PRESS RELEASE
Rockwell Announces Parts Business Spinoff
17 March 1997
Rockwell to Spin Off Automotive Components Businesses; Move Will Complete Transformation to an Electronics Company
SEAL BEACH, Calif., March 17 -- Rockwell International
Corporation announced today that its board of directors has
approved a plan to spin off its automotive component systems businesses into a
new, separately traded, publicly held company. These businesses had 1996
sales of approximately $3.1 billion. Following the spin-off Rockwell will be
an electronics company with global leadership positions in industrial
automation, semiconductor systems and avionics and communications.
Rockwell's Strategic Transformation
"Today Rockwell is comprised of two distinct businesses -- a group of
leading-edge businesses serving segments of the electronics market and
automotive component systems, each with significant differences in their
markets, products, technologies, investment requirements and strategic growth
opportunities," said Donald R. Beall, Rockwell chairman and chief executive
officer. "After careful consideration of our business options, we're
convinced that the full potential of these businesses can best be
reached by operating separately. With this separation, investors will be able
to focus on the specific growth and value characteristics of each company.
"The new automotive component systems company will begin its operations
with all the key elements for growth and continued success already in place:
proven management, strong financial resources and market-leading products,"
Beall said. "For Rockwell, this strategic move completes the transformation of
our company from a broadly diversified concern into an enterprise focused
largely on commercial electronics markets."
For the last decade, Rockwell has been shifting its business toward higher
margin, higher growth commercial and international markets through a carefully
managed program of significant internal investments, coupled with strategic
acquisitions and divestitures. Over the last five years, Rockwell's
electronics businesses have demonstrated their growth and earnings potential
by achieving annual average growth rates in sales and operating income of
21 and 30 percent, respectively.
On Dec. 6, 1996, Rockwell completed the divestiture of its aerospace and
defense businesses to The Boeing Company. By spinning off its automotive
activities, the company completes its transformation to a global electronics
firm.
Details of Spin-off
Rockwell's board of directors approved the spin-off after a thorough
review of the company's operations and consideration of several options for
the Automotive businesses. The spin-off is subject to several conditions
including receipt of a ruling by the U.S. Internal Revenue Service that the
transaction will qualify as a tax-free distribution. Rockwell shareowners
will receive shares in the new automotive company on a pro rata basis.
These shares will be in addition to shares they will continue to hold in
Rockwell. Application will be made to list the new shares on the New York
Stock Exchange.
Rockwell Automotive Activities
Rockwell Automotive consists of two major businesses: Heavy Vehicle
Systems, a major supplier of drivetrain components and systems for heavy- and
medium-duty commercial trucks, trailers, buses, off-highway commercial
vehicles, and government heavy-duty wheeled vehicles; and Light Vehicle
Systems, a leading global supplier of sunroof, door, access control and seat
adjusting systems, electric motors, suspension systems, wheels, and
automotive electronics for passenger cars and light trucks. In addition to
the Rockwell brand, other major Automotive brand names include Golde
(sunroofs), Fumagalli (wheels), ROR (trailer axles) and Rockwell-WABCO (anti-
lock truck brakes).
Larry D. Yost, currently president, Rockwell Heavy Vehicle Systems, will
become president and chief executive officer of the new company. Effective
today, as a step in the implementation of this decision, the Heavy Vehicle
Systems and Light Vehicle Systems businesses will be combined under the
leadership of Yost, who is appointed President -- Automotive. Robert A.
Calder, President -- Light Vehicle Systems, will now report to Yost. Yost
will also serve as Acting President -- Heavy Vehicle Systems.
Yost commented, "Rockwell's heritage automotive businesses are world-
class players in the markets for heavy vehicle and passenger car component
systems. They possess an excellent management team, important technologies,
outstanding employees, impressive global manufacturing capabilities, a well-
deserved reputation for outstanding quality and customer service, and a solid
track record of performance. Establishing a separate, Fortune 400 company for
these businesses is an excellent way to improve customer focus, expand
leadership positions in addressed markets, and provide new opportunities for
our employees."
Headquartered in Troy, Mich., near Detroit, Rockwell's Automotive
businesses have worldwide employment of approximately 16,000, with major U.S.
manufacturing operations in Iowa, Kentucky, Michigan, Ohio, South Carolina,
North Carolina, Tennessee and Wisconsin.
These businesses also have significant global manufacturing and research
operations located in Australia, Brazil, Canada, China, the Czech Republic,
France, Germany, India, Italy, Japan, Korea, Mexico, Spain, Turkey and the
United Kingdom.
Rockwell Looking Forward
Following the spin-off, Rockwell expects its 1997 sales to be
approximately $8 billion, as it focuses on three core businesses. The company
will have approximately 44,000 employees and operations in nearly 100
countries:
Rockwell Automation, with projected FY 1997 sales of $4.5 billion, is the
largest Rockwell unit and the leading supplier of industrial automation
products to the North American market. This business is also a major
competitor in the worldwide market and has operations in over 70 countries.
Major brands include Allen-Bradley, Reliance Electric, Dodge and Rockwell
Software.
Rockwell Semiconductor Systems is a leading provider of
semiconductor products for personal communications OEM customers, and is the
world's leading supplier of fax and personal computer modem chipsets. Fiscal
1997 sales are projected to be approximately $1.8 billion. This business is
also the leading supplier of these devices for Internet Service Providers
(ISPs) and has recently introduced its new K56flex modem chipset to provide
users with greater capability to "surf" the Net.
Avionics & Communications is a leading supplier of Collins brand
avionics and communications products for air transport (airlines/OEMs),
regional aircraft, business aviation, and other commercial and government
markets. Fiscal 1997 sales are projected to approach $1.7 billion.
Timing
Rockwell will move as quickly as possible to complete the spin-off, with
the intent to complete the transaction by the end of Rockwell's fiscal year
(Sept. 30, 1997). Until the spin-off is completed, the two organizations will
operate as a single business. It is expected that the capital structure of
the new automotive company will result in a strong credit rating from the
first day of operation.
Rockwell will be a global electronics company with leadership market
positions in industrial automation, semiconductor systems and avionics and
communications, with projected fiscal 1997 sales of approximately $8 billion
and 44,000 employees.
Rockwell's World Wide Web Site: http://www.rockwell.com
Attachments:
Rockwell Fact Sheet
Rockwell Chronology
Automotive Fact Sheet
Automotive Chronology
Transaction Fact Sheet
Fact Sheet: Rockwell Continuing Businesses
Chairman and CEO: Donald R. Beall
President and COO: Don H. Davis
Revenues: $8 billion (FY 1997 Projection)
Employees: 44,000 worldwide
World Headquarters: Seal Beach, CA (until Aug. 1997) Costa Mesa, CA
(after Aug. 1997)
KEY FACTS
Following the planned spinoff of its Automotive businesses, Rockwell
emerges as a more focused corporation with the following attributes:
Rockwell's businesses will focus on global electronics markets, with
leadership positions in Automation, Semiconductor Systems and Avionics &
Communications.
Over the last five years, Rockwell's electronics businesses have
demonstrated their growth and earnings potential by achieving annual average
growth rates in sales and operating income of 21 and 30 percent, respectively.
Rockwell's balance sheet is virtually debt free, giving the company
substantial flexibility for enhancing shareowner value. The company began
repurchasing $1 billion in stock in December and is currently repurchasing
70,000 shares a day. That program will continue.
International sales will comprise about 35% of total expected FY 97
revenue versus 13% in 1984.
From 1984 to the present, Rockwell has generated $13.1 billion of
operating cash flow; invested $7.4 billion in capital expenditures
and $6.3 billion in R&D; repurchased $2.7 billion of stock and made more than
50 strategic acquisitions and 30 divestitures to strengthen and further
develop its market-leading core businesses.
BUSINESS UNITS
Rockwell Automation -- $4.5 billion in projected FY 1997 revenue. A
leading worldwide manufacturer of industrial automation products.
Headquartered in Milwaukee, Wis., with additional major operations and
facilities in Cleveland, Ohio. Operates 71 plants and is active in
74 countries, with more than 500,000 products.
President and chief operating officer: Jodie K. Glore
Major Products: Standard and engineered electric motors, mechanical power
transmission equipment, logic processors, power and motion control devices,
operator interface devices, sensors and a variety of software for industrial
automation customers around the world. Major brands include Allen-Bradley,
Reliance Electric, Rockwell Software and Dodge.
Rockwell Semiconductor Systems -- $1.8 billion in projected FY 1997
revenue. Manufacturer of semiconductor devices for personal communications
OEM customers. Headquartered in Newport Beach, Calif., with major
manufacturing facilities in Newport Beach, Mexicali, Mexico, and Colorado
Springs, Colo.
President: Dwight W. Decker
Major Products: World's leading supplier of fax and personal computer
modem chipsets and other advanced semiconductor devices which process,
transmit and receive information. Currently deploying K56Flex product line,
which will enable Internet connections at twice the speed of current analog
modems. Also provides chipsets and modules for wireless communications
products such as digital cellular and cordless telephones and Global
Positioning System receivers. Brooktree Division is the leading producer of
high-performance digital and mixed-signal integrated circuits for multimedia,
graphics, communications and imaging applications. Switching Systems Division
provides integrated solutions for mission critical call centers.
Rockwell Avionics and Communications -- $1.7 billion in projected FY 1997
revenue. Developer and manufacturer of avionics and communications products
for commercial and government customers. Headquarters and principal
manufacturing facilities in Cedar Rapids, Iowa, with additional facilities in
Richardson, Texas, and Melbourne, Florida.
President: John (Jack) D. Cosgrove
Major Products: Through world-famous Collins brand name, is leading world
supplier of communications, navigation and flight control systems for air
transport, regional aircraft, business aviation markets and government
customers and also provides systems design, development, integration and
support for complex communications and information management problems of
global customers, and is a leading developer of satellite-based air traffic
management systems.
Fact Sheet: Chronology of Rockwell Continuing Businesses
1903 Lynde Bradley and Dr. Stanton Allen form Compression Rheostat
Company (renamed Allen-Bradley in 1909).
1904 John C. Lincoln and Peter Hitchcock form the Lincoln Electric
Manufacturing Company, a forerunner of Reliance Electric, and
developed the Type AS DC motor.
1930 Arthur Collins begins making radio transmitters in his new venture
named Collins Radio Company.
1933 Admiral Byrd and CBS choose Collins Radio to establish radio contact
for Byrd's historic expedition to the South Pole.
1955 Collins Radio Company designs the first Kineplex transistor modem.
1973 Rockwell changes corporate name from North American Rockwell to
Rockwell International. Rockwell acquires Collins Radio Company.
1978 Rockwell begins shipping modems to facsimile machine manufacturers.
1984 Rockwell introduces the V.22 data modem chipset, virtually creating
the modern modem marketplace.
1985 Allen-Bradley is acquired by Rockwell, adding $1 billion in sales to
Rockwell's growing electronics business.
1993 Collins introduces the SATCOM-906, the world's first six-channel
satellite communications system. The U.S. Department of Defense
awards Collins a contract for up to 94,000 Precision Lightweight GPS
Receivers.
1993 Rockwell acquires Sprecher+Schuh AG of Switzerland to strengthen its
worldwide leadership in industrial automation and expand global
customer and production base.
1995 Rockwell acquires Reliance Electric to add to its growing Automation
business.
1996 Rockwell acquires Brooktree, Inc., a leading designer and
manufacturer of high-performance digital and mixed-signal integrated
circuits for computer graphics, multimedia, imaging and
communications applications.
1997 In February, Rockwell begins shipping K56Flex modem chips.
Fact Sheet: Rockwell Automotive
President: Larry D.Yost
Revenues: $3.1 billion (FY 1997 Projection)
Employees: 16,000 worldwide
World Headquarters: Troy, Michigan
KEY FACTS
Serves more than 800 original equipment manufacturers of autos, coaches
buses, trailers and trucks in the United States, Canada, Europe, the Far East,
Australia, the Middle East, Mexico and South America.
60 percent of Rockwell Automotive's sales are to international
customers.
Operates 48 manufacturing facilities and affiliated companies in
20 countries, including 10 joint ventures in Australia, Brazil, Canada, China,
the Czech Republic, India, Japan, Mexico, Turkey and the United States.
Administers one of the industry's most progressive and comprehensive
Quality Management programs -- 35 manufacturing facilities are ISO 9001/9002
certified.
Operates one of the world's largest, independent automotive research,
development and support facilities -- a 220,000-square-foot technical center
in Troy, Mich.
Heavy Vehicle Systems
Product Description: Drivetrain components for heavy and medium duty
commercial trucks, trailers, buses, off-highway vehicles and government heavy
duty multi-wheeled vehicles. Worldwide supplier of custom components,
including axles, brakes and drivelines for off-highway vehicles used in
industries such as construction, forestry and mining.
Major U.S. Locations:
-- Newark, Ohio --900 employees; specialty axle manufacturing
-- Asheville, N.C. -- 600 employees; drive axle manufacturing
-- Fairfield, Iowa -- 500 employees; driveline manufacturing
-- Kenton, Ohio -- 500 employees; trailer axle product manufacturing
-- Oshkosh, Wisc. -- 500 employees; specialty axle manufacturing
-- Florence, Kentucky -- 300 employees; aftermarket parts
distribution center
-- York, S. C. --300 employees; brake manufacturing
-- Morristown, Tenn. -- 300 employees; axle gearing manufacturing
-- Troy, MI -- 300 employees; corporate headquarters
-- Laurinburg, N.C.-- 200 employees; transmission and clutch
manufacturing
Major International Locations:
-- Osasco, Brazil -- 1,100 employees; axle and axle component
manufacturing
-- Xuzhou, China -- 900 employees; axle manufacturing
-- Cameri, Italy -- 600 employees; drive axle and brake
manufacturing
-- Tilbury, Ontario, Canada -- 400 employees; brake manufacturing
-- Clywd, North Wales-- 400 employees; trailer axle and brake
manufacturing
Other International locations: Australia, France, India, Mexico,
Singapore, Turkey
Light Vehicle Systems
Product Description: Sunroof, door, access control and seat adjustment
systems, electric motors, suspension systems and wheels for passenger cars and
light trucks.
Major U.S. Locations:
-- Gordonsville, Tenn. -- 300 employees; door component
manufacturing
-- Hopkinsville, Ken. -- 100 employees; suspension systems
manufacturing
-- Brighton, MI -- 100 employees; sunroof system manufacturing
-- York, S.C. --100 employees; door component manufacturing
Major International Locations:
-- Thury-Harcourt, France -- 1,000 employees; seat, door and roof
system manufacturing
-- Limeira, Brazil -- 1,000 employees; steel wheel manufacturing
-- Birmingham, England -- 600 employees; roof and access control
system manufacturing
-- Sully-Sur-Loire, France -- 500 employees; door system
manufacturing
-- Liberec, Czech Republic -- 500 employees; door system
manufacturing
-- Frankfurt, Germany -- 400 employees; roof system manufacturing
-- Gifhorn, Germany -- 300 employees; roof system manufacturing
-- Chatham, Ontario -- 300 employees; suspension system
manufacturing
-- Queretaro, Mexico -- 200 employees; door system manufacturing
Other International Locations: Australia, China, India, Italy, Japan,
Spain, South Korea and United Kingdom.
Fact Sheet: Rockwell Automotive Chronology and Additional Information
1909 Timken Detroit Axle Co., later to become part of Wisconsin Parts
Company, is formed.
1919 Willard Rockwell buys a small axle plant called Wisconsin Parts
Company to produce new improved axle based on his own design.
1953 Willard Rockwell merges Wisconsin Parts, Standard Steel and Spring
and Timken Detroit to form Rockwell Spring and Axle Company.
1967 Rockwell-Standard and North American Aviation merge, forming a new
company named North American Rockwell with $2.4 billion in sales.
1973 Rockwell Automotive acquires Fumagalli steel wheel business.
1986 Rockwell Automotive introduces new family of single-speed and two-
speed drive axles.
1988 Rockwell Automotive introduces diaphragm-spring clutches for trucks.
1989 Rockwell Automotive introduces family of 9- and 13-speed on-highway
transmissions.
1990 Rockwell WABCO begins supplying anti-lock braking systems (ABS) for
tractors and trailers.
1993 Rockwell Automotive acquires the former automotive components plant,
Skoda Miada Boleslav in Liberec, in the Czech Republic.
1995 Rockwell Automotive acquires window regulator business from Dura
Automotive Systems.
1996 Rockwell Automotive enters into joint venture in China -- Xuzhou
Construction Machinery Axle and Case Co. in Xuzhou, China.
Rockwell Automotive Annual Production Highlights:
250,000 drive axles 9-million steel wheels
390,000 trailer axles 22 million
window regulators
140,000 steer axles 2 million
sunroofs
1 million door systems 1.3 million air
brake assemblies
TRANSACTION FACT SHEET
Chronology
1. March, 1997 -- Rockwell Board of Directors approve plan to spin-off
Automotive businesses and tax ruling filed.
2. May, 1997 -- Documentation filed with the SEC and other regulatory
agencies.
3. August, 1997 -- Approvals from regulatory agencies anticipated.
4. September, 1997 -- Transaction closes and distribution implemented.
Key Points
Rockwell will retain the company name. The new company will develop a new
name.
Shareowner approval is not required for this transaction.
The transaction, as structured, will be tax-free to Rockwell
shareowners.
The distribution will be a 1-for-3 reverse stock split -- i.e. one share
of the new Automotive company will be issued for every three shares of
Rockwell stock.
Rockwell Key Points:
D.R. Beall and D. H. Davis will continue as Rockwell chairman and chief
executive officer and president and chief operating officer, respectively.
Rockwell's Board of Directors is unaffected by this transaction.
Automotive Key Points:
Upon completion of the transaction, Larry D. Yost will become president
and chief executive officer of the new, independent, Automotive company.
The new company will develop a name and other corporate identity items.
A separate Board of Directors will be established for the new company.
The new company will be headquartered in the existing Automotive
facilities in Troy, Mich.
Application will be made to list the new Automotive company on New York
Stock Exchange.
SOURCE Rockwell International Corporation
CONTACT: Bill Blanning of Rockwell International, 310-797-5819