.  To  improve local infrastructure, such as, housing, potable water,
              sewers, child care, upgrading management and mechanical skills  of
              workers.
 
          6.  To review other categories that the company believes are essential
              to its global operations.
 
          'We  believe a  company poised to  compete in the  21st Century should
     have clear global standards to guide them. This is in the best interests of
     shareholders and thus we urge you to vote in favor of this resolution.'
 
BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
 
     The Company's existing Code of Conduct applies to its operations throughout
the world. The Code, as well as the policies and practices on which it is based,
reflect the Company's long-term  commitment to the  highest levels of  integrity
and  ethics in the conduct of its  worldwide business. The Code has been printed
in a number of languages and distributed to employees at the Company's  domestic
and international locations.
 
     The  Code  reaffirms the  principles that  have guided  the Company  in its
expected relationships  and behaviors  with  its key  constituencies,  including
customers,  suppliers, employees, shareowners  and the communities  in which the
Company operates.  It  also reaffirms  the  Company's  policy to  abide  by  the
national and local laws of its host nations and communities.
 
     The   Company's  ongoing  concern  for  the  well-being  of  its  employees
throughout the world is reflected in  the Code, which states that: 'The  Company
recognizes  the dignity  of the individual,  respects and  trusts each employee,
pays for performance with  compensation and benefits  that are competitive,  and
promotes  self-development through training  that broadens work-related skills.'
It is the Company's policy, reiterated in the Code, to treat its employees on  a
nondiscriminatory basis and to provide them with a safe and healthy workplace.
 
     The  Board of Directors believes that the Company is addressing its ethical
and legal obligations in  a responsible manner as  its operations expand in  the
global  marketplace. The  existing Code of  Conduct and  its underlying policies
address the issues raised in the proposal in
 
                                       24

a way the Board believes appropriate for a worldwide business enterprise and  in
light  of the diverse cultural, economic and political environments in which the
Company conducts  its international  operations. Since  the Board  believes  the
existing  Code, which is already subject to periodic review and modification, is
an appropriate  statement  of the  Company's  guiding principles,  it  does  not
support the further review and amendment sought by the proposal.
 
     FOR  THE REASONS  STATED ABOVE,  THE BOARD  OF DIRECTORS  RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
 
                     5 -- SHAREOWNER PROPOSAL REGARDING THE
                          ANNUAL ELECTION OF DIRECTORS
 
     This proposal has been submitted by Mr. John Chevedden, 2215 Nelson Avenue,
No. 205, Redondo  Beach, California  90278 (the owner  of 442  shares of  Common
Stock).
 
                            ------------------------
 
          'RESOLVED:  The stockholders of AlliedSignal request that the Board of
     Directors take the  steps necessary  for all AlliedSignal  Directors to  be
     elected annually.'
 
          'Currently  Directors  face election  once  every 3  years.  I believe
     infrequent elections help insulate directors and senior executives from the
     consequences of poor  performance. If  the AlliedSignal  Board members  are
     elected  on an annual basis, I as one of the owners of the company, believe
     their oversight  will  be  more zealous,  objective  and  more  effectively
     directed  toward the following  issues and forthcoming  similar issues that
     face AlliedSignal:
 
            Approximately 120 AlliedSignal  employees who lost  their jobs in  a
     wave  of  layoffs in  the  Phoenix, Arizona  area  filed a  lawsuit against
     AlliedSignal in April 1995. The  suit alleges that AlliedSignal  wrongfully
     `targeted  its older workers  for layoff' and  then launched `an aggressive
     corporate policy to recruit and hire new college graduates.' In March 1995,
     the  Equal   Employment  Opportunity   Commission  issued   a  finding   of
     AlliedSignal Age-Discrimination.
 
            At  the  annual shareholders  meeting in  April, Mr.  Bossidy denied
     there was a  policy of  age discrimination at  AlliedSignal. The  following
     day,  the Phoenix lawsuit  was filed and reported  in newspapers across the
     country, including The Wall Street Journal.
 
            This lawsuit  has  resulted in  notable  adverse publicity  which  I
     believe  drives away current employees of  superior skill and increases the
     difficulty of hiring qualified employees,  critical to the high  technology
     specialties of AlliedSignal.
 
            AlliedSignal  has  recently  terminated employees  of  long standing
     contribution to the company in large  numbers. At the same time, the  Board
     approved  a six-year contract  for Mr. Bossidy, hired  as recently as 1991,
     worth up to $47 million.
 
            AlliedSignal  was  involved   in  a  proposed   but  not   completed
     controversial  technology sale that arguably  could have helped the Peoples
     Republic of  China  upgrade its  missile  program. China  is  charged  with
     weapons  exports  to  countries  that support  terrorism  and  human rights
     abuses.
 
                                       25

            In  February  1995,  the  EPA  alleged  that  AlliedSignal  did  not
     adequately  control levels of mercury contamination to which workers at the
     LCP Chemicals toxic waste site were exposed.
 
          'To insure the  monitoring of  these and similar  important issues  as
     well  as Mr. Bossidy's performance, especially as a result of the long term
     security of his employment contract, it is important that all Board members
     be elected annually.
 
          'I urge you to  vote yes for the  annual election of all  AlliedSignal
     Board members.'
 
BOARD OF DIRECTORS' RECOMMENDATION -- THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREOWNERS VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
 
     The  Company's current system of electing directors by classes was approved
by the shareowners  in 1985.  Under this method,  as provided  in the  Company's
Certificate  of  Incorporation  and  By-laws,  approximately  one-third  of  the
directors are elected  annually by  the shareowners. For  the reasons  indicated
below,  it is the Board's  opinion that the classified  Board serves the Company
and its shareowners well.
 
     With the classified Board,  the likelihood of  continuity and stability  in
the  Board's  business  strategies  and  policies  is  enhanced  since generally
two-thirds of the  directors at  all times will  have had  prior experience  and
familiarity  with  the business  and affairs  of the  Company. This  enables the
directors to build on past experience and plan for a reasonable period into  the
future.
 
     The  classified  Board is  intended to  encourage persons  who may  seek to
acquire control of the Company to initiate such action through negotiations with
the Board. At least two meetings  of shareowners would generally be required  to
replace  a majority of the Board. By reducing  the threat of an abrupt change in
the composition of the entire Board, classification of directors would give  the
Board  sufficient  time  to  review  any  takeover  proposal,  study appropriate
alternatives and  achieve  the  best  results for  all  shareowners.  The  Board
believes  that although  a classified  board enhances  the ability  to negotiate
favorable terms with a  proponent of an unfriendly  or unsolicited proposal,  it
does not necessarily discourage takeover offers.
 
     The  Board of Directors disagrees with  the proponent's contention that its
oversight would be different if all  directors were elected annually. The  Board
believes that directors elected to a classified Board are no less accountable to
shareowners  than they would be if elected annually. The Board is routinely made
aware of all significant  issues affecting the Company.  Further, the filing  of
lawsuits or publication of charges made against the Company does not necessarily
mean that they are factual.
 
     Adoption  of this  proposal would  not in  itself eliminate  the classified
Board. Further  action  by the  shareowners  would  be necessary  to  amend  the
Certificate  of Incorporation and  By-laws, with an 80%  vote of the outstanding
shares entitled to vote required for approval.
 
     Previous  shareowner  proposals  to  eliminate  the  classified  Board   of
Directors  have been defeated by the shareowners. The Board continues to believe
that the classified Board is  in the best interest  of the shareowners and  that
the shareowners should oppose efforts to eliminate it.
 
     FOR  THE REASONS  STATED ABOVE,  THE BOARD  OF DIRECTORS  RECOMMENDS A VOTE
AGAINST THIS PROPOSAL.
 
                                       26

                             ADDITIONAL INFORMATION
 
OTHER ACTION AT THE MEETING
 
     The Board of Directors was not  aware within a reasonable time before  this
solicitation  of  any other  matter to  be  presented for  action at  the Annual
Meeting.  If  any  additional  matters   are  properly  presented,  the   shares
represented by a properly signed proxy card will be voted in accordance with the
judgment of the persons named on the proxy card.
 
     Under the Company's By-laws, a shareowner of record entitled to vote at the
Annual Meeting who intends to make a nomination for the election of directors at
the  meeting  must give  the Secretary  of  the Company  written notice  of such
intention in accordance with  the prescribed procedure.  In general, the  By-law
procedure  (the full  provisions of  which govern)  requires that  the notice be
received at the Company's headquarters  not less than 30  nor more than 60  days
prior  to the meeting and  that it set forth  the shareowner's name, address and
number of shares of Common  Stock beneficially owned, together with  information
about  the  candidate  that would  be  required  in a  proxy  statement  and the
candidate's written consent to be nominated and to serve if elected. Nominations
not made in  accordance with  the procedure prescribed  in the  By-laws must  be
disregarded.
 
COST OF SOLICITATION
 
     The  cost of  solicitation will  be borne  by the  Company. In  addition to
solicitation by mail, directors, officers and other employees of the Company may
solicit proxies personally or by telephone or other means of communication.  The
Company  will also reimburse  persons holding stock  in their names  or those of
their nominees for their reasonable expenses in sending proxy material to  their
principals  and obtaining their proxies. The  Company has retained Morrow & Co.,
New York, New York, at an approximate total cost of $25,000, plus  out-of-pocket
expenses,  to assist in  the solicitation of  proxies by mail,  personally or by
telephone or other means of communication.
 
SHAREOWNER PROPOSALS FOR 1997 ANNUAL MEETING
 
     Shareowners may  submit proposals  on  matters appropriate  for  shareowner
action  at the Company's annual meetings, consistent with regulations adopted by
the Securities and Exchange Commission. Proposals to be considered for inclusion
in the Proxy  Statement for  the 1997  Annual Meeting  must be  received by  the
Company  not later than November  11, 1996. Proposals should  be directed to the
attention of the Secretary,  AlliedSignal Inc., P.O.  Box 4000, Morristown,  New
Jersey 07962.
 
                            ------------------------
     Shareowners are urged to send in their proxies without delay.
 
                                         By Order of the Board of Directors
 
                                             PETER M. KREINDLER
                                             Senior Vice President,
                                               General Counsel and Secretary
 
March 11, 1996
 
                                       27

                       DIRECTIONS TO COMPANY HEADQUARTERS
                    101 COLUMBIA ROAD, MORRIS TOWNSHIP, N.J.

                                 [AREA MAP]
 
 FROM RTE. 80 (EAST OR WEST) AND RTE. 287 SOUTH:
Take  Rte. 80 to Rte. 287 South to Exit 37 (Rte. 24 East -- Springfield). Follow
Rte. 24 East to Exit 2A (Rte. 510 West -- Morristown), which exits onto Columbia
Road. At second traffic light, make left into AlliedSignal.
 
 FROM RTE. 287 NORTH:
Take Rte. 287 North  to Exit 37  (Rte. 24 East --  Springfield). Follow Rte.  24
East  to Exit 2A (Rte. 510 West  -- Morristown), which exits onto Columbia Road.
At second traffic light, make left into AlliedSignal.
 
 FROM NEWARK INTERNATIONAL AIRPORT:
Take Rte. 78 West to  Rte. 24 West (Springfield  -- Morristown). Follow Rte.  24
West  to Exit 2A (Rte. 510 West  -- Morristown), which exits onto Columbia Road.
At second traffic light, make left into AlliedSignal.
 
                                      A-1

                                     [LOGO]
 
                         NOTICE OF 1996 ANNUAL MEETING
                              AND PROXY STATEMENT

                                   APPENDIX 1
                             BANK OF NEW YORK CARD
[LOGO]                                                                     PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLIEDSIGNAL INC.
              ANNUAL MEETING OF SHAREOWNERS -- APRIL 22, 1996
 
     The  undersigned hereby appoints LAWRENCE A. BOSSIDY and PETER M. KREINDLER
as proxies (each with power to act alone and with full power of substitution) to
vote, as designated  herein, all  shares the undersigned is entitled to vote  at
the  Annual Meeting  of Shareowners of AlliedSignal Inc. to be held on April 22,
1996,  and at any and all  adjournments thereof.  The proxies are  authorized to
vote  in their  discretion upon such other business as  may properly come before
the Meeting  and any and all adjournments thereof.
 
                            ------------------------
     Your  vote for the election of  Directors and the other proposals described
in the accompanying Proxy  Statement may be specified  on the reverse side.  The
nominees for Director are: Hans W. Becherer, Robert P. Luciano, Robert B. Palmer
and John R. Stafford.

      NOTE: After signing, please insert this       ALLIEDSIGNAL INC.
      Proxy in the enclosed envelope so that        P.O. BOX 11010
      the address at right shows through the        NEW YORK, N.Y. 10203-0010
      window.

     IF PROPERLY  SIGNED, DATED AND  RETURNED,  THIS  PROXY  WILL  BE  VOTED  AS
SPECIFIED ON THE REVERSE SIDE OR, IF NO CHOICE IS SPECIFIED,  THIS PROXY WILL BE
VOTED 'FOR' THE ELECTION OF ALL NOMINEES  FOR  DIRECTOR, 'FOR'  PROPOSAL  2  AND
'AGAINST' PROPOSALS  3, 4 AND 5.
 
                                  (SPECIFY CHOICES AND SIGN ON THE REVERSE SIDE)

       [      ]
PLEASE COMPLETE (X) IN BLUE OR BLACK INK.

A VOTE 'FOR' PROPOSALS 1 AND 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS:

1. Election of Directors
   (H.W. Becherer, R.P. Luciano, R.B. Palmer and J.R. Stafford)

FOR all         WITHHOLD AUTHORITY              EXCEPTION
nominees [X]    to vote for all nominees [X]    (see instruction [X]
                                                below)

Instruction: To withhold authority to vote for any individual nominee(s), mark
the 'Exception' box and write the name(s) on the line below.

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

2. Appointment of Independent Accountants

FOR   [X]         AGAINST   [X]        ABSTAIN   [X]

A VOTE 'AGAINST' PROPOSALS 3-5 IS RECOMMENDED BY THE BOARD OF DIRECTORS:

3. Shareowner proposal regarding the Company's maquiladora operations

FOR   [X]         AGAINST   [X]        ABSTAIN   [X]

4. Shareowner proposal regarding a global set of standards

FOR   [X]         AGAINST   [X]        ABSTAIN   [X]

5. Shareowner proposal regarding the annual election of directors

FOR   [X]         AGAINST   [X]        ABSTAIN   [X]

Please complete (X) if you:

Plan to attend the           Have written comments
Annual Meeting     [X]       on this card          [X]

PLEASE  SIGN  EXACTLY  AS NAME  APPEARS ON  THIS  PROXY. JOINT
OWNERS  SHOULD  ALL  SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES
AND OTHERS ACTING IN A REPRESENTATIVE CAPACITY SHOULD INDICATE
TITLE WHEN SIGNING.

Dated __________________________________________________, 1996
                  (Please Insert Date)
Signed _______________________________________________________

       _______________________________________________________
       PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE
       ENCLOSED ENVELOPE.

Please complete (X) if you want your vote kept confidential under
the policy described on page 1 of the Proxy Statement.            [X]

                                   APPENDIX 2
                            SAVINGS PLAN PROXY CARD

                     REQUEST FOR CONFIDENTIAL INSTRUCTIONS
       SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLIEDSIGNAL INC.
             PURSUANT TO THE ALLIEDSIGNAL SAVINGS PLAN (THE 'PLAN')
 
     The  undersigned  hereby instructs  State  Street Bank  and  Trust Company,
Trustee under the  Plan, to  vote, as designated  herein, all  shares of  Common
Stock  with respect to which the undersigned is entitled to instruct the Trustee
as to voting under the Plan at the Annual Meeting of Shareowners of AlliedSignal
Inc. to be held on April 22, 1996, and at any and all adjournments thereof.  The
Trustee  is  also  authorized  to  vote  such  shares  in  connection  with  the
transaction of such other business as  may properly come before the Meeting  and
any and all adjournments thereof.
 
                            ------------------------
     Your  vote for the election of  Directors and the other proposals described
in the accompanying Proxy  Statement may be specified  on the reverse side.  The
nominees for Director are: Hans W. Becherer, Robert P. Luciano, Robert B. Palmer
and John R. Stafford.
 
     IF  THIS CARD IS PROPERLY SIGNED AND  RETURNED, THE SHARES WILL BE VOTED AS
SPECIFIED HEREIN OR, IF NO  CHOICE IS SPECIFIED,  THEY WILL  BE  VOTED 'FOR' THE
ELECTION OF ALL NOMINEES  FOR DIRECTOR, 'FOR' PROPOSAL 2 AND 'AGAINST' PROPOSALS
3, 4  AND  5.  THE  TRUSTEE  WILL  VOTE  SHARES  AS TO WHICH NO INSTRUCTIONS ARE
RECEIVED IN THE  SAME RATIO AS  SHARES  WITH  RESPECT TO WHICH INSTRUCTIONS HAVE
BEEN RECEIVED FROM OTHER PARTICIPANTS IN THE PLAN.
 
                                         [CONTINUE AND SIGN ON THE REVERSE SIDE]

A VOTE 'FOR' PROPOSALS 1 AND 2 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:

1. Election of Directors
   (H.W. Becherer, R.P. Luciano, R.B. Palmer and J.R. Stafford)

[ ] FOR all nominees         [ ] WITHHOLD AUTHORITY 
    (except as noted below)      to vote for all nominees

INSTRUCTION: To withhold authority to vote for any individual
             nominee(s), write the name(s) on the line below.

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

2. Appointment of Independent Accountants

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

A VOTE 'AGAINST' PROPOSALS 3-5 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:

3. Shareowner proposal regarding the Company's maquiladora operations

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

4. Shareowner proposal regarding a global set of standards

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

5. Shareowner proposal regarding the annual election of directors

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

PLEASE  SIGN  EXACTLY  AS NAME  APPEARS.

Dated __________________________________________________, 1996
                  (Please Insert Date)

Signed _______________________________________________________

PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.

                                   APPENDIX 3
                             THRIFT PLAN PROXY CARD

                     REQUEST FOR CONFIDENTIAL INSTRUCTIONS
       SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLIEDSIGNAL INC.
             PURSUANT TO THE ALLIEDSIGNAL THRIFT PLAN (THE 'PLAN')
 
     The  undersigned  hereby instructs  State  Street Bank  and  Trust Company,
Trustee under the  Plan, to  vote, as designated  herein, all  shares of  Common
Stock  with respect to which the undersigned is entitled to instruct the Trustee
as to voting under the Plan at the Annual Meeting of Shareowners of AlliedSignal
Inc. to be held on April 22, 1996, and at any and all adjournments thereof.  The
Trustee  is  also  authorized  to  vote  such  shares  in  connection  with  the
transaction of such other business as  may properly come before the Meeting  and
any and all adjournments thereof.
 
                            ------------------------
     Your  vote for the election of  Directors and the other proposals described
in the accompanying Proxy  Statement may be specified  on the reverse side.  The
nominees for Director are: Hans W. Becherer, Robert P. Luciano, Robert B. Palmer
and John R. Stafford.
 
     IF  THIS CARD IS PROPERLY SIGNED AND  RETURNED, THE SHARES WILL BE VOTED AS
SPECIFIED HEREIN OR, IF NO  CHOICE  IS SPECIFIED,  THEY WILL BE  VOTED 'FOR' THE
ELECTION   OF  ALL  NOMINEES   FOR  DIRECTOR, 'FOR'  PROPOSAL  2  AND  'AGAINST'
PROPOSALS 3, 4 AND 5. THE TRUSTEE WILL VOTE SHARES AS  TO WHICH NO  INSTRUCTIONS
ARE RECEIVED IN THE SAME RATIO AS SHARES WITH RESPECT TO WHICH INSTRUCTIONS HAVE
BEEN RECEIVED FROM OTHER PARTICIPANTS IN THE PLAN.
 
                                         [CONTINUE AND SIGN ON THE REVERSE SIDE]

A VOTE 'FOR' PROPOSALS 1 AND 2 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:

1. Election of Directors
   (H.W. Becherer, R.P. Luciano, R.B. Palmer and J.R. Stafford)

[ ] FOR all nominees         [ ] WITHHOLD AUTHORITY 
    (except as noted below)      to vote for all nominees

INSTRUCTION: To withhold authority to vote for any individual
             nominee(s), write the name(s) on the line below.

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

2. Appointment of Independent Accountants

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

A VOTE 'AGAINST' PROPOSALS 3-5 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:

3. Shareowner proposal regarding the Company's maquiladora operations

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

4. Shareowner proposal regarding a global set of standards

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

5. Shareowner proposal regarding the annual election of directors

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

PLEASE  SIGN  EXACTLY  AS NAME  APPEARS.

Dated __________________________________________________, 1996
                  (Please Insert Date)

Signed _______________________________________________________

PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.

                                   APPENDIX 4
                        TRUCK BRAKE SYSTEMS PROXY CARD

                     REQUEST FOR CONFIDENTIAL INSTRUCTIONS
       SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLIEDSIGNAL INC.
     PURSUANT TO THE ALLIEDSIGNAL TRUCK BRAKE SYSTEMS COMPANY SAVINGS PLAN
                                   (THE 'PLAN')
 
     The  undersigned  hereby instructs  State  Street Bank  and  Trust Company,
Trustee under the  Plan, to  vote, as designated  herein, all  shares of  Common
Stock  with respect to which the undersigned is entitled to instruct the Trustee
as to voting under the Plan at the Annual Meeting of Shareowners of AlliedSignal
Inc. to be held on April 22, 1996, and at any and all adjournments thereof.  The
Trustee  is  also  authorized  to  vote  such  shares  in  connection  with  the
transaction of such other business as  may properly come before the Meeting  and
any and all adjournments thereof.
 
                            ------------------------
     Your  vote for the election of  Directors and the other proposals described
in the accompanying Proxy  Statement may be specified  on the reverse side.  The
nominees for Director are: Hans W. Becherer, Robert P. Luciano, Robert B. Palmer
and John R. Stafford.
 
     IF  THIS CARD IS PROPERLY SIGNED AND  RETURNED, THE SHARES WILL BE VOTED AS
SPECIFIED HEREIN OR, IF NO  CHOICE IS SPECIFIED,  THEY WILL BE  VOTED  'FOR' THE
ELECTION OF ALL NOMINEES  FOR DIRECTOR, 'FOR' PROPOSAL 2 AND 'AGAINST' PROPOSALS
3, 4 AND 5. THE TRUSTEE WILL  VOTE  SHARES  AS  TO  WHICH  NO  INSTRUCTIONS  ARE
RECEIVED IN THE  SAME RATIO AS  SHARES  WITH  RESPECT TO WHICH INSTRUCTIONS HAVE
BEEN RECEIVED FROM OTHER PARTICIPANTS IN THE PLAN.
 
                                         [CONTINUE AND SIGN ON THE REVERSE SIDE]

A VOTE 'FOR' PROPOSALS 1 AND 2 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:

1. Election of Directors
   (H.W. Becherer, R.P. Luciano, R.B. Palmer and J.R. Stafford)

[ ] FOR all nominees         [ ] WITHHOLD AUTHORITY 
    (except as noted below)      to vote for all nominees

INSTRUCTION: To withhold authority to vote for any individual
             nominee(s), write the name(s) on the line below.

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

2. Appointment of Independent Accountants

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

A VOTE 'AGAINST' PROPOSALS 3-5 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:

3. Shareowner proposal regarding the Company's maquiladora operations

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

4. Shareowner proposal regarding a global set of standards

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

5. Shareowner proposal regarding the annual election of directors

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

PLEASE  SIGN  EXACTLY  AS NAME  APPEARS.

Dated __________________________________________________, 1996
                  (Please Insert Date)

Signed _______________________________________________________

PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.

                                   APPENDIX 5
                  ASEC MANUFACTURING SAVINGS PLAN PROXY CARD

                     REQUEST FOR CONFIDENTIAL INSTRUCTIONS
       SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALLIEDSIGNAL INC.
          PURSUANT TO THE ASEC MANUFACTURING SAVINGS PLAN (THE 'PLAN')
 
     The  undersigned  hereby instructs  State  Street Bank  and  Trust Company,
Trustee under the  Plan, to  vote, as designated  herein, all  shares of  Common
Stock  with respect to which the undersigned is entitled to instruct the Trustee
as to voting under the Plan at the Annual Meeting of Shareowners of AlliedSignal
Inc. to be held on April 22, 1996, and at any and all adjournments thereof.  The
Trustee  is  also  authorized  to  vote  such  shares  in  connection  with  the
transaction of such other business as  may properly come before the Meeting  and
any and all adjournments thereof.
 
                            ------------------------
     Your  vote for the election of  Directors and the other proposals described
in the accompanying Proxy  Statement may be specified  on the reverse side.  The
nominees for Director are: Hans W. Becherer, Robert P. Luciano, Robert B. Palmer
and John R. Stafford.
 
     IF  THIS CARD IS PROPERLY SIGNED AND  RETURNED, THE SHARES WILL BE VOTED AS
SPECIFIED HEREIN OR, IF NO  CHOICE IS SPECIFIED,  THEY WILL BE  VOTED 'FOR'  THE
ELECTION OF  ALL NOMINEES FOR DIRECTOR, 'FOR' PROPOSAL 2 AND 'AGAINST' PROPOSALS
3, 4 AND 5.  THE  TRUSTEE  WILL  VOTE  SHARES  AS  TO WHICH NO INSTRUCTIONS  ARE
RECEIVED IN THE  SAME RATIO AS SHARES WITH RESPECT TO  WHICH  INSTRUCTIONS  HAVE
BEEN RECEIVED FROM OTHER PARTICIPANTS IN THE PLAN.
 
                                         [CONTINUE AND SIGN ON THE REVERSE SIDE]

A VOTE 'FOR' PROPOSALS 1 AND 2 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:

1. Election of Directors
   (H.W. Becherer, R.P. Luciano, R.B. Palmer and J.R. Stafford)

[ ] FOR all nominees         [ ] WITHHOLD AUTHORITY 
    (except as noted below)      to vote for all nominees

INSTRUCTION: To withhold authority to vote for any individual
             nominee(s), write the name(s) on the line below.

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

2. Appointment of Independent Accountants

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

A VOTE 'AGAINST' PROPOSALS 3-5 IS RECOMMENDED BY THE
BOARD OF DIRECTORS:

3. Shareowner proposal regarding the Company's maquiladora operations

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

4. Shareowner proposal regarding a global set of standards

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

5. Shareowner proposal regarding the annual election of directors

FOR   [ ]         AGAINST   [ ]        ABSTAIN   [ ]

Please  sign  exactly  as name  appears.

Dated __________________________________________________, 1996
                  (Please Insert Date)

Signed _______________________________________________________

PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY IN THE ENCLOSED ENVELOPE.

                                   APPENDIX 6
                                   SP LETTER

[LOGO]                                                 AlliedSignal Inc.
                                                       P.O. Box 3000
                                                       Morristown, NJ 07962-2496

LARRY BOSSIDY
Chairman and
Chief Executive Officer
 
                                                              March 11, 1996
 
Dear Plan Participant:
 
Thanks to the commitment of AlliedSignal's employees, 1995 was another
outstanding year for the Company, with sales and earnings rising significantly
to record levels. Wall Street took notice of our results, and the Company's
stock price rose 40% during the year. In addition, the common stock dividend was
increased again this year, representing the fourth consecutive annual increase
of at least 15%. I am delighted that participants in the savings plans are
benefiting from this higher return on their shares.
 
Enclosed is a meeting notice and proxy statement for the 1996 Annual Meeting of
Shareowners. As a plan participant, you are entitled to instruct the Trustee,
State Street Bank and Trust Company, how to vote the AlliedSignal shares
attributable to your plan account. The proxy statement includes the proposals to
be voted on, as well as the recommendations of the Board of Directors. A card
requesting your confidential voting instructions is enclosed for your use.
 
This is your opportunity to have the plan shares voted in accordance with your
wishes. All votes are important, and I urge you to exercise your right to vote
by completing the instruction card at your earliest convenience.
 
If you own AlliedSignal shares other than through the plans, you will receive a
separate proxy card for those shares. In order to vote all your shares, you
should return your plan instruction card in the enclosed envelope to the
Trustee, and return any proxy card you receive for other shares in the separate
envelope provided with that card.
 
I look forward to your continuing support as we work together to make 1996
another year of progress for the Company.
 
                                                              Sincerely,
 
                                                              LARRY BOSSIDY

Enclosures