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ALLIEDSIGNAL 'A' SENIOR DEBT, 'F-1' CP AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, June 14 /PRNewswire/ -- AlliedSignal Inc.'s (NYSE: ALD) `A' senior debt and `F-1' commercial paper ratings are affirmed. The `A' senior debt of predecessor entities - Allied Corp., Allied Chemical Overseas Finance N.V., and The Signal Companies, Inc. - guaranteed by AlliedSignal also is affirmed. Affirmations apply to $1.3 billion of senior debt and approximately $350 million of outstanding commercial paper. The credit trend remains improving.
 The action is based on the company's strong market positions, improving productivity and financial performance, and clearly defined strategies to generate continued financial progress and forward growth.
 Although some of its key markets remain weak, Allied has demonstrated improving profit margins and earnings in each of its three core businesses. These have followed substantial restructuring provisions and tough decisions to separate employees and close sites worldwide. Allied also has improved total quality and productivity and reduced manufacturing cycle times. Financial performance is benefiting from disciplined capital expenditures, improved working capital turns, and lower dividend outlays.
 Allied had a cash flow surplus in 1992, apart from cash generated from asset sales, and forecasts positive cash flow for 1993. Since year-end 1991, the company reduced total debt $700 million to $2.1 billion, in part with $940 million of net proceeds from selling its holdings in Union Texas Petroleum Holdings, Inc. While book debt leverage remains at 48 percent, in part from a $1.1 billion charge for adopting SFAS 106, cash flow debt coverage has improved to 38 percent from 1991's 33 percent, and dividends now are less than 20 percent of cash flow, before working capital charges. However, debt leverage is only 19 percent if Allied's equity market value of $9.2 billion is substituted for book equity of $2.3 billion. Book debt leverage should decline gradually with earnings progress, surplus cash generation, and a reasonable dividend payout.
 Allied's fundamental position remains sound, with some 65 percent of total sales arising from products in which it has a leading or strong market share. Its three core businesses - aerospace, automotive, and engineered materials - are internally well balanced and benefit from new product flows and leaner, more efficient operations, rather than pricing. Acquisitions are part of Allied's growth strategy, and Fitch believes these can be financed with cash on hand, cash from operations, and possibly some additional debt. However, as long as cash flow growth continues, such acquisition financing would not raise credit concerns.
 -0- 6/14/93
 /CONTACT: Mary Anne Sudol, CFA, 212-908-0562, or Thomas B. Harker, CFA, 212-908-0560, both of Fitch/
 (ALD)


CO: AlliedSignal Inc. ST: IN: ARO SU: RTG

MP -- NY033 -- 1511 06/14/93 10:16 EST
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Publication:PR Newswire
Date:Jun 14, 1993
Words:438
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